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As has been noted before, the disaster of the eurozone is, in the eyes of some policymakers, as much an opportunity for further pan-European empire-building as it is an occasion for shame and embarrassment. This week, Angela Merkel, German Chancellor, and Nicolas Sarkozy (remember him? He’s the one who married one of Mick Jagger’s old flames), came up with this barnstormer of an idea, in the form of a European-style “Tobin tax” and a form of increased economic central government. It has the ring of inevitability about it.
The problem for the UK is that said tax, which has been assailed by the likes of Tim Worstall before, would apply not just to the eurozone, but to the UK, which is not in the euro. And given the relative size of London as a financial centre compared to Paris, Frankfurt or Milan, guess which place takes the biggest relative hit? You guessed: London. Never mind, of course, that banks that can do so will put some of their activities outside the EU, or that the costs of the tax will be borne by savers, borrowers and users of financial services generally, in the form of lower rates of savings interest – already negative in real terms – more expensive costs of hedging forex transactions, and the like. This is what is known as tax incidence. Politicians are not, as we know, in the business of understanding the Law of Unintended Consequences. Indeed, we might even define today’s political class as people who defy this law.
Of course, Cameron, Osborne and others (but not their LibDem allies) will protest about such a tax on London’s financial sector, but look how far such protests got us before concerning sovereign debt bailouts by the UK. And such men have shamefully pandered to such anti-capitalist sentiment in the past, so there is a sort of brute justice if they fail to prevent this latest move now. Such men, of course, have enjoyed the fruits of financial wheeler-dealing when the going was good, such as financing of the Tory party by the likes of Michael Spencer, the founder of derivatives powerhouse ICAP. (As an aside, I see that the odious Vincent Cable, Business Secretary, wants to slap capital gains tax on housing transactions of wealthy properties if the Tories decide to ditch the top 50 per cent rate of income tax. Even a land value tax is better than CGT, although not by very much. There is no such thing as a benign tax.)
Alas, banker bashing has reached such heights of hysteria that some might even try and argue that such a tax on the evils of speculation is a jolly good idea. It pained me to see that even that otherwise fine book on the recent market disaster by Kevin Dowd and Martin Hutchinson, floated the idea.
Allister Heath weighs on the latest eurozone wheeze. He’s unimpressed, not surprisingly.
Update: Here is a twist on the issue of tax incidence and taxes on companies. Milton Friedman is magnificent.
“Richtie is the true Clausewitzian nightmare, an industrious idiot who never stops.”
– David Moore, commenting on an item by Tim Worstall, who fisks the absurd Richard Murphy.
Okay, back to the recent violent disorder. Eating in a local cheap restaurant for lunch, I grabbed a copy of the Daily Mail and was pleasantly surprised at this remarkably non-hysterical piece on the recent controversy about David Starkey, the historian. But of course, if you want a reliable mix of social conservative rant and shafts of lucid insight in the same piece, there is always Peter Hitchens (brother of Christopher) on hand. In the article I link to here, I broadly agreed with some of it but as usual, there is always the equivalent of a crack in the pavement.
“Say to him [Cameron] that mass immigration should be stopped and reversed, and that those who refuse any of the huge number of jobs which are then available should be denied benefits of any kind, and he will gibber in shock.”
Interesting. So Mr Hitchens thinks that mass immigration should be “reversed”. How exactly? There is often, I find in some of the denunciations of mass immigration, an unspoken assumption, never fleshed out, as to what said denouncers want to do about it. Does Mr Hitchens think, for instance, that those who have been living in the UK for some time, and who hold UK passports, should, if they fall into the “wrong” demographic groups as he might define them, be deported? To where? How? Never mind European “human rights” legislation, how can any supposed “conservative” such as Mr Hitchens, with his famed love of “family values” and the rest, countenance a reversal of mass immigration without spelling out the details? Casually referring to “reversing” X or why without saying how is foolish, in my humble opinion.
Of course, there are tens of thousands or more people who emigrate from the UK every year in pursuit of a better life. And I suspect the recent mayhem will only add to the shift. But I get the impression that such folk are not the ones that Mr Hitchens has in mind.
We tend not be very nice about the BBC around here. It is a state-created broadcaster that forces everyone to pay for it, etc. (Boo, hiss, throw rotten tomatoes, etc). But it does occasionally put up programmes of some value. In view of the popularity of shows in which the rich, famous or infamous track down their ancestors, such as “Who Do You Think You Are?”, there is a show that runs in the dead-zone of daytime TV, called Heir Hunters. It shows how various financial/legal professionals earn a living by trying to track down people who could inherit money from the deceased but who don’t know about it because there was no will signed. The actual commission or fee that these people charge for this work is not disclosed but the general effect of what these businesses are doing is positive, in my view. The reason for my saying that is that at present, if a deceased person’s estate has not be carved up in a will, then it is grabbed by the state.
A friend of mine who works in this area reckons that in his own, modest way, he is keeping private wealth out of the hands of the state by making sure that those who could inherit the money actually do so. Anyway, the popularity of the show suggests that inheritance of wealth is something that Brits of many backgrounds are comfortable with. Most of the people highlighted in the programme are not exactly the Duke of Westminster type.
The popularity of this sort of programme also, of course, speaks of the enduring interest people have in history, family traditions and roots. Like certain other passions and enthusiasms, it appears to be ineradicable, and woe betide the politician who attacks it, however indirectly, via taxes.
“The global paper standard has lasted 40 years but evidence is accumulating daily that its endgame is now fast approaching. The world economy is caught in a deepening financial crisis caused by excessive levels of debt, severe asset price bubbles and overextended banks—all imbalances that are the direct consequence of four decades of unprecedented fiat money creation, of artificially low interest rates and of “lender-of-last-resort” central banking. Monetary policy today—whether by the U.S. Federal Reserve, the ECB or the Bank of Japan—is not much more than an increasingly desperate attempt to postpone via super-low interest rates and periodic debt monetization the painful but unavoidable liquidation of these imbalances. This will not only ultimately prove futile, but will lead to a complete currency catastrophe if pursued further.”
– Detlev Schlichter, writing in the Wall Street Journal. The fact that he is now gigging at the mighty WSJ is, of itself, a great thing.
Update: today is the 40th anniversary of Richard Nixon’s decision to kill off the link between the dollar and gold, although in reality the old gold standard had been dead for much longer.
Whenever a senior political figure, such as David Cameron or Boris Johnson (the London mayor) writes a newspaper column on some issue or other – and Boris Johnson does this a good deal, being a good writer – you can bet that in light of recent events, at least one commenter will make some remark about the politicians’ holidays. You see, it was terrible, apparently, that our Prime Minister was sunning himself in Tuscany or that BJ was carousing in Canada, rather than working 24/7 in their offices. To delay coming back to our Sceptred Isle for a few days when the disorder broke out is inexcusable, just the sort of lazy, arrogant stuff you can expect. Etonians. Bullingdon Club. These bastards probably did PPE at Oxford! (Sarcasm warning).
As you can see, I find all this type of commentary tiresome. It suggests an inability to realise that in the age of the internet, video conferencing and the like, that things don’t collapse when a political leader is away. The Prime Minister is not my Daddy.
And from the point of view of someone who believes in minimal government, the free market and the open society, this mindset is very foolish. While I don’t want to pay for their holidays, I happen to think that the idea of politicians taking time off from their politicking is a very good idea and should be encouraged. A century or more ago, the Peels, Palmerstons, Gladstones and Disraelis holidayed a good deal, and their backbench members of Parliament holidayed even more, or ran their estates. In the USofA, Congress was deliberately located on the swamps of the Potomac in order to discourage people from meeting during the hot, malaria-filled summer months. (Arguably, the governence of the US went down the tubes when air conditioning was invented). And London stank so badly because of the lack of drainage that getting out of London was a good idea for anyone who could do so.
As I said, I don’t mind politicians taking time off so long as we, the taxpayer, don’t have to pay for it. But in principle, the idea that Civilization will come to an end unless Dave, Boris or Barack are constantly at their desks or in the assembly is barmy. There is much to be said for a bit of time out from these people. As the saying goes, we should be grateful we don’t get all the politics we pay for.
(Aside, the commentators on the Daily Telegraph site are truly awful, arguably worse than the Guardian. Take a look at the moronic stuff regarding BJ’s latest article on the riots).
I am a busy person this weekend so I haven’t time to do much more than to link to this fascinating interview with a former CIA operative on his experiences of living in Iran. With all the troubles in the world right now, it pays to keep an eye on a country and a regime that continues to be a serious threat. More optimistically, though, if Iran ever did move towards genuine openness and democracy, the impact on the rest of the Middle East region would be immense.
This struck me:
“If the Iranian regime dared for one day, for even half a day, to allow Iranians to come into the streets and say what they really want, then you would see tens of millions of Iranians in the streets shouting “Death to the Islamic Republic!”
“If there were a free referendum today, “yes” or “no” to the Iranian Republic, more than 90 percent would say “no.” If there were a free referendum today saying “yes” or “no” to establishing ties with America, more than 90 percent would say “yes.””
Here is a good collection of some of the strangest looking bits of architecture in the world. Some buildings will be familiar – like the Guggenheim in Bilbao, Spain – others, less so. Click on the link and scroll down. It’s a large collection.
Notice how the loudest complaints about “broken politics” come from those who lost the debate. It’s understandable for sore losers to rage against the machine. But there’s no need for the rest of us to parrot their petulance.
– Charles Krauthammer.
Just as war, as is sometimes said, can be the health of the state, so can domestic civil disorder. One of the arguments we can expect to hear in the coming days, and are beginning to hear already, is how much of the recent mayhem has been driven by Britain’s evil “consumerist” culture, our “market-based materialism”, and suchlike. The implication being that we need to have more and more controls over our lives (that is not the same as saying people need to understand self-control and save rather than rely on credit. That is a separate argument). I am willing to stake a few pounds that there will be calls for some sort of National Service for youngsters, if not in the form of the military (who’d want these scum in charge of weapons?), but something else, perhaps. (Again, I have nothing against clubs and groups set up to help youngsters grow up a bit into adults, so long as this is voluntary.)
A random example of the kind of “if only we had powerful leaders” line comes from John McTernan, in the Daily Telegraph. He starts off with this:
“Churchill redeemed himself, and saved the world, during the Second World War. Margaret Thatcher defeated fascism in the Falklands war, and ultra-Leftism in the miners’ strike. We are a better and stronger country, at home and abroad, for her undeviating will and courage. It wasn’t just Britain – the post-war world was full of examples. Nixon and China. Reagan and the Russians. Gorbachev and perestroika. Mandela and de Klerk. These were big figures who made bold choices, shaped the future, called the shots.”
Well, maybe. I find the Nixon example dubious. Sure, he may not be the devil of lazy historical analysis and he unfroze relations with China, but he also, remember, imposed wage and price controls in a panic about inflation and was hardly a consistent advocate of small government, at all. I’ll come to Mrs Thatcher in a minute.
“Evelyn Waugh used to criticise the Conservative Party because it had never turned the clock back by a single minute. But at least it was properly conservative. Harold Macmillan would be shocked at the modern party’s Maoist commitment to revolutionary change, just as Tony Crosland would be aghast at Labour’s obeisance to capital.”
Harold Macmillan is a man who wanted Britain to join the EU; his essentially paternalist version of Toryism, and his deference to the legal privileges of the trade unions, helped breed the kind of complacent attitudes that saw the UK lose its industrial edge. In certain ways, “Supermac” and that whole generation of Tories up to Mrs Thatcher advocated a form of controlled retreat. As for the awful Tony Crosland, why praise a man who once infamously said he wanted to destroy those “fucking grammar schools?”. I hate it when a certain kind of commentator gets all misty-eyed for the political leaders of days of yore, such as the ghastly Nye Bevan, the Labour politician who saddled this country with the National Health Service. We can do without that kind of “leadership”, thank you very much.
“The connecting thread is that Left and Right have accepted not merely market mechanisms, but the market’s ultimate mastery. For more than 30 years, politicians have told industries, communities and voters that you can’t buck the system. In doing so, they have internalised their own advice, and ended up enslaved by these new gods themselves.”
One of the people who said you cannot defy market forces, or fail to heed what Kipling called the “Gods of the Copybook Headings”, was of course, Margaret Thatcher, whom the author of this article claims to admire. In fact, Mrs Thatcher’s greatness, in my opinion, in part stemmed from her willingness to tell people that water did not flow uphill, that if you want to distribute wealth, you have to create it, and that defying the laws of supply and demand typically made problems worse, as in the case of trying to fix the value of sterling. That was one of her best traits.
“George Osborne’s mantra is that if we don’t face up to austerity, then we’ll be like Greece, at the mercy of the markets. Would any Conservative politician, in any previous administration, have compared our great nation to a failing southern European economy (rather than a modern-day Athens or Sparta)?”
I have no idea. I think that pointing out that if the UK fails to get its house in order then we will have the kind of disaster as seen in another country, is a good thing for a politician to do. It is about describing hard reality, not coming out with some sort of guff about “we are a great nation and can do what we like” sort of line.
“Our former leaders would be shocked by the willingness of Cabinet ministers to talk down our country. Accepting your own powerlessness is a characteristic of weak leaders throughout history: always managing, never transforming.”
It is not about “talking down”, but facing reality. To change, you first need to accept where you are now. In the UK, many people, some of them holding quite diverse political views, have been slapped hard with that reality.
People going to fancy dress parties do it. The blogger Old Holborn does it. I am talking about face masks.
Face masks have been targeted as one of the things that the authorities may try to ban in the wake of the riots. Enforcing such a rule, even if it makes sense, strikes me as difficult. Perhaps the only way to interpret and enforce such a law would be to say that anyone wearing an item obscuring most of the face during a time of public disorder would be at risk of prosecution. (Wearing a ski mask should be illegal in the middle of a riot, but not on the slopes of Chamonix, for example). But again, how to decide when to impose the rule? Perhaps a public official, preferably a magistrate, has to read out what used to be called the riot act and after the reading of said act, anyone wearing a mask or suchlike is in trouble.
But it may not be so cut and dried as that, alas. There is the issue of public versus private space to consider. Owners of private property, such as shopping malls and the like, are entirely within their rights to insist that people entering the premises should show their faces, and comply with whatever codes of behaviour might be stipulated, however rational or otherwise, just as private members’ clubs and other places ought to be able to insist on dress codes, for example. Banks will typically insist that motorcyclists take off their helmets, if I recall correctly. (That makes perfect sense, for security reasons).
But as I know some regulars will ask, how does this ban on face masks apply to Muslim women who cover their faces behind a veil or other such form of costume? If such a person enters a shop, say, does this mean the police will now insist they show their faces? I’d like to see how that’s going to work. What about Islamist demonstrators against, say, military actions in the Mid-East? I cannot honestly see how the cops are going to successfully enforce a mask ban without a serious ruckus.
Like a lot of ideas that sound good to politicians in the heat of the moment, the notion of banning people from obscuring all or part of their faces is difficult as a general aim of the law, even if owners of private spaces are entitled, as they are, to make such demands. I can see all kinds of issues of interpretation coming up: what about a guy who wears a baseball cap with big sunglasses – is that illegal, or not? What counts as a “mask”? Surely, any law would need to consider the full context here, but it is not always obvious whether wearing a certain item signifies intent to avoid detection.
Instead of such silly measures, the government must focus its attention, as has been pointed out ad nauseam here, on the following areas:
–T ougher sentences for crimes of all kinds, including theft, which in far too many cases is treated as a minor matter. Such punishments must include restitution of the victim(s);
— Drastic cuts to welfare benefits combined with a big rise in tax thresholds at the bottom of the scale to make work pay. Even the dimmest thugs operate under some sort of cost/benefit analysis. Make work pay;
— Lowering the compulsory school-leaving age; change to labour market rules to encourage apprenticeships, vocational training;
— Allow people to use force in self defence, including firearms;
— Legalise (most) drugs. Yes, this is probably the most controversial idea, and maybe I would not enact this until the moral hazard-machine of the Welfare State has been seriously changed, but it is a key issue. If gangs don’t control the drugs trade, it undermines the gang culture more generally;
— Tax cuts more generally so that married spouses don’t feel under such pressure to both work to keep a decent income. This may also reinforce marriage and provide a better environment for children;
— Scrap the various quangos, race relations organisations and other tax-funded institutions that far from alleviating tensions, often inflame them by the manufacture of various grievances for classic bureaucratic empire-building reasons;
— Zero tolerance policing. Get some guys from New York over to London for some rapid tutorials.
I am sure there are more ideas on how to strengthen the family, encourage positive behaviours and deter bad ones, but it seems to me that trying to regulate dress codes in the streets is one of the most pointless unless the conditions can be very clearly defined in law and avoid arbitrariness. Not a good idea, Prime Minister. There are other, more urgent things to do, and time is short.
“The public’s mood has changed irrevocably; on crime and punishment, social attitudes will have hardened permanently as a result of the past week’s events. Strong speeches from the prime minister are a step in the right direction, as is the much more effective policing of the past 48 hours, but the public wants real, permanent change, not just temporary, emergency measures. A YouGov poll found that 85 per cent of the public believe that most of those taking part in the riots will go unpunished – they have lost faith in the system. This is understandable: it also reflects the perception of the thugs themselves. Criminal activity is far more rational than people believe, especially in wealthy societies such as ours: there is a lot of empirical and statistical work that shows that criminals implicitly weigh up the costs and benefits of crime. A high probability and cost of detection reduces crime, all other things equal; a low likelihood of detection, a low likely cost (such as a negligible prison sentence or a caution, as has too often been the case in the past) and a larger payoff (flat screen TVs or expensive trainers) raises it. Many of those storming shops made that very calculation this week, albeit implicitly and in some cases incorrectly.”
Allister Heath, editor of CityAM. Read it all.
The political party that most intelligently grasps this change of mood, and responds to it by a re-assertion of the right of individuals to defend themselves and their property, and which unravels the disaster wrought by welfarism, supine policing and a hopelessly over-regulated labour market, should win the next election. The question, as ever, is which party has the nous and courage to do this. So far, the signs have not been very encouraging.
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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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