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“When sweeping, idealistic dreams trickle down into sales and marketing channels, AI’s potential uses become unclear. Framing AI as a general-purpose Swiss Army knife for productivity inevitably leads to paralysis for its end users: Where do you even start with a technology that can do everything?” – Parmy Olsen, Bloomberg ($) Along with others, Olsen is freaked out by the skyrocketing ascent of chip-maker Nvidia’s stock price. June 21st, 2024 | 18 comments
 Lord (David) Frost is in suitably scornful form this morning in the Daily Telegraph (£). He takes aim at the idea, set out in yesterday’s Labour manifesto, that economic growth can be lifted from its torpor by a mass of councils, committees, agencies and the like, all directed from Whitehall but working, somehow or other, in “partnership” with private sector firms. As he notes, Starmer and the rest of them have learned all the wrong lessons from lockdowns, and in fact they liked the lockdowns precisely because of the ability to order the public around, to mark their movements and somehow command innovations (vaccines) by clapping one’s hands together. The headline of the article is excellent: Lockdown is the inspiration behind Labour’s ‘plan’ for growth. Excerpt:
I cannot resist parallels with where we were in 1964. The Conservatives, led at the time by Alec Douglas-Home (a much underestimated politician and a sharply intelligent man), appeared exhausted and “out of touch”. There was this whole thing about the “grass moors” – pictures of toffs shooting game birds on Scottish estates, and speaking in absurd public school accents. The times they were a changin’: the Beatles were exploding, George Best was transforming the world of football, Sean Connery was on the big screen doing battle against Spectre, and Peter Cook and Dudley Moore were making us laugh on TV; consumer goods were more accessible in our shops, and Labour sought to go for the “white heat of the technological revolution”. A lot of this was flim-flam, although some wasn’t. Harold Wilson, who smoked a pipe in public to appear more “sound”, apparently, did a lot of arguably good liberal things: censorship of literature more or less ended; the death penalty ended; homosexuality was decriminalised, divorce laws eased. Social conservatives may jib at this, but there was an aspect of genuine liberalism on parts of the Left that have vanished now in these “cancel culture” times. The downsides were still enormous: ugly buildings, the launch of the destruction of grammar schools and encouragement of egalitarian (and mostly bad) ideas in education. (This Dominic Sandbrook article gives a flavour.) We know how things ended. In 1967, there was a serious run on the pound in the foreign exchange markets (the UK was still part of the Bretton Woods system, which was ultimately underpinned by the dollar and the $ was still linked, however tenuously, to gold); attempts to rein in trade unions failed; spending on welfare and health rose. Horrid tower blocks were built to replace older housing, to the questionable benefit of the country. There was a “Brain Drain” – sky-high taxes on the “rich” meant that anyone of note in music, film, entertainment, commerce and industry lived abroad. By 1970 the wheels had come off. Wilson’s government appeared out of ideas, and its enthusiasm for central planning and control appeared as discredited as the Soviet Union. Throw in the turmoil abroad (Vietnam, end of Bretton Woods, the OPEC oil shock, racial and social mayhem in the US,) and things moved fast. Unfortunately, when the Tories were elected on a slim majority in 1970, a promise of radical reform under the horrible Edward Heath did not endure, and by 1974 the country was in deep trouble: strikes, power cuts, civil disorder, the nightmare of Northern Ireland. It wasn’t until 1979, with the election of Margaret Thatcher’s Conservatives, that matters improved. And for several years it was turbulent, and not a sure thing. Consider the parallels, even beyond the confines of the Labour manifesto: We have seen a relentless assault on “the rich”; and taxes are rising on them, and there is in the background the threat of a wealth tax, encouraging people who can to get out. The Labour Party wants to impose value added tax on private schools, consolidating the power of unions who hate any form of choice in education. There’s likely to be a lot of house building (something I broadly support), but one has to ask about the likely quality and appearance of it. And to go back to Lord Frost’s point, there is an inability, a sort of complete mental block, to think of bottom-up solutions by individuals doing their own thing to anything. Every problem, in the Labour mind, starts with what government can do about it. I am reminded of the theme of that excellent book, “Seeing Like A State, How Certain Schemes to Improve the Human Condition Have Failed”, by James C Scott. I doubt that Keir Starmer or his likely future Chancellor and finance minister, Rachel Reeves, have read it. The groundwork for this memory-holing of lessons from the past has been in evidence for some time. I think the 2008 financial crisis, and the way that a poisonous narrative was allowed to build around what caused it (evil bankers, deregulation, etc, when the causes were mostly about government), carries a lot of the blame for this. There’s also just a dreadful complacency among those who just assumed that arguments for free enterprise had been won and we can focus more on gender pronouns or so on. (I have seen plenty of comments like this from “social conservatives” who have even told me, at times, that public debt “does not matter” because immigration is so much more important.) What has happened is that the classical liberalism tradition has gone soft. I was struck by how, for example, you can go into a bookshop such as Waterstones in the UK and almost every tome on politics and economics will be banging on about the alleged evils of neo-liberalism and how such ideas rule the world. If only. (A book, Free Lunch Thinking, by Tom Bergin of Reuters, is one of the more intelligent ones, but it is full of questionable conclusions, such as its attacks on the idea that incentives matter, and has been nicely and politely taken apart by Kristian Niemietz of the IEA.) It is worth recounting all this to understand that while history never exactly repeats itself, it does rhyme. The 60s aren’t coming back as far as music, fashion and films are concerned (shame), but we are likely to get some of the other stuff. June 14th, 2024 | 25 comments
“I am under no illusion that even the most passionate and articulate defence of classically liberal values would be an enormous vote winner. But in an election likely to return a Labour government who will, by their nature, proselytise about the good the state can do, and with a Conservative Party which has in recent years shown a frankly alarming tendency towards illiberalism, implementing sugar taxes and attempting to ban smoking forever. The country desperately needs a counterweight to slow our seemingly inevitable slide towards an ever expanding state. Even if the Tories don’t get completely annihilated at the ballot box they are likely to spend at least the next six months tearing themselves apart in a leadership election. The Lib Dems will be providing the real opposition for a while and they need to stand for something.” – Emma Revell, in CityAM. June 11th, 2024 | 15 comments
I think we are long past the point where organisations such as the UK’s BBC, never mind such havens of moral bankruptcy, the UN, can be treated seriously any more. One of the long list of reasons I have for despising the current Conservative government (and that’s not about Rishi Sunak, but earlier) is that the BBC still exists. It ought to be a smouldering wreck, as if taken out by an IDF F-15:
Wall Street Journal editorial comment on how the rescue of four hostages has elicited condemnation from various quarters.
A question that appears not to occur to some, but does to me, and a few others, is if the civilians in Gaza are the poor innocent types that we are told they are, how come the hostages were residing at the pleasure of them? According to Charles Moore, in the Daily Telegraph (£), Questions that ought to be put by journalists include: “Why does the BBC not inquire into the reasons that Hamas keeps hostages in civilian areas?” He also asks: “At least three of the hostages were held by civilians (a former Al Jazeera journalist and his family members). What is the extent of Gaza civilian cooperation with Hamas murder and hostage-taking?” Finally: “One understands…deeply deplores, that the BBC has committed itself to extreme bias in its coverage of Israel/Gaza, but does that mean that it has to employ imbiciles?” I fear the answer is `yes'”. A few years ago, the UK’s Institute for Economic Affairs had a relatively mildly-written case for scrapping the licence fee tax. It seems to me that if any supposedly sane political party wants to win my vote, the least it can do is pledge to scrap that fee and break the BBC up. For years, the standard response of the BBC grandees to any suggestion of reform is to go on about how it provides world-class journalism and programmes. It’s not a joke that gets funnier with being repeated. June 11th, 2024 | 15 comments
“In the Singaporean case, economic growth has proved to be an upshot of cultural values; it requires a critical mass of the population to hold a certain moral and political psychology, and a particular set of dispositions about enterprise and industry, risk, and change. Cultural values are sticky, and to change them, some moment of acute crisis, when it appears that the costs of continuing down a certain path are greater than shifting course, is required. Yet while crises are necessary for cultural change, they are not sufficient: they represent moments of maximal opportunity, though they must be exploited. And for this, skilled politicians with judgement and a strategy are required.” June 7th, 2024 | 15 comments
The Wall Street Journal ($) has been running articles looking at the silicon chip industry, and the attempts by countries such as the US to try and protect and stimulate production of high-end chips. I can strongly recommend Chip Wars by Chris Miller for an overview of the rise of this extraordinary industry, and the web of supply chains that underpin it. Here’s the newspaper’s latest feature on the topic:
No kidding. When lots of public money is hosed around, firms will try and get some of it.
Another way of describing it is corporate welfare.
I am sure they are.
There are dangers of major misallocation of capital when politicians drive anything.
This is an expensive business.
I am sure they are. The lobbying industry gets another cause to chase. June 6th, 2024 | 10 comments
The historical record is clear; “One-Nation” Conservatism is an unelectable platform. It is completely toxic, politically. The existence of challenger parties on the Right is possible only because the Conservative Party is still under the malign influence of individuals who believe that vast legal immigration is an unmixed economic good which creates ‘concerns’ which must be addressed by listening. Who think that ‘trans’ and ‘woke’ are just culture war distractions from the next bold investment in Britain’s ever nascent life sciences industry. Who think that we must be a ‘Net Zero superpower’ if we want to maintain our ‘soft power’ abroad. There is no political constituency in Britain for these people. They are kept in Parliament because of tribal Tory voters and the fact that the alternative is usually worse. – Sydney Carton, The Critic. June 4th, 2024 | 29 comments
More and more mainstream journalists (maybe we need to retire the term “mainstream” as it begs many questions) are sitting up and taking notice of the Argentinian president, Javier Milei. His openly declared support for radical classical liberalism and “Austrian economics”, for thinkers such as Ludwig von Mises, FA Hayek and Milton Friedman are a breath of fresh air in these increasingly unpleasant, statist times. His package of reform moves, including slashes to the budgets of the Argentinian state, are inevitably attracting criticism and pushback. This is to be expected. When Ludwig Erhard, the former West German economics minister, put the Deutschemark on a firm footing, ended price controls and cut forms of intervention, the UK occupying authorities, for example, thought he was nuts; when Poland pivoted sharply towards free enterprise in the early 90s, things got tough for a while as a lot of formerly concealed unemployment surfaced. The same happens in many other nations that adopt the “shock therapy” of moving off the morphine drip of cheap money. Imagine, if you will, the likely pain if Venezuela moves away from socialism; the UK had a tough time when Mrs Thatcher enacted reforms in the 1980s, and fashionable opinion thought she was mad and could not succeed. It seems rather typical of this cycle, then, that Daily Telegraph economics writer Ambrose Evans-Pritchard argues that Argentina is engaged in an “extreme” form of Austrian economics, and argues that it is all going wrong. AEP is a Keyensian; he sometimes writes intelligently but a lot of his predictions are way off base. He’s predicted the crackup of the eurozone so many times that his credibility is shot on that issue. He’s all for Net Zero and the policies to make it happen. But there is more than a grudging respect for Milei here – AEP knows that Argentina’s statist, Peronist culture is awful and needs to change. And AEP does argue that maybe Milei ought to take a leaf out of Erhard’s book on the issue of the currency. Unfortunately, AEP is a full-on fiat currency guy, who presumably agrees with Keynes that gold is a relic, etc. In any event, people are noticing Argentina now. Its currency and debt is more highly valued; thousands of civil servants have been fired, and Milei is pushing to end a lot of controls. He faces resistance, and may not succeed. But here he is, more than six months into power, and I hope he succeeds. A prosperous, liberal Argentina would be a refreshing contrast not just to the Argentina of many recent decades, but to the horrible regimes of other Latin American states. And who knows – it would be nice if the UK could improve relations with such a country, maybe work out something over the Falklands, and forge closer trade ties with a country that the UK helped to build a century ago. May 16th, 2024 | 11 comments - (Comments are closed)
The recent decision by President Biden to slap tariffs on a range of Chinese imports, including electric vehicles, has gone through with relatively little political noise and pushback. There was a time a while ago when certain figures in the Republican Party and part of the mainstream media would have been alarmed by this, given how widely free trade was accepted as a default position, with caveats about protecting sectors deemed vital for security, or because of things such as blatant abuse of intellectual property. Nowadays, it appears that mercantilism, and special interest lobbying power that drives it, is as strong as ever. The Wall Street Journal writes ($):
Of course, the question is who is being “defeated”, if at all, by hammering the economy of China? Will it be the Chinese Communist Party, which in many ways is more or less a sort of Mafia, or the regular Chinese people? Let’s not forget that tens of millions of Chinese citizens have been lifted to a standard of living that would have been a shock to those familiar with the terrible Mao-induced catastophes/crimes of the Great Leap Forward in the 50s and the Cultural Revolution of the mid-60s. While I suppose that deliberately impoverishing China – which is what some people might want to see – is the goal, regardless of the human costs – I see it as right to pursue two broad courses – encourage prosperity around the world and resist the most egregious abuses. It is also a fact worth considering that it is not, in general, prosperous countries that attack other rich ones. It usually tends to be countries that are in decline for various reasons – often self-induced – that lash out against their real or presumed opponents. A China that wants to conquer Taiwan, for example, or mess with the West in various ways, is in my view motivated by a sort of nagging insecurity as much as anything else. China has done far more to harm itself by its clampdowns under Xi than anything that Biden, Trump or whoever is likely to do. And protectionism is, as I explain below, a very blunt instrument that causes widespread collateral damage and self-harm. The newspaper notes that one bad policy begets another, as politicians try to offset the bad effects of their previous policy:
It is. The long-term negative consequences of rising protectionism will be complacency, sloth, special pleading, shoddier products, and the rest. This may take years to manifest itself. It is not even as if the tariffs being imposed by the Biden administration are to be offset by large tax cuts domestically. In the late 19th Century, the various administrations after the US Civil War did impose tariffs, but domestic taxes were puny compared with what we have now. In any event, arguments that protectionism “protects” seem to be as weak as they ever have been. And there are the downstream impacts to consider: by making imports of solar panels, cars, cooking oil or whatever more expensive, it increases costs not just to consumers, but also to intermediate manufacturers who use these things. Import tariffs on steel drive up the cost of everthing made with steel, to give one simple example. There is also the corrupting effect that protectionism has, as explained by Phillip W Magness:
Magness also notes another myth about tariffs that modern-day protectionists like to lean on:
In any event, while they are different in many ways, it appears that both Mr Biden and Mr Trump are in agreement that tariffs are great. Whatever other qualities, or the lack thereof, may distinguish these men from each other and may persuade voters to jump one way or the other, or abstain, or just despair, it appears that on protectionism, we are back in an age as if Adam Smith and David Ricardo never existed. May 16th, 2024 | 12 comments - (Comments are closed)
“If I messed up a funny story around my relatives, they would go ‘That’s not how you tell that joke. The prostitute has to be behind the drapes when the wife comes in.’ You went to Duke—that is an unbelievable privilege. I now have an Honorary Doctorate of Humane Letters degree from Duke University. And if I can figure out a way to use that, I will. I haven’t figured anything out yet. I think it’s pretty much as useful in real life as this outfit I’m wearing. But so what? I’ll take it. My point is we’re embarrassed about things we should be proud of and proud of things we should be embarrassed about.” – Jerry Seinfeld drops some humorous truth bombs at a college speech. May 14th, 2024 | 7 comments - (Comments are closed)
“Israel placed fifth this year, due to low support in the jury voting. But it came second to Croatia in the popular vote. Though Ireland’s entrant, a “nonbinary” satanist named Bambie Thug, had called for Israel’s expulsion, Irish voters put Israel in second place. Israel topped the popular vote in Britain, Spain, Germany, France, Finland, Sweden, Holland, Belgium, Switzerland, Portugal and Italy. Europeans may struggle to tell good tunes from bad, but they know the difference between good and evil.” – Dominic Green, Wall Street Journal ($) For more coverage on the rather satisfying result of this admittedly silly competition, see here. May 13th, 2024 | 29 comments - (Comments are closed)
“…you can’t long remain a free society if you don’t believe in freedom. And it’s no good just saying you believe in it: you have to live it. Sometimes that means politicians deciding ‘we would rather live with this injustice or this social problem than expand the state to deal with it.’ When was the last time you heard anyone say that? And that’s the problem.” – David Frost, Daily Telegraph (£) May 10th, 2024 | 18 comments - (Comments are closed)
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