We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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“The Tory vision of the country is, or should be, one where people are busy – working, thinking, travelling, prospering, bettering their lives. It involves building things and going places. It involves houses and factories, roads and cars, ports and airports, as well as parks, countryside and gardens.”
– David Frost, a former member of the Boris Johnson administration, who resigned in part over things like tax hikes. I get the impression that his views are falling on deaf ears among many Conservative MPs, for whom building things, travelling, entrepreneurship, or of how life should be about a sense of adventure, are all terrible things to be banned or viewed with suspicion. Maybe we will get a political realignment at some point, where the Tories revert to their 19th Century default of being the party that largely resisted, or was snooty about, industry and an upwardly mobile class, with a different party championing such things. It may not happen, but I get the sense that there is a lot of change in the political culture at the moment. If you are a young, ambitious person, what on earth does much of the UK political order have to offer if you detest politics and want to just get on with life? The answer, for many, will be to leave.
“The revived fortunes of fossil fuels, especially coal, may explain some of the weakened resolve for decarbonization. Global bank lending to fossil fuel companies is up 15 per cent, to over $300 billion, in the first nine months of this year, from the same period in 2021, according to data compiled by Bloomberg. This is Wall Street just doing its job: making money. Banks earned more than $1 billion in revenue from fossil lending during the first three quarters, in line with 2021. Why quit business with a booming sector over a distant climate goal?”
– Alistair Marsh, Bloomberg. ($) The US news service has been pushing the whole “Green transition” agenda in recent years in its coverage, at the behest of founder Michael Bloomberg, so there is something darkly amusing watching the organisation concede that decarbonisation has been a big loser for investors in recent months. If you are JP Morgan, BlackRock, Bank of America Merrill Lynch or a small investment house in Massachusetts, you have to explain to clients why you hugely lagged the stock market because of your “Green” decisions.
As the late Richard Feynman once said apropos the Space Shuttle, nature cannot be fooled. That applies to economics as well.
“You couldn’t force lockdowns without laptops, Zoom, Amazon deliveries, cloud computing, Slack, QR codes or Netflix. Without them, lockdowns would have lasted two, maybe three weeks tops before the utter destruction of the economy forced everyone back to the workplace. Instead, we took the Faucian bargain of technology-enabled yearlong lockdowns because it was doable. Silicon Valley’s tools became shackles.”
– Andy Kessler, WSJ ($). Tech is great, and these channels would be useful in any sense, but it is certainly true that for a segment of the population (such as those with media influence and in government), they made lockdowns far more “doable”. For a fan of tech such as me, that is an uncomfortable thought.
“Faucian bargain” – very droll.
For the past two weeks, a stock narrative has been that UK Chancellor of the Exchequer Kwasi Kwarteng’s “mini-budget” was reckless and rattled the markets, and he should have been more cautious, set out the debt and borrowing side first, not talked about reversing Rishi Sunak’s tax hikes to corporate tax, NICs, etc, and got fully on board with the idea that what the UK needs are the highest taxes since Clement Attlee. This, apparently, is what the clever people in the Square Mile wanted, happily cheered on by much of the media, and the damper ends of the Tory Party.
But given a few days to think about this, what strikes me as what a lot of hysteria there has been, and how heavy taxes remain. This story in the Telegraph today shows how “fiscal drag” caused by static tax thresholds means millions of UK taxpayers will, in real terms, be worse off because their tax bills are going up, not down.
So the idea that we are going to move to some sort of Reaganite low-tax country was always a bit overdone. It suggests that fashionable opinion has so totally imbibed forms of socialism that anything a bit different sends people crazy. (The performance of the International Monetary Fund, an organisation that should be shut down, is a case in point.) It suggest that those Tory MPs threatening to unpick even the smaller tax hikes need to ask themselves why they are Tory MPs at all.
“The point is that Britain was in an economic mess before Ms. Truss took office, and there is no alternative universe in which policies that have failed for 12 years suddenly would start working on the cusp of a global downturn. The choice is the gamble of a major policy overhaul, or the certainty of steeper decline. So yes, U.S. Republicans, do take note of Ms. Truss’s travails in Britain. The Tories squandered their reputation for competent, free-market economic management. They now find that it’s hard to win back at precisely the moment they and the country need it most.”
The Wall Street Journal (I seem to be quoting it a lot these days), giving its transatlantic take on the past 12 years of Conservative fecklessness and some occasional sensible moves. Its verdict on the Bank of England is particularly damning:
The Osborne Treasury and the Bank of England under Governors Mervyn King and Mark Carney set the tone by “looking through” above-target inflation for four years from 2010-13, and again in 2017-19. The central bank ignored its price-stability mandate in order to hold interest rates at historic lows while suppressing government borrowing costs with quantitative easing.
This stoked asset-price inflation, especially in housing, while suppressing productive investment and real wages. Inflation-adjusted pay fell 6.7% from 2009-14.
Mr. Carney’s successor Andrew Bailey poured on generous monetary stimulus during the pandemic, and he has been slow to withdraw it as the inflationary crisis deepens. One day before Mr. Kwarteng’s tax announcement, Mr. Bailey gave markets a bad surprise with a dovish 50-basis-point increase in interest rates rather than a 75-point raise that would follow the Federal Reserve’s lead and match the severity of U.K. inflation.
No wonder markets were primed to question Britain’s policy credibility when Mr. Kwarteng unveiled the new tax plan.
On the bright side, at least we hopefully won’t hear much more about Modern Monetary Theory.
Addendum: I have ordered Edward Chancellor’s book, The Price of Time, and will review it when I get my copy. It is getting good reviews. We shall see!
Sterling is recovering a bit against the dollar. I wonder if some hedge fund types that have shorted the pound have been squeezed out.
Update: In response to bad polls and the fact that many Tory MPs are more or less social democrats with a blue label, the Chancellor has reversed his removal of the 45% top tax rate. So, combined with national insurance and other taxes, top earners face a marginal rate around 60 per cent, which is high even by European standards. Needless to say, this is unlikely to help the party retain power unless there is a dramatic improvement in the economy. And even if there is, the “it’s time for a change” will be hard to resist. Labour can get rid of its nuttier members and get into power.
“The unemployment rate was 3.5% in July, the same as in February 2020, but the U.S. has three million fewer workers. Where did everyone go? This in an economy with 11.2 million job openings. It’s mostly men 25 to 54 who haven’t come back to work. Now a McKinsey study suggests that 40% of workers are thinking of quitting their jobs. Does anyone want to work anymore?”
– Andy Kessler, Wall Street Journal ($).
Mr. Biden forgives half-a-trillion dollars in student debt without the assent of Congress. White House aides collude with tech platforms to silence dissenting voices on Covid. His regulators stretch the law beyond previous understanding to impose more control over the private economy. And that’s before they get the votes to break the Senate filibuster, add new U.S. states, override 50 state voting laws, and pack the Supreme Court. Mr. Biden has become his foe’s polarizing mirror image. It is exactly what he promised as a candidate he wouldn’t do.
Wall Street Journal ($), from which I have quoted quite a lot lately.
“Setting aside the stunning sexist double standard being applied to the current prime minister of Finland Sanna Marin, forgive me if I don’t think it’s news, or relevant, or important, or even noteworthy that she’s got moves. Look, I don’t believe politicians are any more noble or courageous or quasi divine than the rest of us. What’s more, if I were running a Western European democracy I’d imagine my stress level would be considerably higher than it is now. She’s got the right to burn off some steam, live life, and relax every once in a while. And unlike Dick Cheney’s hobby, no one went to the hospital.”
– G. Patrick Lynch, at the Econlog blog.
Elon Musk, the cheeky chap, has also weighed in on the issue.
“It was bound to happen. After skating through the summer without rolling blackouts, Californians on Wednesday were told to raise their thermostats to 78 degrees and avoid charging electric vehicles during peak hours as a heat wave grips the state. Good thing new gas-powered cars won’t be banned until 2035.”
– Wall Street Journal ($).
In my view, the idea of making people rely on electric vehicles (EVs) and then curbing how much power they have, is a design feature, not a bug. Those of a Big Government cast of mind (most politicians) might rather like the idea of fitting “kill switches” into EVs so that a bureaucrat can disable them. By making cars costly and annoying, it also forces people to use public transport.
At its root, hatred of the car is hatred of individualism and freedom. It is hatred of autonomy, even the joys of owning and driving a vehicle. All that “car culture” stuff is just so vulgar. Lord (David) Frost, the former UK Cabinet Minister and all-round-good egg, wrote a recent article about how, as a teenager, he bought a Rush album containing the song Red Barchetta, which posits a dystopian future when motor cars are banned.
He wrote:
Cars should also be about beauty. They represent the society that made them. Communist East Germany produced the Trabant. Communist China produces Politburo-style boxes. Western civilisation produced the VW Beetle and the Mini, the Ferrari Testarossa and the E-type Jag – symbols of achievement, of individualism, of power.
And cars are about excitement. The Fiat 500 nipping around the streets of Florence. The elation of burning down the Autoroute du Midi with the Alps in the distance. The sense of anticipation of heading along the urban freeway, the towers of New York or Chicago before you, as the signs flash by and the off-ramps flicker past.
We’ll miss it when it is gone. And that time is closer than you think.
CEOs at prominent firms such as Apple, Tesla and Goldman Sachs have required employees to return to the office, curbing the working from home trend that got going at the start of the pandemic.
One point that jumps out at me is how this shows that skilled employees have a lot of market muscle today – firms need to persuade them to do certain things and don’t have all the power.
Consider: Labour is not homogenous and takes time to replace. We have seen a dramatic example of this in the airline sector, where thousands of staff, such as those working in security and baggage handling, were let go, creating a bottleneck problem when restrictions ended. Airlines are now scrambling to get people re-hired, but that is not easy as employees and contractors must go through security vetting. Hence the thousands of cancelled and rescheduled flights that have been a feature of the holiday travelling season.
What all this shows is how flawed Karl Marx was in his claim that capitalists have the superior bargaining power over “workers” and that business owners hope to create a “reserve army” of the unemployed who will put downward pressure on wages, hence creating the “surplus” that becomes profit.
Among the many things wrong with Marx’s idea is that claim that the majority of the risks and uncertainties are on the employees’ side. Hiring and retaining labour, including skilled labour, is not straightforward. There are search costs to consider in hiring, and employers know that it is often better to retain a worker, even if they could get someone a bit cheaper, than have the cost and time of hiring another. Also, a worker is paid a wage/salary, at least initially, whether a firm has made a profit or not, and that is a risk the employer has to bear (otherwise why else do firms have revolving credit facilities to manage cashflow?) Further, all workers are to some extent also “capitalists” – they have built skills and character (punctuality, agreeableness, ability to follow rules, get on with others and serve clients, etc) that take time and effort to acquire. A plumber, software programmer or security manager have capital sitting in their heads, and when a firm hires such a person, it is renting that capital.
There are of course of lots of reasons why Marx’s description of labour/capital relations is wrong and simplistic (example: his insertion of the idea of “socially necessary labour” begs the question of how one knows what that is, and it turns out that SNL is revealed by the interplay of prices in a market, rendering his idea circular). But the current working from home/office argument seems to bring home a particular point, which is that those supposedly evil capitalists don’t have all the power, and in many cases, have far less than even they might have hoped for.
Addendum: Thomas Sowell’s critique of Marxism remains one of the most succinct and effective that I have read. Also, there is a segment in Robert Nozick’s Anarchy, State and Utopia where he demolishes the “exploitation” theory very effectively. Another good treatment of the issue is by Kevin McFarlane, an engineer and libertarian.
Mr Sunak…..explained how the minutes from Sage meetngs were edited so that dissenting voices were not included in the final draft.
(Report from the Daily Telegraph.)
In other words, the committee – Sage – that was created by the government to oversee COVID-19 policy deliberately suppressed views from one of the most important departments of state – The Treasury – because it did not go with the lockdown narrative.
I am not a particular fan of former Chancellor of the Exchequer, Rishi Sunak, one of the two senior figures running for leadership of the Conservative Party. We have the highest tax burden in 70 years, and he could, had he been so inclined, resigned rather than gone along with that. Nevertheless, his comments on how policy on Covid was driven over the past few years are shocking, if true. Maybe he is trying to justify himself after events – he could, of course, have resigned and explained why he was so appalled at what happened. We must not forget the efforts made by the scientific/policy “establishment” to suppress awkward voices such as the signatories of the Great Barrington Declaration in their calls for focused action against the virus rather than indiscriminate lockdowns.
I am not particularly hopeful that the right lessons will be learned from the COVID-19 debacle, such as how dangerous it is to give power to a group of people with no wider appreciation of the damage actions can cause (assuming that said damage was not indeed part of the actual point). The dynamics of power being what they are, this sort of thing can and will happen again. Groupthink is killing people, in some cases, literally. A solid consensus in the banking/financial services sector before the 2008 financial crash held that central bankers had more or less cracked the problem of setting interest rates, running monetary policy and inflation, and that if banks got involved in odd-sounding derivative products, they’d be fine in lending sub-prime loans; we have had “the science is settled” consensus on global warming, and part of our current energy clusterfuck can be pinned on a determined drive against fossil fuels in much of the West. The response to covid was another dangerous “the science is settled” moment. The way that children are taught – or not taught – in schools is another example of a dangerous consensus.
Challenging these “the science is settled” mindsets is hard, but it has to be done.
“The U.S. could have set an example for the world through innovation. Instead the government chose to spend hundreds of billions of dollars to achieve no noticeable climate benefit.”
– Bjorn Lomborg, Wall Street Journal ($).
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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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