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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Andrew Lilico, on CapX
“Our fiscal situation is hopelessly beyond the capacity of our politics to address it. Tax and spending is so high, and so concentrated in unproductive activities such as NHS spending, that it is bearing down on growth, creating a doom loop of insufficient tax revenues to keep our debts from rising leading to increased tax rates leading to lower GDP growth leading to lower tax revenues. The only ways out are fiscal crisis, inflating away our debts or brute luck. What’s my guess? I’m still betting on luck, with new technologies boosting growth enough for us to escape, but crisis is getting nearer and nearer with every month that passes.”
When people start holding out for the whizz-bang potential of tech, or just plain luck, to take us away from the brink, things aren’t good. Plan for the worst, and hope for the best is a smarter strategy. At the moment, the UK, like all too many other developed countries, appears to be stuck in what Lilico refers to the “doom-loop” of sluggish growth, an ageing population, falling revenue, higher borrowing, and so forth. The term “doom-loop” got used a lot, I recall, during the pandemic, when some of our present discontents took a turn for the worse. Breaking free of such a “loop” will require a level of brute courage and honesty that, unfortunately, will be a tall order. I am not even sure how far down this path Nigel Farage of Reform can go – particularly if he is trying to woo disgruntled, “our NHS” Labour voters in the north, Midlands and other parts of the UK. As for the Tories…they appear for the moment to have gone on a sabbatical.
Where to turn for ideas? Well, I’ve started to read the books (here and here) on the UK’s economic plight by Jonathan Patrick Moynihan, who is a member of the House of Lords (“Baron Moynihan of Chelsea”), and a businessman and venture capitalist. The books are superbly written, and rather lovely items in their own right with the cartoons of famous politicians and pundits on the dust covers. They seem to chart a way forward. But at root the message is hard: cut spending, and shed a lot of functions.
The question, for me, is when and how does the work of pushing back against the current insanity start, assuming that Starmer, Reeves and the rest of these jokers see out a full parliamentary term.
At what point, for example, would an Argentinian-style chainsaw approach be required? Are we going to need a case of crisis treatment when all else has failed?
“We live with the risk of injury or death in every other human endeavor, from mountain climbing to skydiving, from driving to flying. But for some reason, space-related activities are held to a different standard. Why is it that we see the death of test pilots as an unfortunate consequence of their job, but not for astronauts?”
– Rand Simberg, Safe Is Not An Option: Overcoming The Futile Obsession With Getting Everyone Back Alive That Is Killing Our Expansion Into Space. The book was published in 2013, around a time when Elon Musk and his SpaceX business, as well as others, was not quite as in our public consciousness as it is now. Published 12 years ago, the book retains much of its power and persuasiveness, and lessons apply far beyond spaceflight. Simberg is one of the early bloggers out there, like Glenn Reynolds at Instapundit.
“President Trump appears to be annoyed that trade negotiations with the European Union are dragging along too slowly. Join the club, pal. The biggest victims of Brussels’ indecision and sloth on trade are the Europeans themselves. Even if Mr. Trump’s tariffs fall to U.S. courts, it won’t liberate the Continent from trade war. The bloc is too good at doing damage to itself.”
– Joseph C Sternberg, Wall Street Journal ($)
This, by the way, is part of why I voted for Brexit nine years ago. I saw little chance that the bloc would reform, become more accountable, and make it easier to roll back red tape, and replace one-size-fits-all with mutual recognition of standards.
“Labour seems to think the British economic renaissance is going to be rebuilt on minor changes to a food and drink trade that amounts to 2-3 per cent of our exports, yet if it really believed this, why is it killing family farms and making them erect solar panels instead?”
– David Frost, former chief Brexit negotiator in the former Tory government, writing about the sellout deal that UK prime minister Sir Keir Starmer agreed with the EU at the weekend. The deal effectively puts the UK back into the EU Single Market on farming and food; it also gives a number of concessions that, even if they don’t completely reverse the UK’s independence from the EU, make a number of steps in that direction. This is one of those cases where the devil is in the detail. Like Lord (David) Frost, I want the UK to go for mutual recognition of trade standards, which is what sovereign nation states, such as New Zealand, already do without fuss. Apparently, this is outside the mental universe of Brussels negotiators and the UK government.
The reference in the quote above is to the policy of the current Labour government to impose inheritance tax on family-run farms, a measure that will force a number of these farmers’ families to sell up, possibly selling out to energy companies instead.
From where I stand, it seems pretty clear that Starmer wants to reverse Brexit, even if it falls short of formal re-entry into the EU.
“Yes, like any philosophy, neoliberalism has its limits, and as with any philosophy, some of its adherents get overexcited and take things a bit too far. But given where we currently are, and where we are likely to go in the near future, focussing on the risk of “too much neoliberalism” seems bizarre to me. It is as if you were lost in the desert, and your main worry was that if you find an oasis, you might end up drinking too much water, and get overhydrated. Maybe one day, neoliberalism will be so popular that there really will be a non-trivial risk of taking it too far. If so – that will be a good day.”
– Kristian Niemietz, Editorial Director, Institute of Economic Affairs. (Part of his commentary is this recent apologia to libertarians from Noah Smith, a US centre-leftist who appears to have some intellectual honesty and grit, which is refreshing, and so it appears, rare.)
It might be helpful of critics of neoliberalism bothered to define it clearly.
(Tim Worstall has a related takedown of George Monbiot’s recent forays into this territory. Worstall is, as you might expect, unimpressed.)
“Europe has a serious free speech problem. Instead of taking ever more measures to punish their citizens for what they say, it’s time for countries from Germany to Britain to abolish the deeply illiberal legislation they have, with little attention from the press or the public, introduced over the course of the last decades. To live up to the most basic values of the democracies that are now under threat, the continent needs to reverse course—and restore true freedom of speech.”
– Yascha Mounk
“Perhaps the greatest paradox of all is that parts of the Maga movement are embracing a form of Right-wing wokery, with their own dark conspiracy theories, cult of victimhood, identity politics, denial of reality, moral grandstanding, hypersensitivity and purity tests.
“In this vein, whingeing about trade deficits deserves to be dismissed as critical trade theory’, as Trumpian corollary of critical race theory: it postulates, nonsensically, that any shortfall must be caused by unfair practices, oppression or historic injustice. The ‘woke Right,’ a term coined by James Lindsay, is almost as much of a turn-off as the original Left-wing variety.”
– Allister Heath, Daily Telegraph (£)
He gives Mr Trump high marks on taking the fight vs DEI, some of the DOGE cuts (with a few caveats), and on energy policy (which in my view is Trump’s ace in the hole). But the broader point Heath makes about where he thinks Trump/Maga is losing it, including this nifty term of Heath’s, “critical trade theory”, is absolutely spot-on. It is, in my view, one of the big blinds spots of today’s populist Right and threatens to undo the good things that a Trump 2.0 might achieve, which would be bad not just for the US, but the West in general. As Heath goes on to write (and remember, he’s a pro-Brexit, free market chap, and not some obdurate Never Trumper), a course correction is needed. And Trump is not incapable of it.
As you can imagine, there have been a lot of attempts to make sense of what Mr Trump is trying to do about tariffs. As of the time of my writing this, the dollar is coming under pressure, Mr Trump appears to be ratcheting up the tariff war with China to even higher levels, and there are signs that a few of his allies are getting nervous (seriously, how on earth can he have people working in his government such as Elon Musk and Peter Navarro who talk to each other in this way?)
One way to think about the the US/rest of world imbalances is that this is about production and consumption. In various ways, countries such as Germany, Japan and China produce a lot, and tend to be careful on how much they consume; on the flipside, the US loves to consume. As Joseph Sternberg in the Wall Street Journal puts it:
The core of Intellectual Trumpism runs as follows: The global economy is characterized by large, policy-induced imbalances in both trade and capital flows. These are caused at root by the decisions of some large economies—Germany, Japan and especially China are the usual suspects—to subsidize production by suppressing consumption in their domestic economies. This creates “surplus” output that they foist on the U.S.
This view isn’t wrong, so far as it goes. Those economies and others historically deployed a range of policy tools to boost exports. In China, the most egregious manifestations are direct subsidies for exporting companies. Less visible to foreign eyes is the financial repression: the deliberate suppression of domestic interest rates and political control of credit to subsidize businesses (which benefit from cheap borrowing) at the expense of consumers (who receive less income from their saving and investment). Such policies can take many forms. In Germany, extensive subsidies shield large companies—meaning exporters—from the worst energy-price consequences of Berlin’s dumb net-zero climate policies. Households pay full freight for electricity.
This is an interesting point about the control of credit and yes, Net Zero, intersecting in ways that suppress consumption and encourage production, much of which has to go overseas – to places like the US.
Sternberg continues:
Because other economies under-consume, the argument runs, they accumulate excess savings. They recycle these savings into the U.S., where we transform foreign claims (in the form of equity investments or purchases of American debt) into consumption of the foreign country’s excess production. Hey presto, a trade deficit.
An oddity of this argument is how little agency the U.S. is said to exercise. Once Washington had made the first mistake of opening our economy via tariff reductions and the free flow of capital, it was off to the races.
The truth is much more complex, and politically challenging: While some other economies suppress domestic consumption and subsidize export production, Americans choose to do almost exactly the opposite. Through political choices such as suppressing energy production and distribution, or permitting red tape and the like, or any number of other policy foibles, we make it much harder than it otherwise would be to produce things in the U.S. Meanwhile, you can’t take a step in America without tripping over a consumption subsidy.
So what has the US been doing to encourage consumption?
To cite a few: Fannie Mae and Freddie Mac stimulate overconsumption of housing. Subsidized student loans stimulate overconsumption of higher education (which, given the poor lifetime earnings prospects of many degrees, should indeed be understood as consumption rather than as an investment in human capital). The earned-income tax credit creates complex distortions that at the margin subsidize consumption while discouraging additional productive work.
Most glaring, though, are our entitlements. Social Security, Medicare and Medicaid, not to mention a raft of other benefit programs, funnel vast quantities of money into consumption. The trick here is that we’re able to finance these via chronic fiscal deficits funded by foreign investors, meaning at the margin Americans borrow from the rest of the world at ultralow interest rates and funnel the cash into consumption at home.
And as the writer says, the “root-cause” solution to the trade deficit issue, to the extent that it is a problem that governments should address, is to rebalance – get rid of consumption subsidies and stop penalising production. That means, for instance, rolling back regulations, zoning laws, etc. (To the limited extent that this is being done by Trump, that is a mark in his favour.)
Some elements of such an agenda can be popular, as Mr. Trump is discovering with his deregulation and cheaper-energy drives. But the entitlement half is a minefield. Republicans are reluctant even about dialing back Medicaid benefits for able-bodied working-age people. The last time anyone tried to reform Social Security, President George W. Bush backed allowing a portion of payroll tax payments to flow into individual investment accounts. The existing system creates a consumption subsidy by transforming tax payments into transfers to recipients; the reform would have created a form of investment subsidy. That bit of good sense degenerated into a traumatic political fiasco for the GOP.
This the key. Social Security and other big entitlement programmes in the US are, as they are in the UK and much of the West, popular with ordinary voters; and the voters who switched from the Democrats to Republicans in 2016 and 2024 aren’t going to be happy to see these programmes reformed or reduced. It is therefore easy to see why tariffs are a tempting technique – it is easier to go on about those naughty, over-producing Asians and Germans as being at fault, rather than because incentives are structured as they are.
Sternberg concludes:
Note that the end result [of tariffs] is in one way the same as entitlement reform: less U.S. consumption, only via the demand suppression of higher import prices. But beyond that, the two policies diverge—and not to Intellectual Trumpism’s advantage. Among many other problems, protectionism risks depressing domestic production, a warning emerging from industries across America whose supply chains are imperiled by tariffs. It certainly doesn’t help domestic productivity. Entitlement reform, by contrast, tends to be an enormous supply-side spur to future economic growth that benefits households as inflation-adjusted wages rise.
The problem, however, is that entitlement reform is very hard to do, politically. There are some things that will also be politically tough: not everyone likes deregulation, given how occupational licensing and so on often shields vested interests. (Think of how the London mayor tried to hit Uber, at the urging of the traditional taxi sector, a few years ago.) Zoning laws are a problem but they are also supported by people who want to protect the value of their properties, as they see them, and so on. In certain countries, the planning system is so convoluted that it is a major brake on production. Fixing all this takes political will and the risk of antagonising vested interests.
As Matthew Lynn, a columnist writing in the Sunday Telegraph (£) puts it, the compulsion on car firms to build more electric vehicles (EVs), on pain of large fines, was already causing great damage to the UK and European economy. With the US now imposing blanket 25% tariffs on car imports from the UK, the Net Zero obsession is suicidal for the UK-based car industry, home to brands such as Jaguar Landrover, which has just paused shipments to the US:
“It would be ridiculous for the Government to start fining the car companies for not selling enough cars that no one really wants at the same time as the Trump administration is hitting them with huge new levies in their main export market. None of the car companies is in exactly great shape to start with. The combination may well prove fatal.
The [UK] government should announce an immediate one-year suspension of the EV target, and then start a consultation on postponing it for another five or even 10 years. If it was scrapped immediately no one would miss it.”
Tens of thousands of car workers could lose their jobs, unless there is a drastic change in policy in the UK – never mind what the Trump administration chooses to do – and they live in those famed “Red Wall” seats that the insurgent new party, Reform, is targeting at the next General Election.
I am travelling to the US soon. I go there regularly for work. Reason magazine has this article. Worth a read:
Border phone searches are in the news a lot lately. Last month, a French scientist was allegedly blocked from coming to a conference in Houston after U.S. Customs and Border Protection (CBP) found statements against President Donald Trump on his phone. A few days later, Brown University doctor Rasha Alawieh was turned away at the airport after CBP allegedly found pro-Hezbollah images on her phone.
How does CBP have the power to rummage through phones so easily? After all, ordinary police can’t just stop you on the street and search your phone without a warrant. But courts have recognized a border exemption to the Fourth Amendment, allowing the government to conduct routine anti-smuggling searches of travelers. Although some lower courts have weighed in on whether that exemption applies to personal electronic files, there’s no definitive ruling yet on phone searches at the border.
Until the Supreme Court rules on the issue, CBP officers are mostly limited by the agency’s own internal regulations. The regulations allow officers to conduct a “basic search” (flipping through the phone by hand) at their discretion, and require “reasonable suspicion” or a “national security concern” to conduct an “advanced search” with forensic phone hacking software such as Cellebrite. The regulations also restrict officers to searching what’s already on the phone, not downloading new data, so phone searches should be conducted in airplane mode or otherwise disconnected from the internet.
As the article notes, organisations such as the Electronic Frontier Foundation have put up advice on what to do. The EEF states this: “As of this writing, the federal government is considering requiring disclosure from certain foreign visitors of social media login credentials, allowing access to private postings and “friend” lists.”
For what it is worth, I haven’t ever been asked to show my phone to immigration authorities in places including Hong Kong, Singapore, Dubai, Switzerland, France, Germany, Malta, or for that matter, the US at airports in California, Boston, Miami, New York and Chicago. But that might change. Sadly, where the US “leads”, the rest of the world can follow. The US is land of the free, and all that. It does, or at least has, set the tone, even if performance was spotty in actual reality.
The Reason article makes the following points about the UK, Australia, New Zealand and Canada:
Another consideration is what happens on the other side of the journey. Canada, Britain, Australia, and New Zealand, which all share intelligence with the U.S. government under the Five Eyes program, have different border privacy policies. Under Australian law, travelers do not have to unlock their phones. Canadian authorities, like US authorities, say they will seize a phone if a traveler refuses to unlock it. New Zealand imposes a $5,000 fine for failing to unlock a phone, and Britain considers refusing to unlock a phone for police to be a counterterrorism offense.
Well, he went ahead and did it. In a ceremony outside the White House, Donald Trump unveiled a list of tariffs on countries, on “friend and foe”, starting with a minimum of 10% (the UK, which is now outside the European Union, was hit with the 10% rate, while the EU was hit with double that amount). In general I see this as a bad day for the US and world economy for all the sort of reasons I have laid out.
This will not adjust the worldview of the red hat wearers, but I wonder has it ever occurred to Mr Trump’s fans that his arguments, when adjusted for a bit of rhetoric, are more or less leftist stuff from the 1990s?
Elliot Keck (who he?) had this recent excellently sharp item over at CapX:
It can be infuriating making the case for free markets. Too much time has to be spent batting away obviously terrible, tried-and-failed ideas. Proposals for a wealth tax are just the latest iteration requiring many a wall to be bashed with many a head. Just in the last few days, a group called ‘Patriotic Millionaires’ has urged Rachel Reeves to consider a ‘simple way’ to grow the economy with a tax of 2% on wealth over £10 million per year. A recent piece in the New Statesman concluded that a wealth tax wouldn’t be straightforward, but it could work. The new director of the Institute for Fiscal Studies has also called for a one-off wealth tax.
This is mad. As a TaxPayers’ Alliance study of wealth taxes has demonstrated, they’ve failed everywhere they’ve been tried. When Labour considered one in the 1970s, they concluded it would be unworkable, despite capital being far less mobile then than it is today.
We are already seeing the wealthy flee at a shocking rate (just look at the Adam Smith Institute’s millionaire tracker), forced abroad by changes to non-dom rules, punitive marginal tax rates, shoddy public services, increasing crime and the imposition of VAT on private schools, to name just a few incentives. When this is pointed out to proponents of wealth taxes, as I recently found on LBC, the response is not to dispute the problem but to bemoan the fact that every time the rich are asked to pay their ‘fair share’, they throw their toys out the pram and flee.
Yet now those who have the temerity to be affluent are being told to cough up to clean up the almighty mess made by our political class. It’s yet another reason for the wealthy to line up for the last chopper out of Saigon. Rather than criticising those who leave, we should increasingly be thanking those who choose to stay.
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We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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