What if we have reached a point where the scale and scope of government have become absurdly large? What you would observe is a growing gap between the theories used to justify government expansion and its practical impact. You would observe the cost of education and health care rising, without commensurate benefits. You would observe stimulus programs that increase employment according to computer models but not in reality. You would observe crony capitalism. You would observe budgets distorted by public-sector unions. You would observe fraudulent accounting that shifts costs for pensions onto future generations.
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“Perhaps the most annoying thing about Julian Assange (yes, I know it’s a long list) is that he is in danger of giving the European Arrest Warrant (EAW) a good name. Maybe my memory is failing, but I don’t recall any of his supporters being critical of the EU’s fast-track extradition system when it was being debated 10 years ago.” Philip Johnston, in today’s Daily Telegraph. It is an interesting point to make. Leaving aside Assange for a minute (there’s no need to hurry), the power of extradition creates an interesting point for those concerned about liberty and the importance of due process of law. Some extradition agreements between states might be acceptable if, for example, an offence for which a person is to be extradited to country B from A is recognised as a criminal offence in both nations. However, with the EU Arrest Warrant, you can be extradited into a country from another where the offence in question is not recognised in the place where the person happens to be staying at a particular point in time. As we have seen with recent controversy about the UK’s extradition agreement with the United States, a person can be moved to the US – and vice versa – without a prima facie establishment of guilt having to be shown in the country where the person is being transferred from. Given the plea-bargaining lottery that the US adopts in certain cases, for example, this seems to involve serious abuse of due process. These points need to be aired because, amid all the other issues kicked up by the Assange affair (the alleged sex crimes, the activities of Wikileaks, potential damage to military forces in the field, etc) the specifics of extradition principles can be obscured. Unlike some more isolationist types, I don’t have a problem with treaties between states to shift suspected criminals around to see that justice is done, provided there is a reciprocal recognition of the rules of procedure. For instance, there is simply no way that a country such as the UK should have such an arrangement with a state enforcing shariah law, say, or with a country such as Russia, which is a police state, or for that matter, Ecuador. August 21st, 2012 | 2 comments - (Comments are closed)
 There is something grimly amusing at reading Matt Yglesias, purveyor of conventional (ie, wrong) thinking on matters economic, getting a bit sniffy about the way in which certain commentators, such as Bryan Caplan, cite the great insights of the 19th Century French thinker, Frederic Bastiat (well known to this blog, of course):
The point is that the issue of “idle resources” or an “output gap” only makes sense if you start from the position of assuming that there is an optimum amount of economic activity to be had, and that supposedly clever central bankers (try not to laugh please) know what this “gap” is and have the skills to fill it. Given the manifest failings of Keynesianism – and arguably also some of the cruder forms of monetarism – it seems those who want to push this approach are under an onus of proof. Yglesias also writes about one of Bastiat’s most famous satires of businesses, the one where he mocks firms that ask for protection against competition: the “candlemaker’s petition”:
That is quite cute and he has a decent point – not all requests for protection of a business are, ipso facto, wrong, but this does not really work as a smackdown. The argument for patents (and as we know, classical liberals have sharp disagreements about intellectual property rights, as shown by the likes of Greg Perkins, say, or Tim Sandefur, or this guy), is that they are incentives to capture the commercial use of an idea for a specified period of time on the basis that creating such property rights in commercial inventions increases the likely existence of said in total, which is different from tariffs, where there seems to be clear evidence that such things reduce the overall economic pie. (Critics of IP sometimes argue that it stifles overall innovation, but I have seen no conclusive evidence either way.) Thinking of Bastiat’s satire, it does not really, in my view, mean that I would scorn a firm or individual for seeking to protect an original idea from being copied by someone else without payment. In any respect, the presumed “rent seeking” failings of IP (and there are problems) can be seriously reduced by reforms, such as granting patents to independent inventors of a gadget, greater disclosure of invention processes in patent filings, an efficient secondary market in IP, shorter IP durations, and so on. It is good that those of us who venerate Bastiat are forced to think through how his ideas apply to such matters, even to the point of working out if he has any weak spots. But I don’t see that Yglesias has landed the killer blow that he thinks he has. And he cannot just write Bastiat off as a witty Frenchman whose insights are out of date. They are screamingly relevant, just as Adam Smith and others of that vintage are. I suppose it is good that Mr Bastiat is getting up the noses of some folk. That counts as progress. There’s plenty more where that came from. (I realise that this is the second time in a row I have written something with a French angle. A pity that French president Francois Hollande does not share the wisdom of Bastiat.) Update: Caplan responds with some more observations on how policy wonks live in the sort of bubbles that need to be pricked. August 20th, 2012 | 39 comments - (Comments are closed)
“What irritates me about France today is how the taste for work, for effort, has been completely lost.” – Bertrand Meunier, who recently agreed to move to London from France to take a job at private equity firm CVC Capital Partners. He is one of many such people who are leaving that country to come to the UK in the wake of new, heavy taxes imposed by the recently elected socialist government in Paris. In the relative sense, London is marginally less ghastly than Paris, tax-wise. If you are a French person looking to work at a school for Gallic expats’ children in London, that looks like a growing business to be in. August 20th, 2012 | 10 comments - (Comments are closed)
“People who do otherwise commendable work are capable of rape and other crimes. If presented with rape allegations, they must face them like anybody else, however otherwise worthy their past contributions. Now, these statements should be so self-evidently obvious, it is ludicrous that they need to be said. But the furore over WikiLeaks founder Julian Assange sadly makes it necessary. Although now granted political asylum by Ecuador, Assange is a rape suspect who skipped bail. Yet some of his supporters have ended up making arguments that they would never dream of making about anybody else.” – Owen Jones, writing in the Independent. He is, by the way, a big fan of Wikileaks. I am not so keen, as I have explained here before at Samizdata, such as when Wikileaks affected private bank details. Here is also a good article on the impact of Wikileaks’ activity on investigative journalism, by Nick Cohen. Update: George Galloway has, er, tried to defend Assange. With friends like Galloway, Assange doesn’t need enemies. August 17th, 2012 | 37 comments - (Comments are closed)
A Reuters columnist says that markets have yet to face up to the fact that there could soon be a “glut” of oil. In other words, the scarcity-mongers are mistaken.
Quite. In these depressing times, it is easy to miss the positives. August 14th, 2012 | 16 comments - (Comments are closed)
As it is holiday season, this item – via Instapundit – got my attention. It is about why some kinds of travel guides tend to be mealy-mouthed about some of the countries they write about:
There is a related point, also. When I occasionally read of how a region or place is “unspoilt”, it often is just an aesthetic comment that area X or Y has not been buggered up by ugly buildings. Fair enough. Even the most ardent defender of laissez-faire does not have to like all the consequences of some buildings. But there is a danger that this can sometimes tip over into a dislike of building and human activity per se. To take one example: I love certain big cities precisely because they are “spoilt” by the energy and sometimes crazy creativity of the people who live in them and build them. August 14th, 2012 | 12 comments - (Comments are closed)
Now that the likes of yours truly are back from holiday to a post-Olympic London, I have been reading about the number of people who noted how quiet London (outside the Games areas) has been. Tranquil streets, empty restaurants, that sort of thing. It appears that the authorities, such as Transport For London, did a “good” job, in a way, in putting the fear of God into the domestic populace. Janet Daley writes:
I am very pleased the event has gone off well. Not least because there were not (unless it has been kept secret) any major security problems at the Games. Lots of sportsmen and women had a grand old time, the capital looked pretty good to outsiders, etc. The last two weeks does certainly prove that if certain organisations want to convince Londoners that they should get out, they will. Holding the Games in August also helped. And the terrible summer weather leading up to the Games also encouraged a lot of us to hit the airports and railway stations. I may have missed some of the buzz of Olympic London, but the lovely countryside and weather in Southwestern France more than compensated for it. There is, of course, the matter of the cost of all this. To borrow from Frederic Bastiat, the French economics and legal writer, we can all see the benefits of shiny new stadiums, swimming pools and cycle tracks. That is seen. What is not seen are the things and services that will not be supplied or made due to the taxes and other charges imposed to make the Olympics happen. There are no photos of entrepreneurs whose business plans might be stillborn from such costs, for example. I doubt whether Lord Coe or other Olympic grandees gave much thought to the opportunity costs of such events, or cared. And the insights of Bastiat apply to other “eye-catching” projects: space flights, high speed rail, big aircraft carriers, etc. Anyway, I am not going to rain on the parade of what appears to have been a successful event. But being the Adam Smith libertarian that I am, it would be remiss not to remind fans of big sporting jamborees that these things have a cost, and the costs will be borne by those quite different, sometimes, from the beneficiaries. August 13th, 2012 | 3 comments - (Comments are closed)
“So the Games have managed to achieve what even Hitler failed to accomplish with the Blitz: the total evacuation of London’s working population. Well, not quite total. There are plenty of poor devils who are still trying to scratch a living in the wasteland of empty restaurants, shops and streets. The trouble is that the the usual customers – the great mass of people who normally commute into central London every day – have been terrorised into staying away by a hugely successful Transport for London promotional campaign.” She writes about how so many Londoners have fled the country. I am one of them. More than 7 months ago, dreading what I feared might be the impact of the Games, I booked two weeks’ holiday in southwestern France, staying in the lovely small town of Marseillan, in the Languedoc region (nearest big city is Montpellier). I am actually doing some work down here although I have handed most responsibility to a colleague. My wife and I are having a great time – the weather is glorious without being raspingly hot; the food is amazing and good value; the locals are very pleasant; and last but not least, there is a most gratifying lack of Brits to remind me of home. I do check in on the internet occasionally, but although this might strike some as unsporting, I just haven’t got the “Olympic bug” at all. Yes, I thought parts of the opening ceremony were fun (glad to see Brunel honoured as the great Victorian civil engineer he was), and thought the James Bond routine was hilarious, and was not even all that annoyed about the National Health Service propaganda. (I thought the bit about the Industrial Revolution was actually not bad – all that celebration of carbon emissions and molten steel! But I am just not all that enthused. The greatest sporting festival this year has come and gone (the European football championships), and the Tour de France was also a gloriously unexpected highlight of the year. And as Brian says, there was also the cricket. Always the cricket. By the way, Bradley Wiggins, winner of the Tour, cycled past where I am now staying, and the locals worship the guy. He has become a bit of a cult in France. They like his character, guts and behaviour. My blogging output is going to be light for the next 10 days. You see, they sell cheap but excellent red wine here by the litre. July 31st, 2012 | 14 comments - (Comments are closed)
“What I find fascinating is how many intelligent people are willing, even feel urged, to provide intellectual support for a system that is not the result of intellectual discourse but came about – rather non-intellectually – through sheer power politics, opportunism and hubris, and that is evidently failing. Our financial system (or non-system) offers a great example of Nietzsche’s dictum that investigating the true origin and the true motivation behind things most often leads to surprising results. The purpose and the clever design that most people later believe to be behind various institutions are often only projected onto them with hindsight.” As regular commenter “Laird” said the other day, compared to the chicanery that is modern central banking, the row about the LIBOR business is small beer indeed. July 27th, 2012 | 3 comments - (Comments are closed)
From Foreign Affairs:
This is one of the best and most incisive explanations of what is wrong with the current system of averaging out interbank rates – as done via the British Bankers’ Association – and what needs to be done to avoid a repeat. Refreshingly, the article, written in the sort of publication that policymakers read, does not call for more regulation, which is definitely not what is needed. July 25th, 2012 | 13 comments - (Comments are closed)
The stifling impact of being run by so-called “moderates” continues. On the BBC TV this morning, the programme is leading with the fact that a government finance minister, some hopefully soon-to-be-gone creature called David Gauke, is attacking people who have ever paid a builder, plumber or garage mechanic in cash so as to avoid paying VAT. Mr Gauke told his TV interloctor, in words that may haunt him, that he has never done any such a naughty thing, oh no. The context for this is that the UK government has recently announced a campaign against what it defines, with worrying vagueness, as “aggressive avoidance” schemes. Not just “avoidance”, which is what happens if you hold a tax-advantaged fund such as a Self Invested Personal Pension, or if you do not smoke (avoiding tobacco duty), or don’t drive (avoiding petrol tax) or drink (etc). No, “bad avoidance” is if you structure your financial affairs in such a way as to pay as little tax as you can do so without actively defrauding anyone. An interesting notion. As we know, the UK comedian Jimmy Carr was recently hit by exposure of his tax-planning, and other celebs and sports folk have sometimes got into similar sorts of arrangements. In as much as governments need to exist at all – and I am not an anarchist – there is a legitimate argument about the least-bad way to do this, and the simpler and flatter the tax regime is, the better. A huge chunk of this tax planning industry from which people like Jimmy Carr make use would vanish in a puff of smoke if our system was overhauled on the sort of lines recently proposed by the 2020 Tax Commission. The trouble with the stance taken by Mr Gauke is that he presumes that there is some correct chunk of our wealth to which the State has presumed to take a share, and that any action we take to avoid tax might increase the tax burden paid by our fellow citizens. But what this man seems to ignore is, a), that an economy is not a static pie where my action must negatively affect someone else (that old zero-sum problem again), but an economy is something can grow through mutually beneficial trade, and that that, b), in a tolerably free society, the level of tax that citizens will pay has its limits, even if people don’t go in for some of the more artificial wealth structures to minimise tax (bearing in mind that it costs money to get an accountant/lawyer to set these schemes up). Also, suppose that, instead of getting a builder into do a bit of work for cash to smarten up my flat or tackle an issue, I try and get a mate around to do the job for me in return for buying him a nice bottle of wine or editing some material for him/her? Is this not also wrong in the eyes of Mr Gauke? I guess it is. Even before I have done anything, the State is saying: “I want a piece of whatever action you engage in”. Taken to extremes, this penalises work over leisure. It is not surprising what the results are. At root, this is a matter of basic political philosophy. In the main (there are exceptions), the current Conservative Party and its Liberal Democrat coalition partners subscribe to a deeply paternalistic, communitarian outlook of the sort that Barack Obama, in his recent communitarian-leaning “you did not build that” speech, could identify with. This is also a sign of how under Cameron, the Tory party has reverted to the older, more trade-disdaining traditions of old and away from its Thatcherite strains. How’s that working out for us? People who make a living by getting paid in cash to fix windows, respray cars or mend pipes are not an evil. In the vast majority of cases, they are doing something about which someone like David Gauke, David Cameron or Barack Obama have been ignorant of all their lives: earning a living, and providing people with goods and services in a free market. They might as well try and understand life on Mars. It is shame we can’t send them there. Update: The Daily Telegraph weighs in. It is not impressed by Gauke. July 24th, 2012 | 20 comments - (Comments are closed)
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