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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“All corporate taxes fall on households in the end. Companies might be convenient places to get cash from but they are not the people actually carrying the economic burden. It is some combination of shareholders, workers and consumers that are carrying the burden: those getting the social services which they are unable to fund.”
– Tim Worstall, dealing with yet another piece of nonsense from that over-blown socialist buffoon, Richard Murphy. I have to admire Tim’s stamina in how he relentlessly mocks and refutes the rubbish from Murphy. But someone has to do it.
Here is an interesting article over at the Wall Street Journal about how Microsoft’s Paul Allen is faring with his own space venture. Rand Simberg weighs in.
All this private sector space stuff reminds me of this marvellously entertaining book by Victor Koman, although I agreed with an old American friend of mine that the book jacket design was a bit poor.
I hope Dale Amon doesn’t mind my writing about his chosen specialist subject!
“Yes indeed, Britain is on the outside: left out of this idyll of anti-competitive regulation and tax harmonisation. I can remember when the greatest Eurosceptic nightmare was a “United States of Europe”. They should be so lucky. The United States of America has nothing like this ferociously imposed central control over the budgets of its member states. Nor does it require tax harmonisation among them. The states of the American union have independent tax systems: apart from federal income tax, the taxes that US citizens pay are determined by the states they are in. Some of those states have high property and death taxes – others (like Nevada, where the revenue from gambling pays for almost everything) have low ones. Some have sales taxes and specific duties which others do not. Hence the great American tradition of driving across state lines in order to buy cheaper alcohol.”
– Janet Daley.
Legitimately self-made African billionaires are harbingers of hope. Though few in number, they are growing more common. They exemplify how far Africa has come and give reason to believe that its recent high growth rates may continue. The politics of the continent’s Mediterranean shore may have dominated headlines this year, but the new boom south of the Sahara will affect more lives.
From Ghana in the west to Mozambique in the south, Africa’s economies are consistently growing faster than those of almost any other region of the world. At least half a dozen have expanded by more than 6 per cent a year for six or more years.
The Economist, 3 December, page 77. (Behind the magazine’s paywall, so thank me for typing it out for you). The magazine has a nice study of the continent, laying out the continued problems but also the many bright spots. There is a handy map showing which countries have the fastest and slowest GDP growth rates, with the fastest rates in black (Ethiopia, at 7.5 per cent), then red, lighter red, all the way down to the deadbeats, in white. Of course, in looking at percentage rises or falls in growth, it pays to remember that statistics can be highly misleading (hardly a surprise to any skeptics of government, of course) and it is easy to rise fast from a low base. But still, these numbers are indicative of a more positive picture.
Needless top say, Zimbabwe came at the bottom of the growth league. It remains a grim lesson in how collectivism, cronyism and debauchery of money spell disaster. If parts of Africa are beginning to understand the follies of this and start to make serious money, that is excellent news. For a start, refugees from the hellholes of the continent might, instead of entering sclerotic Europe, choose to make a life in a more congenial place elsewhere.
Of course, there have been false dawns before. But with the flood of money entering the continent from China (after all that commodity wealth), I have a feeling that the rise of Africa has some staying power, particularly given the young demographics. Of course, it could all be messed up from things such as a rise of global protectionism.
There is something about this story about bank debt buybacks that I don’t quite understand, although I have only had two cups of coffee as of the time of writing:
“European banks are turning to buying back their own debt in order to raise some of the billions in extra capital required by regulators. At least six major banks have launched debt buybacks in the last two weeks and investment bankers say more are likely.”
Okay, so if a bank has debt – ie, others are lending it money – and the bank buys back, or in other words, pays off some of that debt, like paying off a credit card, say, how is this raising capital? The bank is presumably paying the debt off with, er, what? Fairy dust?
“In Lloyds’ case, it will exchange bonds previously issued for new instruments that are compatible with new regulations. The move allows lenders to book profits and reduce the stock of non Basel III capital on their books without issuing new equity or offloading assets.”
This is not very clear. What is the defining characteristic of “Basel III capital” in this case?
Finally we get a glimmer of how this actually works:
“The capital raised in this way is likely to be in the hundreds of millions. It boosts earnings by realising “own credit” gains that are otherwise purely theoretical. The market price of banks’ debt has fallen dramatically in recent weeks, which enables banks to buy back their debt for an amount above the market price but below the cash they raised by selling the instruments, booking a profit.”
Now I understand – I think.
As usual, the CityAM publication has a blisteringly good item on the Eurozone’s latest absurdities today. It is become my daily morning read. The fact that several of its writers are friends and acquaintances is, of course, purely coincidental.
It is pretty clear that, whatever big criticisms it launched at George W Bush and his administration when it was in power, that Reason magazine seems to have taken things up another notch after a recent frank, and frankly appalling speech by The One. David Harsanyi is not a happy bunny:
“Smart people can grouse all they want about the supposed zealotry of the tea party or the conservative presidential field (and sometimes, they might be right), but Obama’s mimicking Teddy Roosevelt’s end-of-career hard left turn tells us a lot about the president’s worldview. In his speech in Osawatomie, Kan., Obama dropped almost all pretenses and made the progressive case against an American free market system, which he called “a simple theory…one that speaks to our rugged individualism and our healthy skepticism of too much government….And that theory fits well on a bumper sticker. But here’s the problem: It doesn’t work.”
“Obama, after all, is such a towering economic mind that in Osawatomie, he once again blamed ATMs (and the Internets) for job losses. This is a man we can trust. “Less productivity! More jobs!”
“That’s not to say capital isn’t useful occasionally, of course. A few days ago, Obama hosted a $38,000-a-plate fundraiser for wealthy Manhattanites. The president—with the Democratic National Committee—has hauled in more cash from rent-seeking financial-sector companies than all Republican candidates combined. This president has supported every big-business bailout with taxpayers’ money, even though he claims they shouldn’t be on the “hook for Wall Street’s mistakes.”
“But it is refreshing to hear Obama come out and give us a clear picture of this country in all its ugly class-conscious, unjust, menacing glory rather than veil his arguments with any of that soothing rhetoric that got him elected last time. It’s time, my friends, for a new square deal.”
And yet I have this fear that Obama is going to win next November.
This is a pretty decent check-list for suspected bad science from blogger Eric Raymond. It is the sort of thing that it would be useful for trainee and even experienced journalists to learn.
The internet has been buzzing for a while about the incident of a woman, Emma West, who, as shown in a video, shouted abuse at people on a tram. It is not exactly clear from the clip what might have led to this, but regardless, it is pretty nasty and a young child sits nearby as she delivers these words. She has, according to reports, been subsequently arrested and charged.
Some people out there in the blogosphere are outraged by this turn of events – that West has been dealt with by the authorities, I mean. Initially, the libertarian in me agreed wholeheartedly, regarding this as an appalling attempt to enforce codes of conduct, including speech, in public places. It does make me deeply uneasy and I wonder whether the law would have come down like a ton of bricks on her had she just left, say, litter on the floor.
The blogger Old Holborn expresses such a view, for instance. Some people seem to suggest, in fact, that people like this woman have been provoked beyond endurance by the impact of mass immigration. Well maybe, although as a supporter of the freedom of people to move from A to B – so long as they do not expect state benefits – I don’t see why immigration should be halted because it offends people like this woman. After all, given that she lives in London, and that it is, thankfully, a cosmopolitan city and one of the financial capitals of the planet, she will have to face up the chance of meeting lots of foreign-looking folk on a fairly regular basis, immigration or not.
I had second thoughts about this business, however, when I considered that under the old Common Law (which libertarians often praise), and other laws too, an offence of “breach of the peace” might apply to this woman’s conduct; such a situation should, perhaps, involve no more than a rap over the knuckles from a magistrate and told to be of good behaviour. The same used to apply to people who got very drunk and disorderly, etc. This would not have anything specifically to do, as such, with being politically correct, as far as I can see. (There may have been elements of PC-ness in this case, of course.). The issue would be simply whether her behaviour was deemed likely to cause disorder, and of what the risk of that really was.
Also, from a property rights point of view, if a train/other service is run by a private company, say, then I would argue that the train company should be free to decide such matters, just as, in a perfect liberal world, pubs and clubs and other such places could so decide. (Alas, such principles have already been partly destroyed as in the outlawing of smoking in privately owned commercial premises). If I own, say, a theatre, and I saw a customer shout abuse of any kind at another in the bar, then I’d be within my rights as the owner of said property to kick the people out and if necessary, ban him/her from re-entering.
The context is also important in such cases, or it can be. It is one thing, maybe, to trade insults with someone in a fairly open place; it is another business if you are on a confined space such as a train carriage or small office and have to hear such abuse, in close proximity. The smaller the space, the more good manners matter. Indeed, think of how the word “civility” and “civic” run together – manners are a function of having to live close to one’s fellows. Institutions such as navies, where people have to sleep cheek by jowl, understand this point almost instinctively – hence all the seemingly petty rules.
These are issues where a healthy civil society is one in which certain behaviours are internalised, reducing the need for rules on such conduct to be enforced by things like police. We should not need to legislate so that mothers do not swear in front of their young children while verbally attacking strangers, or dumping litter on the pavement, or spitting, or urinating in public. And to a degree, the fundamental problem is that this internalisation of moral conduct has been hit by a variety of forces, including the Welfare State, breeding an often oafish, whining sense of entitlement. And it also leads me to the view that one of the most effective ways to restore civility is through private, non-state ownership of public spaces.
By the way, on a related topic, I can recommend Edward Shils’ classic, The Virtue of Civility.
Paul Krugman:
“Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole.”
Let us fisk this:
“The story so far: In the years leading up to the 2008 crisis, Europe, like America, had a runaway banking system and a rapid buildup of debt. In Europe’s case, however, much of the lending was across borders, as funds from Germany flowed into southern Europe. This lending was perceived as low risk. Hey, the recipients were all on the euro, so what could go wrong?”
Nice piece of snark, which I do not demur from.
“For the most part, by the way, this lending went to the private sector, not to governments. Only Greece ran large budget deficits during the good years; Spain actually had a surplus on the eve of the crisis.”
That may be true. I have not checked. However, the fact that Spain’s public finances went down the toilet so fast does not quite suggest that the Spanish public sector was a model of mean-minded prudence.
“Then the bubble burst. Private spending in the debtor nations fell sharply. And the question European leaders should have been asking was how to keep those spending cuts from causing a Europe-wide downturn.”
No, they should have been facing up to the fact that a vast number of mal-investments were caused by a decade of under-priced credit, and that there was no way that such a build-up of bad investments can be unwound painlessly. Seeking to hold off the pain by increasing public spending (and hence scaring the hell out of the global bond market) is hardly likely to achieve the desired effect.
“During the years of easy money, wages and prices in southern Europe rose substantially faster than in northern Europe. This divergence now needs to be reversed, either through falling prices in the south or through rising prices in the north. And it matters which: If southern Europe is forced to deflate its way to competitiveness, it will both pay a heavy price in employment and worsen its debt problems. The chances of success would be much greater if the gap were closed via rising prices in the north.”
That may be true in crudely political terms; after having enjoyed the fat years, those who have done so are not likely to enjoy a lean period. However…
“But to close the gap through rising prices in the north, policy makers would have to accept temporarily higher inflation for the euro area as a whole. And they’ve made it clear that they won’t. Last April, in fact, the European Central Bank began raising interest rates, even though it was obvious to most observers that underlying inflation was, if anything, too low.”
Well, it seems a bit glib to assume, as Keynesians like Professor Krugman do, that the inflation will prove to be temporary… Riiiight… One key problem for the eurozone, as he ought to know, is that labour markets in much of the region are so heavily regulated that getting a meaningful adjustment in wages and prices is hard, and yet this has to happen if countries such as Greece and Germany are to co-exist under the same currency area without strife. The same issue, of course, would apply if the whole region were to adopt, say, an inelastic system of real money instead of fiat money issued by a central bank or banks.
Another point for Professor Krugman to remember is that in some member nations, such as France, there has been double-digit percent unemployment for the young long before anyone had heard about sub-prime or credit crunches. And Europe’s record for wealth and job creation, compared to that of the US prior to the crunch, has been and remains lamentable.
““Green” will never be quite the same after Obama. When Solyndra and its affiliated scandals are at last fully brought into the light of day, we will see the logical reification of Climategate I & II, Al Gore’s hucksterism, and Van Jones’s lunacy. How ironic that the more Obama tried to stop drilling in the West, offshore, and in Alaska, as well as stopping the Canadian pipeline, the more the American private sector kept finding oil and gas despite rather than because of the U.S. government. How further ironic that the one area that Obama felt was unnecessary for, or indeed antithetical to, America’s economic recovery — vast new gas and oil finds — will soon turn out to be America’s greatest boon in the last 20 years. While Obama and Energy Secretary Chu still insist on subsidizing money-losing wind and solar concerns, we are in the midst of a revolution that, within 20 years, will reduce or even end the trade deficit, help pay off the national debt, create millions of new jobs, and turn the Western Hemisphere into the new Persian Gulf. The American petroleum revolution can be delayed by Obama, but it cannot be stopped.”
– Victor Davis Hanson.
“For what it’s worth, I have yet to meet a British eurosceptic who is enjoying the economic turmoil on our doorstep. It is plainly in our interest that the eurozone-which takes 40 per cent of our exports, and comprises our allies and friends-should flourish. That’s precisely why we are alarmed at the readiness of eurocrats to sacrifice their peoples’ prosperity so as to keep their monetary union together. Not that Norman Davies is much interested in what eurosceptics actually think. One of the oddities of the whole debate is that euroenthusiastic commentators who are quick to spot prejudice in others when it comes to racism, sexism or xenophobia are quite unable to detect it in themselves when it comes to people who don’t share their Weltanschauung. (By the way, Professor Davies, one uses nouvel before a masculine noun beginning with a vowel – le nouvel an, but le nouveau franc. When loftily dismissing people as anti-Europeans, it’s a good idea to get your own French right.)”
– Daniel Hannan, MEP, having a go, among others, at the historian Norman Davies.
It is hard to keep up with the unfolding events of the eurozone debt crisis. Earlier this week, the auction by the German government of 10-year bonds, which is an event normally garnering only specialist coverage, made big news. It was, in the words of several news-sites, a disaster, with only some of the paper being bought.
With impeccable timing, therefore, the Institute of Economic Affairs, the UK-based free market think tank, held a panel debate last night around the question of whether the euro has a future. And an interesting collection of folk were on display: Prof Philip Booth, Editorial & Programme Director, IEA; William Cash, Conservative MP for Stone and a long-standing eurosceptic and loather of most things around the European Union; Ed Conway, Economics Editor, Sky News, Dominic Raab, Conservative MP for Esher and Walton, and finally, and in my view, most memorably, John Stevens, a former member of the European Parliament.
Stevens was memorable because, while he made some good arguments (such as that return to the drachma would cause severe problems for the Greeks in some ways), he also repeated a mistaken old argument that I occasionally hear from pro-EU/euro types.
The argument goes something like this: Small states (like the old city-states of Italy or wherever) cannot thrive on their own and need to be part of a bigger country. The European Union enables its members to punch with a heavier weight than alone. The old glories of Renaissance Italy only serve as a reminder of how small states lose their edge to bigger entities. And with China and India on the rampage, we need to stick together, despite the odd problem of making the project work.
Okay, that is a bit of a paraphrase, but in essentials that is what Stevens said last night. Like others in the audience, I smelled something a bit fishy about it. For a start, is it really the case that the prosperity of small states/principalities/whatever – like 15th Century Milan – could not be sustained alone and that these places had to merge or be taken over by a much bigger entity in order to survive? (It is not as if modern Italy, which was only unified 150 years ago, is an economic colossus as a result of said unification). Take Hong Kong, for instance. In geographic terms, it is tiny compared with the Chinese mainland and for reasons most Samizdata regulars will be familiar with, Hong Kong has been one of the great economic success stories since the Second World War. (For sure, it was a British colony until 1997 but plenty of other places were colonies and they did not thrive). The same goes for Singapore. Or to travel back in time a bit: the UK – hardly a big country – Switzerland (ditto) or the Netherlands. In the latter example, the Dutch were so lacking in room that rather than conquer a bunch of neighbours, they reclaimed land from the sea. The Swiss seem to be doing rather well, despite the pressures on their discreet banking sector. In fact, places such as Switzerland are a standing reproach to Transnational Progressivists generally.
And in any event, what all these examples of economically successful small states show is that they can survive and thrive so long as they can trade in a global marketplace, exploiting a wide division of labour. It is not necessary – pace Stevens and his allies – to create a centralised institution such as the EU or anything else in order for this trading to occur. So long as different jurisdictions recognise each other’s rules, trade can proceed. In that sense, any regulatory system that takes hold is a “bottom-up” phenomenon, not one imposed from above.
It should also be noted that if, by any chance, the eurozone does fracture, with some of the “northern” euro member countries operating a stronger currency than in the “south”, then this might ultimately work to the benefit of the people for whom the single currency was purportedly designed: the citizens of EU member states.
As an aside, I was pleased that Prof Booth last night pointed out that for economic liberals/libertarians, the issue that really counts is whether the arrangements we arrive at really do mean more, rather than less, movement of goods, services and people. Or, in other words, more freedom, period. No classical liberal can be happy at the prospect of a eurozone collapse being followed by a descent into autarky, protectionism and xenophobia.
Here, by the way, is an interesting book on the folly of empires.
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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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