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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UBS has been closing the secret accounts of its American clients, forcing them into the cold, tax lawyers say. Many Americans with undeclared accounts have sought leniency by making voluntary disclosures to the IRS. Meanwhile, UBS has reported large outflows of deposits, which go beyond its American clientele.
Union Bank of Switzerland is haemorrhaging clients, not just American ones who have unwisely not stuffed their US passports in a shredder, but others too who no longer trust the bank with their privacy.
Frankly UBS was insane to do business in the USA in the first place, given the mafia-like behaviour of the American tax authorities, and the way I see it, this is just a very bad business decision being punished by clients voting with their feet money in favour of more discrete and less bombastic banks that cater to people with the quaint notion that their own money belongs to them and not the IRS… or any other rapacious state.
And any US nationals throwing themselves on the mercy of the thuggish IRS seriously need their heads examined. At the first sign of trouble, and this has been brewing a long time, they should have sold up and got the hell out of the USA for good. The weather in Costa Rica is really very nice, guys, trust me, and your money buys a whole lot more down here.
As I read a recent issue of New Scientist this morning, I very nearly skipped over an article titled “Falling Out of Love With Market Myths” with a photo on the fold of Ronald Reagan walking with Margaret Thatcher. The title and presentation leads one to expect the sort of thing one would expect from British academic types, and ditto, check… the article was written by an Oxford educated academic named Terence Kealey, now a Vice-Chancellor at the University of Buckingham.
I plowed on any way and was rewarded by a very surprising statement:
In fact, the evidence shows otherwise. In 2003, the Organisation for Economic Co-operation and Development published The Sources of Economic Growth in OECD Countries, reporting on a comprehensive regression analysis of the factors that might explain the different growth rates of the world’s 21 leading economies between 1971 and 1998. This indicated that only privately funded R&D led to economic growth, and that publicly funded R&D did not. Worse, the public funding of R&D crowded out private funding, and thus slowed economic growth.
Surprising, that is, in the sense of being a key element of an article in New Scientist by a member of academia. It is a very interesting article and well worth reading.
Brian Doherty has an article slamming the record and conduct of Federal Reserve chairman Ben Bernanke. It will not be news to the likes of us hard-money advocates, but still, well worth your time.
I like Doherty’s recent book on the American libertarian movement, by the way.
The next time Gordon Brown, or his counterparts mock free marketeer “Austrians” such as myself for our opposition to Keynesian monetary expansionism and huge state debt, perhaps they could explain why, after all the vast spending that there has been, we get figures such as this. Just asking.
For those unaware, Mr Kaletsky is an economics writer and supposed investment guru who fully supports the Keynesian view. I assume most readers have heard of Mr Krugman.
The decision by the UK government a few months ago to use anti-terrorism powers over the case of Icelandic banks in trouble has caused deep resentment in Iceland. As this article suggests, such a tactic is hardly a way for Britain – now in deep debt – to make friends with foreign investors. Of course, Mr Brown may have made the calculation that he will be out of power in a few months so why care? But even so, the use of such powers represented a new low for UK diplomatic relations. It also proves the age-old truth that if governments acquire new powers, they will use them in ways far beyond their original scope.
“Groupthink was a major factor in the buildup of risk in the financial system in the decade preceding the recent crisis. Top bank executives and regulators ignored dissenting voices from both ends of the political spectrum which were questioning the excesses that were building up in the system. What was once a comfortable consensus about the strength of our regulatory structure has now been replaced by an equally comfortable and equally flawed consensus about how to fix it.”
Arnold Kling, libertarian-leaning economist, giving a long report on the problems with how the US administration has sought to deal with the crisis, and why he thinks those moves will make future problems more, not less likely. My fear is that for now, such warnings will continue to go unheeded not just in the US administration of The Community Organiser, but in the UK and parts of Europe, as well.
Apparently it is news that the UK is still in recession, or as the headline says Economic recovery in UK ‘on hold’.
On hold? The government is debasing people’s saving as quickly as possible and stripping money out of productive sectors and pumping it into unproductive sectors, and generally trying their damnedest to drive businesses and wealth creators out for years now… and the fact this is tearing a huge hole is surprising to who exactly?
Which is why you can’t trust nature. Anatole Kaletsky is worried about stagflation. Can this be the same Anatole Kaletsky who only six month ago called for government to “punish savers”?
As I wrote at that time,
[Unsubbed original:] The purpose of banks used to be to make a profit by using the deposits in their care productively at second-hand. That is why they pay interest: to bring in funds to be lent. If they don’t do either then they are no longer banks but state-sponsored rentiers.
Far from encouraging productive capital, Mr Kaletsky’s prescription would have us reverting to a pre-capitalist economy where those with savings dare not recycle them. Their personal cash will end up converted to valuables, hoarded, and hidden to keep them safe from predatory tax farmers. Printing money is also a well-tested means of encouraging the same sort of behaviour.
For a recovery we need capitalism and the market to do their work. However painful, that is better than reversion to the Dark Ages because governments and their advisors want to be seen to be doing *something*. Doing nothing may be the best alternative.
Mr Kaletsky has got what he asked for and now finds he does not want it. Human, all too human.
I had to read the headline twice. Then I read the article twice. I still don’t get it.
What I first thought it said was,
International development minister urges firms to pool HIV patients
Weird, obscure line, but no weirder than a lot of things that come out of the international development department, and potentially a lot more sensible. I suppose it might make sense for the big southern African companies, especially, to combine their employee health programmes. But if it were more effective, wouldn’t they already be doing it? Wouldn’t the South African government, in any case (now they have got rid of that barking health minister), be the one doing the urging?
What it actually said was,
International development minister urges firms to pool HIV patents
Now that makes a lot less sense. It is quite up to the standard we have come to expect from DFID, a real candidate for economic illiteracy of the day.
[Mike Foster MP] wants companies to contribute to a “patent pool”, which the international drug-purchasing facility, Unitaid – set up by a number of donor countries, including the UK – is trying to establish.
“While it is absolutely vital that we work to reduce the human cost of HIV by focusing our efforts on preventing new infections, we must also face up to the stark reality of the treatment challenge we face. The pharmaceutical industry has an opportunity to act now to help prevent future human catastrophe. It is time for them to state their clear commitment to make new HIV medicines affordable to those who need them most.”
According to the all-party report, if HIV patents are put in a pool, generics companies – which make the cheap combinations now used in Africa – will be permitted to make low-cost copies of newer drugs and devise new combinations in a single pill, which is important for people living in poverty.
What can this possibly mean? There’s no real explanation here of how a ‘patent pool’ might work. It sounds like pharmaceuticals companies are being offered to the opportunity to swap an unstable legal monopoly for an internationally approved cartel, and to pose as humanitarians while doing so. Would that really lower the cost of HIV medication, and improve its effectiveness in general? It is far from obvious why that should be the case. Would medicines that are both cheaper and more effective be permitted to flow back to Western countries? I doubt it.
Which points up the weirdness of the whole exercise. In order to be economic in Western countries, HIV medicines have to be very expensive to buy there. That is not just because they are expensive to develop, but because the absolute numbers of people who need them are small. In the West, just as in poorer parts of the world almost no individual can afford to pay for their own treatment. So there’s a different sort of cartel effect maintaining the oligopolistic market. Government protects the patentees; and government subsidies end up paying for the consequences.
You don’t have to be a believer in the efficacy of beetroot and garlic as anti-virals to notice that the difference between the scale of the epidemic in parts of Africa and the richest parts of the world is not a consequence of the availabilty of drugs – or at least not the availabilty of anti-retrovirals. We have fewer people getting the disease in the first place. But we have fewer people with all sorts of infectious diseases. Malaria and dengue are not more treatable than they were when they were endemic in Europe, and the US, less than a century ago. The difference is better living conditions that everyone will work for if they have the chance.
Patent pooling, it seems to me, is no better than patent farming, in that it seeks to exploit artifical restrictions on innovation that just happen to be there for the benefit of a restricted interest group. It is an exercise in dinosaur husbandry, with little real relevance to improving the lives of us mammals. A reconfiguration of corporarate welfare, with its concentration on subsidising treatment of a particular disease, and bureaucrats swapping targets with bureaucrats, is a distraction from the less collectively ‘manageable’ task of avoiding the spread of infection, which is the invisible part of the virtuous circle of the people who are not sick getting better general health and more comfortable lives. That isn’t going to come from government drug programmes. I suspect it might come from “people living in poverty” having a bit more access to the non-patent and never-patent – but still restricted – technologies of choosing their own priorities and exploiting their own comparative advantages.
There have been a few clashes between Switzerland and the US, and to a certain extent, Britain, in recent months over the fact that centuries-old Swiss bank secrecy laws prevent Swiss-based banks from divulging information about their clients to foreign governments that suspect people to be evading taxes. Evasion is not a crime in Swiss law, contrasting with the Anglo-Saxon legal distinction between avoidance (which is broadly ok), and evasion (which isn’t). UBS, the Zurich-listed banking and wealth management giant, is currently embroiled in a case in the US in which the Department of Justice is demanding that the Swiss bank reveals details on up to 52,000 US clients. UBS is, so far, telling the American authorities to sod off. But the affair has cost UBS: the bank has stopped offering offshore banking to US clients and other non-US banks may also follow suit, or start to do so.
Meanwhile, countries such as Germany and the UK have been leaning on Switzerland to crack its secrecy laws, but that is not easy. To do so means that the Swiss electorate would have to approve primary domestic legislation and given that Swiss banks account for about 13 per cent of the country’s GDP, I can hardly see the Swiss voters, unless they are very stupid, throwing away one of their economic ace cards.
And I have defended tax havens several times before, for those who want to see why I take my position in the way I do. In summary: I consider what some countries are doing to be nothing less than an attempt to create a global tax cartel, with jurisdictions such as Switzerland, Singapore or Monaco in the position of non-cartelised competitors. But as we have seen in the case of OPEC in the 1990s, when the oil price was low, cartels crumble eventually. I cannot see countries such as India, China, Russia or Brazil shunning the opportunity to provide low-tax attractions to investors who become fed up at the larceny of their home governments. Even though some taxes – such as sales taxes and land taxes – are quite hard to dodge, I think it is a mark of an open, free world that people can migrate to jurisdictions where the taxes are to their liking, rather than have all their options cut off at source, which the cartelisers would do. Unfortunately, the drive against tax havens is too good an opportunity for the current transnational progressive class to miss.
Of course, the US has a tax haven called Delaware, and the UK has its numerous offshore dependencies, such as the Isle of Man, Jersey, British Virgin Islands and the Caymans. There is an element of cant to the stance taken by the likes of say, Barack Obama on this.
So, drawing all this together from a symbolic point of view, I hope Roger Federer, the debonair Swiss tennis genius, overcomes the boom-boom serving machine, Andy Roddick. No offence Andy – who seems a nice guy – but I want the dude from the mountains to win.
One of the same, government dependent, “private” credit rating agencies who rated mortgage backed securities as “Triple A” (because Barney Frank and Chris Dodd, and the rest, were determined that reason would not stop the “affordable housing policy” and the lenders had to dump the crazy mortgages somehow – and, besides, Alan Greenspan Federal Reserve was backing up the building of a pyramid of debt upon them in spite of complaining about it from time to time) is now saying that there is no threat to the “Triple A” rating of United States government debt.
No doubt questions as to the soundness of this judgement about United States government debt will be met with the same response as such questions as “are you sure these people will pay back their mortgages” were. Namely a look of contempt saying “you are so simplistic, you do not understand the first elements of these complex matters – it does not even matter who the mortgages are to, the financial instruments that important people deal in are only distantly related to such basic things”.
However, please note the get out clause:
As long as the United States government takes action to reduce the national debt.
Both short term, “stimulus”, action and long term, health care “reform”, action is all about increasing the national debt. So when the house of cards finally collapses the credit rating agency will be able to say “What are you complaining about? We warned you!”
Thanks to our vigilant commentariat, I read this excellent, pithy demolition of central banking by Jamie Whyte, the banker and writer on philosophy and other subjects. Good on the Times (of London) for running it. It’s a healthy antidote to the flawed semi-Keynesian nonsense of Mr Kaletsky.
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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.
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