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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A lot of people are noticing the parallels between what happened in Japan when and since their bubble burst, and what Britain, and if our Prime Minister gets his way the entire world, is now doing to itself. About a month ago, I did a podcast, with Antoine Clarke and Michael Jennings, in which Michael J in particular gave Japan a big mention, as an illustration of what not to do.
This headline, which I snapped yesterday, reminded me of that conversation:
A zero percent interest rate has been a feature of Japanese life in recent years, as has almost total economic stagnation. In an October 29th article in the Independent, Hamish McRae noted this parallel. I got back to that piece thanks an ASI email, which flagged up this blog posting by Tom Clougherty. Said Clougherty:
The result is that average Japanese living standards have barely risen for 20 years, while inequality has risen sharply. And this is despite them adopting the policies our government are now touting: low interest rates, increased government borrowing, and higher public spending to “prime the pump”. If it didn’t work for Japan, are we really to believe it will work for us?
Indeed. McRae actually went on to say that we are not in as bad a pickle as Japan. Which is some comfort, but not very much.
Matt Welch – author of a recent fine study of John McCain – has this to say about the recent cave-in by so-called conservatives to calls for a massive bailout of failed businesses and banks:
In June I read what I thought I’d never see again: a mainstream column, by a mainstream columnist (The Washington Post’s David Ignatius), arguing against the effects of airline deregulation, one of the most liberating government acts of the last four decades (see “40 Years of Free Minds and Free Markets,” page 28). When reregulation is suddenly on the table even for an industry where market forces have cut prices in half while doubling the customer base, it’s time to get back to first principles and fight like hell to secure victories we’d long thought won.
Indeed. Like a few other Samizdata contributors – such as carbon-footprint monster Michael Jennings – I am a big fan of the deregulated airline business. This business has been a huge boon in places like Europe. Thanks to the lower cost of flying around, I can see friends in Europe, see my family (and they, ahem, can visit me). The development of the cheap airline business model, notwithstanding some of its flaws, has done more to bring Europeans together than all the EU directives ever passed. Arguably, such directives have in fact been a hindrance, rather than a help, to such closeness.
On Matt’s broader point, he is right that we are going to have to make the case for free markets, dispersed property rights, entrepreneurship and trade all over again. It is extraordinary to think that barely over a year ago, Conservative Party leader David Cameron was attacking cheap flights. He has allowed a Big Government, environmentalist message to overshadow what must always be a staunch support of freedom and property rights. He reminded me of the comment attributed to the Duke of Wellington in the 1820s about the railway train: he disapproved of them as they would encourage the common people to move around.
Thankfully, such nonsense has disappeared But just you wait: as and when the good times reappear, the inhabitants of Notting Hill, the Upper East Side and central Paris will be arguing for shackling the unwashed masses to living and holidaying within a few miles of where they live. It is vital, therefore, that the defence of the market order, and resistance to bailing out politically well connected firms like GM or RBS, be given a strong, populist image. Defending deregulated airlines strikes me as a good sort of issue to use in this respect. Keep your stinking, socialist hands off my Ryanairs, my Easyjets and my Southwests! Unleash the spirit of Richard Cobden!
“Unlike those excitable countries where the peasants overrun the presidential palace, settled democratic societies rarely vote to “go left.” Yet oddly enough that’s where they’ve all gone. In its assumptions about the size of the state and the role of government, almost every advanced nation is more left than it was, and getting lefter.”
Mark Steyn. As he points out, the upcoming US government bailout of General Motors and god-knows-what-else should nail the idea that the US is the land of “unregulated capitalism”.
Update: PJ O’Rourke writes in similar vein.
Tim Worstall, whom I read daily, has a good post dealing with the idea that it is somehow wicked for banks to charge a higher interest rate for a mortgage than the official base rate as set by the Bank of England (or any other central bank, come to that). It is, as he says, a matter of pricing for risk. Lending money to a person with a relatively small deposit – or collateral – relative to the total value of a loan is risky. I am going to have to renegotiate my mortgage in the next few weeks, and because the pricing of risk has risen dramatically, I can expect to pay more even though my loan-to-value ratio is quite low and I have a decent amount of equity, while both my wife and I earn a reasonable amount of money. It is not a great situation to be in, but it could be worse. For many years I chose to rent and stash up enough money to put down a good deposit, as did my wife. That, by the way, is one reason why there is a basic injustice when relatively prudent folk get taxed to bail out the imprudent, such as a person on a 100 per cent mortgage.
To be honest, had the price of risk not been artificially reduced by recklessly loose monetary policy over the past few years, we would not be in this pickle in the first place, but that’s another story.
Politics trundles on and the more you pay attention to it the more depressed you are going to get, so what I like to do instead is look at gadgets. Gadgets aren’t everything. An affordable mobile phone is scant consolation if your ludicrously unaffordable house has just been repossessed. Flat screen televisions are only as good as the stuff that’s on them. Cool cars only provide escape from the cares of city life in car commercials, not in cities.
Nevertheless, gadgets are still being done well, and every now and again I like to pick out a new one and praise it on Samizdata, both for its own beautiful sake, and because doing this makes the point that life would be so much better if everything (not just gadgets) was done like that, by grasping capitalists in competition with one another instead of by tyrannically pompous bunglers who are clever only at winning elections or at sucking up to such people. The last such gadget that I got excited about here was the Asus Eee-PC, which I now happily possess, and am gradually finding more uses for. And now, I offer you the Panasonic Lumix DMC-G1, which is a digital camera, which looks like this:
 It doesn’t look anything very special, or very different, does it? And for many people it won’t be. For all those Real Photographers squinting into their optical viewfinders to get the perfect shot with their brick-like Canon or Nikon DSLRs, the G1 would be a severe come-down, because the G1 doesn’t have an optical viewfinder. But for that vast tribe of cheaper and more cheerful digital snappers who prefer cameras that don’t weigh so much, the fact that the G1 has no optical viewfinder is exactly the point. We Billion Monkeys, as I like to call us, look at all those Real Photographers with their clunky black contraptions and we say to ourselves, yes, I’d love my pictures to be as good as theirs are, and it would certainly be nice to be able to use lots of different lenses the way they do, but really, does a camera have to be that big to be that good?
The thing is – from where we Billion Monkeys stand, sit or crouch – DSLRs look like a relic of the analog age, like those weird early steam ships that also had sails on them. DSLR stands for Digital Single Lens Reflex, and this refers to the fact – commenters will doubtless correct me to the degree to which I am, I am sure, somewhat-to-completely wrong – that in order for the optical viewfinder to be an accurate foretaste of the picture being attempted, the light that enters a DSLR has to be divided up and sent off to two different places, one of them being the optical viewfinder and the other being the magical electronic surface that turns the light into a digital picture. This process involves … well, it involves a lot of space and a lot of complication.
So, the G1 does away with the the optical viewfinder. You can still squint through an eyepiece if you really want to, but what you see is a digital picture, not a merely optical one. More conveniently, you can see the digital picture beforehand on a small screen, which, as with the best little digital cameras, twiddles, and hence lets you take pictures that you can still see even when you are holding the camera way above your head or way down in front of your private parts. Most DSLRs still only show you the picture on their screens afterwards, but the latest ones also have these see-the-picture-beforehand screens, but this combining of optical and digital previewing all adds to the size and the expense. What the G1 does is put all its pre-viewing and post-viewing eggs in the one digital basket.
→ Continue reading: The Panasonic Lumix DMC-G1 is a glimpse of a different and better world
I must say that one of the few gratifying aspects of the current financial turmoil has been the way in which one of the UK’s biggest banks, Barclays, has decided to spurn any offers of help from the UK government – ie, the UK taxpayer – and raise funds from mostly private investors. In its recent raising of about $12 billion of funds to improve its capital position, Barclays made it clear that it wanted to stick with funding via the commercial market because, if it had drawn on the UK state moneys that have been provided for the likes of Lloyds TSB and Royal Bank of Scotland, it would lose its freedom to set pay, among other things.
Now, free market purists may object that the Middle Eastern funds that have pumped cash into Barclays are not entirely private sector organisation and of course they have a point. But the fact is that as a taxpayer, I haven’t been asked to write a checque to Barclays, in contrast to other UK banks. Barclays has also kept its affairs away from the hands of such characters as Alistair Darling, the UK finance minister. Those banks which have taken state aid face the risk that the confidentiality of their clients, especially in the wealth management area, could be compromised. Of course, even before 9/11, banks have been required to compromise on secrecy due to things like money laundering laws and the like. But there is no doubt that once a bank becomes an arm of the state, such erosions of client confidentiality that have already occurred will increase.
And the reaction of certain parts of the media has been interesting. On Friday evening, the BBC economics correspondent, Robert Peston, told us in that extraordinary voice of his how Barclays shareholders would be penalised by having to pay a higher amount to obtain funding than if they had, like good little corporatists, gone along to the UK Treasury. Peston, as a corporatist himself and creature of New Labour, cannot fathom why a bank wants to stay out of the public sector. Barclays’ executive bonuses may be “obscene” as far as Peston is concerned, but at least Barclays avoided some of the worst excesses of the credit boom. It is, as a result, relatively strong as a bank. Barclays must be thankful that it lost a merger battle to buy ABN Amro last year. If its refusal to eat from the state table annoys BBC journalists – who of course are paid out of a tax – then the bank must have done something very right. One cannot exactly say that of a lot of banks these days.
During the recent LA/LI Conference, Sean Gabb, half of the two-man team that now runs the Libertarian Alliance (Tim Evans being the other half) sat himself down next to me and asked me to suggest good speakers for next year. My best two suggestions were two Michaels.
Michael Jennings will be well-known to regular readers here as an expert on technological trends and much else besides. He would be exactly the kind of second-tier speaker, and I mean this in no disrespectful way, who maybe isn’t a superstar name who would cause dozens more attendees to sign up in the first place, but who would add greatly to the enjoyment and enlightenment of the event for all who did attend. Technology, I am sure you will agree, can be relied upon to keep on supplying interesting trends for someone like Michael to talk about.
And the other Michael I suggested was Michael O’Leary, the boss of Ryanair. Okay, definitely a first-tier speaker, but equally definitely a long shot. But what’s the worst he can say? No, too busy running Britain’s largest low fares airline, you can afford my air fares but not me but the best of luck anway being what he probably would say, if anything, if asked.
Ryanair press releases are actually fun to read (like some of Sean Gabb’s, come to think of it). Here is a typically populist and opportunistic snippet from the latest one:
Ryanair, Britain’s largest low fares airline, today (31st Oct) offered to rescue Jonathan Ross after he was ‘Sent to Coventry’ by the bigwigs at the BBC. Ryanair will help Ross jet off to much more exotic surrounds as it sent him free tickets to escape the media spotlight and sample how those who don’t earn £18million a year live.
Ryanair, called on the black sheep of the BBC, who will lose £1.5million over the next 12 weeks, to make his money go further by escaping the high cost of living in Mayfair and fly on one of Ryanair’s over 350 UK routes where he can live cheaper, get a tan and gear himself up for his return to the beeb next year.
Does Coventry have an airport, I wonder?
O’Leary’s open contempt for state monopolies of all kinds, but especially in the airline business (on the ground and in the air), is most pleasing. A growing trend in public opinion, especially since this latest wall-of-taxpayer-money bailout of dodgy banks, is the alignment of enthusiasm for free markets with populism, while statist solutions to problems are becoming regarded more and more as elitist manipulations, the rich helping themselves to public money on scale that the poor could never dream of. O’Leary feeds into that current, I think, especially in the way he bangs on about how much more you often have to pay the government, when you fly Ryanair, than you have to pay him.
Michael Jennings, constant globetrotter that he is, could doubtless tell libertarians about the impact of low fare airlines on the world, even if Michael O’Leary is otherwise engaged.
There’s a rather comical culture clash now being played out in the West Indies, between new money and cricket:
Senior ECB officials, who almost bent over backwards to welcome Stanford and his millions at Lord’s last summer, were also under fire with calls for them to stand down after failing to undertake adequate checks on Stanford. Rod Bransgrove, Hampshire’s chairman, told the Daily Telegraph that the position of Giles Clarke, the ECB chairman, was in doubt. “I asked the ECB to do a lot more checking on Stanford and this competition. We made it very clear we that we should not enter into this agreement without proper checks but he [Clarke] had already done the deal. The board should resign collectively”.
The ECB and Stanford agreed on an unprecedented US$100 million deal in the summer, spread over five years, but the inaugural competition this week in Antigua has attracted mounting criticism in England.
The flack really started to fly on Monday when Stanford was pictured with Matt Prior’s wife on his knee and with his arms around two other girlfriends of members of the England team during a match the night before. It provoked a strong reaction from parts of the media, and in addition, one England player reportedly said: “If that was my wife he’d put on his lap I would have wanted to punch him”.
Last night’s planned cocktail party with the teams was cancelled at short notice, with officials rather unconvincingly claiming there were “logistical problems over a venue”. One journalist was unconvinced. “As if Stanford would ever have trouble in securing a venue for anything in Antigua,” he noted. “He owns most of them.”
I recall boasting here a while ago that my grandfather was the captain of his local cricket team by virtue of the fact that he owned the pitch. This was in Dingestow, which is a small village in Monmouthshire. My cousin still lives there, in the biggest house there, which is called Dingestow Court. But that’s old money. Old money pitch owners would make irrational bowling and field placing decisions, but they wouldn’t mess with other cricketer’s wives or ‘girl friends’, i.e. ladies whom other cricketers were courting.
All of this trouble in the West Indies now has arisen because of the rather sudden eruption of Twenty20 cricket. It turns out that, unlike so much of old school test cricket, people will pay large amounts of money to go and watch Twenty20, even between relatively moderate players. Suddenly cricket has become a very, very big, very twenty-first century business. And the cricket world is finding it tricky to adjust. It hit me the other day what a huge impact Twenty20 cricket is having when I half noticed (as you do when watching the telly) a TV advert for some kind of computerised or perhaps gambling-related version of soccer, which they were also calling “Twenty20”. Cricket is now featured in the sports pages of the popular press in Britain in a way that it hasn’t been for years, except during an Ashes series.
Here is some more Stanford grumbling. English cricket, says former England captain Mike Atherton, has become Stanford’s WAG.
William Rees-Mogg has a nice, rather wistful account of the days of when bank managers actually knew their clients, knew their economic circumstances and were not in the business of lending money to folk with little or no credit history. Mr Rees-Mogg is a devotee of the gold standard. However, in talking about the changing nature of banks and the quality of their staff, he does not touch on an issue which struck me the other day: limited liability.
Under limited liability laws and with central bankers acting as lenders of last resort, there is an element of moral hazard. Some free marketeers like Sean Gabb – whom I mention below – think limited liability laws are a statist curse on the capitalist system, since they would not arise without active state adjustments of corporate law. I am not sure about whether limited liability would exist in a world of pure laissez faire. It might, I guess. Also, not everyone buys the idea that LL is a distortion of the market or would not exist without state action.
However, there are still some nooks and crannies of the banking world where unlimited liability still exists and works successfully. The Swiss private bank Pictet, founded in 1805 in that memorable Napoleonic battle year of Austerlitz and Trafalgar, operates a partnership system where the bank partners face unlimited liability. As a result, Pictet operates a very conservative lending and investment policy. During the fat years of the ‘Noughties, Pictet may have seen some of its more aggressive competitors steal a march, but now the bank is attracting inflows from investors who appreciate the structure of the firm. At a time when Swiss banks have sometimes attracted bad headlines due to massive losses undertaken by over-confident people, the example of Pictet is an interesting contrast.
The IEA now has a blog, which is good. Good that it has one, and good in that it looks to be good.
Here are two characteristic quotes, from the two most recent posting at this blog. First, here is a recycled little something that John Meadowcroft contrived to get published by the Times yesterday, about Marx:
Sir – Marx’s theory of the crises of capitalism is little more than a melodramatic description of the business cycle – standard fare in economic analysis. Every original contribution that Marx made to our understanding of capitalism is demonstrably false: the working class does not become increasingly immiserated; the class structure does not become increasingly polarised; no society has evolved from feudalism through capitalism to communism; the iron law of wages is fallacious; the State does not wither away when capitalism is abolished. Marx will continue to be neglected by serious scholars because he was wrong in every important respect.
And here is a the final paragraph of a summary of this publication:
Given the complex causes of the gender pay gap, it is clear that complete equality of pay is unlikely to be achieved without draconian measures that would restrict freedom of choice and damage the economic prospects of both men and women. Calls for new legislation on equal pay should therefore be resisted.
The IEA has always seemed to me to be the kind of organisation which should have a blog, but also as the kind of organisation which has been mindlessly prejudiced against having a blog on account of having nothing to say about kittens and sunsets and the personal dietary habits of its inmates, and on account of not liking the bark-at-the-moon style of current affairs commentary, as if that were all you were allowed to do, blogwise. This is like denouncing the whole idea of telephones merely because other people often chatter pointlessly to each other with them. Why should that bother you? Happily, the IEA has now overcome any such prejudices.
The Bailout Reader over on the Ludwig Von Mises Institute site is an essential reality based antidote to the crapulous ignorance on offer in the mainstream media on the current economic crisis. When it comes to economics at least, the Ludwig Von Mises Institute is hard to better.
If ever there was a ‘Crisis of Regulatory Statism’, look around you… this is it.
Read every word of it.
Spectator politics correspondent Fraser Nelson spots that Gordon “off balance sheet” Brown, as I will now continue to call this shit of a national leader, has devised an accounting wheeze to remove the tens of billions of public debt involved in the Northern Rock bailout from the public accounts. As a result, Brown can claim that the UK public finances are fine, nothing to look at here, please move along.
As Mr Nelson points out, Brown engages in practices that politicians are only too keen to condemn when applied by banks. But at least banks, if they try to remove certain default risks off their balance sheets, use forms of tradable insurance policies known as credit default swaps. I’d be interested to know how exactly Brown & Co. intend to hedge out the risk that Northern Rock does not return to any form of profit. This disconnect between the talk of prudence on the one hand and financial trickery on the other will, I hope, be the undoing of this overrated bullshitter from north of the border. Brown is damaging the age-old Scottish reputation for plain dealing. No wonder so many Scots want to cut loose from the UK. I don’t blame them.
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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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