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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.
Now that banks are being forced back to their traditional model of being dull institutions, those chasers after excitement who have been shown the door might like to consider some career options. I rather like Matthew Lynn’s list of suggested new ideas.
On a serious note, it is one thing to embrace risk-taking as a virtue of entrepreneurship, so long as the persons taking the risks carry responsibility for the bust. The problem with the investment banks, such as now-defunct Lehman Brothers and Bear Stearns, is that seldom happens. If the “Masters of the Universe” really do crave the high-wire, much better that they do so with money not given to them by the taxpayer.
On a separate but related point about state ownership of banks, one issue that has not yet been much discussed is that of political and business corruption. Under “public” ownership, what will count will be what Ayn Rand called “the politics of pull”: the ability of governments to put their toadies onto bank boards to ensure that favoured groups get their loans and other benefits, while enriching those with the right connections. We saw that in countries like France, state-controlled banks such as Credit Lyonnais became engines of corruption on a huge scale. If ever there was an issue for enterprising journalists to go after, it is this one. They may probably do so once they have become bored describing Gordon “off balance sheet” Brown as some sort of economic superman.
The only other thing I would add is that I am in the advertising industry and most of the ads for sub-prime loans had dried up before the recent bail-out bill. As soon as that went through the volume for these ads went up 10 times. Whatever the government did to “fix” the problem ain’t working because all they did was just give everyone who didn’t make money the first time around another shot at the craps table.
– from a comment by “Ben Franklin” on this Belmont Club posting spotted by David Farrer
Poor naive George W. Bush! For all his shambolic presidency, his dreadful mistakes, and the horrors of aggressive imperialism, his last couple of months in office could end up being the most disastrous for the world.
Bloomberg reports:
The leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election.
President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement after meeting yesterday that they will continue pressing for coordination to address “the challenges facing the global economy.”
The initial summit will seek “agreement on principles of reform needed to avoid a repetition and assure global prosperity in the future,” and later meetings “would be designed to implement agreement on specific steps to be taken to meet those principles,” the statement said.
Just how bad this could be is already showing. The report continues:
Sarkozy and Barraso are pressing Bush for a G8 agenda that includes stiffer regulation and supervision for cross-border banks, a global “early warning” system and an overhaul of the International Monetary Fund. Talks may also encompass tougher regulations on hedge funds, new rules for credit-rating companies, limits on executive pay and changing the treatment of tax havens such as the Cayman Islands and Monaco.
Just what has the continuation of the OECD nations’ campaign to plunder smaller states and institute globally uniform (high) taxation got to do with the market crash? Nothing. Executive pay? Irrelevant, too, save in the politics of envy. Mainstream banks, not hedgies, were the ones that crashed after playing iffy games with CDOs, and governments helped pump-up house prices – with enthusiasm. Where this agenda comes in is as an opportunity to kick the resented “Anglo-Saxon” model of capitalism while it is down – even, and especially, in those places where it is not down yet. (Are we missing Commissioner Mandelson yet?)
Mr Bush has lost the thread entirely if he really thinks a transnational “reform” of the financial system can do other than damage “free markets, free enterprise and free trade”. He may have a patchy record on liberty, and a bad record on limited government. His guests in November will have no interest in either. They will tempt him (have tempted him) with the mantle of world saviour, and will try to get him to bind his successors. We shall have to hope that his successor, either one of whom would be well to the economic right of the self-selected ‘international community’, depressingly enough, is more wily and far-sighted.
Meanwhile, where is there left to run?
…They would make Guido Fawkes an advisor on how to fight the next election. Of course Guido (aka Paul Staines), whom I know and like, prefers, as I and many other bloggers do, to give party politics a wide berth in professional terms. He is far more effective doing what he is doing now and obviously has a great time doing it. But as his example shows, the guy has more sense on how the Tories should go after the absurd notion of Gordon ‘off-balance-sheet’ Brown than any number of folk working in Tory HQ.
Think about it: the Tories should put up posters with the Brown comment on “no return to boom and bust” over, and over, and over. That this man, who has presided over deteriorating public finances during a relatively strong period of growth, sold our gold reserves at a fraction of their current value, raided pension funds and shafted taxpayers should be able to pose as some sort of economic Winston Churchill is a joke.
Jesse Walker at Reason magazine points out something very inconvenient for Naomi Klein, whom I discussed recently at this blog:
Let’s just zero in on the contrast Klein draws between utopian theories and real-world practice. It’s a fair argument if you apply it properly: that is, if you look at the consequences of Friedman’s policy prescriptions where they are put in place. It makes sense, for example, to look at how Friedman’s ideas about denationalization and free trade fared in Chile after they were put into effect. It doesn’t make much sense to look at Blackwater’s contracts in occupied Iraq, because — try as Klein might to pretend otherwise — they don’t have anything to do with Friedman. (And of course, it’s important to examine the ways Pinochet’s Chile deviated from Friedman’s economic ideas as well as the ways it embraced them.)
Exactly.
At the same time, you have to consider how Friedmanism fared everywhere some portion of it was applied, not just cherry-pick the most unappealing regimes that experimented with it. If the only place that adopted any of Friedman’s economic ideas was Chile, then Klein might be onto something when she suggests there’s a connection between libertarian economic policies and deeply un-libertarian ideas about torture, censorship, surveillance, and state-sanctioned murder. But the most sweeping free-market reforms of the last 40 years were not adopted in Pinochet’s Chile, Thatcher’s UK, or anyplace else addressed in Klein’s book. They were enacted by the New Zealand Labour Party in the 1980s. Far from fusing economic liberalization with political repression, the Labour government expanded civil liberties: It adopted a bill of rights, decriminalized homosexuality, improved the treatment of the native Maori. And while Pinochet signed on to the CIA’s war against the Latin American left, New Zealand strained its relations with Washington by making itself a nuclear-free zone, a policy that effectively barred the U.S. Navy from New Zealand ports. By Klein’s logic, these are all effects of Friedmanomics.
One would not expect Ms Klein to respond to this other than with smears. It turns out that she more or less ignored the devastating review of her book by Johan Norberg at CATO recently, did not address his very serious accusations of widespread inaccuracy or misrepesentation. To repeat: it is not just her views that are a problem – I am sure some leftists argue in good faith – but her actual, repeated lying, fabrications and errors that are so easily corrected and yet she cannot be bothered to do so. That is one reason why I loathe so much of this sort of writer. It is a sort of contemptuous attitude towards simple fact-checking that I cannot abide. So Friedman did not support the Iraq war after all? Well, whatever, he might as well have done, seems to be her attitude.
The point that Jesse Walker makes about the varied effects of free market ideas is important. Yes, some repressive regimes around the world may have found it convenient, for whatever reason, to claim they had signed on to the package, as Chile did. But then remember that even former London mayor Ken “friend of Hugo Chavez” Livingstone once argued that he had borrowed the idea of road-charging from the great Chicago professor. In different times, very different types of political leader, such as Richard Nixon, claimed to be Keynesians, just as, right now, a lot of people are scurrying to claim to be in favour of tougher regulations (see Guy Herbert’s comment immediately below this one).
Klein tries to draw an equivalence, in a muddied way, between those leftists who deny that Marx can be blamed for the horrors done in his name and those of us who point out it is absurd to try to blame free market thinkers from what is happening now. Well the reason, Ms Klein, why Friedman et al cannot be so blamed is that what is happening now is not an example of laissez faire capitalism. Re-read that slowly, Ms Klein: what is happening now is not a case of laissez faire. Just to spell it out for those who have not been following this debate: the central banks responsible for setting interest rates are state bodies; the US home loan agencies such as Freddie Mac that underwrote risky mortages are ultimately state bodies; the legislation forcing banks to lend to risky groups is state activity; the Basel and other bank capital rules that have arguably encouraged the irresponsible use of credit derivatives are state rules, and so on. With the exception of Lehman Brothers and some of the Icelandic banks, not a single large financial institution has been allowed to go bust, as a private company would in a free market. Not one.
Corporate industrialists are frequently not keen on free markets. They are fond of order, safety, and “fairness” or “a level playing-field” – which means everybody doing things the same way they do. They like a managed world, because management is what they do. So no good comes of appointing them as regulators. Technocracy joins with bureaucracy.
Here is Adair Turner interviewed by The Guardian (perhaps in itself a significant choice of forum):
There will be more people asking more questions and getting more information than we were getting before… . There is no doubt the touch will be heavier. We have to make sure it is intelligent and focused on where the risks really are.
Translation: “We have to destroy The City in order to save it.” This is ‘risk’ as understood by a safety fanatic – one-sided, and totally unrelated to choice or to return.
We will have more people than before looking at the high-impact, systemically important firms with major knock-on effects than we did before. We will pay more than necessary to attract the correct quality of people from outside.
More than necessary? And who will pay for such artificial premiums? Whoever the FSA decides to tax or fine. It is a predatory organisation: a Self-Financing Regulatory Agency. So it wil have to find more occasions to punish and to license in order to fund more intervention, licensing and punishment.
There is no chance of a 1929-33 Depression. We know the lessons and we know how to stop it happening again.
A prime lesson of the Great Depression for most commentators has been that shutting down free trade in goods in order to protect industrial markets made the depression deeper and longer than anyone could have imagined. It stopped trade and industry recovering from the shock. That our Government is looking to blame foreign investors for our problems and is taking measures to frighten them off, and that Lord Adair is advocating, as the cure for a financial market crash, tight supervision of the surviving free markets in finance and commercial instruments, suggests the lessons have been rather badly understood. They risk stopping the financial markets recovering from the shock.
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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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