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.
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The Spectator has a strong article on just how bad the public finances are in the UK as a result of the private finance initiative (PFI) being used to move lots of public spending items, including traditional “core” activities, “off the balance sheet”. As I have said before, the very notion of “off-balance sheet financing” needs to be smashed into atoms. If someone has a debt to someone else, it has to be recorded somewhere; it does not just vanish into thin air. Gordon Brown was an enthusiastic user of PFI to reduce the recorded total of debt to give the impression that our finances were in better shape than is really the case.
There is a double-standard here. At the moment, there is a chorus of abuse being hurled at investment firms for the problems connected to the credit crunch and some of that criticism may even hold some water. One does not have to be an opponent of the market to be critical of some of the daft investments that have been made. The sheer, brain-frying complexity of financial derivative products appears to have wrong-footed even some of the sharper banks. But politicians have been engaging in accounting practices, such as those involving PFI, which would have corporate executives brought before a court of law or sacked on the spot. The very promises that politicians make over spending commitments such as pensions, for instance, are comparable to hawkers of Ponzi schemes.
There is a real difference between the brutal changes going on in the City, Wall Street and elsewhere, and the unreality of the political circus. With business tycoons, most, if not all of them get the boot if things go wrong, although I doubt many of them will be crying too much, judging by their high salaries. It is a pity that the process of punishing crooked political actions is not as swift.
Meanwhile, the same folk who brought us the likes of PFI will no doubt argue for yet more regulations.
Peter Tatchell, selling Green policy under the guise of giving advice to the PM, has a number of suggestions. One of them fully restores the Green Party’s reputation for plain weirdness:
Raise tax-free personal allowances from £6,035 to £8,000 for people earning under £20,000 a year and to £7,000 for those earning £20,000 to £25,000, which would be funded by a rise in tax on incomes over £80,000 and which would assist the lower-paid at a time of rocketing food prices.
That top limit of £25,000 implies he’s leaving personal allowances where they are for people earning over £25,000, so that they drop by £1,000, twice. Lots of people, including me, have suggested reshaping the tax system by raising allowances. But no-one I think has before suggested that it would be a vote-winner openly to treat very large numbers of people to marginal rates over 100% by clawing back an extra £200 when they cross an arbitrary threshold. Twice. At close to the median earnings level so the maximum numbers notice.
In fact, it was a disaster for Gordon Brown when he did it as a concealed one-time-only adjustment. Possibly it was the disaster for Gordon Brown, where he finally came unstuck. It’s probably not something he wants to try again once, Peter. Let alone twice.
Bloody hell, I did not see this coming. Bank of America has bought the 94-year-old brokerage, Merrill Lynch, for a cool $50 billion after the latter firm got hammered by worries about its ability to sustain huge losses. Meanwhile, the investment bank Lehman Brothers, one of the veterans of Wall Street’s banking sector, has gone bankrupt. I know a lot of people who work for both places. I imagine that the atmsophere is grim.
About the best that can be said about all this is that at least the Fed, or the US taxpayer, have not been asked this time to ride to the rescue, as was partly the case with the purchase of Bear Stearns by JPMorgan, as that deal was underwritten by guarantees by the Fed. At last, it has dawned on policymakers that hurling more public funds into the black hole of the current financial mess merely prolongs the agony; it does not end it. That, of course, is zero consolation to the thousands of people who will lose their jobs from these institutions.
This may be the “dark that comes before the dawn”, but it will not feel like that if you are close to the action. I just hope that politicians resist the urge to lock the door after the horse has bolted by imposing new reams of pointless legislation. We have already had endless efforts by central bankers and other luminaries to impose capital requirements on banks through what is known as the Basel process, and a fat lot of good that has done. What is pretty clear from my own vantage point is that we are seeing the culmination of a credit and asset price bubble that has burst very nastily. Relearning the merits of sound money is going to be painful.
A point for the economists to ponder over is whether the use of complex financial products like derivatives have concentrated the risks of financial collapses or made it easier to spread those risks around, so that although there is pain, it is not lethal to an entire economy. I incline to the latter view.
Here is a comment at Coffee House on this posting:
Brown will pull a rabbit out of his hat. He will declare that he will hold a referendum on the UK being IN or OUT of the EU! He will promise to accept the decision and make policy changes following the result!
SUCH a policy, such a move would instantly wipe the smiles off the Tories as we will have the spectacle of Cameron/Osborne etc in the IN camp and forever losing their eurosceptic labels!
Brown knows that being out of the EU will bring in massive investment and also save the country billions.
Expect this in late Autumn.
This is from “alan” and is comment number nine, at 8.09am. As a political prophecy I think it is barking moonbattery. But as a description of economic reality, does what alan says, suicide note capitals and all (“SUCH a policy”), perhaps have merit?
I have long believed that leaving the EU would be good for Britain’s economy, quite aside from such incidentals as the rule of law rather versus rule by the mere say-so of rulers, and in due course getting dragged into whatever European civil wars accompany the eventual break-up of the EU. But I have tended to assume that leaving the EU in the nearer future would inevitably involve a period of economic bad news, during which the associated dislocations – and the EU’s enraged punishments – would be immediate, but during which the clear eventual benefits to Britain’s economy would be somewhat slower to materialise.
However, would leaving the EU be a short-term fix for Britain’s present economic woes? Would it have the immediate benefits that alan claims for it? If so, that would be a meme worth getting behind.
UPDATE: Some interesting EUro-commentary from Guido.
Over at the Cato Institute blog, contributor Daniel Griswold argues that the US, the world’s biggest user of energy, is not quite as dependent on energy from only a few nations as one might think. I agree. Energy “independence” sounds like a smart strategy if you fear that a handful of nations, run by thugs, have a heavy armlock on energy supplies. Fortunately, Mr Griswold argues, it is a bit more varied than that.
Of course, part of what bugs me about the constant demand for energy independence is the concern that this might be a form of protectionism in drag, much akin to calls by western farmers for “food independence”, often just a thin excuse for tariffs on imports.
Although of course it is a joke, see the posting immediately below. As Jonathan has already noted, Guido Fawkes has had a lot of fun over the last few months noting that every time Gordon Brown comes out in support of anything, it immediately tanks. Andy Murray was Mr Brown’s latest victim, apparently. So when I read on the Coffee House blog this morning that Gordon Brown now supports Barack Obama, I knew that Guido would be crowing with laughter, if not now then very soon, and sure enough, he is. Obama, says a delighted Guido, is now officially doomed. Luckily, before posting this, I also checked out Samizdata to see if anyone else here was having a laugh about this, and of course, they are.
Apologies if you think I am duplicating here, but behind the hilarity of all this is to be observed an interesting re-arrangement of the political conventions, which is why I still put this thought up as a separate posting. More and more mere people, especially political people, like the ones who read Samizdata for example, have their particular preferences not just in their own countries and constituencies and districts and states and towns, but in ‘foreign’ parts also. The logic of the internet – even of instant electronic communication itself, which got started getting on for two hundred years ago – has always, to me, suggested global political affiliations, and in due course, global political parties. Certainly the Communist movement thought so. Maybe language remains a big barrier, but geography now matters less and less.
Remember that counter-productive attempt by the Guardian to swing the last (was it?) Presidential election against Bush? Many concluded that this proved the wisdom of political people staying out of foreign elections. To me it merely proved that if you want to help this or that side in foreign parts, make sure that you really are helping. Because attempts to help like this are absolutely not going to stop. As the very existence of Samizdata now nicely illustrates, this is all now one big Anglospherical conversation.
Obama’s idiotic campaign trip to Germany was, you might say, a self-inflicted version of that same Guardian blunder. But nor does that folly prove, to me, that campaigners should never go abroad and seek foreign support when campaigning, merely that they should choose their foreign supporters with more care than Obama did. Having the right sort of foreigners waving and cheering next to him can do a politician all kinds of good, now that the pictures can be flashed around the world in seconds.
Under pressure from the McCain camp, the Brown regime is conducting another of its hasty and shambolic retreats. All sorts of stuff gets read out by Mr Brown, or appears under his name in printed articles. But you don’t suppose that he actually reads it all beforehand, do you? Mr Brown’s people are now assuring us that it was one of them who inadvertently revealed this sentiment, rather than Mr Brown himself who actually said it. All Mr Brown did was allow his name to be attached to the bottom of a newspaper article. So once again, there is this pattern, of the political leader trying, but failing, to observe the old and obsolete conventions, against his natural instincts, but his mere people not being so inhibited about saying what they think. Sooner or later the world’s leaders will all follow their mere supporters, and stop pretending to be neutral in foreign elections. Their line should be, because this will be the truth: of course I’ll work with whoever wins, I’m a politician. But meanwhile, yes, I do most definitely have my preferences.
The particular awfulness and embarrassingness of Mr Brown’s particular expression of a preference in the US Presidential election should not detract from the more general interestingness of this little event. Inevitably, most of the commentary will be about how the Obama campaign may now have peaked (the comments on Jonathan’s previous posting are already saying yes it has), and about how the Brown regime is unravelling, definitely, again, some more. But I find the more general global political party angle at least as interesting.
After all, this is not now only Brown preferring Obama, which we all know he does despite any denials (does anybody at all in what is left of the Labour Party not prefer Obama to McCain?). This is also now the McCain team opposing Brown, and not caring who knows it. And by extension, and whatever Mr McCain may personally feel or even know about the man, helping David Cameron. After all, the heading at Coffee House says: “The McCain campaign mocks Gordon Brown”. So now Mr McCain is doing it too, whatever denials he may subsequently issue.
More important, would a U.S. government default indeed be “the end of the world”? …..One could plausibly argue just the opposite. In fact, a firm refusal to bail out the mortgage agencies would establish a strong barrier between U.S. Treasuries and the fortunes of not only the mortgage agencies themselves but also the myriad other institutions that we can imagine receiving similar treatment. Wouldn’t that in fact help maintain confidence in U.S. government securities?
Jeffrey Rogers Hummel.
Similar arguments, of course, apply to state bailouts of other institutions, such as UK mortgage lender Northern Rock, for instance.
Thanks to Reason’s Hit & Run blog for the pointer.
London mayor Boris Johnson chides the United Nations for urging the planet to go vegetarian as a way to conserve resources. Instead, says Mr Johnson, the UN should, as it used to do, focus on the problem of “over-population”. I have written quite a lot about how fears about a population “explosion” have often proved wide of the mark. Suffice to say that in western Europe, for example, birthrates have been falling; the problem if anything is the reverse.
Of course, as a father of four children, Mr Johnson does not think that concerns about too many people should be a reason for making changes to his own personal sexual behaviour. No siree (as he would no doubt put it), that’s for other people, old bean.
Meanwhile, here is an old and wonderfully acerbic review of a book touting Malthusianism by Ronald Bailey.
“What is the point of growing food if you let them get destroyed by pests? And another thing, if a sheep gets a headache, I’d give it an asprin.”
That was broadly the gist of a remark made this morning on a BBC food show by Gregg Wallace, the grocer and UK television presenter, who is not a devotee of organic food. Ah, I thought, this guy is prepared to pull the chains of the organic purists on live TV! But then he spoiled it all by going on, as a lot of prominent TV chefs seem to do these days, about the supposed evils of Britain importing food and hence the locals not developing what he regards as a strong national culture that appreciates food. He also criticised working mothers for forgetting how to cook. I must say I smiled at this point since all the folk cooking on the show were men. To be fair, Mr Wallace did not go quite as far as that over-exposed blowhard, Gordon “four letter word” Ramsay, whom Perry of this parish criticised lately.
This is nonsense, to be polite about it. For a start, Mr Wallace bashed the enclosure of UK open land as somehow playing a part in Britain’s historically drab cuisine. Funny, because I thought that the enclosure of farms, and the development of the four-course rotation system that went along with it, helped to make possible the vital leap in UK food production, and hence a surplus, that freed up capital to be used elsewhere: the Industrial Revolution. Up until the late 18th Century, remember, starvation was a regular feature of life in Europe. So much so, in fact, that Thomas Malthus’s prediction that population growth would always be checked by starvation and food shortages was a reason why economics got known as the “dismal science”. Well, the Irish were “self sufficient” by living on potatoes while evil imports of cheap corn from abroad were restricted by the Corn Laws, a situation that came to a terrible conclusion in the Great Famine of the mid-1840s, in which millions of Irish families emigrated to the US to at least have the chance of something to eat. Self-sufficiency, indeed.
All this talk about self-sufficiency by the affluent members of today’s media and entertaiment classes does make me wonder at their lack of understanding of basic economics. To begin with, what sort of geographical area does Mr Wallace think it is acceptable for trade in agriculture to occur in? A county, a parish, a region, a nation, a small street, what? Furthermore, surely the benefits of diversification in agricultural production around the world, made possible by rapid transportation, refrigeration, storage techniques and the rest, actually makes the world as a whole less not more, vulnerable to sudden shifts in economic conditions, or the climate, or even war, although during wars, of course, it may be necessary to build up food supplies, as happened in the UK during WW2.
If it makes more sense economically to grow tomatoes in Spain and fly them over to Manchester rather than for Mancunians to eat only what our foodie superiors deem to be “in season”, why should not such imports occur? For sure, if you want to patronise your local farmers’ market to ensure that local farmers make a living, that is your right. But why are “local” farmers more “deserving” of your wallet than a farmer in Kenya, New Zealand or Canada? At this stage, the Greens will say it is a “waste” to import food from afar if that involves gobbling up expensive fuels, but then in a free market, if the cost of importing food becomes expensive, then local farmers can and should be exploiting that cost advantage. This in fact may already be happening.
And in any event, if there has been an improvement in the quality of food produce and restaurants in the UK in recent years – and I believe there has been – then trade, globalisation and mass transport have driven much of this. A generation that now regards it as routine to fly off to France for a long weekend courtesy of Ryanair or Easyjet has raised expectations of what should be on sale in shops in the UK. We should not forget the significance of the abolition of exchange controls in the UK in 1979 in also driving this increase in travel, and hence a broadening of tastes.
I am sure Mr Wallace means well. He comes across as the sort of no-nonsense, food-loving East End Boy made good for whom I have a lot of admiration. By all means encourage folk to learn more about food, to cook and appreciate food and fine wine. But for goodness sake, TV chefs, spare us propaganda about the evils of imports and stick to what you do best. That’s the division of labour for you.
Right, time for lunch.
I do not bother to write articles attacking leftist stuff from openly leftist publications or broadcasters.
For example, it may irritate me that the BBC sneer at Sarah Palin as “close to the oil industry” when, in fact, the lady exposed corrupt links between oil and Alaska politics. And it may be annoying that the BBC sneers that Governor Palin made her speech with “her husband and children in tow”, when it did not say that Senator Obama had “his wife and children in tow” when he made his speech. But the BBC is the BBC… it is a leftist broadcaster and its job is to present a leftist view of the world – although it is irritating that people are forced to pay for the BBC.
However, the Economist is different, it claims to be a free market magazine (sorry “newspaper”) dedicated to rolling back the state – and it simply is not.
The latest example is the front cover story “Bring back the real McCain“. When one turns to the article it turns out to be yet another Economist attack on the “irresponsible” policy of John McCain – the policy of trying to keep tax rates from being increased, and even reducing some of the absurdly high tax rates presently in place. The general tone of the article was both that tax cuts for “the rich” are immoral and that, on top of this, they must be “paid for”.
Contrary to what the Economist seems to believe, it was not the reduction of top rates of tax that was the problem under President Bush – on the contrary the revenue from the top rates of tax increased. It was the wild increase in government spending that has been the problem under President Bush.
Not just the mis-management of the Iraq war, although whatever one thinks of the judgement to go into Iraq in the first place the lack of planning for an insurgency meant a lot more blood and treasure being spent in the long run than would have been spent if more troops had been sent in the first place. There has also been all the subsidies, new entitlement programs and other wild spending and, again contrary to what the Economist thinks, the “earmarks” have been very important – for often Congressmen and Senators only vote for a spending bill because of the little earmark for some special interest buried on page…
And who in the Senate has been the most important voice of opposition to all this wild spending over the last few years – for all his faults, it has been John McCain. So for the Economist to claim he is not tough enough on spending to “pay for” his desire to make taxation less heavy is absurd, anti-earmark McCain is but it does not stop there – and, as stated above, the earmarks grease the wheels for the rest of the spending.
As for the idea that higher rates of tax at the top end will mean more revenue, the basis of the Economist claim that not ending the Bush tax rate reductions will cost X vast amount of revenue, this claim does not just ignore the reality of higher revenue from the reductions in the top rates of certain taxes under Bush, it ignores what happened under both Reagan and Thatcher, and under President Kennedy, and under every government that has reduced high top rates of tax since at least the Grand Duke Leopold II of Tuscany in the 18th century. Perhaps Grand Duke Leopold is too recent for the Economist writers, but to the horror of collectivists, “tax cuts for the rich” really do “pay for themselves”.
However, there is also another factor. On the very day the Economist hit the shelves, its sister publication the Financial Times reported that yet more companies were leaving the United Kingdom because of our very high rate of Corporation Tax.
Yes, you guessed it, the American combined State and Federal Corporation Tax burden is actually worse than that of the United Kingdom. “But lots of American corporations do not pay Corporation Tax” – the ones that make losses do not pay for they have no profits to pay tax out of (hint – this is not a good thing for the corporations concerned), other companies do not pay because they are not “corporations” at all – they are privately owned companies whose owners pay income tax on their profits.
Sadly ignorant of all of the above, the Economist specifically targeted John McCain’s proposal to reduced the rate of Corporation Tax as one of his “irresponsible” policies.
John McCain is no economic genius, but has shown the ability to learn. The Economist writers show no such ability, all they can do is to trot out the moronic collectivism they were taught at school and university. I know I have said this before, but it needs saying whilst the Economist still pretends to be a “free market” publication.
I like this, from a blogger I have only recently discovered, Will Wilkinson:
Climate eschatology really is the ultimate in big lie crisis politics. The far-left has failed so comprehensively to make the case for its vision of society and economy that the only thing left to do is to brazenly and repeatedly assert that the world will literally collapse unless we implement this otherwise indefensible vision.
Well said. The rest of Wilkinson’s blog, which goes by the name of The Fly Bottle is well worth a regular look also, in the event that you need telling.
One of the things that irritates me about propagandists on my side is that they are often reluctant to spot a great victory, even when they have just won one. Wilkinson’s point is not just that climate chaos-ism is nonsense, a claim that I increasingly find myself agreeing with completely, not least because the now undependable notion of “global warming” has been replaced by the idiotic phrase “climate chaos”, or, even more idiotically, “climate change”. When was there ever a time when the climate did not change? What Wilkinson is also noting is that the hysteria whipped up around the changeability of the climate was whipped up because these lunatics came to realise that they had no other arguments against a more-or-less capitalist, more-or-less-free-market world economy. They have now conceded – not in so many words, rather by changing the subject – that capitalism works, and the only nasty thing they have left to say about it is that it works so well that it ruins the planet.
I do not want to suggest that this is a dazzlingly original observation. I merely thank Wilkinson for clarifying something that most of the regular writers of and readers of this blog all know, in the sense of agreeing when they are told it, but which they might not have said to themselves with absolutely clarity before. One of the reasons I noticed this posting of Wilkinson’s was that I had made precisely the same point in something else I was recently writing, about how well I think capitalism has been doing lately, both in practice and in the ideological enthusiasm sense.
Wilkinson continues:
I think the point is that the clock really is ticking. If we don’t “do something” soon, we’ll probably see that we don’t really need to do anything really dramatic, and then the window for radical social change will be closed. So I expect the volume to get much louder.
Exactly. As and when it comes to be agreed that capitalism is not now ruining the planet, that will be another huge victory for the forces of sanity. Two-nil to us, that will make it. What idiocy will the lunatic tendency think of next, I wonder (comments welcome), to take everyone’s minds off that huge defeat?
I know I know. The incorrigibly pessimistic part of our commentariat will now want to say that the damage has been done, etc. Maybe so. But although ideological shifts do not necessarily have immediate consequences, they do have consequences, and these shifts will have good consequences. They already are, I would say.
However, I do agree with the point that Johnathan Pearce makes from time to time that it would be good for us to ponder what would be the least-worst arrangements for if and when capitalism ever does start ruining the planet for real. I favour technical fixes rather than global regulations, but then I would, wouldn’t I?
As a fairly regular user of Heathrow Airport and other UK airports such as Gatwick – the former has suffered all manner of problems due to loss of baggage, massive queues – this, on the face of it, looks a good development, but I have my reservations, as I will explain later:
Aug. 20 (Bloomberg) — BAA Ltd., the owner of London’s Heathrow airport, should be broken up and its Gatwick and Stansted terminals sold off to foster competition in the U.K. capital, antitrust regulators said.
The unit of Spanish builder Grupo Ferrovial SA provides a poor service to airlines and passengers and has shown a lack of initiative in planning for additional capacity, the Competition Commission said today, recommending that the company should also be stripped of either Glasgow or Edinburgh airport in Scotland. BAA said the analysis was “flawed.”
Hmm. The problem partly stems from the fact that when BAA was originally privatised by the former Tory government, it was sold as a monopoly. That is not, in and of itself, a terrible thing so long as there are other competing transportation businesses. But there were not other big airports owned by non-BAA businesses to compete, especially against the crucial hub of Heathrow. In a previous Samizdata posting on the Snafu of the opening of Heathrow’s Terminal Five, one commenter pointed out that one issue that is sometimes overlooked in issues like this is restrictions on new airport builds by the planning authorities. Well indeed. I think there is a good case for building an airport to the eastern side of London, on the flat lands that sit to the north of the Thames (it is not as if this is an area of outstanding natural beauty). It would relieve some of the air traffic now coming over the capital, which would be good for abating noise as well as removing a potential safety and security issue of thousands of aircraft flying into land over the middle of London.
Getting planning permission for a new airport is, under the current system, very difficult. Yes, there are, in the UK, a lot of old, disused military bases left by the RAF and the USAF, such as in Oxfordshire, Lincolnshire, and East Anglia and bits of Kent. However, the trouble is that such bases were deliberately built miles away from major urban centres, to prevent the danger that an attack on such a base would hit a large city. So you have th situation of huge runways turning into rubble in the middle of Suffolk but of no real use to commuters in London. So we would need something a bit closer. Another matter to bear in mind is that southern England is not very large: airspace is at a premium and already crowded, if not quite so bad as during the Cold War, when the UK was covered in airbases.
I am not, as a free market purist, at all happy to see a private business broken up at the behest of a state regulator, but then we should recall that BAA was originally put together as a state business and sold as a monopoly as a matter of state policy. When its current owners, the Spanish firm Ferrovial, bought BAA, they must have known that failure to sort out the problems might have incurred the wrath of the regulator. It would be nice in a total free market not to have to bother about such things, but it would have been failure of basic due diligence for Ferrovial’s lawyers not to have warned their managers that competition issue might arise. Well, it jolly well has arisen at last. We would not, as the old joke about the Irishman giving street directions to a tourist, want to start from here. But here is where we are. If there is a chance of putting a large, competitive fire up the backsides of BAA’s management, there is a chance, however slender, that the experience of coming to and from the UK by air might be a tad more pleasant in future.
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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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