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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I must admit I have tended to view Naomi Klein, the author of No Logo, the anti-capitalist book, as a committed socialist but not obviously a downright liar. If this scathing review of her recent book, The Shock Doctrine, is accurate, then she he has appallingly traduced the late Professor Milton Friedman, accusing him of holding attitudes that he did not actually hold, such as over the recent invasion of Iraq (she claims he was for it, in fact he opposed it). The book, according to the review, reveals that she cannot figure out what the difference between a classical liberal and a neo-conservative is, for example. As the reviewer, Johan Norberg makes clear, a lot of “shock” events, like terrorist attacks, wars and hyperinflation do not work in the interests of classical liberals, but quite the opposite. In Weimar Germany, inflation destroyed much the middle class, helping to pave the way for Hitler. Wars have been used by national leaders to justify big increases in government powers that are often not rescinded. And so on. Klein either knows this, or cannot be bothered to mention it as it does not fit into her thesis.
Anyway, read the review. It is superb.
Apologies: I got the woman’s surname wrong, now fixed.
A report in the Daily Telegraph today over the Group of 8 gathering of political leaders in Japan carries this:
Mr Brown will call for the creation of a new international panel of experts – mirroring a similar panel for climate change – which will examine long-term trends in food supplies and offer advice to individual countries.
A panel of experts? Surely, the best judges of long term trends are those investors who have been putting their own and their clients’ money on the line. Those evil people – speculators – have a strong vested interest in getting these long-term trends right. I would rather listen to the famed investor and commodities writer Jim Rogers than a bunch of academics hired to form some form of panel.
He will also pledge to increase investment in agricultural research and push for an increase in aid to agricultural projects in the developing world. In total, Britain’s contribution to tackling higher food prices has now cost the Government more than £500m.
How about not spending taxpayers’ money on such ventures and instead, removing trade barriers and other trade restrictions, such as production quotas and the like?
As for encouraging research, there is no need for states to do this. Large companies in the agricultural sphere, such as Monsanto and Bayer do oodles of research already. These governments would do better to resist attempts to outlaw GM foods and other “frankenstein” technologies.
That great economist Gordon Brown is at it again. His depth of understanding of real people and the real world is unrivalled after 11 years of prudent stewardship of the UK’s whole economic wellbeing:
Britons must stop wasting food in an effort to help combat rising living costs, Gordon Brown has said en route to the G8 summit in Japan.
Mr Brown said “unnecessary” purchases were contributing to price hikes, and urged people to plan meals in advance and store food properly.
A Cabinet Office study on food policy reveals that the average UK household throws away £8 of leftovers a week.
Back-to-front puritanism. Sounds to me like the ‘problem’ is food is so relatively cheap that Britons don’t mind wasting it. (Encouraged by bureaucratic nonsenses such as use-by dates, no doubt.) If something is genuinely expensive and hard to get, people do not throw it away.They don’t plan meals in advance and store food carefully because they can afford to live at their convenience and with less effort. We are so rich in the western world that the price of basic food and of energy has only a marginal effect on our living standards.
That’s not to say consumers and producers, unless prevented from doing so by state bullying in some unpredicted direction, won’t change their behaviour because of that marginal increase in costs. They certainly will. What they won’t do is simply less of the same thing, nor will they without threats follow the puritan agenda. The whole social and economic system will adapt in a million different ways by changes in factor prices, taste and technology.
Brown seems to think we should always be striving and suffering towards some abstract common goal, however. So the facts don’t suit.
So it is with ‘recycling’. Driven by targets and prohibitions and propaganda, it has become a national obsession. But this is at the cost of subsidy and taxation that uses up resources and displaces people from other activity. Some re-uses are enforced; others are now forbidden. It has more to do with the taboos of governmentalism than any rational allocation of resources.
There used to be quite a lot of voluntary recycling, the measure of the utility of waste reclamation being the price of the materials. Much of it has been stopped. That ‘waste’ food would have had value and been sold to pig-farmers not so long ago. Banned. On no evidence. For no other reason than it suited the bureaucracy.
A person calling him or herself “Thorkel” left a comment over at Wired magazine’s recent item on water shortages:
Your article on the planet’s dwindling supplies of freshwater (“Peak Water,” issue 16.05) shies away from the obvious: There’s not a hope in hell of avoiding dangerous water shortages until demand is reduced. And there’s not a hope in hell of reducing demand sufficiently until the human population is significantly reduced. We can either start taking measures to curtail our own breeding, or we can die in thirst and hunger and in the wars over what little is left.
How “significantly” we should reduce the human population, or by what means, is not explained. Apart from “curtailing our own breeding” (by forced sterlisation, compulsory abortions on the Chinese model, perhaps?) is not explained either. Neither is this writer, I expect, aware of how previous predictions of disastrous shortages of water and food been shown to be utter nonsense.
More than two-thirds of the Earth’s surface is covered in water. That seawater is not drinkable but then the problem is therefore one of using resources to convert that water into drinkable form. But to suggest that the Earth has a water shortage problem is a nonsense; what it has is currently an under-investment in the systems that might be needed to convert seawater into liquids fit for human use.
The always readable Leon Louw, who spoke at last year’s Libertarian Alliance conference on the issues raised here, is good on this topic.
Data is accumulating that the British residential property market is now undergoing a significant fall. The commercial side of it has been suffering for some time. Apart from some prime residential bits in central London – and even these parts are not immune to change – average prices have now fallen month on month across the country for quite some time.
Some of this may abate eventually. I hope so, since a collapse in house prices would presage a major recession. It is all well and good for people to say that a shakeout is necessary to clear all this cheap money out of the system – and I understand that point – but it is pretty grim having to endure the process first-hand. But beyond that, what this episode reminds me of is the unwise move by many people to put all their long-term retirement savings options into property. I know quite a few people who cheerfully tell me that they have no pension and are relying on a business or set of properties to do the job. Well, they have a half-decent point: many pension savings schemes are a rip-off and poorly invested. But relying on bricks and mortar to keep us comfortable in our rocking chairs does not strike me as very smart. Maybe market developments will act as a wakeup call. And anyway, as I have remarked before, more and more people are going to have to re-think the whole notion of “retirement” anyway, particularly if we are going to live longer, and in healthier shape, than our ancestors.
Just to avoid any possible confusion, I should probably point out here that the Samizdata Illuminatus is a collective pseudonym used when any of the regular writers of this site wants to publish something anonymously. The author of this post is actually in London, not Massachusetts
Dale posted below about the idiotic rules he encountered when attempting to buy asprin in (I presume) Northern Ireland. I cannot answer the question as to whether the situation with asprin is really as absurd as his pharmacy said it was, but in answer to the question of whether it could be that absurd, I can assure him that the answer is very definitely yes. In this regard I have a little story of my own.
I have a hiatus hernia, which causes acid reflex in my oesophagus, which is intensely painful and uncomfortable, makes it difficult to eat certain kinds of food (anything at all acidic), and if untreated could lead to longer term problems that are even more serious (In the worst case cancer of the oesophagus). There is a class of drugs called proton-pump inhibitors that are used to treat this condition, and they are simply wonderful. You take one pill a day, and all your symptoms go away. They are really this good. The best known of these drugs is omeprazole, sold under the brand name “Losec” in Europe and “Prilosec” in the US. To get this drung, I could get a prescription from a doctor, but I would rather not have to deal with the NHS, as I find doing so to be too soul destroying.
However, the drug is available in the UK without a prescription, so no problem.
Well, not exactly. Omeprazole is a “behind the counter” drug in the UK, meaning that it is only available in pharmacies and you cannot simply pick it up off a shelf and then take it to the cashier and pay for it, but you have to actually walk up to the pharmacy counter and ask for it, supposedly so that you can receive proper advice. However, the nasty sting is that pharmacies tend not to display the price of such drugs in clear view, so you don’t usually find out the price until after you ask for the drug. They are relying on people being too embarassed to say that the drug is too expensive after having asked a pharmacist for it, so “behind the counter” drugs tend to be priced much higher then they would be if they were on the regular shelves.
To make things worse, the law states that the over the counter version of omeprazole must be sold in 10mg pills (the standard for the prescription version is 20mg) and in packets containing no more than 14 pills. There is nothing stopping you from buying a larger number of pills to obtain a larger dose, other than the fact that the way the drug is regulated and sold makes it expensive to do this. I am charged about £8 for such a pack of 14 pills, but as they are half dose pills, this is only a week’s supply. (This is almost entirely profit for the pharmacy, as the patent on the drug has expired).
So, although the drug is very effective for people with certain ailments, not prone to any kind of abuse, pretty much completely harmless, out of patent and very cheap to manufacture without any intellectual property issues, I cannot buy it without vast numbers of rent seekers in the medical and related professions profiteering from doing so (either by charging me directly or charging the government via the NHS) and the price being pushed up to a level I find annoying.
The US lacks this “behind the counter” racket, and omeprazole is also available over the counter in the US in large packets of proper 20mg pills, so there is nothing preventing me from buying it in large quantities at Wal-Mart when I am in the US, for about a quarter of what I pay for it in the UK. However, the Americans have lots of other rackets and the situation with this drug is sadly not typical, as American regulators (under pressure from doctors groups) are extremely reluctant to reclassify other prescription drugs as over the counter.
Sadly, though, I visit the US only once a year, if that, and my supplies seldom last until the next trip. Recently, I have found another solution, however, which is to buy the drug on eBay from people in Delhi. The price in this case is much less than I would pay even in the US, and less than a tenth what I would pay in the UK. It is possible to argue about the ethics of importing patented medicines from abroad, but in a situation in which the patent has expired, parallel imports are definitely something to be encouraged. It is probably not technically legal for me to conduct my own parallel imports from abroad, but I really do not care.
And there is something supremely ironic about using India to get arount the permit-Raj of the developed world medical bureaucracy.
As the US television journalist John Stossel points out, when politicians start calling for “windfall” taxes on oil or other evil firms for making “obscene” profits (which begs a question of what the right level is), they ignore the fact that such taxes will reduce dividends and shareholder returns, including those of pension funds. And the pension fund members – us ordinary Joes – lose out when politicians decide to come a-lootin’.
Part of the trouble is the vocabulary. “Windfall”, like “windfall apple”, implies that a good – such as a juicy apple – has fallen to earth and the acquirer of said has done nothing to earn it. It is, so the argument goes, just dumb luck that the chap who found the apple did so. And so, to switch to those Big Oil firms, there is no merit in clocking up monster profits when the oil price spikes. But this ignores the fact that oil firms and their investors took a risk in seeking to find, process and sell oil products and those risks could easily have gone wrong. We tend to forget how risky, both physically and economically, investing in oil is. When Brent crude was trading below $10 a barrel in the mid-90s, did those politicians who want to chase a few votes by bashing Big Oil cry any tears for the oil firms that were taking big losses at the time? No, of course they did not. And frankly, given that petrol is so heavily taxed in many major nations today, it is, to put it politely, rank hypocrisy for any politician to strike attitudes on the supposed venality of oil firms at all.
By the way, John Stossel is a marvel. If only we could have a few of him in the British television media.
Tim Worstall provides a suitably terse response to the latest piece of economic illiteracy from leftie writer Richard Murphy, who is against admirable things like avoidance of high taxes, and who now is supporting measures to prevent, or at least hamper, investors from making money by “shorting” the shares of firms they think are likely to perform badly.
The practice of “shorting” seems to get a certain class of person all upset. Earlier this year, when the shares of HBOS, the UK banking group, came under pressure, the cry went up that those irresponsible wreckers called hedge funds were deliberately trying to destroy the firm to make a fast profit. What this ignores is that if there were not investors willing to temporarily borrow stock as part of their short-selling tactics, then this would reduce the total number of counterparties in a market, and reduce liquidity and efficiency in the pricing of shares, which is a bad thing. Illiquid markets – which can produce big jumps up or down in the prices of shares – are generally not good places to be in, particularly for smaller investors.
If I take a dim view of a company that I do not own, shorting lets me act on that view and maybe make some money out of it. Quite why this is so terrible, Mr Murphy does not bother to explain.
Some time ago, when I wrote about this topic, one sarcastic commenter moaned that I was insulting the intelligence of readers by trying to explain what “shorting” is. I reject that criticism since it s plainly obvious that even among supposedly intelligent people, the workings of the financial markets are mysterious. And what people do not understand, they fear.
The Irish “no” vote on the EU’s Lisbon Treaty has already had some positive effects, such as the lessening chances of the European major states attempting to create a tax cartel. Well, we can all hope, anyway:
France has dropped plans to push forward with tax harmonisation under its European Union presidency, following Ireland’s rejection of the Lisbon treaty.
Christine Lagarde, French finance minister, told the Financial Times that while the proposal for a common consolidated corporate tax base had not been abandoned altogether, Paris would no longer press other governments to back it over the next six months.
Yes, perhaps the French, rather than attempting to prevent some horrific “race to the bottom” on tax rates, should instead admit that tax competition, including that which comes from those dreadful offshore centres, is a good thing.
The comments ought to underscore just how serious are the consequences of creating an EU state and the benefits that exist from resisting that ambition.
Well, maybe I write these words in a spirit of optimism as the light pours through my window. Indulge me for a while.
When people rack up massive credit card debts it is easy to blame the card companies for seducing us poor moppets into living life beyond our means. So it is perhaps a little surprising that the sort of hysteria that has done for “Big Tobacco” (what, as opposed to “little tobacco”?) has not caused a political clampdown on credit card firms. I guess the reason why they have escaped heavy controls is that because the majority of the adult population use them, it would be electoral suicide for politicians to call for them to be banned or heavily restricted.
Debt is clearly a serious problem for lots of people and the have now, buy later culture plays a part in this. A lot of people are also unaware that if you do not repay a card in full every month, the bill can swell alarmingly. A rising burden of taxation has not helped, either, which can hardly be blamed on wicked money-lenders. Strengthening the incentives to save and avoid indebtedness is a good thing. Cutting taxes on investments and savings products is a good start.
Yet the supposedly “conservative” columnist David Brooks comes out with the sort of panicky, “We are all dying of debt” item that you just can tell is a warm-up to calls for heavy government regulation. He places a lot of the blame on the likes of financial services firms, and avoids mentioning the role that central banks like the Fed and government-backed mortgage agencies like Freddie Mac might have played in fuelling heavy borrowing. And there is this paragraph that really raised my eyebrows:
Public and private programs could give the poor and middle class access to financial planners. Usury laws could be enforced and strengthened. Colleges could reduce credit card advertising on campus.
Huh? Ursury laws? Forgive me, but I was not aware that charging interest on loans was or is a civil or criminal offence, as it is in the Muslim world or was the case in the Middle Ages. And the line about restricting or even banning advertising of financial products like credit cards so that poor, gullible college kids do not buy them is patronising nonsense. After all, if Mr Brooks wants to use the government to help give people financial planning advice, it is pretty silly to prevent firms from advertising products that are legal, as credit cards are.
But then I remember that Brooks is not all that keen on the idea of the state leaving adults alone, even if that means their making mistakes, anyway. That’s just so Reaganite, dahling. Check out this article.
The Financial Times carries a report – if we can dignify this rather biased piece of journalism as a report – stating that European business leaders are becoming embarrassed at the size of paychecks that are being paid out to the heads of some companies. Oh dear. The story’s underlying assumption that equality of outcome, as opposed to equality before the law, is a good thing, is unquestioned. Of course, if the economic pie is of fixed size, then the fact that Fat Capitalist Bastard X has a larger slice of it than Poor Oppressed Worker does become an issue of justice. But therin lies the rub.
European economies, certainly in the more mature economies of Germany, France, Italy and the Low Countries, have grown at barely more than 2 per cent per annum in recent years, with Germany among the better ones, at 2.6 per cent last year. Take a look at this grid of growth rates, with European ones often at the bottom. After an extremely painful period of restructuring inside the straitjacket of the single currency, Germany has become more prosperous, or at least its blue chip companies like BMW and Siemens have. France is still floundering: President Sarkozy has not proven much of a reformer. So it is unsurprising that Europe’s economic “pie” has not expanded much. In such an environment, where you have some global companies based in Europe which are doing well, their CEOs get paid a fortune, but among the mass of the public who work for small and medium-sized firms dependent on domestic markets, the picture is far less rosy. Throw in the impact of rising commodity prices like oil and wheat, and no wonder the income gap is expanding relatively.
Of course, the FT, a faithfully centrist publcation in its political complexion, does not point out that this inequality does rather undermine the idea that the social-democrat, or “Rhine” model of “managed capitalism” is so much better than the anarchic, Anglo-Saxon sort. And remember than in France, for example, the country has a relatively steep, progressive tax code, plus a wealth tax on the super-rich. It has an absurd 35-hour work-week rule and some of the most protected labour markets in the world. And yet inequality is, according to the FT, increasing.
One of the few positive things in the article, however, is the point that some large institutional investors, like pension funds, are using their market clout as shareholders to vote against massive payouts to CEOs in firms that do not perform well. This is the sort of pressure I support. As an investor, if I hold a stake in a company run by a chump who demands a 10 per cent pay rise, for example, it is only right that I should say no. Of course, the other option is to sell that firm’s shares. Sooner or later, companies run by over-paid idiots tend to lose money for their investors. As for CEOs that run strong firms and are paid big bucks, well, if their shareholders are relatively better off in terms of the returns on their investment, than the headline-grabbing paychecks of a CEO are easy to defend. After all, if being a CEO was easy, there would be more of them around, and hence, they would be less well paid on average. The question that the FT does not ask is why the supply of CEOs and other senior managers is not greater than it is.
The FT today carries a piece from Timothy Geithner, We can reduce risk in the financial system in which the president of the Federal Bank of New York asserts:
The institutions that play a central role in money and funding markets – including the main globally active banks and investment banks – need to operate under a unified framework that provides a stronger form of consolidated supervision, with appropriate requirements for capital and liquidity. […] It is important that we move quickly to adapt the regulatory system to address the vulnerabilities exposed by this financial crisis. We are beginning the process of building the necessary consensus here and with the other main financial centres.
The FT itself kindly translates: “NY Fed chief in push for global bank framework”. Is this merely one more piece of assumption by a US government agent that running the entire world according to US government standards is an unquestionable good? Or is such a fearsome regulatory cartel genuinely likely to come about?
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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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