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 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?
There are many aspects of the European Union that I dislike but I have never quite shared the view that the euro is due to collapse at some point, even if one or two member nations revert to domestic currencies, which at this stage looks highly unlikely barring an Asian-style collapse. Of course, I certainly think that imposing a single, monopoly currency on widely diverging economies at different points of the economic cycle is fraught with danger but that, remember, applies to single political jurisdictions like Britain or the US as well as blocks of different countries, which is why I am interested in the idea of free banking and multiple currency systems within a single polity. People who scoff at this idea have to argue why, if this is so weird, you can operate in a world with different forms of computer software, etc. Here is another interesting article on the idea.
Of course, I know that the prime reason for objecting to the euro for many people is not the economics anyway, but its place in the political agenda of those who wish to forge a European single state, relegating the separate nations to the status of provinces. But if people imagine that the economics of the euro-zone are going to blow the whole thing apart, they may have to wait a long time. A couple or more years ago, remember, it was argued – with a lot of convincing detail – that the euro would fall apart and countries like Italy would be forced to quit. That has not happened. The Daily and Sunday Telegraphs, with columnists like Evans Ambrose Pritchard and Liam Halligan, have argued several times about the euro’s demise. Halligan is arguing this again. Well, try as I might, it is quite hard to imagine at the moment that the euro is about to fall to pieces. Try telling that to anyone who has bought euros with sterling or dollars lately. We might soon be reaching the point where, to borrow from Mark Twain, the comment is that rumours of the euro’s death have been much exaggerated.
The Economist ran a comparison of Senator McCain and Senator Obama this week. Senator McCain was damned with faint praise for his ‘orthodox’ supply side deregulation proposals (things the Economist itself is supposed to believe in) and then the magazine (sorry ‘newspaper’) dismissed proposals to deregulate health care and other areas of life with the following statement.
“America is already a pretty deregulated place”.
So the thousands of pages of Federal, State and local regulations that are strangling life in the United States, do not really exist?
And people wonder why I hate the Economist. The writers know nothing about the political economy of the United States – or anywhere else. Ignorance is not fatal if someone understands that they are ignorant (for example, I am ignorant of spelling and grammar) but to be ignorant and to think oneself knowledgeable is a fatal combination.
However, how can the writers of the Economist be anything other than ignorant – when they are the products of modern universities?
I recently heard a Professor of Economics from the University of York on BBC Radio. This person suggested that a good way to reduce inflation (so that the Bank of England could reduce interest rates) would be to take yet more things out of the (already rigged) Consumer Price Index. The Professor was not being ironic – the man really thought he was making a sensible suggestion.
The students of such people go on to be writers for the Economist.
I guess the rise in commodity prices – as I alluded to in my post below on farming – has galvanised a fair bit of commentary on the business of producing, shipping and selling food. Perhaps it is a welcome sign that in an affluent age such as ours, when so many people are utterly divorced from this most basic human activity, we have been reminded of it. Anyway, it tells one a lot about the state of the culture that this is considered a good headline in the Daily Telegraph: “Big supermarkets are not evil.”
Of course they are not evil. But at a time when any business, even if it has to operate in a ferociously competitive one like retail, is regarded as morally dubious if it is simply big, it is at least good that some in the MSM are, however belatedly, sticking up for such enterprises. About the only thing I can think of that counts as a legitimate criticism of supermarket chains is when their bosses exploit, or actively seek, to get governments to pass eminent domain, or compulsory purchase, laws to make it easier for them to build their sites. That is a just cause for free marketeers to complain about. Otherwise, though, bleating about supermarkets is largely nonsense. If they do “force” smaller shops out of business, the truth is more often that regulations, high taxes and extortionate rents are hurting small shops. It may well be that low-price supermarkets, which exploit economies of scale, are biting into the margins of some mid-tier shops that neither have the benefits of bigness nor the niche attractions of a high-margin, specialist retail outlet. But I suspect that a lot of the dislike of this trend is more aesthetic than economic. Oh the vulgarity!
One issue that tends to be overlooked is that in our prosperous age, we have lost some of that early awe, even excitement, that people used to get when they had walked into a massive shop for the first time. Back in the early 1950s, when there was still some rationing in Britain, my father remembers how impressed he was by walking into a supermarket in Canada. You could, he noted, buy anything from a suit, a tractor, to a tin of salmon. He thought that was fantastic.
This unintentionally hilarious news story at The Observer reveals a great deal about the mindset of the urban, ecologically aware types that write for that newspaper:
Soaring food prices are threatening to inflict widespread ecological damage on the countryside, as farmers abandon environmentally friendly schemes that have improved much of the landscape.
It is a matter of debate whether these schemes have improved or harmed the landscape: such an observation has as much to do with a certain aesthetic taste as anything else. For years, policymakers have thrown vast gobs of taxpayers’ money to discourage farmers, such as in my native Suffolk, from growing crops like wheat, barley, soybeans, beans and so on. Now that the price of wheat has skyrocketed, encouraged by such developments as biofuels and rapid growth in emerging market economies, the economics of “set aside”, as the daft policy is known, looks completely indefensible. So farmers are acting as entrepreneurs should in the face of rising prices for their produce: they are growing more crops. If that means that land that had been set aside for cute little meadows is now being ploughed up and sown with wheat, well, that is just too bad. Do the Observer journalists argue that there should not be some change in land usage at a time of rapidly rising food prices? There is no point in bashing the current government for such rising prices – I don’t think even the most fanatical Gordon Brown hater thinks he is to blame for this – if farmers are not allowed to exploit market forces in the way they should have been allowed to do all the way along.
For what it is worth, the Suffolk farmer’s son in me rather objects to the countryside being regarded by the Guardianista classes – many of whom have no idea about husbandry – as a glorified park for them to ramble around in. It is, as this article reminds us, primarily a place of work, where food is produced. It is sometimes useful to be reminded that the landscape has been moulded by the hand of Man. I personally rather like to see large, golden fields of wheat. But then I’m kind of strange in that way.
Here is a long and good article about the destruction of the economy of Venezuela by Hugo Chavez, the president who recently attempted – unsuccessfuly, thank goodness – to get himself voted president for life. I know I am preaching to the coverted around here by pointing out the sheer folly of what this thug is attempting, but sometimes you have to keep pointing to such examples lest people in other parts of the world forget just what a disaster state central planning is.
It never fails to strike me how such a resource-rich nation like Venezuela can be ruined by a political operator like Chavez, and contrast that with how a small colony, with hardly any resources at all apart from sheer entrepreneurial spirit, like Hong Kong, can rise to be one of the richest places on the planet.
For a great guide to some of the key drivers of wealth in countries down the ages, this classic by David Landes is greatly recommended.
Or perhaps a ‘stupidity’ of congressmen? A ‘fantasy’ of lawmakers? An ‘arrogance’ of representatives? They all seem to fit.
The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure. The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.
The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.
The US House of Representatives have just in effect declared that all foreign governments and businesses must be subject to the wishes of US politicians and their regulations and sell oil at prices that US legislators like. Or else. The sheer absurdity of this is breathtaking. Exactly what sanction were they planning against OPEC? Perhaps not buying their fungible oil? Yeah, that will do the trick.
Wired reports on a scheme to make new nations:
Tired of the United States and the other 190-odd nations on Earth?
If a small team of Silicon Valley millionaires get their way, in a few years, you could have a new option for global citizenship: A permanent, quasi-sovereign nation floating in international waters.
With a $500,000 donation from PayPal founder Peter Thiel, a Google engineer and a former Sun Microsystems programmer have launched The Seasteading Institute, an organization dedicated to creating experimental ocean communities “with diverse social, political, and legal systems.”
Excellent. Most of the bad ideas about how to govern nations have been tried out for centuries. They work moderately well for luckier ones amongst the plunderers, more or less appallingly for the plunderees. The good ideas, like very low taxes, very light regulation – in short: liberty – have been attempted only very occasionally. Anything which tilts that balance in the good direction is to be welcomed. I strongly believe that all social, political, and legal ideas should indeed be allowed on these jumped-up oil rigs (rather than merely my own social, political, and legal ideas), as the Seasteading Institute clearly envisages, but only if all those involved in each attempt consent to being part of it.
That should shoot most of the collectivists at the starting line. Most collectivist political ideas are about what should be done by them, the evil collectivists and their evil friends, to others who can’t defend themselves against their ghastly ideas even by running away, let alone resisting plunder. If only for that reason, the evil collectivists are all going to hate this stuff. And if only for that reason, I already like it, even if it never gets much beyond internet speculation.
The more honestly deluded among the collectivists, who really think that people will consent and go on consenting to their rancid notions, like those 1620-vintage (have I got that date right?) settlers on the east coast of what is now the USA, will, if they are ever silly enough to try one of these schemes, get a crash course in what they really should be doing and how the world really works.
I found out about this plan via one of my internet favourites just now, BLDG BLOG. The BLDG BLOG man is torn between architectural excitement and political unease:
It’s not just a question of producing better loft apartments, for which you can charge an extra $300,000, or of perfecting the art of luxury kitchen space; it’s a question of designing architecture for extreme conditions and, should your architecture survive, thus opening up room for a new form of what might be called post-terrestrial sovereignty, i.e. governance freed from landed terrain.
Which is not to be confused with advocacy of the project; I just like discussing its political side-effects: architecture becomes wed with, indeed inseparable from, a political project. It is construction in the service of constitutionality (and vice versa). Wed with oceanic mobility, the architecture of seasteading doesn’t just aesthetically augment a natural landscape; it actually encases, or gives physical shape to, a political community. It is architecture as political space in the most literal sense.
He’s not advocating it, you understand. Perish the thought. Who knows what frightful political genies may be let out of the bottle of the twentieth century collectivism to which most architects are still wedded? But, he can’t stop himself thinking: cool. I hope he’s right. About the coolness, I mean.
I’ve been doing some more reading of the Wired piece. One of the moving spirits behind the Seasteading Institute is Patri Friedman, who is David Friedman’s son. If David Friedman is anything to go by, Patri (whom I have not met but whose blog I dip into from time to time) is surely a great guy. However, this makes me fear that the people doing this particular scheme are experts not on money, power, etc., but on libertarianism. This is not a good sign. Schemes like this cannot merely be virtuous. They have to work, and I fear that this one won’t. I mean, if it only starts to look like working, think of the number and nature of the people who will want it squashed. I really do hope that I’m wrong about this particular scheme. If I’m only wrong once about schemes like this, it will be a different world and a massively better one.
The Daily Telegraph, perhaps not surprisingly as this is not a flattering story for the current government, points out that official figures show that almost 2 million Britons have left the UK since 1997. However one tries to spin this, such an outflow of people is not exactly a ringing endorsement of government policy, although there has always been and I hope will remain a steady two-way flow of people to and from this island, if only as an expression of the understandable desire of people to live in new places, to strike out to make a new life and so forth. Naturally, much of the media focus will be on the reasons why people are leaving. This is well-trodden ground already (crime, tax, weather, cost of living, etc).
One factor that struck me was that 1.58 million foreigners resident in the UK left during the 1997-2006/7 period, which suggests that while millions of foreigners come to the country, many of them do not choose to stay for more than a few years. What counts of course is the net trend. During the period, 3.9 million people came to the UK, with 500,000 arriving in 2006 alone. The pace of inflow – and possibly outflow – seems to be speeding up.
As I learned on a previous posting about immigration and emigration, there is a tendency – even among generally liberal people – to treat the movement of people from A to B as a utilitarian calculus, to work out if the net benefit or harm of human migration can be computed into a neat, hard number. Rarely does one hear the question addressed in terms of the freedom of a person to move to another place more to their liking so long as they respect the rights and property of whomever they choose to make their new neighbours, do not violate the laws of a host country, etc. Instead, the point is asked, “How does the arrival or departure of people to and from this nation benefit or harm me?” The question has no easy answer. For some low-paid indigenous workers, the sudden arrival of foreigners will put downward pressure on wages in the short run, but add new sources of consumer demand in the medium and long run. An exodus of entrepreneurs, meanwhile, reduces the “national pie”: but should any classical liberal worthy of that name care about the collective wealth held within a given geographical area? The UK is not a company – which has a defined end, like making cars – but an association of hopefully free persons pursuing their own ends within the boundaries of certain laws. I think it is sometimes worth stepping back to reflect on the fact that in this globalised age, millions of people are taking advantage of the ability to find the place to live that most suits them and their families and achieve their ambitions. I happen to think this is mostly a good thing, whatever caveats one can throw in about welfare, the pace of cultural assimilation and the like.
Here is an article by the journalist and parliamentary sketch-writer, Edward Pearce, that is well worth a read.
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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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