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]
|
I occasionally take a look the Observer newspaper to see if that sister publication to the Guardian has improved; sometimes it has good things in it – I like its sports coverage – but its write-ups on business issues never change from a sort of anti-globalista, Keynesian mish-mash. An article in this Sunday’s paper about the supposed crisis of shortages of drinking water is no exception:
The midday sun beats down on a phalanx of riot police facing thousands of jeering demonstrators, angry at proposals to put up their water bills by more than a third. Moments later a uniformed officer astride a horse shouts an order and the police charge down the street to embark on a club-wielding melee that leaves dozens of bloodied protesters with broken limbs.
A film clip from the latest offering from Hollywood? Unfortunately not. It’s a description of a real-life event in Cochabamba, Bolivia’s third largest city, where a subsidiary of Bechtel, the US engineering giant, took over the municipal water utility and increased bills to a level that the poorest could not afford.
Yup, those evil foreigners, and worse, Americans!
Welcome to a new world, where war and civil strife loom in the wake of chronic water shortages caused by rising population, drought (exacerbated by global warming) and increased demand from the newly affluent middle classes in the emerging economies of Asia and Latin America.
If water is so scarce (it is not, two-thirds of the globe is covered with the wet stuff) then those evil capitalists would surely be investing like hell to create more of it, by irrigation, building reservoirs, desalination plants, etc. If demand from all those “affluent middle classes is rising” for the good things of life, that seems like a great market to tap (‘scuse the pun). Greater revenues for the water companies, particularly if they are allowed to compete for business rather than protected as monopolies, will surely drive increased investment in water, no? But as far as the author of this article is concerned, the very idea of allowing foreign, private companies to operate such utilities is beyond the pale.
The question for countries as far apart as China and Argentina is whether to unleash market forces by allowing access to private European and American multinationals that have the technological know-how to help bring water to the masses – but at a price that many may be unable, or unwilling, to pay.
If the problem is that people cannot afford to pay supposedly higher water bills, then the problem is lack of income; protecting state-run utilities and resisting the investments of mulitnationals is daft; surely, if the underlying problem is poverty, then the solution is more trade, more capital flows, more investment, right?
As Cochabamba illustrates, water is an explosive issue in developing countries, where people have traditionally received supplies for free from local wells and rivers. But in the past 15 years rapid industrialisation, especially in places such as China, has led to widespread pollution and degradation of the local environment.
“For free”. Well, someone had to dig that well. Someone had to lift the water out of it, transport it, purify it, etc. When people say that water should be “free”, they pay no heed to the expenditure of effort in getting water and conveying it to where people want it the most. Multinationals are rather good at figuring out how to do this.
Max Lawson, senior policy adviser for Oxfam, says: ‘We are sceptical that private-sector involvement is the solution for very poor countries. In fact, there is an argument that much greater public sector involvement and cash is needed to channel supplies to where they are most needed.’
Another pretty good reason for not giving a penny to Oxfam, in my opinion.
Some earlier reflections on water.
Surfing around the net, I came across this now-oldish story about Charles Koch, the billionaire, who is an avid collector of fine wines. He may – I have to be careful here – have been scammed by a seller of fake wine. Instead of buying what he thought was red stuff once owned by Thomas Jefferson, the wine may be er, a bit younger. Oh dear. Given the enormous – and to my mind barking mad – sums of cash that people spend on wine, this is almost inevitable. The same thing can happen with antiques. There have been infamous forgers of paintings. The movie re-make of the Thomas Crown Affair, which I thought was an excellent film, is about art forgery (amongst other things). But I had not come across the idea of someone faking wine itself.
The investment market in wine is now a big business; this seems almost immoral, but then I tell myself, as a student of Adam Smith, Ludwig von Mises and Milton Friedman, that if investors want to punt on the future price of Margaux, Talbot or Mouton-Rothschild, then go ahead. There is even a London-based electronic exchange (Liv-ex) for trading in wines, most of which are French. Trading in New World wines is also large but not done out of a central exchange yet. I am not quite sure the God Bacchus would approve of this: the idea of wine, even if you lay it down for years, is eventually to get out the corkscrew and drink it. But the forgery story is a great one: there has to be a movie in this somewhere.
Where do they find these people?:
Today it seems politically unpalatable, but soon the state will have to turn to rationing to halt hyper-frantic consumerism
It is unpalatable because it is f******g stupid, Maddie. And how do you tell the difference, pray, between “hyper-frantic consumerism” and say, the mature, intelligent, oh-so virtuous form of consumer activity that you might favour? No answer to that, of course. We are just supposed to accept the wisdom of rationing by our betters instead of the supposed wild anarchy of the marketplace.
Well, it is Monday, start of the week and all that and a dotty Guardian columnist has got me all fired up. It is almost better than going to the gym.
Update: I urge readers, if they have the stomach for it, to actually read the CiF comment thread. Quite encouragingly, some people get just how authortarian Bunting and her mindset actually is. It is, at last, starting to dawn on the smarter parts of the left (sometimes I think this is a rather select demographic) that the whole Green agenda is poison to genuine, progressive politics. Once, socialists were supposed to be rather keen on consumption, I thought; okay, they were totally wrong about the process of getting more stuff to consume, but consumption was part of the idea. M. Bunting is, of course, precisely the kind of reactionary-in-drag worrywart that Brendan O’Neill complained about the other day.
Update 2: this comment at CiF is worth reproducing in full:
What utter nonsense. I was a child during WW2 and rationing, along with being bombed and losing fathers to the carnage, was suffering and sacrifice, sometimes resulting in lifelong problems due to inadequate nutrition. You know nothing about what we and our parents endured during the war and have no right to compare it to reducing consumption, apparently because dinner party liberals will make us do it. Rationing will not be introduced and it is incredible that a sane person could imagine it will be.
Well said. My only nagging worry is that rationing might be introduced. Never underestimate the sheer fanaticism of the eco-authortarians.
I am not quite as vexed by the writings of former Living Marxism (a bit of an oxymoron, Ed) writers such as Brendan O’Neill, Mick Hume or Claire Fox as Stephen Pollard is – life is too short for such intellectual eye-gouging – but I kind of get Stephen’s general point. Those of us who have toiled away exposing the idiocies of Big Government for decades and plugging the case for free markets, etc, find it a bit hard to take for a bunch of Marxists to claim to be such libertarian souls, when in fact they are just as hostile to the market economy as they ever were. No-one has ever proved to me that you can have a liberal, open society without property rights. O’Neill, writing in this week’s edition of The Spectator, rather confirms Pollard’s suspicions in what was quite good rant against modern “anti-capitalists”:
Of course, Marx wanted to destroy capitalism because he thought it didn’t go far enough in remaking the world in man’s image and organising society according to man’s needs and desire. Today’s sorry excuses for Marxists and anti-capitalists think capitalism has gone too far in its development of the forces of production and encouragement of consumerism. I’m with Marx. Let’s replace capitalism with something even more dazzlingly cocky and human-centric. But let’s first deal with the luddites, locavores and eco-feudalists who have given anti-capitalism a bad name.
The problem, of course, is that the “dazzlingly cocky and human-centric” shiny sort of Marxist future is never spelled out. What would it look like? Does it come with a tester? Are there examples on eBay? Seriously, given the manifold failures of state central planning, and the various incoherent attempts by some thinkers to fashion “market socialism” (another oxymoron), it is not really quite good enough for a chap like O’Neill to pose as some sort of hip and clever critic of anti-capitalists, then to claim that he is still a Marxist, but then to leave a bloody great black hole of explanation of what his sort of society would look like. Consider, the various theories associated with Marx have been more or less destroyed, both by practical experience and logical argument: the labour theory of value (which ignores the value of ideas in wealth creation); the theory of the inevitable clash between the “workers” and the “bosses”; the historical “inevitability” of the collapse of capitalism, the immiseration of the proletariat, etc. While some of Marx’s arguments about class had some interesting points, pretty much all of the central tenets of the Bearded One’s ideas are plain wrong. I mean, as intellectual defeats go, this is the equivalent of a village pub football team being annihilated 10-nil by Manchester Utd. There’s no way back.
I do not often look at, and never buy, the Financial Times newspaper. Partly, and perhaps unfairly, because of the Marxists it used to employ and partly because the main relatively free market voice in the newspaper is that of Samuel Britton – a man who supported the exchange rate fixing ERM of the European Union. A very bitter political dispute in Britain some years ago, about which people on opposite sides still carry a lot hatred to this day – well if they are unforgiving people like me they do.
However, I happened to see a copy of the Financial Times a few days ago and had a brief look at it.
There was an article by Lawrence Summers suggesting three steps to avoid an American recession. The three steps were basically “more subsides, more subsidies and more subsides”. People who owned money on their houses were to be helped by the government (via various “private” entities it controls), the banks who are suffering a “credit crunch” were to be helped as well, and the whole system was to get more money also.
Why not just print the money and throw it into the streets at random? Or if computers must be used, just tell everyone they have ten per cent more money in their bank accounts?
Perhaps because following a Major Douglas style approach is too open and public. The political merit of complex and private subsidies, as supported by Lord Keynes, is that it both gets powerful private special interests on the side of the credit-money expansion and keeps things from the attention of the general public. Of course one must not ask too many questions about what caused the credit money bubble in the first place – just a bit of vague talk about “animal spirits” or “speculation” will do. As Mr Summers says “the time to worry about bad debts is over” – we must “keep the credit flowing”.
So the way to deal with a credit-money bubble is to increase the amount of credit-money. Well the Federal Reserve, and the rest of the system, have been playing this game a long time – the last serious effort to let the system clear itself out was in the early 1980’s when Paul Volker was head of the Fed. And with the basic situation, the entitlement programs and so on, so vulnerable now I do not see much chance of people of power accepting a clear out – till it is forced on them by events.
As for the Financial Times, articles like the one by Mr Summers reminded me why it is a good idea not to buy it.
I did look at the article directly below Mr Summers’ article. It was about how the Democrats should not give any “hint” that they are hoping for defeat in Iraq – which is odd as many of the Democrats have been doing everything short of conducting a Black Mass to Satan in the hope of that there would be defeat in Iraq. The article also said that the Democrats have a “winner” in their idea of the United States government organizing health care for 300 million people.
Enough said.
I have often wondered why it is that so many super-rich – and they do not get a lot richer than Warren Buffett – feel the need to make out that their enormous wealth is something embarrassing or shameful, or that they would rather they did not have it. Our capitalists of today are sometimes a rather glum bunch. Buffett says he wishes he could pay more in taxes. Well, Mr Buffett, I am sure you can look up the address of the IRS from the Internet and send them a big cheque. If he really thinks that Congress can make better use of his wealth than one of the smartest investors of modern times, well, go for it. Get out that pen and sign away. Buffett has already demonstrated, via his contributions to the Bill Gates Foundation, that he knows how to use his wealth for philanthropic purposes.
Of course, if he wants to give it to me, I have certain needs……
Ambrose Evans-Pritchard, who currently covers economic issues for the Daily Telegraph, wonders whether the €uro zone, faced with a possibly ruinously high exchange rate for the single currency against the dollar and some other major currencies, will embrace the “nuclear option” of imposing exchange controls to prevent the euro rising much further. Evans-Pritchard wonders whether such thoughts are idle. I think he is right but is also right to ponder this issue. If, in order to protect the likes of Airbus and other big exporters, the EU were to halt or control inflows of capital to the euro zone, the impact on places like London, the world’s largest forex market, would be devastating. Tens of thousands of jobs in the money market business would be lost. Such controls would further hammer any idea that the EU had, or ever has had, much to do with free trade. It would set back the cause of global free markets for years. Some defenders for exchange controls might try to argue that they would be less bad than higher tariffs on imports to the EU, but there are plenty of those tariffs already.
The general popularity of the euro at the moment is more because it is – temporarily – seen as a more reliable store of value than the dollar, rather than because of a new-found belief in in the economic prowess of Germany, France, Italy or Spain, for instance. With a large budget and current account deficit, the US has been letting the buck drop to make its exports more competitive overseas and as a result, the euro and the pound have risen, making it cheap for Brits to take their holidays in the States, for example. There is some sign that this exchange rate movement is working (I am actually pretty bullish about American exporters for the next year. I am actually quite upbeat about the US economy, which is always written off, with a hint of anti-American bias, by the usual commentators).
I do not think the EU will embrace exchange controls; such a move would be hugely controversial and unlikely to succeed. Prophets of doom would do well to recall that West Germany, back in the 1970s, lived quite successfully with a strong deutschemark; there is nothing axiomatic about why the EU cannot cope with a strong euro, at least not in the short run. The more fundamental problem, of course, is whether the countries making up the euro zone should have joined it in the first place, given their different characteristics. I think the euro could be a disaster for some nations, or at least a very painful experience. My wife’s country, Malta, is about to join the euro next year. Thank god it does not have a big export market.
The other day, flicking through one of those glossy property magazines that get shoved through my letterbox, I came across this article about the Russian emigre, Leon Max, who fled the Soviet Union in the 1970s, went to the States and founded a now very successful fashion business, Max Studio. He has recently bought a beautiful stately home in Northamptonshire – Paul Marks’ stamping ground – and I sympathise with most of the sentiment behind this paragraph in the magazine, Country House: “Max admits that England’s favourable tax regime was a factor (in buying the house). He is not apologetic about this. He is an enthusiastic free marketeer and libertarian. In his own self mocking words, he says, “Considering I was brought up under Communism, I am a little to the right of Pinochet.” (There is no web link to the article).
Not sure I like the Pinochet argument – he was a torturer although no worse than most Latin American regimes and better in many ways – but I get the general idea of what Leon Max means. Frankly, if more people like him want to live in Britain, bring them on. It may partially counter a trend of emigration among smart young Britons as noted by Fraser Nelson, the journalist, in a recent article.
Perhaps Britain’s newest classical liberal think tank, Progressive Vision, should ask Leon Max for a donation.
“The stock market is pure capitalism. The stock you buy doesn’t know if you’re white or black, male or female, old or young, American or French. Prices are dictated by supply and demand and nothing else. It’s global, efficient, wildly volatile, always surprising: raw and beautiful.”
Ken Fisher investment management chief and Forbes columnist.
Anatole Kaletsky, writing in today’s Times (of London) has a justifiably ferocious piece about how the “loan” by the benighted British taxpayer to the stricken British mortgage firm, Northern Rock, has encouraged the latter to make all kinds of presumptions about its future behaviour.
I knew this would happen. They may wear smart suits and talk the language of capitalism, but the truth is, City financiers can be just as infantilised by the prospect of taxpayers’ largesse as any farmer or coalminer getting a subsidy. At least the coalminers did a job that was physically dangerous.
Every investor/economic commentator will have their own pet theories of when or if a market is going to hit the wall and the economy slow down. You would have to have been living in the upper reaches of the Amazon not to have realised that the global economic situation is looking dicier than for many months, at least as far as the West is concerned (emerging markets like India are a different story). Well, I wonder whether this story, about a disappointing art auction, is a harbinger. In the late 1980s, art fetched incredible prices: Van Goghs and Monets went for previously unheard of prices. But in the early 1990s the market sank before recovering as the dotcom boom took hold.
It is hard sometimes for someone who lives in what might be called the “Westminster village” to understand how monumentally boring are all the commentaries in the political press about Which Cabinet Minister is In and Who is the Favoured One of Gordon, etc. In the Daily Telegraph today, Rachel Sylvester ponders the fact that the Chancellor of the Exchequer, Alisdair Darling, is a puppet of Gordon Brown, the Prime Minister. Oh, the horror.
To be honest though, much that I despise this government, it seems to show a lack of historical perspective to complain about the sheer dominance of a Prime Minister over Treasury affairs. I have been reading Douglas Hurd’s rather good biography of Sir Robert Peel, the Prime Minister of the mid-19th Century. As premier, Peel delivered budgets himself rather than get his Chancellor to do so. The budgets, which overthrew the Corn Laws – a system of trade tariffs – split the Tories at the time between the old landed gentry (who wanted tariffs) and the ‘Peelites’ (who wanted laissez faire). But Peel was using his old prerogative as ‘First Lord of the Treasury’ as the Prime Minister is known, to take the lead in economic and financial affairs. In the late 1980s, the same happened when Nigel Lawson, the Chancellor of the time, tried and failed to persuade Mrs Thatcher to accede to his demand that Britain join the European exchange rate mechanism (we did eventually join it, and a right disaster that turned out to be).
Gordon Brown is guilty of many sins, but leading economic policy is not one of them. The problem is not the personnel, but the policies themselves. None of the major figures in the current government favour a more modest role for the state; everything else, my dears, is pure detail.
|
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.
|
