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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On the face of it, who could object to a company deciding to do more to help the world’s poor? Reuters has a story titled Gates calls for “creative capitalism” (which is a bit like saying ‘Gates calls for agriculture that creates food’).
Gates said the self-interest behind capitalism had driven multiple innovations but to harness it to the benefit of all required the system be refined. Greater focus on recognition for improving the lives of others could provide a spur for companies to focus more on making money out of providing valuable products at affordable prices to the world’s poor. He urged multinationals to pledge the services of their top people to the work.
Ah, I get it. White man speak with forked tongue… “but to harness it to the benefit of all required the system be refined”. Bill Gates is not in fact calling for voluntary anything, he is calling for The System to be ‘refined’, which means he wants to make capitalism less capitalist and more politically directed by our caring masters. Could the fact he hangs out with show biz types and politicos who are all solidly statist give us a clue to decoding his words here?
So is Billy Boy just another dissembling corporate stuffed shirt looking for more ‘feel good’ photo opportunities with such deep thinkers as Bono or that Guy Who Thinks He Invented the Internet?
Well, why should the English-speaking world have all the fun when it comes to a banking disaster?
Société Générale, France’s second-biggest bank, has revealed that one of its traders in Paris had committed a 5bn euro (£3.6bn/$7.1bn) fraud.
3.6bn quid. However one looks at it, that is a lot of money. The Telegraph story I linked to has named the guy who is alleged to have perpetrated the fraud; the meltdown easily surpasses the collapse of Barings, the blue-blooded British bank that went down due to massive losses incurred by derivatives dealer Nick Leeson back in the mid-90s.
What early conclusions can one draw? First of all, it is not possible to argue that the more heavily regulated banking systems in continental Europe are inherently superior to those wild, anarchic Anglos. At the very largest banks operating out of Paris, New York or London, it seems that human venality, incompetence and dishonesty is no respecter of cultural differences. What investors need to realise is that banks contain human beings with all the weaknesses, as well as virtues, humans have. Regulatory zeal has not prevented frauds; and yet every time there is a fresh SNAFU, a chorus goes up demanding some new set of regulations – “something must be done”. In the end, the only course is to catch the wrongdoers, lock them up or force them, if possible, to repay the folk they have swindled.
To say that 2008 has started badly in the financial markets is an understatement; with banks like Citi taking huge losses linked to the falls in the US housing sector, this latest, Gallic twist of bad financial news is the last thing that investors needed. Jobs have already been axed in the City; it is likely to get worse before it gets better.
Here is a list of recent monster banking frauds.
It is interesting how companies are so keen to get swept up in whatever profoundly illiberal fashions define the mainstream. Prêt a Manger, a high quality sandwich chain, proudly says they do not use air freighted produce. They are a major purchaser and they are refusing to buy from a great many Third World producers whose products depend on air freight. No doubt this is seen as a positive thing, hence the fact they go out of their way to let you know.
 Prêt founder Julian Metcalf is a fine entrepreneur and his company does make great lunch food. Moreover I approve of them giving their leftover food to homeless shelters, all enlightened stuff. From a business point of view I can see their thinking as a much higher percentage of their clientele are likely to be middle class Guardian readers with an eco-fetish than impoverished Kenyan farmers desperately trying to get the European trading system to let them sell their damn products and really not needing a meme infecting the private sector that makes it even harder for them than it already is.
I have no idea if the directors of Prêt actually believe the eco-bollocks or if it is just a marketing exercise. However as I am not saying Prêt a Manger should not have the right, for whatever reason they wish, to buy from who they wish, it does not make any difference to my argument because either way I would criticise them for it. I eat there in spite of the greener-that-thou crap, not because of it. But the thing that really gets up my nose and motivates me to look elsewhere is… → Continue reading: Prêt a Manger and fighting the Culture War
It has been a mad-cap few days; the FTSE 100 index of shares oscillated by 9% today, an incredibly volatile day and although it ended higher after the Fed tried to kick-start the US economy with a sharp rate cut, we are not out of the woods yet. Although Britain may not have some of the problems of the USA, we have the disaster of Northern Rock. It looks as if the British government has decided that it is so desperate to avoid being tarnished as a government that nationalised a failed bank that it will, instead, create an elaborate set of government guarantees to enable a consortium of investors, led by Richard Branson, to run Northern Rock and over a period of time and with luck, repay the loans. It is a no-win situation for the taxpayer, of course, who bears the risk of this venture. It also adds to moral hazard and undermines the necessary fear of going bust that should, in a healthy economy, act to deter unwise lending practices (that is harsh, I know, but consider the long-term problems of not letting this happen).
Anatole Kaletsky is far too much of an economic intervenionist for my liking, but his article today is pretty good. His comments on Brown are damning.
Some time ago I made vaguely praiseworthy comments about Richard Branson, in the context of the airline industry. Well, we are all entitled to revise our opinions; I am not really sure I like what the Bearded One is up to, or his rather undedifying association with a deal involving huge amounts of public funds.
Update: Tim Worstall has some further thoughts.
Equity investors are having a rough time at the moment.
All of Asia’s major stock markets plummeted on Tuesday morning, continuing a bloodbath in share prices that saw London’s FTSE 100 suffer its biggest one-day fall since the 9/11 terror attacks as fears of a worldwide recession gripped the markets.
I wonder what brought that on? Could it be that the lack of easy money going through the financial system will finally impact on company earnings? I have no idea; I don’t work in the industry. But with the bears rampant, it will be interesting and worrying to see our political lords and masters promise ‘interventions’ to ‘stabilise’ the market. Good luck with that!
Thank you for trying to offer us high quality, low cost agricultural products. However I am sorry but we would prefer it if you remain dependent on tax funded handouts from First World governments and their anointed NGOs. And speaking of NGOs, if you People of Colour start getting involved in horrid global trade, what will happen to the people who work for NGOs? We need NGOs so that our children can go work for them in that pesky gap year, helping you poor ignorant dark people with your Third Worldie Problems, and thereby allowing our kiddies to develop self-esteem and feel good about themselves.
Also we prefer to see you living in photogenic eco-friendly low carbon footprint mud huts, so please stop trying to pull yourself out of poverty via icky capitalist global trade in the one area you should have a comparative advantage. I say ‘should’ because actually we prefer to buy our food from tax subsidised local farmers, for the good of the planet, you understand.
Peace and love,
Janet Guardianista
Good piece by Jeff Randall today on what the rapid rise of gold implies. Gold at $1,000 an ounce looks eminently plausible. Mind you, there is a fair bit of speculative froth here. I like the fact that Jeff, who must have felt very out of place during his time as a journalist for the BBC, approvingly quotes F.A. Hayek’s views on banking and gold.
Let’s not forget that Gordon Brown, you know, that clever chap from the University of Edinburgh, once a centre of the Scottish Englightenment, flogged Britain’s official gold reserves for a mere $275 an ounce. Vote Labour!
I was quite interested to read this article in The Times which suggested that the peak output of crude oil production would quite possibly be driven by the limits of consumer demand for the stuff, rather then the constraints of supply of oil. This idea, put forward by BP’s chief economist, Paul Davies, was that consumer demand would weaken, due to economic factors and also political factors as Western societies increasingly demand ‘cleaner’ energy solutions for their cars.
With car makers introducing alternative energy vehicles and these likely to be widespread by the end of the decade, it is quite understandable where Paul Davies is coming from. And given that the decline in existing oilfield production is less then had been thought, it is possible that supplies could continue to increase to meet the rising demand from the newly booming economies of India and China.
With alternative energy cars still very much at the prototype stage, it is unlikely that the current demand-driven spike in oil prices will slacken in the short to medium term. But I was curious to read the opinion of Times correspondent Carl Mortished. He suggested that to reach a peak in production would require global regulation, taxation, and other notions beloved of journalists. It seems to me that the reason why oil production is continuing to climb is the very global nature of the commodity; there is no government able to regulate it, and even the producer’s cartel OPEC is not very successful. It is, rather, the demands of the free market that drive the oil industry, just as it is the demands of the free market that drive auto makers to devise alternatives to gasoline powered cars.
A wonderful snippet from a BBC radio reporter (Ed Stourton) in Afghanistan for the Today programme: A new bus-stop has been built in Lashikar Gah as part of the ‘reconstruction’ effort.
The report does not say whether it is a replacement for a pre-war bus-stop. Somehow I doubt it. It is very well-equipped, having its own mosque and a pharmacy, as waiting times “can be rather long”.
An odd approach. In most of the world a bus-stop is a place where buses happen to stop. Of course bus-stops, like ports and railway stations all round the world provide opportunities for traders, places of worship, bars and cafes and so forth, but they seldom have them built in. Bus companies and their passengers are primarily interested in selling and buying travel. The pause at the roadside to move from foot to wheel, wheel to foot, refuel, refresh, is just procedural necessity.
Even in the first world, where there are some fabulous bus stations and garages, mostly this is an utilitarian afterthought, contingently well-designed. Everywhere (I thought) the buses are the transport network, not the stops. You have a shed for the buses at the end of the route, and signs to show where the buses are supposed to stop. Many places they do without the shed, not least because the buses are always on the move maximising their passenger-, luggage- and livestock- miles.
But a government bus-stop is built to different, higher, standards. A throwaway line at the end of the report reveals just how long those waiting times are: “There are no buses yet.”
Writing in Forbes, Alexander Tabarrok has written a cheerful essay on the long term outlook for world economic growth.
New ideas mean more growth, and even small changes in economic growth rates produce large economic and social benefits. At current income levels, with an inflation-adjusted growth rate of 3% per year, America’s real per capita gross domestic product would exceed $1 million per year in just over 100 years, more than 22 times higher than it is today. Growth like that could solve many problems.
It is good to see a whole-hearted, open and positive outlook for humanity. Much of the media’s reportage accentuates the negative, as bad news always sells. Even here at Samizdata.net, we spend much of our time chronicling the follies and evils of governments and handing out (well deserved) brickbats. But there is also plenty of reason to be cheerful too.
I would just add one caveat to Professor Tabarrok’s optimism. Long term economic growth requires a stable framework of liberty, peace and a consistently applied rule of law. The trend of events by governments in the last decade have not been positive on these metrics, and governments who think that they can erode the rights and liberties of their citizens without it having an economic impact in the long term are kidding themselves.
This item in the FT reminds us that the spirit of enterprise has not reached all pockets of British society:
More than half a million young Britons are officially too sick to work and claiming incapacity benefits, a higher tally than the number claiming unemployment benefit, according to figures obtained by the Financial Times.
The word I think the FT is looking for but reluctant to use, I think, is “lazy”.
The figure, which includes more than 300,000 young people claiming for “mental and behavioural disorders”, shows continuing high levels of worklessness among the young, in spite of 10 years of steady economic growth and a concerted attempt to move people off welfare and into work.
I will not dismiss problems of mental health – this is a serious subject, but 300,000?
This does rather throw the issue of economic immigration – and indeed, emigration – into sharper relief. If a significant chunk of the potential working population is mentally not the full set of cards, or lazy, no wonder it is proving easy for motiviated, not-ill foreigners to enter the UK job market. Contrary to the Rod Liddles of this world, I dread to think what would have happened to the British economy had it not been for the influx of immigrants over the past decade or so.
Kevin Hassett, of the American Enterprise Institute, has a pretty good item over at Bloomberg about the good economic developments over the past 12 months, which inevitably get overlooked with so much understandable focus on the sub-prime mortgage snafu and the associated mega-buck losses sustained by some of the world’s top financial institutions, such as Citi and Merrill. But much of the economic news is good; when I punch some numbers on my Bloomberg machine, I am reminded that a goodly number of African stock markets are up strongly this year – that nicely upsets the usual cliches of Africa as a story of unmitigated woe, not that there are not serious problems there of course. China’s stock market looks like a bubble but the growth of the economy is real enough, whatever one thinks of government statistics; one of the best performing stock markets of 2007 has been Germany’s, up more than 20% this year, despite the high exchange rate of the euro. France may be starting to turn a corner, despite my doubts on how far Sarkozy will go in liberalising that country’s economy. A weak dollar should boost American exports and hence help the US economy close its trade deficit. Most Latin American economies are on an upward curve and Venezuela’s Chavez received an admirable rebuff in his attempt to seize permanent power late in the year. (Quick question: what are readers’ bets for most promising economy in 2008?). Russia is problematic: its status as an energy exporter means it is enjoying a bonanza of revenues, but this needs to be matched the emergence of a large, broad middle class able to sustain the sort of entrepreneurial economy for the long term; India is a bright spot; most of central Europe, Scandanavia is in decent shape. Italy is a permanent car accident and a possible quitter of the euro, but Italy seems to have incredible powers of survival.
All of these developments should be borne in mind when you look at how Britain’s economy has performed. On one level, the figures are poor: we have UK public deficits despite years of economic growth; tax burdens are rising and productivity is not what it could be; but from my admittedly biased vantage point in central London, I do not see a country in crisis (what I do see is a statist political culture in decline or at best, paralysis, which is not quite the same thing); the inventiveness and entrepreneurial gusto in this country is impressive, although one worries about the impact of an exodus of bright talents to foreign, sunnier climes. All in all though, I think it quite wrong to end 2007 on a whiny note, so I will not. As far as the cause of liberty is concerned, there is all to play for; the ID card venture is not a done deal and the Big Brother state received a mighty poke in the eye this year with the fiasco of the lost data on 25m people. I get more and more sense from the media that Britons are losing patience with this state of affairs. Let’s hope so.
Wishing my fellow contributors and our readers a very happy, prosperous and healthy 2008.
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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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