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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Following on from Thaddus’s recent posting about how politicians are trying to enlist children in the Green agenda, it is worthwhile pondering why environmentalism, even the more scientifically credible sort, is often depressing, puritanical and unpleasant. Let’s face it, a lot of libertarians’ hostility to Greenery is a suspicion that the Greens are “watermelons” – green on the outside, and socialists on the inside. Socialism, in as much as it has ever been a coherent political and economic point of view, has been economically if not entirely intellectually discredited. It has been a failure, with varying degrees of nastiness, ranging from the stifling if relatively benign version of Sweden through the to mass killing fields of Mao’s China and Pol Pot’s Cambodia. So if you hate capitalism and material wealth then the Green agenda comes in very handy.
There is a danger in this approach, however, and not just because ad hominem points about the motives of one’s ideological opponents often put off the uncommitted. The fact may be that the planet is genuinely getting warmer and that human activity has helped to cause that. Pollution of the air, seas and rivers is a problem for someone who is polluted. The destruction of ancient woodlands and the loss of flora and fauna is bad. So I can see why environmentalism appeals not just to anti-capitalists, but to conservatives and liberals who want to live the good life and ensure there is plenty of that good life around for future generations. There is in fact a school of environmental thought that harnesses ideas of property and markets to make its case.
Another point I’d make is this: why cannot the Greens, or at least the more sensible ones, throw off the image of po-faced puritanism that so often hangs around their pronouncements. His Supreme Blogness, Glenn Reynolds, has interesting thoughts here on how technologies like electric cars and so forth should be sold not as a sort of “hair-shirt” consumer gesture but because such technologies might be fun and interesting for people.
Fun – that is a word one does not hear much about when discussing technological fixes for our planet. Perhaps we should hear it a good deal more.
I have no idea whether the journalists at the Daily Telegraph make it their business to read this blog (although they most certainly should do so, naturally) but this article nicely backed up my point the other day about the economic upsurge of India.
In my posting here, a number of commenters scoffed with disbelief that some jumped up rating agency should be so daft as to proclaim that India’s debt rating has improved, and that the country'[s economy is improving. “My dear boy, this is India!” you can hear them cry. And one commenter, bless him, even suggested that India is still far behind most of Latin America, a comment sure to provoke hollow laughs from any entrepreneural type hoping to prosper in Chavez’s Venezuela. Of course, as I said at the time, India is still moving up from a relatively low base. During the immediate post-war years, the East Asian economies in places like South Korea, Hong Kong and Taiwan powered ahead while India, influenced by those dreadful Fabians and London School of Economics types who stuffed the old colonial service, embraced socialism, planning and progressive taxes. But the fact, that cannot be denied, is that this country, with its vast, English-speaking population, relatively stable system of property rights and its admirable enthusiasm for the world’s greatest sport, is shooting the economic lights out.
There is just no pleasing some people, it seems.
The good news from India keeps coming. This week, the international credit rating agency, Standard & Poors pronounced that the “Third World” nation had become so prosperous that the risk of lending money to the country had fallen significantly.
New York-based Standard & Poor’s said it upgraded India’s sovereign rating to BBB-, the lowest investment grade rating, from BB+, the highest junk rating.
The rating revision could help reduce India’s borrowing costs on the global market.
As anyone who has taken out a personal loan or mortgage will know, getting a stronger credit rating is a big deal. India is now ahead of economic basket-cases such as Argentina or Venezuela, and has got there by a programme of economic liberalisation. I keep banging on about the vigour of the Indian economy – notwithstanding the still-grinding poverty in parts of the country – because it is probably the most positive economic story of our times. It shouts, loud and clear, that markets work. Market economics is doubly potent when combined with a relatively robust civil society, protection of property rights and the priceless asset of an international language like English.
Meanwhile, India-based Tata Steel has sealed its purchase of UK steelmaker Corus.
Today is Milton Friedman Day. Interesting selection of links to events marking the great man’s life over at Virginia Postrel’s blog.
Here is the main event link.
Earlier in the week I wrote about how UK finance minister Gordon Brown’s economic record is likely to be a poor one. If you ask many people about what they dislike most about the gloomy Scot, they will tell you of how he changed the tax rules in a way that sucked billions of pounds out of company final-salary pension funds. Hundreds of these schemes have shut their doors to new recruits and in some cases, like UK pest control business Rentokil, have cut the benefits of even existing pension scheme members. We are living for longer, and the shift in human longevity continues to push up pension liabilities. These liabilities are accounted for as a debt item on corporate balance sheets – something that has hit many businesses as a shock.
In the case of once-nationalised utilities like British Telecom or the airline, British Airways, the big black holes in their pension schemes are almost as large as the market value of these firms. Companies are pouring billions of pounds into these pension schemes to stay on the right side of Britain’s official pension regulator. No wonder that British Airways is suffering with its struggles against budget airline rivals such as EasyJet or Ryanair, and the impact of higher fuel costs and security-related costs.
One cannot pin all the blame on Brown for what has happened. Having a beer with fellow Samizdata contributor Philip Chaston last night, we agreed that in some ways that final-salary pensions were probably due to fade out or decline anyway, since they were part of an era when a person worked for one firm for their whole life, retired in their sixties and then had the good actuarial grace to drop dead. In an age when people change jobs regularly and live into their 80s and beyond, this particular form of retirement saving is not viable for many companies. In fact, over time, I expect many companies to cease running any significant pension schemes altogether. There is no doubt, however, that Brown has had a crushing impact on pensions, and his continued tax-and-spend policies are unlikely to foster a significant saving habit among the public. Quite the reverse.
I am writing this with a few minutes to go before a documentary on ITV looking at the scale of the UK pension meltdown. It is unlikely to be jolly viewing.
It appears that Britain’s finance minister, Gordon Brown, has timed his run to be our next Prime Minister just in the nick of time as the economic data starts to look a bit sickly. Even with all the usual health warnings about data that seeks to try to capture the complexities of an economy in numbers, the figures on inflation and productivity do not look good. (In the case of productivity, they are not disastrous, mind).
It is probably not grounds for great worry – yet. When an economy expands and more people join the workforce, this can have the perverse effect of reducing “productivity”, while if an economy stagnates but millions lose their jobs, then output per person can go up. Productivity growth is not the be-all or end-all of economics. But the ability of an economy to grow rapidly without triggering inflation is helped if the productive capacity of an economy grows. There is no doubt that after nearly 10 years of this hyper-active Chancellor, with his taxes, lust for regulation and control, that the arteries of the British economy have hardened.
Brown inherited a British economy in 1997 that was, by the standards of the 70s and early 80s, in remarkably fine fettle. The state took less than 40 percent of GDP; inflation was low, productivity was rising, the ranks of the rich and the decently-well off were rising fast. Yes, problems of crime and the weakening of civil society were serious and yet how optimstic so many people were at that time that some of the remaining social evils could be addressed. How long ago that now seems.
For years, I have heard it said that Labour’s ace card was its handling of the economy at the macro-economic level. I tended to go along with that in the main, and I think the decision to put the Bank of England in day-to-day charge of interest rates was sound. Brown’s move of the inflation measure to the less exacting euro zone measure of consumer prices – which does not capture housing costs like mortgages – and his sometimes dubious picks of BOE personnel to set interest rates, threaten to tarnish even that achievement.
An idea of the late FA Hayek was that people could use different currencies within the same jurisdiction and break away from the idea that if you lived in country A or B, you could only use one currency within A or B and never use more than one in each place. The idea of “monopoly money” is so ingrained that to broach the idea is to incur looks of incredulity. (“But surely that would be messy!”) Now, I have looked quite a bit at the idea of competing currencies and there strikes me as being nothing that is implausible about such an idea as such. This story in the Daily Telegraph is therefore most interesting:
If you live in the Bavarian region of Chiemgau, you can exist for months at a time in a euro-free zone of hills and lakes with a population of half a million people. Restaurants, bakeries, hairdressers and a network of supermarkets will accept the local currency: the Chiemgauer.
Notes are exchanged freely like legal tender. You can even use a debit card. Petrol stations are still a problem, but biofuel outlets are signing up. Dentists are next.
The Chiemgauer is one of 16 regional currencies that have sprung into existence across Germany and Austria since the launch of the euro five years ago.
Article worth reading here from time back by Max More.
Some time ago I had these thoughts about the high price of crude oil and the implications for the energy market. Well, the price of oil has been falling, rather fast, these past few months. High prices have forced people and businesses to economise on their use of oil. Sales of large-engine cars and SUVs are down. A perceived slowing in the pace of global economic growth is also hitting the price. New sources of supply, and spending on new refinery capacity, is also pushing prices down. Some of the speculative froth in the market which may have added to the high price of oil is also unwinding a bit.
The rise in the price of oil to nearly $80 a barrel last year triggered all manner of near-hysterical claims about how governments must act to drastically reduce our reliance on such a source of energy. But market participants were acting even as political and media blowhards predicted doom and gloom. There is nothing like a fast rise in the price of a key thing like energy to focus minds on how to adjust behaviour. The rise in the price of oil has spawned a plethora of ventures to develop new sources of energy; encouraged new drilling and exploration efforts to find new oil supplies, and encouraged people to economise on their energy consumption.
With any luck, if oil keeps falling, it will slow the flow of money into the coffers of thugocracies like Saudi Arabia and also crimp the ambitions of Hugo Chavez in oil-producing Venezuela. That has to be a good thing, although George Galloway might have a problem if oil-rich dictators lose some of their revenues.
I sometimes look at the statistics on the back pages of the Economist. Although I am not generally interested in mathematics and (as a student of the Austrian school) do not regard mathematics as a vital part of the study of economics, I have long had a mild fondness for statistics (I know that to many people that seems a dark perversion to admit, but there we are).
Last week I noticed that the Economist had altered its presentation, whether this is a first issue of the year thing, or will be carried on the next issue I do not know, and I had the feeling that something had been left out.
However, it was only after looking again today that my tired old brain finally worked out was missing. There were no money supply figures.
Nothing for either M0 or MB (basically notes and coins, plus a few Treasury instruments) growth, and nothing for any of the broader measures of credit money (M3 and so on). Certainly measuring credit money growth is not easy (there are lots of arguments) – but no money supply stats at all? At least not in the paper version of the Economist, and it is the paper version that most people, who look at the Economist at all, look at.
Perhaps the young people who now dominate the staff of the Economist believe that inflation, which they may think of as rising prices in the shops, if they are not aware that a rising money supply may also cause asset price rises in such things as the stock market and the property market, comes about by union power: for example, obstructing a entrance of an enterprise by ‘picketing’, or government bans on replacing workers who do not turn up to work – or some other non market means, raising wages which, if the money supply is not increased to pay for wages being pushed higher than supply and demand would have done, really leads to higher unemployment – not to greatly rising prices in the shops or in the asset markets. Or perhaps they believe that it is caused by exchange rates – and that governments, via central banks, should set interest rates to influence these exchange rates (no matter how many times efforts to manipulate exchange rates blow up in peoples faces there is never any shortage of folk advising yet more manipulation).
It is hard to know. After all I am not an economist, I am only a student (in the old sense of the word) of this subject so my level of knowledge of the subject should be well below the standard of economists in Britain. But this is not the case, most economists in Britain seem to know very little about economics. Perhaps this is because there are few economics departments in British universities where even Chicago school (let alone Austrian school economics) is taught – so young ‘trained economists’ get hired by the Economist ‘newspaper’ (as the magazine calls itself) but do not know much about economics.
This would explain, why the Economist supports things like ‘land reform’ (i.e. land theft) in Latin America, the absurdity of government ‘anti-trust’ or ‘anti-monopoly’ policy all over the world (a policy based on the treating the ‘perfect competition’ model of neoclassical economics, with everyone having the same level of knowledge and all enterprises being much alike, as something ‘fair’ that governments should try and create in the real world), and supporting ever more taxpayers money for the ‘public services’ (in most of the countries of the world).
Of course it would not explain why the Economist supports the European Union (although not all its activities), but I can not think of anything that could explain that level of perversity.
Still… I should return to statistics.
The vanishing of money supply stats put me in mind of something that used to annoy me about the United States Annual Abstract of Statistics.
There was no simple presentation of the size of State and local government spending or taxation.
The stats for government spending and tax were given only ‘per capita’, which of course takes no account of the fact that in some States of the United States people have higher incomes than in other States.
Later on on found that till the mid 1970’s the Annual Abstract had also given State and local government spending and taxation per thousand Dollars of income – which (again of course) made it very easy to see what percentage of the economy was going to State and local government in a given State of the United States (if you are interested the private Tax Foundation still provides such information).
Was it all a dark plot to disguise the real size of government in different States? Much as some people have suggested that the liking of the statistical office for the ‘median’ (the number in the middle of a group of stats – for example with “1, 3, 4, 5, 7,” the median would be “4”) rather than the ‘mean’ (get all the amounts and divide by “number of numbers” – what the layman thinks of as an “average”) as its measure of average, is due to a hated of inequality (which using the mean for such things as “average income” is supposed to ignore). I do not think so – I think it is more the fashions of the world of statistics which I, as a non-mathematician, should not expect to understand, although I do not expect the ‘mode’ to become a popular measure of average any time soon.
However, it is irritating that the Statistical Office stopped publishing a useful number, such as total State and local taxes per thousand Dollars of income, but continued to publish a useless number, such as total State and local taxes per capita.
Just as it is irritating that the Economist published inflation numbers (the staff there, like most modern people, perhaps think of ‘inflation’ as price rises in the shops), while not publishing money supply growth figures – as if the money supply could explode and there be no consequences ever.
Alex Singleton has been watching the Running Man. I have just been watching a Newsnight report about mobile phones in Kenya. The gist of the report was that mobile phones in Kenya in particular, and Africa generally, are a stunning success. As if by magic, they are transforming the prospects of ordinary people in Africa, and the relationship between ordinary people and their corrupt, aid-gobbling governments.
We watched a deeply impressed BBC reporter, Paul Mason, being told by a black lady, who I rather think may have been one of the authors of this report that indeed, mobile phones are having an impact upon Africa comparable to the switch from dictatorship to democracy – she mentioned other technology as well, like fire, the wheel and the railways – and that the mobile phone industry provided a model for progress in other areas of African life, such as education and healthcare. Her message to the governments of Africa: get out of the way, at let the business people do these things, and the people pay for these things, themselves.
Paul Mason went deep into the Kenyan countryside, braving the chaos of Kenya’s government supplied road system, into Masai territory, to study the difference between places where mobile phone technology was working its magic, and where the wretched of the earth did not have mobile phones. He was, in other words, looking for one of those gaps. But he did not find any gap. The Masai already have their mobiles, and they love them.
Not all the news nowadays is good, to put it mildly, but this Newsnight news was very good news indeed, and not just because of its news about Africa. It was what it said to me and to my fellow countrymen, and (via the BBC’s excellent internet operation) to the entire world, that really pleased me.
It is some time since the book was published, but as I am increasingly finding due to pressures of time, I only recently managed to finish the book “1421, the Year China Discovered the World”, written by former Royal Naval submariner Gavin Menzies. He writes in the tradition of revisionist historians who, fired by a sense that a group of people have been done a great injustice – the Chinese treasure fleet sailors – puts his own skills to righting a perceived wrong. It is an enthralling read, drawing on Menzies’ own navigational knowledge and seamanship, his thirst for adventure and historical knowledge, and above all, by an almost Sherlock Holmes-like ability to track down awkward facts to build a case.
The case is a pretty powerful one, although there are some holes in it, at least on a first reading. What makes the book enjoyable all the way through is that it does not strike the reader that Menzies is full of that tedious modern desire to debunk the achievements of great men in order to exalt his own cleverness. This trait, this desire to show that certain brave folk have feet of clay, bores me to tears. Menzies reveres Cook, Magellan and other European explorers, but he feels the Chinese, who put together massive fleets of enormous sailing junks, have been the victims of undeserved obscurity.
Without spoiling the book for those who have not read it, what Menzies does is to show how certain maps of the mid and late 15th centuries, used by the Portugese and folk such as Columbus, could not possibly have contained the information in them without someone having done the prior work of charting certain areas. He finds all kinds of evidence: fauna, flora, jewellery, stoneware, and patterns of trade. He shows how the Chinese, centuries before Englishman John Harrison invented his vital chronometer, cracked the problem of accurately measuring longitude. Menzies’ navigational expertise is vital to showing how maps of the Middle Ages, when corrected for certain errors, make sense for the modern navigator (as an amateur yachtsman myself, I find this sort of stuff fascinating).
I have a few problems though with this thesis, although they may not be fatal to it. First of all, the mandarin-run China destroyed pretty much all the known written evidence that the voyages that Menzies writes about took place. Several of the admirals who led the expeditions were killed or disappeared. Thousands of their sailors died or found shelter in the lands on which they were shipwrecked. Although a European monk – converting to Islam to avoid problems, perhaps wisely – apparently sailed on the ships and transmitted evidence of the expeditions, it is often rather hard to see how the details that Menzies uses to base his claim can be assembled coherently. I find it frankly incredible that not one major Chinese sailing officer ever laid down independently verifiable accounts of his actions and voyages and that those accounts were all destroyed. The probabilities of such an outcome strike one as low. Menzies relies to a large extent on informed and clever conjecture. But conjecture is what we have and I am not sure how all this would pass muster in a court of law.
→ Continue reading: The Chinese got there first – quite possibly
A few days ago, Perry de Havilland suggested the rather cute idea of erecting statues of the US Senators who cooked up the Sarbanes-Oxley accounting law, on the grounds that this law has encouraged many firms into listing their businesses outside the United States and holding Initial Public Offerings (IPOs) outside Jefferson’s Republic. London’s stock market has benefited from this, as have bourses such as the Amsterdam Euronext, for instance. I do not know whether some of the impact of S-O has been exaggerated – this may be the case – but there is no doubt that from a regulatory point of view, the United States is not quite the model of laissez-faire capitalism that its supporters or indeed opponents imagine it to be. In fact, the US has been becoming a regulatory hell-hole for some time, such as with the recent crackdown on online gambling, to take one example.
Another man who deserves some sort of award for unintentionally driving business away from America is departing NY Attorney-General Eliot Spitzer. He is stepping down from the job to run for political office, and some say he has been doing that while in his present role. While some of his highly public campaigns to crack down on dodgy dealings should be applauded by free marketeers on the grounds that markets need laws against fraud, some of his campaigns seem to be driven more by the wrong-headed belief that markets must in some sense be “fair” and “perfect” in order to work in the interests of the general public. The mistaken idea that markets must contain no barriers to entry, contain “perfect” information and so on, has done incalculable harm to real capitalism, as also seen in the absurdities often perpetrated in the name of “trust-busting”. In his campaign against biased stock market research, for instance, Spitzer seems to downplay the old wise dictum, “let the buyer beware”, and presume to protect the customer against the shock-horror fact that banks might not be models of Olympian objectivity. There is a good and passionate attack on Spitzer’s record here.
Spitzer did some good but also a lot of harm to Wall Street and beyond. Competing financial centres, possibly including the rapidly-growing hub of Dubai, will rush in to fill the gap as capital becomes ever more fluid in this information age (yes, you read me correctly, I said Dubai, notwithstanding the local regional, er, difficulties).
In case any US readers get all hot under the collar about yours truly, a Brit, taking a prod at the US economy, I am only too well aware of how Britain is falling under the same regulatory menace, both of the home-grown and EU varieties. We all lose if the world’s biggest free economy becomes encumbered by bad laws.
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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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