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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American judge Alex Kozinski, interviewed recently in U.S. magazine Reason, is roughly billed as a ‘libertarian’ judge. He is asked, among various things, for his views on the infamous Kelo eminent domain decision, which relates to the case in which a local municipality in the States won the power to evict people from their own homes in order to redevelop a site for commercial and tax-raising reasons. It is a decision which has scandalised classical liberals and defenders of property rights. Yet Kozinski thinks the decision is fine, and comes up with the following jaw-dropper:
What’s the difference between taking property for public roads or anything else? Do only public automobiles travel on public roads? I don’t understand why it’s a problem. If the government thinks the city will benefit by having a road there instead of having your house so that people can drive their private cars on it, then it has to make that decision. Who owns the road really doesn’t matter. What matters is that it makes it easier for other people to get from point A to point B using their private vehicles for private purposes. You could say “but it’s my house and my private purpose is more important than your private purpose.” But we live in a society.
“We live in society”. And so what? This judge is using ‘society’ as a sort of mystical incantation to shut down debate. His argument seems in broad terms to be a sort of utilitarian one: if the interests of a supposed majority are served by seizing the property of some people, then this is okay so long as ‘fair’ compensation is paid. His argument seems not to accept that though certain outcomes may be desirable, that it is necessary for the state to be constrained by certain long-term rules and institutions, most emphatically, by the existence of property rights. The judge’s position seems to be “property rights be damned”. If we imagine there are alternate uses of property that might put a gleam in the eye of a politician with property developers in his back pocket, then there is no limit to the assaults on property rights that could be permitted under the Kozinski formulation.
Eminent domain – what we Brits call compulsory purchase – can be justified, if at all, for creating certain facilities like a road, military base or law court that are essential for the peaceful ordering of a society, essential for human life and in the interests of all, and not just because it makes life a bit nicer for some or most of us, whether we be motorists or whatever. What is terrible about the Kelo decision is that it was driven by commercial gain, not a clear public interest such as defence of the realm.
After all, if the economic pie really is swelled by people selling their homes for new development, then that would happen in a market, albeit perhaps not in the neat and tidy way favoured by power-grabbing government official. Yet this ‘libertarian’ judge cannot see that. May we be preserved from ‘libertarian’ judges like this.
For an excellent book about this subject, see this work by Timothy Sandefur.
As an aside, I should point out that the reason I keep focusing on this issue is because American legal rulings and arguments have a habit of travelling across the Big Pond.
Having recently become a struggling podcaster myself, I have been paying a lot more attention than I otherwise would to podcasters who sound like they have got past the struggling stage. And of all the podcasts I have heard, the one that has impressed me most in recent weeks has been this one, in which Russell Roberts interviews Bruce Bueno de Mesquita.
At Cafe Hayek, where I first learned about it, Roberts describes this podcast thus:
According to Bruce’s worldview, every leader, no matter what the system, tries to stay in office and prosper. The relentless application of this simple idea turns out to have very interesting implications for foreign aid, the relief of poverty around the world and about a thousand other things. Bruce has a big brain with a lot of interesting things to say. It’s a very long podcast (about an hour and a half) and it opens with a fairly intense discussion of the theories in Bruce’s book. From there he talks about a wide range of applications.
And at EconTalk, Roberts writes:
This lengthy and intense conversation covers a wide range of topics including the evil political genius of Lenin, the dark side of US foreign aid, the sinister machinations of King Leopold of Belgium, the natural resource curse, the British monarchy in the 11th century, term limits and the inevitable failure of the standard methods of fighting world poverty.
King Leopold II of Belgium is a particularly revealing example.
→ Continue reading: Bruce Bueno de Mesquita on the logic of political survival and the two faces of King Leopold II of Belgium
We would certainly be watching out for any profiteering that might occur…we wouldn’t want that to happen, there’s no reason for it.
Western Australian Royal Automotive Club (RAC) representative Mike Upton on today’s news that quotes for a Liquid Petroleum Gas conversion in passenger vehicles had jumped markedly from A$2500 to up to $4850 in response to the federal and state governments’ combined $3000 subsidy on the purchase and installation of such equipment.
And now for a story of a nature rarely seen in the pages of Samizdata – that of government policy incompetence resulting in farce. As in the rest of the world, we Australians are starting to rankle about paying the high petrol prices experienced at present. Politicians of all stripes sense votes in this issue, and they are right to do so – I am certain the average Australian firmly believes the government should Do Something about this added financial impost. Consequently, the Australian federal government has announced that it will Do Something About It by spending other peoples’ money. That should come as no surprise to those that watch governments with a w(e)ary eye, however this latest brain fart from the sages in Canberra – to subsidise Australian motorists if they convert their petrol powered cars to Liquid Petroleum Gas (LPG) – is more egregiously stupid and counterproductive than most, and deserves attention.
First, some background. LPG is widely available in Australian cities. All of the larger fuel stations sell it. LPG’s price is usually slightly less than half that of conventional unleaded petrol. I estimate that somewhere between 5-10% of cars have conversions enabling them to run on gas. A conversion kit, fitted, costs about A$2500. The federal government subsidy is worth up to A$2000 per conversion.
There are a number of fairly simple and certain predictions one can make from such a proposal, given the circumstances outlined above. Firstly, the cost of vehicle conversion will soar due to the massive increase in demand(1). No matter – the increased investment will soon be recouped through fuel savings. That is the whole point of the subsidy; alleviate the political headache of high fuel prices by getting Australians to switch from expensive petrol to cheap LPG. Of course, all things are static – especially prices.
Back in the unfortunate realm of reality, it is quite obvious that a return on the conversion investment is unlikely to be realised, because the price of LPG will also be a victim of incrementally increasing demand, as more and more gas-powered cars hit the road. The price of petrol may fall slightly, though oil (and thus petrol) is a global commodity with a more-or-less uniform price. Naturally, producers will sell their fuel in a market that provides the optimum return. Thus, supply will fall in concert with the slump in demand, leaving prices largely unchanged. And another factor to be considered by those who are thinking about taking up the government’s ostensibly generous offer – petrol excise is a major revenue earner for the Commonwealth. If this starts to dry up, lightly-taxed and increasingly-used LPG is going to look like quite an attractive target for the Treasury boys, narrowing the price gap further. The two fuels will probably reach price parity at some not-too-distant point; that is, the price of LPG will rise to meet that of petrol.
Simply put, this subsidy will achieve none of its stated aims, create a bunch of unintended negative consequences and is a most elementary economic blunder. The lesson – and it should be well understood by a government that trumpets its sound economic management at any opportunity – is that subsidies do far more harm than good. The big winners will be gas conversion component manufacturers and those installing this equipment. Gas suppliers also stand to benefit. The losers will be the broad pool of taxpayers (again) and those who have invested in a gas conversion kit in the vain hope of cheaper vehicle running costs.
What a marvellous outcome.
LPG-powered cars do, however, emit far lower levels of greenhouse pollutants than their petrol-powered counterparts. A nation of gas-powered cars may help Australia achieve its assigned Kyoto targets. We sensibly refrained from taking on that ball and chain, however we may as well sign the bloody treaty now – our adherence to it might be the only thing we have to show from the colossal waste of taxpayers’ money that is about to take place.
(1) = In my home state of Western Australia, our state government had already declared it was going to subsidise LPG conversions by $1000 per unit. This subsidy will now run on top of the federal government’s $2000 subsidy. Expect all conversions in WA to rise, probably overnight, from A$2500 to $3000+ when the subsidies come into force.
There is an interesting article in Newsweek suggesting capitalism is on the march in more minds than you might think.
In France, books approved by the Education Ministry promote statist policies and voodoo economics. “Economic growth imposes a way of life that fosters stress, nervous depression, circulatory disease and even cancer,” reports “20th-Century History,” a popular high-school text published by Hatier. Another suggests Margaret Thatcher and Ronald Reagan were dangerous free-market extremists whose reforms plunged their countries into chaos and despair. Such blatant disinformation sheds new light on the debate over why it is that Europeans lag so far behind Americans in rates of entrepreneurship and job creation.
[…]
a recent poll by the IPOS Institute finds the market economy’s approval rating rising to 59 percent among Germans under 30, with only 32 percent saying the state needs to play a bigger role. Ten years ago, the figures were reversed. “The values shift is already underway,” says Bürklin. It’s about time.
Indeed it is about time. The absurdities and contradictions of the statist world view is our biggest ally and gradually more people do figure out better theories for understanding reality regardless of what they are taught.
For all the arguments between the Chicago and Austrian schools of economics, the fact remains that Milton Friedman is one of the good guys. Milton Friedman has struggled for freedom all his life and has brought the basic ideas of private property rights and free markets to more people (via, for example, his weekly article in Newsweek magazine and in his best selling books such as ‘Capitalism and Freedom’ and ‘Free to Choose’) than any other person alive.
Like millions of other people I express my good wishes to Dr Friedman, to Rose Friedman and to their children and whole family.
Last night, I snapped photos at the Globalisation Institute gathering at the Foreign Press Association, Carlton House Terrace, just off Trafalgar Square. Alex Singleton used a few of the snaps I took at the GI Blog, and several more of my snaps have also already appeared at Guido Fawkes.
Said Guido:
The totty quotient was high . . .
Indeed it was. Here are some further snaps that Guido might have used, but didn’t.
It was an impressive gathering, high both in quantity and quality of attendees, all chatting away merrily and sipping pink champagne.
Also. a bloke spoke:
The bloke, a Conservative Shadow Minister, spoke about how free trade in Africa would be a good thing. NGO persons and other enemies prowled about, gnashing their fangs and wondering how to denounce this well-disposed and well-organised event. Potential donors also mingled, impressed. The GI is definitely going places.
If you are an even occasional Samizdata reader I am sure you will find this interview with Milton and Rose Friedman of great interest. Their opinion on immigration, for example, is predictably libertarian:
Is immigration, I asked–especially illegal immigration–good for the economy, or bad? “It’s neither one nor the other,” Mr. Friedman replied. “But it’s good for freedom. In principle, you ought to have completely open immigration. But with the welfare state it’s really not possible to do that. . . . She’s an immigrant,” he added, pointing to his wife. “She came in just before World War I.” (Rose–smiling gently: “I was two years old.”) “If there were no welfare state,” he continued, “you could have open immigration, because everybody would be responsible for himself.” Was he suggesting that one can’t have immigration reform without welfare reform? “No, you can have immigration reform, but you can’t have open immigration without largely the elimination of welfare.
I would have loved to have been there to ask him about my ideas on immigration and the politics of the minimum wage.
A while back I suggested that the the high price of gold may be a harbinger of rising inflation, and that even though some people suggest that gold prices are a fogeyish obsession of a few “gold bugs”, the price movement of this golden metal can still offer an early indicator of trouble.
I think I can say a mild “I told you so”. After having been off the radar for years, due to a variety of factors, inflation is rearing its head again. To an extent, of course, the cost of living has been rising in Britain a lot more than official statistics suggest because of the way in which Britain’s finance minister, Gordon Brown, has stripped out things like housing price movements and taxes to make the figures look better. (In all fairness to Brown, his Tory predecessors were no better in this respect). Anatole Kaletsky has a good article here warning that the mighty U.S. Federal Reserve is in danger of letting the inflation genie out of the bottle. A further rise in rates, he says, may be needed, possibly raising the risk of a recession. He may be right. The Fed’s key lending rate is 5.25 percent and has risen 17 times since its low-point around the time of 9/11.
It is a bit rich, though, for an unashamed neo-Keynesian like Kaletsky to bash the Fed for failing to be tough enough, and for not acting sooner, on rates. Kaletsky has not been shy of bashing the European Central Bank for its supposedly restrictive approach on interest rates. The problem of course is that no central bank chief, even if he or she has the wisdom of Solomon, can anticipate perfectly the right course for interest rates. If such a central bank makes an error, that mistake can be enormously costly in terms of jobs, livelihoods, even the loss of homes (I recall a now-departed commenter, called Euan Gray, dismiss such concerns with a sort of “let the experts sort it out” approach of his.)
The perils of central bankers getting the economic signals wrong explains why some classical liberal economists remain fond of F.A. Hayek’s argument for a return to a sort of commodity-backed, competitive currency system. Yes, such a system would have its problems and banks might go bust from time to time. But although such a banking system would have its crises, they would be relatively small compared to the risk of an entire economic region getting into trouble on account of a mistake by a central bank chief and his economists. The bigger and more powerful the central bank, the bigger the potential cockups. That remains for me a great attraction of Hayek’s idea: mistakes will get made, but those mistakes will be dispersed and people will have options to flee a delinquently-run currency.
That is to ask, who actually foots the bill for business taxes? It is much easier for a politician to raise taxes on businesses, which do not vote and are constantly portrayed as the villains by our virulently ignorant press, than on individuals. But we learn, from todays (subscription-only) Wall Street Journal Political Diary, that it is not so simple::
A new study by American Enterprise Institute scholars Kevin Hassett and Aparna Mathur shows that the corporate income tax is for the most part paid by workers in the form of lower wages. They found manufacturing wages were negatively associated with high corporate tax rates in a study of 72 nations.
Taxes have to come from somewhere. Businesses will pass costs on to those with the least bargaining power. Businesses have to choose between holding down wages, charging customers more (hard to do, in a competitive market), paying capital less (very hard to do, in the brutally competitive capital markets), and cutting capital re-investment (not smart if you want to be in business in three years). In the absence of an extremely tight labor market, keeping wages down is the path of least resistance.
I think Tory leader, windmill pioneer and attendee of uber-Chav celebrity bashes, David Cameron, might want to take a break from the social whirl and read this about the much-derided U.S. tax cuts of 2003:
In the nine quarters preceding that cut on dividend and capital gains rates and in marginal income-tax rates, economic growth averaged an annual 1.1%. In the 12 quarters–three full years–since the tax cut passed, growth has averaged a remarkable 4%. Monetary policy has also fueled this expansion, but the tax cuts were perfectly targeted to improve the incentives to take risks among businesses shell-shocked by the dot-com collapse, 9/11 and Sarbanes-Oxley.
This growth in turn has produced a record flood of tax revenues, just as the most ebullient supply-siders predicted. In the first nine months of fiscal 2006, tax revenues have climbed by $206 billion, or nearly 13%. As the Congressional Budget Office recently noted, “That increase represents the second-highest rate of growth for that nine-month period in the past 25 years”–exceeded only by the year before. For all of fiscal 2005, revenues rose by $274 billion, or 15%. We should add that CBO itself failed to anticipate this revenue boom, as the nearby table shows. Maybe its economists should rethink their models.
Britain’s Conservatives believed – at least during the 1980s when a certain Nigel Lawson was Chancellor – that cuts to marginal tax rates could actually generate more, not less revenue for the State, as well as being a good thing in its own right for widening economic liberty and reducing the bite taken out of the pockets of the citizenry. Now, I know that some libertarian purists out there might actually be suspicious about a measure that would raise more revenues, even if it is a good thing for individual taxpayers. I say let purity be damned. we know that politicians are not motivated much by supposed abstract concerns about the balance between the individual and the State these days, but the practical benefits of cutting tax rates should still resonate with our political classes. The Laffer Curve still operates, at least if you accept the WSJ article. Even current Chancellor Gordon Brown might wake up to the sort of facts that the Wall Street Journal is on about. It would be nice to think that the Tories would seize on such data, make a fuss, point out the benefits of flattening the tax code, simplifying it and cutting rates. Instead, unless I am missing out here, is silence.
Maybe the implosion of the current government means the opposition can afford to slump in the hammock during the back end of summer and wait. But it would be nice to think that they could be a tad more ambitious. Only a tad – I would not want our Dave to break into a sweat or anything.
American economist Thomas Sowell remains, in my view, one of the “must-read” authors for folk interested in the case for liberal markets and critiques of well-intentioned but hubristic social policy. In one of his books, The Vision of the Anointed, he hits upon a key fact that is so often ignored by writers making statements such as “X percent of the population own Y percent of the wealth”, and then proceed, in terms of great indignation, to argue for massive redistribution of wealth to rectify said terrible state of affairs. Sowell points out that what such statements miss out is that we are all getting older, our lives change, and as we do so, it is common for folk to pass from one wealth bracket to another:
“One common source of needless alarm about statistics is a failure to understand that a given series of numbers may represent a changing assortment of people. A joke has it that, upon being told that a pedestrian is hit by a car every 20 minutes in New York, the listener responded, “He must get awfully tired of that!” Exactly the same reasoning – or lack of reasoning – appears in statistics that are intended to be taken seriously.” (page 43).
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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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