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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How else? You might ask. But this abstract in McKinsey Quarterly caught my attention with its astounding wrong-headedness:
How Brazil can Grow –
The most important obstacle is Brazil’s huge informal economy which, distorts competition by putting efficient, law-abiding companies at a disadvantage. Macroeconomic instabilityreflected in the high cost of capitalis the second-most-important hurdle, followed by regulations (such as rigid labor laws) that limit productivity.
Could it possibly be that it’s the top-heavy regulatory state and shocking tax rates on officially recognised activities that are keep the poor poor, small companies small, and the poltically unconnected outside the system hoping not to be noticed? It couldn’t be state favouritism and that same capricious regulatory apparatus that keep the risks high and capital proportionately expensive? It would also be interesting to know in what sense ‘efficient’ and ‘law-abiding’ go hand in hand in such circumstances. It is implied that unlawful, invisible, enterprises are inefficient ones (in whatever sense that is). How do they know?
Sorry to keep banging on about J K Galbraith, but I just had to drag a gem of a BBC Radio 4 radio interview out of this comment thread – thanks to commenter John K (not Galbraith, one assumes) for bringing it to light. The Radio 4 producers were no doubt expecting hushed reverence for a crusty Keynesian warrior like Galbraith – much beloved by most BBC types – so I think they received rather a rude shock when the interviewee, Meghnad Desai, got into his free marketeering stride. My favourite part :
“So Galbraith was very much a 1950s man. And he still has fans, because lots of people are still stuck in the 1950s. You know, quite a lot of them in the Labour Party.”
I also particularly enjoyed the shocked pause before the interviewer, Greg Wood, thanked the eminent Professor for his heresy.
A firm friend of government interference passes on.
When people in public offices start bleating about a conspiracy of private firms to screw the public, it is usually a sign that said public official is trying to spread a profound misunderstanding of market forces, or is an idiot, or is trying to name a scapegoat to shore up public support. In the case of President George W. Bush – not exactly the brightest light in the harbour – it may be just be a combination of all three.
Anyway, veteran libertarian scholar and free marketeer Tibor Machan is having none of it.
Oil prices are high – though in inflation adjusted terms, not as high as in some periods. The reasons for this have nothing to do with the nefarious activities of Big Oil. It is caused by rising demand from the expanding Chinese and Indian economies; a lack of supply caused by low investment during the 80s and 90s when crude prices fell to below $10 per barrel at one stage; a lack of refining capacity for the same reason; regulations designed to cut pollution, which raise production costs, the interruptions to supplies from the Middle East because of the conflict there, and finally, an element of speculation from hedge funds and the like.
Adam Smith famously warned of the dangers of firms forming cartels to prop up the price of a particular good or service, although in practice such cartels tend not to last very long unless they can enlist support from governments in some ways to prevent new companies from entering a market. If Exxon, say, tried to do a deal with Shell to rig the price of gasoline at X dollars a gallon (not litres, dammit) then sooner or later another firm would see a market opportunity to undercut that price, and in an age when motorists can check prices on the internet, it is hard to see how this process could be stopped without State intervention.
Conspiracy theories are great fun, and I hate to be a party-pooper, but in 99 times out of 100, they are bunk.
Gary Jason – a writer I had not heard of before, has an interesting review about a book chronicling how filthy rich some prominent American leftists are. The usual collection of intellectual gargoyles are on show: Ralph Nader, Nancy Pelosi and Michael Moore. I must admit I was taken aback as to how much money Nader is worth, although that is probably my naivete. Jason asks the interesting question about how leftists who decry business are so easy with a life of affluence, and takes a stab at a few answers.
For example, I rather liked this paragraph:
I suspect that there is also a subtler phenomenon at work, one that I would call “warding off the evil eye.” I suspect that some successful people — here I have in mind certain businessmen who have become enormously rich — fear that the envious lower classes will possibly do them harm. Considering the long history of class warfare politics, this is not an irrational fear. To ward off envy, these captains of industry make a conspicuous show of being kind and caring, setting up foundations that prominently feature their names.
This sort of ground has been trodden a few times before. What intrigues me is why there are so few seriously, stinkingly, rich folk on the libertarian side of the street, so to speak. There are a few libertarian friends of mine with decent jobs, nice houses; some have inherited fairly serious money and do not have to work; but I don’t know any of our number who has the sort of wealth described in Jason’s book review. It is a paradox that celebrants of capitalism and market economics are often on their uppers, financially, in my experience, although my impressions are just that, impressions.
I guess it may be partly down to the fact that folk who are good at handling ideas and making arguments for this and that tend not to have the sort of skills to make pots of money. It may also be that, in today’s largely corporate world, being known as a holder of controversial ideas (such as legalising heroin, zero state welfare, etc) is not good for the prospects of a person trying to clamber up the corporate ladder. And if a person wants to create their own business, they tend not to have the time to ponder the Big Questions, write The Road To Serfdom or Atlas Shrugged.
Even so, it remains for me a bit of a puzzle why so few of us are not rolling in cash, given our views about the benefits of the marketplace.
On a related theme, I can recommend this article on why intellectuals often hate capitalism, by the late Harvard University professor, Robert Nozick, and this book, by Ludwig von Mises.
Frank Furedi, the British sociologist who has already established a bit of a record for trashing doomongering of various types, lays into what he sees as the misanthropy of so many of today’s glum authors. I cannot do justice to it in one short comment, so make yourself a coffee or pour your favourite alcoholic beverage, sit back, and enjoy:
Human beings are not angels; on a bad day they are capable of evil deeds. But the very fact that we can designate certain acts as evil shows that we are capable of rectifying acts of injustice. And on balance we aspire to do good. Contrary to the fantasies of romantic primitivism, civilisation and development have made our species more knowledgeable and sensitive about the workings of nature. The aspiration to improve the conditions of life – the most basic motive of people throughout the ages – is one that has driven humanity from the Stone Age through to the twenty-first century.
If believing in the human potential is today labelled ‘anthropocentrism’ and ‘speciesism’, then I wholeheartedly plead guilty to subscribing to both of those views.
Hat-tip: Ronald Bailey at Reason’s blog. Bailey is also a profound techno-optimist with little time for the zero-sum economics or mentality of the latter-day Malthusians that Furedi hammers. This book is worth adding to your reading list. (As if I did not have enough, Ed).
It has been a relatively quiet year so far in Australian politics, with the main story being an investigation into a scandal involving the Australian Wheat Board, which was accused of paying huge bribes for wheat contracts to Saddam Hussain’s Iraq. The political controversy relates to what the government knew about it and what it did about it.
It seems that the government did not know very much about it, and did absolutely nothing about it. The Cole Enquiry that has been formed to investigate this matter and Prime Minister John Howard will testify tomorrow. I have generally taken the view that the enquiries have been a political circus and conducted for partisan reasons, so I’ve not followed it very closely. Other people have taken a greater interest, and have come to different conclusions. However I still feel that this matter is more a case of cock-up rather then conspiracy.
I got thinking about the case from a different angle though, about the bribes. The fact that bribes needed to be paid at all for a straightforward commercial transaction is a shocking indictment of the regulatory stranglehold Saddam Hussein and the UN had placed on Iraq. This is small beer compared to the literal stranglehold that the tyrant kept his people under. But bribery is a natural part of things in so many parts of the world, in various and many degrees. It is by no means restricted to ‘third world’ countries either. But it occurred to me that the more you need to bribe agents of the state to get anything done, the worse the control the state has over the economy, and is a passable indicator of real, as opposed to nominal, economic freedom in a society.
Australia’s flagship national broadsheet, The Australian, published an article today sporting the title Cut to the bone: working poor on the rise. To illustrate this terrible phenomenon, the Oz article provides the example of Vicki and Terry Rawiri, who
[by day] worked at the supermarket, while at night Vicki, 42, weighed carcasses and Terry, 43, classified as a labourer, worked as a slaughterman.
And even then they could barely afford the gruel, you might surmise. Well – not really. This pitiable couple
were trying to get ahead by paying off the mortgage of their $365,000 [about 150 000 GBP] home in Cowra in eight years
Your heart bleeds, no? The sacrifices abject poverty forces one to make! Leaving aside the horrors of working hard to pay off one’s mortgage quickly, the article goes on to quote a survey filled with anecdotal evidence of the plight of Australia’s poor; how they cannot afford to drive registered cars, thus risking the law’s wrath in unlicenced wrecks, how they can only find $20 to go to the movies if it comes out of the food budget. Well, here’s some anecdotal evidence that I have gathered in my travels – I once worked at a very large and very busy liquor store in an especially low socio-economic suburb in Perth. The poor may not be able to drive a registered car or spend $20 on a movie, but rest assured that a large chunk of them generally have quite a lot of money to spend on alcohol. Putting that aside, the tough luck stories of a few are not borne out by hard economic data from the Australian Bureau of Statistics pertaining to the poor in the aggregate:
over the period from 1994–95 [to 2003-2004], there was an estimated 22% increase in the real mean income of both low income people and middle income people and 19% for high income people
→ Continue reading: Australia’s working poor: a tragic case
In this month’s lead essay at Cato Unbound, ‘Why Aid Doesn’t Work,’ William Easterly makes a rational case for directing international aid dollars toward programs where the results can be objectively measured by hard scientific methods. He is persuasive, but in the end, the scientific method is still just a patch, a facsimile for what is really missing: legality.
In the developed world, the distinction between government and non-government organizations is meaningful, but not in places where government is corrupt and ineffective. In a lawless state (ie, one where corruption dominates the channels through which people get things done, for good or for ill), both aid organizations and entrepreneurial warlords effectively operate by the same rules. One’s moral orientation is not the point. If the basic sphere of operation is illegal (in the deepest sense of the word), then there is little chance that your efforts will result in enlightened, long-term improvement. Will Connors, a Chicago journalist and blogger working in Ethiopia has written compellingly about corruption in the aid community there.
Any aid-before-government aparatus is still going to break down – it will just do so further down the road. As Easterly suggests, you may demonstrably produce healthier, taller, better-educated children by buying them meat to eat twice a week, but if the best they can hope for is to grow up to be a corrupt low-level official, have you really accomplished anything lasting?
Better to see aid dollars spent as investment dollars – sunk into private businesses, rather than programs of any kind. It is possible. It is even possible that the weaker the local (corrupt) government, the greater the opportunity for leveraging capital investment. In Carol Pineau’s documentary, Africa: Open For Business, the CEO of Daallo, a Somali airline, marvels that the only reason he is able to thrive is that there is no government at all in his country. No government means no corruption, he observes dryly.
Entrepreneurs are the leading men of capitalism, the venturesome protagonists who move the plot forward. But economic theory gives them few if any lines to read.
The Economist.
I think that the economics profession is showing a bit more interest in entrepreneurship, at least since the 1980s. The “Austrian” school that gave us the likes of von Mises, Ludwig Lachmann and Israel Kirzner, for instance, puts the entrepreneur pretty much front and centre of the economic picture. For sheer gusto in defending the entrepreneur, there is still to this day no better advocate in my view than George Gilder.
Should money be as free as speech? After all, it is also a form of communication.
In the past year, the internet has spawned a few companies aimed at helping individuals borrow and lend without bothering to involve a bank or credit agency. Zopa, based in the UK, aggregates individuals into groups for the purpose of making small loans, with a socially conscious slant. In the US, Prosper just launched a sleek, well-designed person-to-person lending site. Borrowers can also form groups on Prosper, for the sake of leveraging better interest rates. I also know of at least one nascent project, Bruce Boston’s Quid St., which aims to aggregate individuals for the purpose of making capital investments (as opposed to loans). I met Bruce recently, and he mentioned what an influence gaming had on his view of how to build an online marketplace. Which put me in mind of the Park Paradigm, a blog about digital markets whose authors think future finacial markets may evolve out of sports book and gambling sites. And not entirely unrelated note, Paypal made it possible just this week for people to send each other money anywhere, via cell phone.
What we are witnessing here, I think, is the creation of a new international capital market.
But we already have an international capital market, you say. Well, yes and no. When it comes to lending and investing and otherwise redistributing capital, we make do with a rudimentary, feudal system that has never really caught up with our momentum toward the free flow of other types of currency–cash, ideas, information, energy, goods and services, even political will. We have developed extremely liberal mechanisms for exchanging these forms of dynamic and stored energy, but capital remains over-managed, its governance, distribution and oversight resting in the hands of a select few.
The invention of a truly open and free capital market will be as significant a development as the invention of the printing press, affecting the free flow of wealth and opportunity much the way that invention affected the free flow of intellectual capital. 500 years after Gutenberg, it’s hard to imagine a world without cheap, plentiful and ungovernable words. One hundred years from today, it will be just as hard to remember a world where capital flowed through banks and currencies were government-issued.
Capital, and as a consequence personal wealth, will exist in a much more fluid and dynamic state than it now does, and all our discussions about wealth, wages and income will take place in an entirely new financial language. We may not end up solving poverty, so much as rendering it obsolete, all because of the technology-driven privatization of capital that is just now beginning.
That is the conclusion of research published today by Mischa Balen. Over a billion people worldwide do not have access to safe drinking water, and 2.6 billion people have no sanitation facilities. More than two million people die each year from diarrhoea, and over six million people are blind as a result of trachoma, a disease strongly related to lack of face washing. In Sub Saharan Africa, 42% of the population lacks access to decent water. This state of affairs, he finds, is caused by state failure in water systems.
What can be done? Where the private sector has been called in, it has prevented wars and conflict by creating a system of property rights and acting as an incentive to conserve; increased access to clean water; increased the treatment of sewage, thereby lowering infant mortality; cut politicisation from the supply of water; promoted sustainable development by reducing wastage.
That is great. Unfortunately, ideological opponents of markets are campaigning heavily against the private sector. They choose, he says, “not to compare private provision in reality with state provision in reality, but private provision in reality with a mythical, utopian state provision which does not exist in the real world.” No change there, then.
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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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