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The usual collection of fabulously rich but economically illiterate show biz twits are going to assemble for Bob Geldof’s Live 8 event timed to coincide with the impending G8 conference in Scotland on 6-8 July. Now God knows lampooning rock ‘n’ roll’s A-list ‘idiocracy’ is fun and easy sport, but I must confess that I have always regarded Geldof as an intellectual cut above your typical gormless entertainer, so perhaps a closer look at what is going on is in order.
Live8 is going to be a freak show, that is for sure, surrounded by pro-poverty activists (by which I mean people who argue for a world structured in a way in which more people will be a great deal poorer) such as identity obsessed feminists, pro-Saddam communists, eco-luddites and all manner of other folks with very strange ideas about the nature of reality.
Yet unlike Live Aid, the objective of which was to raise money to mitigate a clear and present humanitarian disaster in Africa, Live 8 aims to raise political awareness on African poverty. Well that sounds like a splendid idea to me. Clearly the overwhelmingly largest cause of the destitution of large areas of sub-Saharan Africa is cause directly by corrupt African governments. So it would be fair to say that as the main obstacle to African prosperity and liberty is political, then the solution too will need to be political.
To his credit, Tony Blair has often said that it makes little sense to send aid money to corrupt regimes (which makes his infatuation with the UN all the more bizarre, given that it is an institution whose job it is to disburse money which mitigates the political cost of tyranny the world over) and so perhaps if the aim of Live8 is to work up support for the disintermediation of African government from the process of solving African problems, well, that is an idea I could certainly get behind, at least in principle.
Likewise I am all in favour of gathering political support for an end to all trade barriers that keep African products out of First World markets, empowering people at both ends of the trade relationship. Now this is something calculated to split the left in an interesting way as lefties who actually do care about doing something effective for the Third World inevitably succumb to the logic of Free Trade as opposed to the current system of subsidized Western agriculture and discriminated against Third World agriculture.
So it seems to me that although the din of idiotarian drum banging will be deafening, there is actually a fairly laudable message that might, just might, come out of this whole process. Perhaps it is time for some anti-idiotarian meme hacks? I certainly hope Bureaucrash are going to put in an appearance or two in Scotland…
And since we are on the subject of ‘Star Wars’ this evening, it appears that Our Glorious Leader has finally been seduced by the ‘Dork Side’:
They are the must-have fashion accessory for the socially aware – and now Tony Blair has got in on the craze.
Whether worn to highlight racism, cancer research or poverty, coloured bands are a familiar sight on the wrists of footballers and pop stars.
Now the prime minister has been photographed wearing a white Make Poverty History wristband during a trip to a hospital in Edgware, north London.
Perhaps he wants to be in a filmy-wilmy with Gwynnie and Braddie?
[Furthermore, for a polished and forensic debunking of this cloth-headed, celebrity-driven codswallop, I recommend Stephen Pollard]
Last week, my friend Jonathan Pearce made some observations on the impending takeover of the Manchester United football club by Malcolm Glazer. This led to a lengthy comments thread that I was going to add to, but the comment in question got a little long, so I thought I would turn it into a post. In particular, I wanted to address the key question, which is simply is there any way Mr Glazer can get enough revenue from the club to pay of the large debt that has been accrued, and if so, how.
As I see it there are two sources of value in the club that the present management is not presently allowed to exploit, and to make a success of his bid Glazer needs to gain control of at least one of them. One is that television rights are sold collectively, and as a consequence the share of television money that is going to Manchester United as not comensurate with their popularity and fan base. The other is that Asian and particularly Chinese television markets are not presently competitive and as a consequence Asian television companies are paying far less for the right to show football than the matches are actually worth. I will address these two issues in turn. → Continue reading: Some more thoughts on the Manchester United business
The United States has imposed new quotas on textile imports in order to protect American textiles manufacturers from competition. The move is bad news for American consumers and it is also bad news for the world’s poorest. Some of the blame must be apportioned to the campaigns of protectionists like Britain’s Christian Aid which have been claiming – incorrectly – that textiles liberalization is not in the interests of the poor. They have helped create a worldwide feeling of unease about the end of quotas.
The result is that America has now taken action, not to help producers in developing countries, but to protect uncompetitive American producers. America’s move is unwarranted and unjustified. The former European trade commissioner and future WTO boss, Pascal Lamy, has attacked the new quotas:
Mr. Lamy said that the global trade body [WTO] had been easing out the quota system over the last decade and that all countries had been given ample opportunity to prepare for the changes.
“It is not the law of the jungle, and the W.T.O. rules were clearly set,” he said. “Why are some politicians now not recognizing that fact?”
Fortunately, the new quotas will have to go by 2008. But in the meantime, America’s move means that developing countries will have worse jobs, less wealth creation and less trade. Is this really what Christian Aid was aiming for?
Crossposted from the Globalisation Institute Blog.
These are difficult times in Western car industry. The Economist magazine reports that dark clouds are gathering in parts of the world economy, pointing to a slowing of consumer spending, higher interest rates and large government budget deficits (facts which may start to really hit the re-elected UK Labour government). I hope the Economist is wrong since I have a mortgage to pay and bills to meet, but its arguments are quite convicing. And one possible harbinger of trouble right now is the car industry.
The recent demise of British carmmaker Rover is well known. Across the pond, however, two even bigger auto firms have hit trouble, and yet caused surprisingly scant news coverage outside the serious parts of the MsM and the business news pages: General Motors and Ford. GM and Ford have been downgraded to “junk” status by international credit rating agency Standard & Poor’s. That means that as far as S&P is concerned, GM and Ford are risky debtors, and there is a relatively high chance that the rustbelt companies could default on their debt. The downgrade has sent shockwaves through the financial markets, forcing many big investors, like pension funds, to wonder about the wisdom of holding corporate bonds at all.
The problem may be confined to these firms. GM, for example, make a lot of the big SUVs that environmentalists get steamed about, and these monsters of the road are now proving more difficult to afford in a world of high oil prices. There is also a glut of cars on the world market and the industrial growth of China and India, and indeed of parts of Latin America, are a growing threat to GM and Ford’s home market.
Britain’s car industry has been through a torrid period since the 1960s, but even in the world’s largest economy, making cars is proving increasingly tough.
German’s leftwing SPD politicians have been bashing those symbols of hated capitalist activity, private equity buyout funds which look out for distressed firms, sell off some of the assets and reconstruct the remainder in the hope of turning a business around, before selling it at a profit. How shameful. Such people are “locusts” destroying Germany’s economy, scream the politicians (who of course have been doing a tremendous job on that score).
In fact, I find all this abuse rather encouraging. If entrepreneurs see value in the German economic landscape, and perceive there are rich profits to be made in turning around businesses and then flogging them off, it is very good news indeed for the country’s economy. By releasing capital from uneconomic areas and focussing it on lucrative new bits, the overall pie gets bigger, jobs get created, and productivity is also increased.
In fact, one could almost create a new economic law: the amount of abuse raining down on entrepreneurs is directly proportional to the good they do. I haven’t seen much reason to doubt this law yet.
Globalisation does funny things:
Former Baywatch star David Hasselhoff has been named international star of the year at the Bollywood movie awards in Atlantic City in the US.
He received the award because his shows, including Knight Rider, are among the most popular on Indian TV.
That is the BBC story. I also recommend this Reuters report on the event, which packs a lot of information into a small space. Such as, that:
Rani Mukherjee won the best actress award for her role “Hum Tum.”
What does Hum Tum mean? Is it a medical condition? Or is that the name of Rani Mukherjee’s character?
And I did not know that they have Bollywood awards in Atlantic City. What is that about?
Says Reuters:
The event was held in the old U.S. East Coast gambling resort of Atlantic City as part of Bollywood’s bid to be a global force in cinema.
Interesting. And I did not know this either:
Bollywood churns out around 1,000 movies a year but despite a fan base that extends to the Middle East, Europe and Asia, few movies make money and the industry is under financial pressure. Bollywood films have not had much commercial success in America.
But Shammi Kapoor, who was given a lifetime achievement award, said better technology was leading to more and better films. “They’re getting to be more topical,” he added. “They aren’t the happy, happy movies of yesteryear.”
Indians will soon be complaining that Bollywood is becoming a fifth column Frankenstein’s laboratory Trojan Horse turncoat snakepit of anti-Indianism that panders to the global market and apes its worst excesses.
This Friday, Michael Jennings will be doing my last-Friday-of-the-month talk, about China. Emergence of, economic miracle, impact on rest of world, and so on.
And, as if determined to assist me in my efforts to publicise this event, the European Union, in the person of Euro-Panjandrum Peter Mandelson, has been uttering anti-Chinese fatuities:
The European Union has called on China to reduce its clothing exports to Europe or else face enforced limits.
That was the warning given by EU trade commissioner Peter Mandelson, as he launched an EU probe into nine categories of Chinese textile exports.
Exports of certain Chinese clothing items to Europe have surged by more than 500% since an international quota system came to an end on 1 January.
Heaven forbid that the people of Europe should be allowed to buy really cheap clothes, as much as they want. Clearly this is a retrograde step, and must be resisted.
“Europe” still lectures places like China as if places like China are the Third World, and Europe, obviously, is the first. But this has a very eighteenth century Asia feel to it, to me. Europe can no more prevent itself being swamped by, flooded with, etc. (although “sold” would be a better word) cheap clothes now than Asia could then prevent the incoming tide of pots and pans, cups and plates, and shirts, made in what was then the English workshop of the world.
This nonsense seems all to be based on some Agreement that was signed a few years ago. And it perfectly illustrates the folly of such agreements, which serve only to allow the supposedly protected industries to remain somnolent for a few more precious years, thereby to lose all touch with economic reality beyond the protections behind which they briefly shelter, to the point where the pressure of economic reality becomes so immense that it is impossible to resist, at which point the protection collapses and economic melt-down duly happens.
It also illustrates Public Choice Theory rather nicely. You can be sure that hundreds of desperate European shirt and trouser makers are even now busily conspiring to explain that Mandelson is talking sense rather than nonsense. Meanwhile the people whom Mandelson is trying to harm (everyone else in Europe plus many thousands of poor workers in China) will be too busy with other things to object very loudly. After all, each of us will only suffer a bit, and anyway, what can any of us do if the EU/Peter Mandelson has decided to harm us all, a bit. That is not news. That is Euro-business as usual.
In due course, the benefits to all of us of free trade with China will be concentrated into the hands of a few illegal clothes importers. But the clothes will not be quite so good or quite so cheap.
Reuters reports on the Chinese response here. My thanks to Alex Singleton of the Globalization Institute for the links, via this, which continues to happen at the ungodly hour that was originally promised. Tim Worstall comments on the same story at the Globalization Institute blog, making similar points to mine about the concentration of the (temporary) benefits associated with protection, but the dispersed nature of the costs, and about how previous restrictions have only stored up trouble.
Meanwhile, how else is “Europe” responding to the menace of people working too hard? By having a law against it.
I am due for a fascinating teleconference in 10 minutes, but I thought this Glenn Reynold’s post nicely illustrated a real blind spot for libertarians. We tend to be market- and economics-oriented, and any concentration of attention in one area creates blind spots in others. One of those blind spots has to do with the economically irrational but irreducibly human craving for non-material benefits in the form of status, recognition, etc.
My historian-brother often says that one of the most interesting phenomena that he’s observed is the cross-cultural willingness of people to trade away economic benefits for status. I suspect that this is one example of that. So, in a surprisingly similar way, is being a politician. That’s an obviously poor economic move for most folks. But one of the drug dealers in Price’s book talks about how he likes the way he becomes the center of attention when he enters a room full of junkies. Politicians, I think, get the same thing, especially in the bubble-environments of Washington, or state capitals. I suspect, in fact, that people are, to varying degrees, hardwired to get an endorphin rush from that sort of attention, just as they’re hardwired in varying degrees to respond to drugs.
As I say, I don’t know if Levitt talks about that or not, but I think it’s one possible explanation for a lot of stuff that looks economically counterproductive.
I have a niggling sense that there is a lot more to be said on this subject, but duty calls. Go read the Instapundit post, and as always, be sure to click the concluding “Indeed.”
Yesterday I was out and about and spotted multiple front cover display of the latest Economist, with a headline which went: The flat-tax revolution.
I liked this, and took a photo of it, but it came out blurry, and before I could take a decent number to make blurriness less likely I was chased away by a security guard mumbling about copyright, etc. So here is the Economist version:
Final paragraph of the story:
It is true that the flat-tax revolutionaries of central and eastern Europe are more inclined to radicalism than their politically maturer neighbours to the west and across the Atlantic. Mobilising support for sensible change is far harder in those more advanced places – but not impossible. In tax reform, as 1986 showed, the radical programme can suddenly look easier to implement than the timid package of piecemeal changes. Now and then, the bigger the idea, and the simpler the idea, the easier it is to roll over the opposition. The flat-tax idea is big enough and simple enough to be worth taking seriously.
Portillo was wittering on yet again, on the telly last night, about how the Conservatives had to go for the “middle ground”, and electorally speaking that may well now be true, if getting votes for whatever will get votes is all that you care about. Accordingly, I look forward to the time when a flat tax is middle of the road, and when flattening the damn tax into the road so that there is nothing left of it is the “extremism” that Portillo et al will then be warning us all against.
Sean Gabb now has a report up about his efforts to knock some freeness into the heads of those self-styled fair traders. And in Alex Singleton’s Globalization Institute email this morning was a link to a write-up of the Globalization Institute in the Church press, although how significant this particular example of the Church press is I do not know. Still, it all helps. See also this posting.
In the comments on that earlier posting that flagged up the meeting in the Church last Friday night, puzzlement was expressed about why so many of these Fair Traders are in favour of free trade for the rich countries, especially in things like agriculture, yet opposed to free trade for poor countries. How come? Are they not being inconsistent?
I can suggest a possible answer that makes sense of such an apparent contradiction. Suppose that (a) you are an egalitarian, and that (b) you think free trade is harmful to whoever has it imposed upon them. That would explain it, I think. Trade freedom makes rich countries poorer, and trade unfreedom makes poor countries richer. Total bollocks of course. Egalitarianism is stupid, and the claim that trade freedom makes countries poorer and that trade unfreedom rescues poor countries is the opposite of the truth. But if that is what you are and what you think, it becomes reasonable. As in: a madman is someone who has lost everything except his reason. Impeccable logic, based on false axioms.
The result of such agitation is actually to make rich countries richer, and to keep the poor countries poor, which is the very thing these self-righteous morons spend their lives saying they object to. But there you go. There’s one born every time a celebrity clicks his/her moronic finger on the telly.
For some further thoughts on these and related matters from me from way back, see this.
It seems a bit odd that the construction industry is going on a spending campaign to persuade smart young graduates to go into the trade. I am surprised that young people really need persuading. In this age of job offshoring, redundancies in the City and suchlike, it actually makes a lot of sense to get a skill in an area that cannot be easily outsourced. Many people in the construction, plumbing and electrical trades seem to be well off, far more so in fact than some young graduate toiling away in an office job. And thanks to new British regulations designed to prevent homeowners from performing any DIY activity more complex than install a shelf or rewire a plug – for their own good! – demand for construction and home maintenance professionals looks set to go on rising into the distance.
Anyone with a supposedly “secure” job ought to think about adding another, non-outsourceable, skill. One thing I always notice about British plumbers, for example, is that they all drive Jaguars or Mercedes. It is not rocket science to figure out why.
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