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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I attended a one-day conference on the EU Constitution today, drawing together an eclectic mixture of people from all parts of the political spectrum, both British and foreign, and all united on the need to get a decisive No vote in the event that Mr Blair decides to hold a referendum on one (let’s pray it is not done by postal vote, god help us). I attended the morning session and drifted home for lunch with my head still ringing with one of the best speeches by a politician I have heard for years.
The politician’s name is Steve Radford and he is a Liberal Party councillor in England. His party is the bit that refused to merge with the old Social Democrats and decided to keep the flame of Gladstone, Richard Cobden and Joe Grimmond burning bright. Well, if Mr Radford’s performance was a guide, the Liberal Party is a very interesting outfit indeed. He denounced the European Union’s economic tariffs most effectively by holding up a bag of sugar and pointed out that the price of the bag is inflated fourfold by tariffs. He denounced the rampant corruption, cronyism and lack of democratic accountability of the EU, a situation which will get only worse if the EU Constitution becomes a fact. He was passionate in making the free market case – all too rare these days, and frequently very funny.
It is refreshing to hear an actual big-L Liberal refer to the anti-Corn Law League and the great campaign to promote free trade by the likes of Richard Cobden. I don’t know about all his views on other subjects, but if every member of the Liberal Party were like this man, I’d very seriously consider voting for it.
I hope we haven’t heard the last of this gentleman.
How long Economics in One Lesson has been available to read free, online, I have no idea, but since she only just heard about this, I feel entitled to say with similar lack of shame (unless of course a fellow Samizdatista has already flagged this up and I missed it) that her posting was how I finally found out about this myself.
It has been a while since I read this book. The bit I recall with the greatest vividness concerned the broken window fallacy. This fallacy says, fallaciously, that broken windows are good for the economy because they are good for the window-mending business. What the broken window fallacy neglects to mention is that broken windows are bad for all the businesses that the window mending money might have gone to instead, but now cannot.
The most extreme statement of this fallacy is the claim that the ultimate window breaker, war, is good for the economy, because that way lots of work is “created” in all the industries that subsequently set to work to repair the destruction. When Keynesian economics was in its pomp, you did hear people actually saying this. Maybe, if those are the kind of circles you still move in, you still do.
Yet war is creative, in a back-handed way, and provided that you lose. It destroys wealth, but it can also destroy certain impediments to future wealth creation. Mancur Olsen, in his book (alas not available on line so far as I know) The Rise and Decline of Nations (lots of five stars out of five reviews here), says that, yes of course, losing a war does destroy wealth, but that it also destroys what he calls “distributional coalitions”. In plainer language, losing a war breaks up politically well-connected rackets, like state-enforced cartels and trade-unions. Thus the post-WW2 economic miracles of Germany and Japan.
This is what you would call a high risk strategy for achieving economic dynamism. I mean, just for starters, be careful who you lose your war to. Pick the wrong country to surrender to and you are liable to end up with an even huger, politically even better connected racket, in the form of your rapacious conquerors. In other words, broken windows followed by more broken windows, and nobody ever mending them.
My good friends who run the Big Blog Company do not like to use Samizdata to promote the Big Blog Company as much as they might, because this is not cool. It is not good blogging practice. But I am only doing this incidentally when I link to the latest posting on their blog. My main purpose is to promote myself, which I suppose is not all that cool either, but there you go.
Said I, here:
A new market is chaotic, and (and this is the point) ignorant. People do not, e.g., know how to spot cowboy operators, or bad products made in all sincerity but badly. Ignorance and foolishness abound, and so to start with, down goes the graph of achievement. . . .
And, back from her tBBC promotional trip to LA, Jackie D said, this very morning, this:
Unfortunately, I wasn’t making it up when I recounted to her how one PR flack we met in LA boasted of how his firm lies to big corporations and promises them good coverage on their “big traffic,” fake blog. The blog itself has been set up by the PR company for the express purpose of scamming companies into paying out substantial amounts of cash for positive postings on it. Looking at the blog, it seems to be authored by an anonymous nobody . . . who just so happens to pepper his commentary with glowing mentions of the PR company’s clients, and negative remarks about their competition.
That is a classic description of how a genuinely new market (as opposed to a made-to-sound-like-a-market governmental rearrangement of a non-market) starts out by working – i.e. not working.
Stay with it guys. In the long run, you will get rich. If you can still be there when the long run starts to run. Eventually all those corporations will start to really understand blogging, and to want help to do the real thing.
To continue my own quote:
. . . But then, if this really is a true market, things bottom out and start to improve and in the longer run the result is a market that is orders of magnitude better . . .
Or, to put it another way:
Anti-liberal NGOs like War on Want and the World Development Movement are using World Water Day (today) to campaign against private investment in water infrastructure. The World Development Movement says that water privatization is: “making it less likely that clean water will ever get to the poorest people.”
Unfortunately the World Development Movement is mistaken. As Global Growth’s development economist, Paul Staines, says (pdf file):
Practical and technological requirements for huge sanitation projects on a metropolis-wide scale require the resources of big enterprises to implement them, the private sector can not only provide the capability but also the capital required. 2 billion people thirst for clean water, Western antiglobalisation NGOs who arrogantly put their ideological interest ahead of the interests of the developing world are full of **it, and if they succeed in their campaign the fast growing cities of the developing world will be as well.
Private investment in water is expanding access to clean, running water. It contrasts strongly with nationalized water systems where politically-favoured groups receive below-cost water, starving off future investment so that unfavoured groups go without. Private investment offers the best plan for increasing access to water.
Crossposted from the Globalisation Institute Blog.
So, on the one hand, you have cheap microwave ovens from Szechuan province. Wonderful.
But, on the other hand, you get this:
The world’s first global health treaty – the Framework Convention on Tobacco Control – comes into force on Sunday.
The anti-smoking pact has been signed by 168 countries, and ratified by 57 of them, which will now have to tighten their anti-tobacco laws.
Not so wonderful. Welcome to the globalized world.
My February last Friday has just ended, and it was definitely one of the better ones. Patrick Crozier spoke about libertarianism and private road ownership. Excellent talk, excellent discussion. The result of Patrick’s time writing for and bossing the now only archived Transport Blog, which he has now ended. (He now writes this.)
Among those present was Alex Singleton, and he naturally talked about his newly launched Globalization Institute, which, of course, has a new blog.
It occurs to me that you might expect the word itself, ‘globalisation’ (I prefer an ‘s’ in the middle there), to be the equivalent, at the global level, of ‘nationalisation’ at the national level. Yet, while nationalisation means the national government stealing things, globalisation means something quite different and much nicer. If globalisation was the same at the global level as nationalisation is at the national level, globalisation would mean a World Government stealing things.
Does this matter? Well, maybe it does, because we surely do need a word to describe the equivalent of nationalisation, but at the global level. I have been drinking and may have forgotten the obvious, but my impression is: we do not have such a word.
Surely the existence of the word ‘nationalisation’ made it far easier to oppose the thing itself. Not having a word for this other form of ‘globalisation’, predation by the government of the globe, makes it harder to oppose, I think.
Well it seems that today, short little link-pieces are okay, so here is a short little link piece, with links to these mealy-mouthed trimmers, arguing for a flat tax, and to me, arguing that mere flatness is not the point. Just having a flat roof to the graph is a hideous compromise. It must be flattened until it is zero-height roadkill. (Metaphor muddle there, but I hope you get the picture.) Seriously, this is one of my best diatribes (“THE TOP RATE OF INCOME TAX SHOULD BE CUT TO ZERO”) from my time as a Libertarian Alliance pulpit banger, and I recommend that you read the whole thing, even if it is only a .pdf.
When the world in due course sees the wisdom of this proposal and enacts in universally, the result will be that there will remain a top rate of income tax, but that whatever money you earn above the level at which the top rate of income tax kicks in, you keep. All of it. These flat-raters say that it should be fifteen percent or whatever for everything you earn. I say, once you have paid your share of the rent, you should keep the lot.
Sorry, I went on a bit there.
Alex Singleton says that this is good news:
The Royal Mail will lose its monopoly on delivering Britain’s letters on Jan. 1, an industry regulator announced Friday – 15 months earlier than originally planned.
Regulator Postcomm said that from the beginning of 2006 private companies will be able to bid for licenses to deliver letters, previously the sole preserve of the state-backed Royal Mail Group PLC.
Postcomm chairman Nigel Stapleton said more competition would create “a more innovative and efficient postal industry.”
“This is only the first step in a process which the commission hopes will eventually see market forces replace regulation as the main driver of an efficient and effective mail industry,” he said.
Bulk mail delivery is already open to competition, but domestic letter services are the exclusive domain of the Royal Mail.
I agree. I have no problem with the principle that postal services ought to be competitive rather than monopolistic, and most of the arguments I hear which allegedly defend that monopoly strike me as misguided. For instance, I have never understood why sending a letter to people living at the far end of beyond in the deep, deep countryside, should cost no more than sending a letter from a dweller in a city to another dweller in the same city. If a competitive postal delivery service wants to have a one-price-fits-all policy, as many do, for simplicity’s sake, fine. If it wants to deliver non-urgent packages sent by me to someone half a mile from me by sending them to Birmingham and back, again: their problem (and their solution) rather than mine. But if other postal services want to ‘skim’, that is, do only easy deliveries (and maybe do them really, really quickly), and thereby force a little product differentiation into this market, well, again, why not? Making a bicycle is easier and cheaper than making a luxury car, and bikes accordingly change hands for far less. Where is the problem with that? Why should both cost the same?
Add all the obvious advantages associated with competitors competing with each other to establish reputations for reliable, efficient and really clever service, and you get a compelling case for a free market.
There is also the point, which I was only reminded of when deciding whether to label this as being about “globalization”, that postal services these days cry out to be global, rather than merely national with global stuff treated as a bolted-on afterthought.
However, I believe that I do see one problem with this particular exercise in demonopolisation. → Continue reading: Demonopolising postal services: the front door problem
We all knew that, of course. But when the Manolo puts the evil eye on you, well, time to update your will, launder your cash, gas up the Lear, and oil the hinges on the back door.
Beautiful shoes for everyone! Death to the tyrant who would deny the peoples the beautiful shoes! This it is the political philosophy of the Manolo.
The Cuban embargo should be lifted, not for ideological libertarian reasons, but for pragmatic ones. Doing so will unleash a tide of cash and goods into Cuba, not to mention Americans, and nothing could be more corrosive of the tyrannical regime there.
Much as I love cigars, I won’t buy Cuban cigars, because that is a state-controlled industry and I choose not to do business with the Cuban state. (Plus, I think they are overrated). I would go to Cuba, though, after the embargo is lifted because doing so would allow me to circumvent the state, meet real Cubans, and undermine a Stalinist bastard in my own small way.
Sarah, after her first day (as an intern?) at the Fairtrade Foundation:
I don’t suppose trade can ever be fair. Someone always has to lose. It’s just they lose less with fair trade than with the regular variety.
Milton Friedman:
Adam Smith’s key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange can take place unless both parties do benefit.
A few weeks ago, I attended one of the talks that are hosted in London by Brian Micklethwait on the last Friday of every month. The speaker was fellow Samizdatista Alex Singleton, and was essentially on the subject of why globalisation is good (and was incidentally about Alex’s new think tank devoted to this very issue).
In the discussion after the talk, one thing that came up was the benefits of global economies of scale and global competition in manufacturing, retailing and the supply chains in between. A point made was that although it is certainly the case that prices on many goods (clothes and electronics being the examples brought up) have dropped due to retailers being able to easily shop throughout the whole world for products to sell, we do not really yet see customers buying goods directly from foreign retailers. Internet commerce is becoming large, but mostly it is domestic in nature.
However, something happened to me this week that made me think that perhaps more international commerce is happening than we realise, and that a lot of it is happening under the radar.
My present mobile phone is a Motorola v500, which is a lovely phone. (Motorola has always had great engineering. Five years ago they were losing badly to Nokia, who had inferior engineering but better industrial design and better user interfaces, but in recent times they have caught up in both regards). However, it has a small external antenna, which is removable and screws into the phone. As it happened, the thread on the antenna became damaged, and I needed a new antenna.
I went into the Carphone Warehouse store from which I had bought the phone, and they were sympathetic but not very helpful. They were more interested in selling new phones and high mark up accessories than tiny replacement antennas. (They suggested that I visit their repair centre in a different part of London or check the Motorola website). I went to a couple of other mobile phone shops with similar results. Checking the Motorola website led to similar results.
So what to do. Well, I checked on ebay, found that there were plenty of people selling replacement antennas for my phone, put in a bid, and purchased an antenna, online, for £2.77 including postage. Although an antenna probably costs 5 cents to make, I suspect that if I had gone to a “repair centre”, I would have been charged considerably more than £2.70 for a new one, and the other advantage of buying on ebay is that the new one would arrive in the mail in a couple of days.
Just as I was logging out of ebay, I noticed something else, which was “Location of Seller: Singapore”. So it turned out that it was easier and cheaper for me to obtain a new antenna from some guy in Singapore than from a local retailer in London.
Thinking about it some more, I suspect that a lot of this is typical. If you set up a “shop”, then there are still restrictions on where you can obtain goods from and who you can sell to. The producers of branded goods still try very hard to make sure that retailers only sell goods that have been bought from the “authorised distributor” of their brand in a particular country, and that they only sell to people in the same market. In a world where every buyer is also potentially a seller, and where goods can be sold on to people elsewhere in the world, though, this is hard to enforce. And what we do have now are large, trusted companies that act as brokers of goods of all kind. Ebay is the classic example, but as I have discussed before, more and more of Amazon’s business is of this kind too, acting as a broker for third party sellers. I haven’t seen any statistics in the percentage of this kind of trade that is cross border, but I suspect it is growing. (I also buy large numbers of DVDs from the US and Canada through third party sellers via Amazon).
Quite sadly, there is also another obstacle to the growth in this kind of cross border commerce. If you send something through the mail, it is subject to cross border bureaucratic interference in the terms of customs duties and local taxes. (In the case of importing most goods into Britain, the issue is the payment of VAT). If you receive a package and HM Customs and Excise decides to charge you VAT on it, then rather than receiving the goods through the mail, you receive a card explaining the situation. You then have to visit the local post office, and pay the VAT plus an “administration charge” before receiving your goods. The inconvenience and the administration charge can between them make it no longer worth your while to buy from overseas in the first place, which is irritating. Ultimatelly it isn’t so much the tax as the inconvenience that goes with it.
But of course there is a loophole. The VAT is waived if the total value of the goods is less than £18. This regulation was presumably brought in some time in the past to avoid the inconvenience of having to charge tax on every small gift sent throught the mail, but it has now grown into being an examption widely used by customers of internet commerce. You learn not to order multiple DVDs in the same package but to order them one at a time. The additional postage costs are often as much or greater than the tax would be, but this way you avoid the bureaucracy. This doesn’t precisely improve the economic efficiency of the whole process, but the exemption is great enough to allow a large global economy to exist in goods under about £18, whereas there are substantial restrictions on trade in goods of higher value. None the less, some stores have set up specifically in order to take advantage of this tax advantage (Amazon Jersey for instance).
One would hope that someday this exemption would be so widely used that it will lead governments to remove the taxes in resignation, but this is sadly much too hopeful. More likely are attempts to charge taxes on all goods, however small, and much more government intrusion into commerce. And it is the intrusion and bureaucracy that is likely to really be economically destructive, even more so than the taxes themselves.
“This is why all goods must have a price set on them; for then there will always be exchange and, if so, association of man with man.”
Aristotle, quoted in Nicomanchean Ethics.
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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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