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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As I have previously, ‘poverty’ is a measure of envy and class hatred Here are some measures that could make poverty worse or better.
One might imagine that importing wealthy people into a country would help reduce poverty: Bill Gates turning up in the United Kingdom with £40,000,000 would increase the average wealth of British inhabitants. In fact this makes “poverty” worse according to poverty-campaigner logic.
Let us imagine a country with nine inhabitants: a, b, c, d, e, f, g, h and i. If a, b, and c have incomes of 100 per year, d has 90, e and f have 50, h has 30 and i has 20, then total income is 540, average income is 60 and the poverty line is 30 if calculated as 50 per cent of average, or 36 if calculated as 60 per cent of average.
The next year Bill Gates arrives with an income of 500. He employs h and i for an extra 20 per year (more than they were getting before). The result is: Bill Gates 460, a, b and c 100 each, d has 90, e and f have 50, h now also has 50 and i has 40. So everyone is out of the poverty level of the year before.
But this is where relativism kicks in: the new poverty line is 52 or 57.2 (depending on the 50 or 60 percent definition). So Bill Gates has not only ‘failed’ to lift h and i out of poverty by giving them jobs that paid better, he has impoverished e and f, who were previously not poor, even though neither e nor f has lost any income.
This tells us the first lesson of tackling “poverty”: no wealthy immigrants must be allowed. In fact all inward investment is bad according to this reasoning. Now imagine that the 1,000 million poorest people in the world (average income 0.01) were to come and live in this country instead of Bill Gates. Also imagine that none of them become billionaires but remain objectively poor.
Total income becomes 10,000,540. Average income drops to 0.01000054 per year. So h with 30 and i with 20 are 3,000 and 2,000 times wealthier than the average, despite no increase in objective income. Also the billion paupers have incomes of 0.01 which is over 99.99 percent of the average, so none of them are “poor”, even though they can’t afford to buy a bread roll.
Note that if half of the billion paupers were to raise their income to the previous average (60), they would be “evil exploiters” of the poor, so would h and i, even if they were to lose 90 percent of their incomes (to 3 and 2 respectively). This means that immigrants who are below the poverty line must be kept there for the sake of “social justice”!
Therefore although all the billion immigrants will starve, they will not die in vain: they will have brought about social justice. A believer in immortal souls who suggested this policy, would be insane but sincere. The problem is that most socialists and social democrats are atheists…
In the British case executing all elderly people aged over 60 who live alone on less than average household incomes would statistically eliminate poverty: either they would be dead, or more likely they would choose to live in groups of two or three and therefore rise towards average household income levels. Executing all students would also have a similar effect. Slaughtering everyone who lives alone would be a guaranteed success in a “War on Want”.
This may appear insanely evil. Yet I have just described the policies of the Cambodian holocaust: Pol Pot really was ‘tackling poverty’.
…about people living in miserable material conditions. It is a measure of relative poverty, or a difference in material goods. This is obviously most useful for the promotion of envy and class hatred. It also allows the glossing over of the twin Marxist errors of the “pauperization of the proletariat” in advanced capitalist economies, and the notion that people have no identity outside their membership of an economically determined class.
It is handy for promoters of class hatred to use ‘poverty’ as an issue. First the relative measure is easy to falsify. It is notorious that in the UK, satellite television dishes appeared disproportionately (in the late 1980s early 1990s) among low-income families before spreading to higher income brackets. On the other hand the only people I’ve ever met who didn’t own television sets in the UK were both in the top 20 per cent of incomes.
What value does one put on television ownership? The price of the set? How does one measure the value of the service provided by broadcasting? What about foreign holidays? If a low-income family travels to Spain for the same relative price as their parents once went to Morecombe on the British coast, are they really no better off?
Taking the measure of a household 60 per cent below the average household I once discovered a cute fraud in the British Household Survey (I’m sorry I don’t recall the year but it was in the early 1990s). “Household” is not the same thing as a house full of people. The bottom fifteen per cent households in the UK in the early 1990s had an average of 1.1 people living in them. The top fifteen percent had over four people living in them. The age distribution was equally revealing. I forget the exact figures, but elderly people and students were the bulk of the bottom fifteen percent of the population. This of course fits with what we know of individual people’s incomes over a lifetime: low-income as a youth, rising income until retirement and a drop in income except where large capital savings have been made.
I calculated that the income per person of the top fifteen percent households was about five times that of the bottom fifteen percent per person households, after taxes and cash benefits were taken into account. Considering that students and elderly people aren’t generally earning salaries, or of they are, these would often be part-time or seasonal, British “poverty” isn’t all its cranked out to be by campaigners for class hatred.
This has intriguing consequences for ways of “tackling poverty”…
More on this subject tomorrow
David Goldstone has discovered that ‘voodoo economics’ is alive and well and living in Broadcasting House in Portland Place, London
Yesterday I discovered that:
The UK has the second highest rate of poverty in the European Union, with 22% in poverty compared to the EU average of 15%. Only Greece is higher. The Scandinavian countries and the Netherlands, with their highly-developed welfare states, have the lowest poverty rates.
Even worse…
The number of people living below the poverty line… is twice as high as it was 20 years ago.
How can this be? Have real incomes not risen in the last 20 years? Has trickle-down failed? Is capitalism not producing more capital? Should I take up socialism?
Well, it turns out that “poverty” BBC-style means anybody with an income below 60% of the median, regardless of the fact the purchasing power of that median has been almost constantly rising. How does the fact some people get richer (in fact most people over the last 20 years) actually make other people somehow poorer?
David Goldstone
Paul Marks points out that it is the spending rather than the taxing which is the root of governments woe
People (not just us evil libertarians) often complain about taxation and there have been many attempts to reduce or at least limit it – these attempts have mostly been unsuccessful.
Few governments tax in order to create piles of money in their store houses – governments normally tax to spend. If we are to limit (let alone reduce) taxation it is government spending that we must fight. Limit one tax and the government will increase another – limit them all and government will borrow, ban borrowing and the fight come back to spending – i.e. (in the end) the fight is about government spending.
As far as I know there is only one State in the U.S. which shows (in its’ laws) a clear understanding of this and that State is Colorado. Colorado has many problems and I would not claim it is the most free market State (although it is one of the smaller government States), but I think that its spending based version of a “Taxpayers Bill of Rights” has, over the few years of its’ history, proved to be useful thing.
In Colorado government spending can only be increased in line with an increase in population or an increase in prices (yes I know there are all sorts of problems with the idea of a price index – but I will not go into that here). This would seem to a be a very moderate limitation – but (as far as I know) there is not another State in the Union that has such a limitations. Over the last few years Colorado has reduced the burden of taxation (i.e total taxes as a percentage of income – not reduced one tax and increased another) and balanced the budget.
The key really is government spending. To convince people that if they want some special benefit from government another benefit will have to be abolished (not just the total spending of the government increased).
In the end the fight has to be about spending. Whatever waffle either side comes out with about the “institutions of a just society” what matters is where the money goes. If we allow people to convince others that government spending is a “good thing” then all the anti tax and anti borrowing campaigns in the world will not save us.
Paul Marks
Shop ’til you drop day!
Some who think poverty is a noble, exalted state would have you buy nothing today, calling it ‘Buy nothing day’. But those who reject the Luddite anti-life call of atavistic collectivism know better.
Every November 30th, we all need to remind ourselves that due to the creeping spread of global capitalism, more of humanity has been lifted above a subsistence level of existence than at any other time in the history of our species.
Plumbers, builders, postmen, farm workers, sailors… all owning technological marvels like motorcars, televisions, computers, all having unheard of life expectancies. This occurs not because of central planning, but rather in spite of it… yet somehow Paris gets fed.
So on November 30th go out and turn your mundane daily participation in the capitalist system into a celebration of it! Make it special. Go out and buy the one you love a book they have wanted but is only available in hardback or maybe even a nice sheepskin coat for the winter. You know it makes sense.
Sean Gabb has written a particularly interesting Free Life Commentary called Is There a Right in Ireland? In this he recounts the substance of a radio interview he gave for an Irish radio station.
I explained why foreign aid is a bad idea. It is the negation of charity for a government to take money from people and to give this to other people, no matter how hungry they are. Charity is by definition an act of choice: interpose the tax gatherer between doner and recipient, and there is no charity. Regardless of its moral status, it is also an unwise transfer of funds. As Peter Bauer once said, foreign aid is the process by which money is taken from poor people in rich countries and given to rich people in poor countries. Very little of the aid ever reaches the advertised recipients. At best, most of it is stolen by those in charge of distributing it. At worst, it becomes a cushion for corrupt and oppressive ruling classes. They can insulate themselves from the effects of their policies. Directly or indirectly, they can get the money to pay the security services on which their power rests. Much better than aid, I said, was free trade with poor countries. That does raise incomes.
But the part of it that particularly fascinated me is the amazed fury his comments caused to both the radio presenter and a charity worker present. Not just shock at the points he made but at the very notion that someone would make them. It seems such ideas were completely alien, unknown, unheard of apparently. It was as if Sean had suggested the world was spherical to people which accepted as axiomatic that the world was flat. → Continue reading: Evidence is so often trumped by emotional preference
The England cricket team, having been utterly smashed in the first test match at Brisbane last week, is now being broken into even smaller pieces by the Australian second eleven, prior to heaven knows what humiliations in the rest of the test matches. England are also now being hammered by Australia in the rugby at Twickenham (oh, hang about, England have scored sixteen unanswered points and now lead by 32-31 with ten minutes left – so forget that) but, the Old Country – sorry, make that “Ancient Enemy” – is still the one dishing out the punishment where it really matters. Take a look at this:
- The Mont Pelerin Society is a secretive, elite group;
- It has less than 500 members worldwide;
- It was founded in 1947 as a cult which worships the free market.
- It designed the policies of financial deregulation, privatization, Competition and free trade. These policies have wrecked Australia and other countries around the world.
- Mont Pelerin is directed from the highest levels of British Intelligence.
Although whoever wrote all this tries hard to dress up the Mont Pelerin Society (whom we have listed on our links page for ages) as an ultra-secret conspiracy, he actually ends up describing how it has operated really quite well.
→ Continue reading: “Don’t let them suck the blood out of New South Wales!”
There is an interesting interview with Frank Shostak over on the Ludwig von Mises Institute.
The US Federal Reserve discourages savings whilst at the same time encouraging mal-investment. Simple common sense would suggest that if interest rates of a mere 1.75 percent have not jolted the US economy out of its torpor, then 1.25 percent is not going to do it either. Interest rates are effectively at zero in Japan and that has produced little or nothing in terms of economic revival.
Yet again the state’s capacity to do harm far outweighs its capacity to do good. The problem is not so much the policies of the Federal reserve, but that there is such a thing as ‘The Federal Reserve’.
Alas so many people everywhere cannot seem to imagine the world continuing to spin on its axis without things like The Federal Reserve, The Department of ‘Education’, The Bundesbank, the BBC, The National Health Service, Income Tax etc. etc… they are just part of their fabric of reality. I have often found that any person who suggest they simply be abolished is treated as if they had suggested amputating a limb, rather than excising a tumour. The truth hurts and no one ever thanks you for hurting them.
Paul Marks points out that there is no imposed structure can achieve what a real market can
Last Sunday there was a big storm in Britain, power was been cut off for a lot of people and some of these households are only now being reconnected.
There have been a lot of attacks on the power companies, but (as far as I know) no one in the media has pointed out that the present set up is not free enterprise at all – it is a government effort to create ‘perfect competition’.
Now ‘perfect competition’ is something that exists in neoclassical economics textbooks – here lots of similar companies (similar assets, similar knowledge, similar just-about-everything) compete in a sort of mathematical game.
In real life enterprises build things and own them. For example a railway is built, or a gas line, or a telephone line, or an electricity line.
Complexity may evolve (with different people owning the track and the trains on a railway, or there being ‘producers’ and ‘providers’ in electricity supply), but any attempt to impose a complex scheme is likely to turn out to be a mess.
In transport the natural competitors for a railway are roads, canals and airlines. The endlessly complicated spiders web of regulations in Britain (to make sure that different people owned the track and ran the trains and that the train operators only ran the trains for a certain period of time, and so on and so on), just caused a mess.
Against electricity the main competitors are gas and (to a much lesser extent) home generation (by solar cells, open coal fires or whatever). Again complexity may evolve (with different companies producing the electricity and supplying it and, perhaps, even different suppliers offering to supply the same household), but any attempt to impose a complex scheme (via endless regulations and administrators) is bound to cause problems – and it has.
In the end what matters is not ‘perfect competition’ but ownership – having a company that owns assets and is responsible if it fails to provide the power that people have paid for.
Paul Marks
What so many of capitalism’s defenders seem to miss is that just because a large company is doing something legally, that does not mean it is ‘kosher’ capitalism. In Germany in the 1930’s and 1940’s, companies like Krupp and Seimens remained under entrenched private management in spite of the National Socialist German Workers Party coming to power, or more accurately, because of the new overtly anti-capitalist government.
They did this by running their companies in such a manner as to support the objectives of the National Socialists. In return, the state ensured they maintained a privileged position, insulated from upstart new market entrants in their respective fields. These companies, working hand in glove with the state, could ensure that national laws would be adjusted as needed to support whatever business models the entrenched companies liked, and the state could be sure that company strategies would be based servicing the needs and objectives of the Nazi Party, not to mention paying backhanders to leading Party members.
Of course, one does not have to look as far back as National Socialist Germany of the 1940’s to see examples of companies trying to manipulate the state to prop up an entrenched way of doing things: for the last few years the music industry in the United States has been trying to use the law of the land to crush challenges to its old physical media based business models. Rather than running their business in the interests of the state, nowadays in modern democratic statist political systems, large companies spend vast sums on lobbyists and on funding the election campaigns of politicians who might as well have an hourly rate for their services stamped on their foreheads.
Now in Australia, Microsoft looks ready to try and buy themselves some legislation for much the same reasons after an Australian court declined to stop people modifying XBox hardware:
Microsoft would be forced to reconsider selling the Xbox video game system in Australia, or seek changes to the law, following the acquittal in July of a Sydney man alleged to have sold chips that modify a Sony PlayStation 2 to play imported games, Microsoft chief executive Steve Ballmer said yesterday.
[…]
“Given the way the economic model works, and that is a subsidy followed, essentially, by fees for every piece of software sold, our licence framework has to do that,” Mr Ballmer said. “If there are aspects that are not allowed, it would encourage us to require a change in the legal framework. Otherwise, it wouldn’t make economic sense.”
As usual a pure laissez-faire solution beckons: if Australia refuses to criminalize innovation and therefore Microsoft declines to sell its XBox Games Consols down under, then simply abolish all the idiotic import restrictions and tariffs currently clogging up Australia’s economy and then… who gives a damn where Microsoft chooses to sell their products: if there is a demand for XBox in Oz, a ‘grey market’ will rapidly appear as capitalist importers across the world buy up XBoxs by the container load elsewhere (such as Taiwan, USA, India) and ship them in themselves.
If that busts MS’s business model, so what? Let them find another one that actually works without the involvement of police around the world to make it succeed.
End of problem.
There’s a little flurry of debate going on about oil, and what it’s used for. Alex Knapp of Heretical Ideas (Tuesday Oct 22 – the direct link doesn’t work) has just one word to say to us: plastics. His point is a good one: oil is not just for making cars and lorries go. Our entire economies now depend on it.
And here’s another point about oil. It is said by some of its opponents that the war that GWB2 wants to start Real Soon Now is really only about oil, only about keeping western economies well supplied, only about economics. And it is agreed by almost everyone that the President is being so delicate with the Saudis, again only because of the vast amounts of oil that they dispose of.
Only? War is a matter of life and death, but so is economics. I’m not saying that this war is/will be only an oil war. (I don’t think this at all as it happens, but that’s not my argument here.) Nor am I saying that all oil wars are good wars. Nor am I saying that the Saudis should be allowed to get away with absolutely anything, and with paying for absolutely anything, for ever, because giving them a seeing to would be too costly, in oil. I’m merely saying this: that when economies flounder people die. They go out of business, get divorced, get stressed and die of heart attacks, commit suicide. They torment one another, beat their kids, the kids leave home, the kids rob people, the kids kill people, the kids die, …
How many gallons of oil are worth the life, by which I mean the death, of one young soldier? It’s not a stupid or merely a rhetorical question. The serious answer cannot be that no amount of oil could possibly be worth any blood. No amount? Any? Just think about that.
All those studies proving that poverty is bad for you and can even kill you are true. They’re wrong only when they say that the way to reduce poverty is to nationalise it.
If you are anything like me, then you missed out on the annual Socially Responsible Investors in the Rockies Conference, which commenced this past weekend. Luckily, Reuters told us all about it.
Socially Responsible Investing, as we will see shortly, has become a big business in and of itself. But what to make of this concept? You might expect me to ridicule the whole movement, but I am not going to. Libertarians believe that the “responsibilities” of a corporation boil down to maximizing shareholder value while complying with the law, but I can find a lot of common ground with the SRI crowd. The problem is that an investor who tries to incoporate SRI principles into his portfolio will be led down any number of blind alleys.
In theory, I think that SRI is a great idea. If progressive types feel the need to bathe themselves in self-congratulatory rhetoric before participating in the capitalist system, that is fine with me. We would all be better off if environmentalists and consumer advocates used their own actual money to try to make things better, rather than pester the rest of us with their demands for more burdensome regulatory restrictions. Under the right conditions, even the most avowed socialists are willing to play — as his financial disclosure for the 2000 presidential race makes clear, Ralph Nader invests heavily in corporate equities (PDF file, requires Adobe Acrobat Reader or similar). (Heh heh, OpenSecrets.org strikes again!)
Unfortunately, determining which companies are “socially responsible” quickly degenerates into a Sisyphean task. What will be the next “politically incorrect” technology or product? Fast food? Cell phones? Tanning salons? Big Chocolate? What will be the next country to face a Chomsky-approved “divestment campaign” a la Israel? I have some very recent finance textbooks that celebrate the exemplary corporate citizenship of… Enron. → Continue reading: Socially Indifferent Investing
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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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