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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World trade could be a powerful motor to reduce poverty, and support economic growth, but that potential is being lost. The problem is not that international trade is inherently opposed to the needs and interests of the poor, but that the rules that govern it are rigged in favour of the rich.
-Oxfam, from the Introduction to their Report Rigged Rules and Double Standards: Trade, Globalisation, and the Fight Against Poverty. See their Make Trade Fair campaign website (but don’t expect the rules to be any less rigged by the time they’ve finished with them).
No doubt anti-market commentators will be using the current troubles of U.S. broking giant Merrill Lynch to bash the capitalist system. But they would be wrong, just as wrong, in fact, as to say that the demise of U.S. energy titan Enron was a slap in the face for we free-market types.
Not so. What I think the Merrill saga shows is that in a dynamic marketplace where more and more wealth is attached to the realm of ideas rather than physical capital, it is crucial to ensure good behaviour. Merrill has suffered over doubts about the impartiality of the analyst advice given to clients. It shows how the brutal forces sweeping global capitalism can chasten the brashest of Wall Street players.
And it ought to show investors in stocks and bonds something else – let the buyer beware!
One of the things that the blogosphere provides is stories, for the mainstream media. And I’m starting to believe that the multinational pharmaceuticals corporation Pfizer – best-known in the UK, if known of at all, for producing the world-renowned wrinkly recreational drug Viagra – is a story.
The thing is, Pfizer supports the free market, with arguments and with money. The magazine Prospect, for example, now contains, on the inside of each front cover, not mere adverts for Pfizer, but essays under the heading “Pfizer forum”, frequently of a decidedly pro-free-market persuasion. In September of last year, for example, they had one by Milton Friedman.
Go to the Pfizer website. Look there under “public policy” and you get the Pfizer forum website. It turns out that one of those pro-free-market essays is by Johan Norberg and is called “In Defense of Global Capitalism”. So they’re not making much of a secret about being in favour of capitalism, are they?
I have already passed the question on through a mutual friend, of mine and of Pfizer. (He wrote one of the Pfizer forum essays.) I repeat the question here: What if the global anti-capitalist left decides to “expose” Pfizer? What if they try to turn them into corporate demons, the way they demonised Dow Chemicals (napalm, if I remember it right), and then Monsanto (genetic engineering)? What if anti-capitalist stirrers start showing up at Pfizer annual general meetings? Maybe this has been tried, but hasn’t worked.
Pfizer must have thought about this because like I say they are not supporting capitalism in secret; they are advertising that they support it. Yet if you type “Pfizer” into Google, you have to wade through a ton of pro-Pfizer material before you encounter anything remotely critical. (The first anti-Pfizer thing I spotted was Oxfam complaining about Pfizer’s attitude to their patents. I guess Pfizer believes that their patents are theirs.)
It is because most multinational corporations do not like the answers to questions like the one I am asking that they do not support capitalism other than in apologetic whispers. How come Pfizer thinks it’s good business to support it out loud? I am delighted they do. Nevertheless, why? I am sure some of this story has already been written, but not so I have noticed. And written or not, like I say, it is a story.
Cato Institute member, scourge of protectionist idiocy and blogger Brink Lindsey pays a fulsome and moving tribute to recently-deceased American steelmaker Ken Iverson, who tore up the script on how to make steel. Iverson reads like a character straight out of Ayn Rand’s Atlas Shrugged. He founded the “mini-mill” model of steel production using scrap steel and smaller, less cumbersome production techniques, founding the North Carolina firm Nuccor.
Iverson consistently opposed tariffs and other protectionist measures, believing his style of business could flourish in a free market. His success as a businessman is a poke in the eye of deluded economists and vote-grabbing politicians who think that such key industries as steel can only survive under the umbrella of government support. Iverson proved the opposite. Ken Iverson was by all accounts very different from the sleek business figures of left-wing demonology. A down to earth character who took his own phone calls and motivated his staff. He surely will take his place in the Pantheon of real capitalist heroes. Reading his brief life story helped brighten my day.
Who would have thought it? Oxfam, the charity normally associated with a fairly leftist view of overseas poverty, has released a big document charting how the best hope for the world’s poor lies in more free trade, not less. Not exactly an earth-shattering revelation to Samizdata writers or most of its readers, I am sure. Nonetheless, for such a well-known and prestigious body to have set its face against the anti-globalisation crowd is good news. It looks like this liberal (in the true sense of the word) meme of ours just keeps on spreading.
You might want to take some time today, of all days, to check out The Centre for Freedom and Prosperity. If you need to know why you should look into the idea of organising your life around off-shore banking and business, then might I suggest you need look no further than what today means for your personal wealth… or at least the part of it you are permitted to keep.
Avoiding tax all together can be difficult for most people but you owe it to yourself to try and minimise the extent to which you are financing your own repression (and mine too). It is quite possible to do it by using the law against itself, though frankly whatever means you have to use when dealing with the state is fine by me. Any oath or declaration extracted under the threat of force has no moral basis whatsoever and breaking it is just a matter of deciding based on risk/benefit analysis, not morality.
As Jason Pontin points out in his article on Red Herring, there is a bifurcation of inventiveness on the planet. A few places do all the entrepreneurial heavy lifting, the rest look on. It is not just circumstances but also cultural factors which produce innovation.
Lloyd’s of London has reported a record loss of £3.1 billion ($4.44 billion) directly related to the 11 September attacks. Similarly Swiss Re reported the largest loss in its 138-year history of 165 million Swiss francs (£69 million/$98.9 million).
This might be interpreted by some as a sign of the vulnerability of global capitalism but in fact it indicates quite the opposite. The fact that the effect of a huge capital loss in the USA can be spread around the world, rather than born entirely by the target of that loss is an impressive demonstration of the ability of modern networked capitalism systems to absorb losses and ‘keep on ticking’.
And just incidentally, it also highlights that it was far more than just the United States which was attacked by the two aircraft which crashed into the WTC.
Is that the headline you saw all over the US media the other day when the US government imposed import tariffs on Canadian lumber? No? I wonder why that was?
A question to all those people who sent me e-mails following my claims after Bush’s imposition of the steel quotas that his economic views were ludicrous. Many of you said he was just playing an inconsequential domestic political card and said George Bush was still a committed free trader. Given that:
1. A large number of US manufactured products involving steel and wood are about to become more expensive both domestically in the USA and compared to similar overseas products.
2. Other US produced goods and services are about to be made more expensive overseas due to retaliatory tariffs by the USA’s major trading partners (i.e. the people who actually have the money to buy most of the huge quantity of goods America exports).
Are you still unconcerned about the economic and political damage being done to the US economy (not to mention the rest of the world’s economy)?
Anyone opened a bank account of late? Transferred an account? Dealt in cash? Sent money abroad? Have you been sent half-insane by the form-filling and ID checking it involved?
If so, then please point an accusatory finger at people like Jonathan M. Winer a former US Deputy Assistant Secretary of State International Law Enforcement who has written a rather plaintiff article in the Financial Times exhorting the entire world to join him in his campaign against what he calls ‘dirty money’.
The anti-money laundering regime, in which doubtless Mr. Winer was instrumental, sought to scupper international terrorists and drug-dealers by imposing a regulatory regime on all financial institutions requiring them to act as investigators and policemen on the state’s behalf. I have witnessed the absurd results of this first-hand as lowly pensioners from Essex are told to hand over their passport when signing a loan agreement just in case they are really Osama Bin Laden in deep cover.
Added to the humiliation of treating people like criminals, the cost-burden on financial institutions are awesome and let us not forget the many small countries which have been bullied into surrendering their banking secrecy and legal safeguards of anonymity which are the only comparative advantages they possess.
After all that, it is more than a little galling to hear Mr. Winer say:
“Long before September 11, many other victims of wrongdoing have found that global evil-doers are better at taking advantage of the financial infrastructure of globalisation than the world’s police and regulators are at catching them”
Is it just me, or does that sound suspiciously like an admission of failure? I cannot say that I am surprised. I (along with many others) predicted long ago that these regulations would do nothing to stop or even slow down determined terrorists or drug-runners. People who are ruthless enough to fly aeroplanes into buildings are hardly going to be phased by having to practice some sleight-of-hand with a bank teller or two.
Mr. Winer goes on to remind us of just how evil money-laundering can be but, rather hilariously, cites economic woes in countries such as Argentina, Mexico and Albania as proof, while forgetting to mention that these countries were hardly paragons of financial virtue to begin with. But, this aside, there is some refreshing frankness in the article. Mr. Winer admits:
“In practice, even the most sophisticated and best-regulated financial centres have proved incapable of adequately overseeing the global enterprises they license”
You’d think that Mr. Winer might have considered this beforehand because it is screamingly obvious. Asking bankers to become policemen is not only a good way to ensure that policemen get lazy but it is also an attempt to get banks engaged in an activity that is diametrically in conflict with their primary function, like asking a cat to bark.
Mr. Winer goes on to suggest a better method for bringing these terrible terrorists and drug-runners to their knees:
“But imagine instead a white list, to make compliance a profit centre, rather than a burden on a bank. A white list – and a reward for being on it.”
This ‘white list’ is something which banks all over the world could apply to join once they have satisfied all the states criteria of compliance to the very highest degree. Then they could proudly advertise themselves as ‘the best of the best’ and all their competitiors would rush to join for the kudos it would give them. Mr.Winer expects this to be a ‘race to the top’.
This is an idea born of hope rather than judgement and is likely to be as successful as his last good idea i.e. a total dud. Complying with the standards required to get on this ‘white list’ would cripple any bank with unendurable profit-eating costs and any that were stupid enough to try would slide dolefully into liquidation while their competitors died laughing.
I am quite pleased that the likes of Mr. Winer are pinning their hopes on this because it is further confirmation that they have lost. That’s what the whole article smacks of really; an almost pathetic, desperate attempt to snatch victory from the jaws of defeat. This may be futile but it is, from Mr. Winer’s point of view, understandable because the ‘anti-money laundering regime’ is not really about drugs or terrorists at all, it is a sordid attempt at self-preservation. The global movement of capital represents a grievous threat to national tax bases, particularly those that demand up to one-half of their citizens earnings. But that little game is up if the citizens in question can move their money beyond their local tax inspectors reach.
All this chaffe about drugs and terrorists is really a vehicle by which the public sector can try to defend itself against the vigour (or what they see as ‘virulence’) of the free market and, in doing so, they are quite happy, indeed almost compelled, into press-ganging every bank clerk and accountant into their fight. But no laws that Mr. Winer can pen will upend the immutable laws of physics and, sooner or later, the international money-laundering regime will be buried in the Graveyard of Grand Schemes.
Mr. Winer’s article is not so much a helpful analysis or even a plea for help so much as notice of his intention to go down fighting.
In this report in the Times of India, US reduces reward on Bin Laden, we see the strangest manifestation of the backward bending demand curve I have ever seen!
 Update: As a couple people have ask me to simply explain what a ‘backward bending demand curve’ is, it is a strange and counter intuitive phenomenon in which sometimes as a product gets cheaper, people buy less of it or if a product gets more expensive, they buy more of it. This does not seem to make sense but it does occasionally happen.
Example 1: A high price designer ‘name label’ dress is offered at a reduced price… still out of reach of the ‘woman in the street’ buyer. Paradoxically the high end target market buy less of the dresses, presumably because the reduced price indicates it is probably ‘last years design’ (even if not true, the price is used as the primary source of information by the potential purchaser as to ‘what is hot’).
Example 2: Soviet made wristwatches, made to uncharacteristically high quality and standards were marketed in Britain in the early 1970’s. They were every bit as good as other high quality wristwatches available at the time but were almost half the price. Even though Soviet products were a relative rarity in the UK, British buyers stayed away in droves, presumably taking the view that any watch that cheap had to be complete rubbish. The Soviets were baffled but on advice from a British consultant raised the price to just below the typical UK price and they stared to sell.
Thus, the US is lowering the price on the head on Osama bin Laden in the hope the new level of reward is something rural Afghans can actually relate to in the real world. In each case the specifics are different but price is just a form of information and sometimes if the price of something is unexpectedly high or low, the effects is the opposite of what one might normally expect. That is what I mean by a ‘backward bending demand curve’!
Also on reflection, I was thinking of this in terms of the US doing the ‘selling’ of an outsourced service here (terrorist removal)… but I suppose one could argue that this is a backward bending supply curve: the US is offering money in the hope some impoverished Afghan will ‘supply’ a dead or bound-hand-and-foot Osama bin Laden 
All those people who greeted the inane steel tariffs with a yawn (“No one is interested in steel tariffs”, “it is just a bit of politics”) will be no doubt equally uninterested that the European Union, you know, the USA’s largest trading partner, is now planning fast track retaliation against the USA that will specifically target US states that benefit from the US protectionist measures.
They join Russia, Australia and Brazil looking into setting up a splendid little self-reinforcing destructive anti-international trade harmonic that will hurt everyone.
If there is anyone out there who did NOT think that international retaliation against US goods and services was the guaranteed response to the new US steel tariff, can they please e-mail me to explain why they did not think that was going to happen?
Now what were you guys saying about it not being any big deal and just being about internal US politics? So what’s next George? “Read my lips: No New Tariffs” perhaps?
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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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