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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The recent massive U.S. government increase in subsidy to its domestic farmers comes in for a deserved and amusing mauling from Daily Telegraph journalist and Tory MP Boris Johnson. He is right to point out that by signing off the vast increase in aid to American farmers, Bush has compounded the damage to international free markets made when he agreed to steel and lumber tariffs earlier in the year.
On a broader point, this makes me wonder whether Bush is headed for going down in history as one of the most protectionist Presidents since the Second World War. On the domestic front his pre-election agenda seems to fallen apart with the exception of the tax cut. Instead, Bush is resorting to pork-barrel politics to shore up support in supposed key states for the Republicans ahead of the Congressional elections this autumn. Of course, we libertarians hold no illusions about politicians as a group, so I suppose Bush’s slide into cynicism should not surprise us. But I never thought I could write the following words – I am beginning to miss Bill Clinton. At least he believed in free trade, if nothing else.
As everyone knows by now, US Treasury Secretary Paul O’Neill and U2 frontman Paul “Bono” Hewson just completed a week-long tour of Africa. While the unlikely pair seem to play off each each other well on stage, and seem to be getting along well offstage, it is not entirely clear how Mr. Bono has suddenly emerged as a power-broker. Several news sources attributed this quote to the man with the wraparound shades:
“[O’Neill] is the man in charge of America’s wallet … and it’s true, I want to open that wallet.”
None of the news sources I saw chose to elaborate on this comment’s obvious falseness. The treasury cannot release any funds until the proper appropriation and authorization bills have made their way through Congress. (I will cut Mr. Hewson some slack because he is not an American; but if certain members of the press need a refresher course in this area, I would recommend that they review their Schoolhouse Rock.) At any rate, it makes you wonder why we should take anything else the guy says seriously.
Bono’s cause is third-world debt relief. He argues that the heavy external debts of foreign governments are the principal obstacle to their emergence from poverty. We shall examine those claims briefly. How effective are official debt-relief programs in improving economic performance? Well, we can let history be the judge, since we have tried this before. In the late 1980s, the US treasury department began a debt-relief program called the Brady Plan, in which creditor banks were encouraged (through the stick / carrot of the federal tax code) to refinance debt at subsidized rates and reduce principal levels by allowing banks to replace severely discounted loans with new debt at levels closer to par value.
Was the Brady Plan a success? It depends on how you define success. If the objective was debt reduction as an end in itself, then the Brady Plan looked good — more than $60 billion in foreign debt was forgiven, by one estimate. But did the Brady Plan succeed on a larger scale, i.e. did it promote economic growth and encourage more responsible borrowing by third world governments? Sorry, Bono, but the track record there is not so good.
In his book International Debt Reexamined (unfortunately no longer in print, though I have a copy from my grad-school days), economist William R. Cline demonstrates that the economies of Brady Plan participants did not outperform those of nonparticipants with similar debt levels in the 1990s. So much for the argument that debt relief is a sine qua non of future economic growth.
Moreover, there is evidence that the Brady Plan (and other official debt relief programs) merely crowded out private debt relief efforts such as debt-for-equity and debt-for-nature swaps, which had commendably been on the rise throughout the mid to late 1980s. The announcement of the Plan itself had the effect of encouraging further profligacy — if your mortgage banker announced that it might be forgiving or substantially reducing your mortgage debt in the near future, wouldn’t you think twice before mailing in your next payment?
Bono’s line of reasoning on third-world debt would have found a favorable audience with economists a generation ago, but has long since fallen out of respectability. The new generation of development economists, spearheaded by the Peruvian economist and think-tank chairman Hernando de Soto, argues that the people of the third world already hold the solution to their poverty. This makes things difficult for would-be celebrity messiahs like Bono. Sorry, pal, but the world is ready to move on, with or without you.
… Paul Staines does not think so!
British Chancellor Gordon Brown’s recent splurge on the National Health Service was supposed to be supported by a bouyant economy, but first quarter figures (just released) are terrible.
Manufacturing output tumbled by 1.5 per cent, leaving it 6.5 per cent down on the same time last year ÷ the biggest annual decline since the recession of the early Eighties. A further slump in exports, by nearly 7 per cent, also took a heavy toll.
On the plus side that means mortgage rates are very unlikely to rise near term, but taxes may be more likely to rise as the economy stagnates – unless you think New Labour would actually consider reducing state spending?
As the graphic shows we have slipped from first to last in the G7 growth league – as the other G7 countries voters all shifted rightwards.
Things are going to get more difficult for Brown, sooner rather than later.
Paul Staines
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)?
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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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