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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When I was a schoolboy some rather smug wag made me look utterly foolish by asking me which I thought would weigh more: a ton of steel or a ton of feathers? “Oh the steel, obviously” I said. Think about it.
Fast forward 25 years and the subject of steel is ruffling feathers in Britain and there must be something about this juxtaposition that makes an awful lot of people appear utterly foolish, most notably those that are spluttering with indignation about this ‘slap in the face’, ‘kick in the shins’, ‘punch up the trousers’ delivered to Britain by the US government’s decision to raise tarrifs. So much for the ‘Special Relationship’, eh.
So much for superficial analysis. Take a pill, John and Jane Bull, for this English patriot is far from ruffled.
This is not to say that British steel production is not significant. It is. In fact, in 1995 it was Britain was the third largest producer in the world. What is insignificant is British exports to the US which account for less than 4% of our total exports. The vast majority of British sales go to the domestic market or Europe.
The really big players in the US market are producers in countries like China and South Korea who, faced with the tarrifs, will turn to Britain and Europe to sell their far more attractively priced steel. That means that prices will drop for the British consumer and British steel producers will have to get leaner, meaner and more innovative in order to remain competitive.
In other words, it is good news for the British economy for precisely the same reason that it is bad news for the US one and, whilst it would be a stretch to suggest that this was Mr.Bush’s intention, it is his fellow Americans that he has ‘slapped in the face’ not us Brits.
Happy now?
New blog Global Grumpy raises an interesting point about the surprising lack of reaction from the US media and muted reaction from conservative bloggers regarding the asinine steel tariffs. He also links to a somewhat pointless article on Slate on the legality of the subject, as if the problem was a legal one rather than an economic and political one. The fact left wing bloggers have little to say is hardly surprising but one can only speculate why the neo-con bloggers are not howling much louder.
Bush’s action is clearly damaging to the US economy due to the inevitable knock-on effects it will have on international trade, not to mention the increased costs passed on directly as US steel becomes more expensive. I was expecting to hear people making much stronger remarks about ‘The Bush Steel Tax on US consumers’ (for that is what it is). The headlines I was expecting were:
- ‘Bush causes squeals of delight amongst anti-globalization advocates’
- ‘Is Bush trying to get France to award him the Legion d’Honneur for inconsistency?’
- ‘Bush encourages reduction in global trade’
- ‘Bush to World: please add tariff barriers against goods exported from USA’
- ‘Bush tells Russians: ‘Yeah I know we are proping up your economy with aid on one hand and trying to wreck your steel industry with the other… so what? If you need money go sell nukes to Iran and stop bugging us’
I hope the reason for this is not the flip side of a phenomena I saw many times during the ghastly Clinton years: even when Clinton occasionally got something right (very occasionally), so great was the detestation of several otherwise analytical commentators (and friends) that they opposed policies which if conducted identically under any US president except Clinton, they would have supported without question. I wonder if ‘wartime’ admiration for Bush has not cause a similar blindness in the other direction towards a truly inane policy.
This is not a trivial issue and could have disastrous implications for the international trade system that are far more important than an industry which employs 150,000 people out of a population of 260 million.
[Note to ‘Global Grumpy’: the two e-mail addresses I have for you both bounce]
Perry’s comments on George W. Bush’s economically illiterate steel tariffs below are surely a reminder that conservatives (with a large or small c) are often the worst defenders of free enterprise.
How on earth can Dubya, for whom I have a fair amount of respect, talk about free markets any more with a straight face? Looks like the worst kind of vote-grubbing measure to me. Clearly bound to have an adverse impact on other sectors of the economy as well as sour relations with other parts of the world.
Bush has given the euro-weenies a stick to beat him with – and this time they have right on their side. Bush’s move is clearly related to next November’s Congressional elections. George, get a copy of Henry Hazlitt’s “Economics in One Lesson” and wise up!
The recent trip by George Bush to Asia in which he preached the value of free trade and capitalism was of course widely reported in the media across the world. As a result, his remarks about the lowering of trade barriers are inevitably going to be thrown back in his face following the ludicrous imposition of 30% tariffs on steel imported into the USA.
Given that the underlying trend for steel imports into the USA has been downwards for years (down 30% over the last four) it is particularly bizarre that this politically motivated protectionism should have been allowed to happened. Of course this will also result in more expensive steel for the domestic US construction and manufacturing industry, it will cause retaliatory tariffs against US products overseas and most importantly, completely destroys the US ability to put political or moral pressure on other countries to lower tariffs against US goods.
So in order to protect some jobs in an inefficient sector, other US jobs are put at risk in not just steel consuming areas of the economy but also possibly the entire export sector once anti-US retaliatory measures are used to hit back by US trading partners.
Perhaps someone needs to point out to Dubya that compared to the value of liberalisation of the world trading system to a massive high tech external trading nation like the USA, the US steel industry is really not that important in the overall scheme of things. In any case, the whole idea that less competition will make the US steel industry more efficient, well, how does that work? It will just penalize the modern and the more competitive US steel producers in order to protect the less efficient unionised dinosaurs who will go bust in a few years anyway regardless. In the meantime overall competitiveness of US industry suffers versus overseas steel users who have access to steel at the regular non-‘protected’ price. Nice one George.
The music industry is a wonderful example of how established players in any market often feel they have a vested interest in stasis rather than dynamic change. Rather than see new technical innovations as potential boons, the industry has spent a fortune trying to use the state to defend its existing business models with an army of lobbyists and lawyers, attempting to un-invent the technologies that they (rightly) see as shattering the current structure of its multi-billion dollar industry. Steven Den Beste has a good article on the subject and makes an excellent point regarding the self-defeating culture in the boardrooms of the music industry majors:
As long as the industry doesn’t see it from that point of view, they will continue to try to fight the future. No industry can ultimately survive if it thinks of its customers as enemies; ultimately the industry has to adopt the point of view of its customers and cater to their desires. You cannot sell someone what you want them to have. You have to sell them what they want to buy.
A classic case of this syndrome of ‘customer-as-enemy’ was provided by Steve Heckler a VP from Sony Pictures Entertainment in August 2000 who said:
The [music] industry will take whatever steps it needs to protect itself and protect its revenue streams,” Heckler said. “It will not lose that revenue stream, no matter what. […] Sony is going to take aggressive steps to stop this. We will develop technology that transcends the individual user. We will firewall Napster at source – we will block it at your cable company, we will block it at your phone company, we will block it at your [ISP]. We will firewall it at your PC.
Although Sony tried to apply some damage limitation spin to Heckler’s remarks soon afterwards, this is clearly delusions of grandeur on a spectacular scale and is exactly the mentality to which Den Beste has alluded. The major players think they can translate their wealth into political muscle and use the state to crush would-be new entrants that seek to undermine their businesses. taking out Napster has only encouraged this flawed thinking. Additionally yet more money is being spent on technological fixes which are also doomed to fail due to the ‘Swiss Watch Effect’ (it is cheaper and easier to smash a Swiss Watch than it is to make one): they spend millions on copy protection that will be broken within months or weeks by the worldwide army of Internet linked 15 year old crackers who work for free.
Another indication of the scale of ‘wrong-think’ going on in boardrooms is that they do not seem to realise that many people’s CD player is their computer. I might have purchase the new Natalie Imbruglia CD White Lilies Island but I have read that most computers gag on some of the tracks due to copy protection and I do tend to play a CD in my computer whilst I surf the Net. As a result I have not bought the CD. Well I suppose if the company strategy is to make it hard for me to rip any tracks into MP3s, one way of doing that is to discourage me from buying their products all together. Somehow I don’t think that was quite the effect they were hoping for but that is the one they have got.
[Update: article amended with Steve Heckler of Sony’s exact remarks thanks to the excellent input of readers Tino D’Amico and Joachim Klehe]
Matt Welch makes some excellent points about the reality of world trade but the following bit suggests he does not read the Samizdata very often.
If free traders spent as much time railing against rich-country protectionism as they do making fun of the anti-globalization kids, the pig-puppet audience would dwindle to a core of fog-headed Maoists, and more importantly, destitute people around the world could vault out of poverty much faster.
We are wounded Matt! You mean we are not your default page when you boot up the ol’ box every morning? We often go though periods of railing against the immorality and stupidity of protectionism. Such as:
Stupidity beyond the measure of language by Natalija Radic on February 1st:
Jospin is a man who is responsible more than any other political figure in the EU (and that is saying something) for people like me being fined and harassed by EU states for trying to do business within the EU because I am an outsider, just another Slavic white nigger girl. Naturally he takes much the same view of Africans and Asians who try to do business in the EU.
Comments worth repeating by Perry de Havilland on January 30th:
To be “strongly against world trade” is to be in favour of poverty and against free association. It is to favour force over choice. It is to favour death and famine in the third world. Anyone who actually wants for the peoples of South America, Africa and Asia to prosper should be demanding not an end to world trade but the removal of all barriers to entry to the US and EU markets. At a stroke that would result in cheaper products for common working western people as cheaper African, South American and Asian goods become available. Immediately the economies of third world nations would improve as they could sell their products without immoral grotesque discriminatory tariff barriers.
What free trade actually means by Natalie Solent on December 18th 2001:
So the European Union, having stopped Africans making a respectable living as producers and traders by denying them access to us, then bestows a lesser largesse via ‘Third World Aid’. Adding insult to injury, the EU then expects gratitude from the very people they have discriminated against. Of course what happens is that Africans, now being dependent on largesse rather than their own efforts, take on the character of beggars, whiny when desperate and sullen when temporarily a little better fed. We in our turn take on the character of patronising social workers-cum-lords of the manor. What a pity, when we could be interacting as equals and fellow human beings.
… and those are just the ones I can be bothered to find. So you see, Matt, here on Samizdata this particular group of free traders really really doesn’t like protectionism and we attack it on both economic and moral grounds quite often.
Andrew Sullivan is pleased that Irish singer Bono is not slagging off drug companies. Well a word of advice, Andrew… don’t get your hopes up that Bono’s seeming conversion to the forces of reason is more than a fragile veneer. He does have this disheartening knack for seeming to make sense, only to dash your raised expectations on the rocks of reality a little further down the road, as I observed back on January 14th 2002 in the article Teeth grinding illogic and grotesque conflation…or perhaps genius?. He is either a perverse genius or a jackass. You choose.
Suman Palit on the Kolkata Libertarian has some interesting links and commentary about hawala, a system of trust based independent networks for transferring money across borders completely outside ‘official’ financial systems. I have touched on the subject of hawala in previous articles and Suman points out the absurdity of US (and other) efforts to try and stamp it out
Criminalising such a large-scale human endeavour that is rooted so deeply in history is laughable and idiotic. Like the failed drug war which penalizes consensual behavior and therefore can never be effectively enforced, stigmatizing hawala simply drives it deeper underground.
The fact is that there are millions of people who simply do not see why the state, any state, should have oversight over their business. The usual demands that people must simply ‘trust the authorities’ is seen as fundamentally irrational in many communities. Too many people have both direct experience and deep societal folk memories that such contentions are simply foolish, leading to a whole culture of economic activity occurring under the radar. The very essence of hawala is that of an audit trail-less trust within a closed and multiply redundant distributed network.
Not only do I predict the US will fail utterly to regulate hawala, I expect that their actions will once again prove the law of unintended consequences is alive and well and living in a town near you. The very actions of the financial regulators will reinforce support for it by proving why hawala is still as needed as it ever was: to enable genuine free trade when princes and policemen try to restrict it, and to avoid confiscation of the proceeds of that legitimate trade by the same people.
Recent events in Argentina have helped drag quite a few things out into the light that would rather have remained skulking in the shadows.
One of the things that is now clear is that the idea a debtor nation can be ‘too big to be allowed to fail’ is revealed to be a myth. When Ecuador defaulted on $6 billion worth of bonds in 1999, people just shrugged it off as ‘only Ecuador’. Yet now we see Argentina going the same way to the tune of $132 billion.
Another thing has become clear about the IMF. Anne Krueger, the IMF’s deputy managing director, has let it be known that the fund is very keen to get out of the ‘sovereign bailout business’. To this end the IMF has some fantastical plans for ‘harmonising’ international bankruptcy laws which will of course come to nothing. Yet the source of the impetus for restructuring the IMF’s relations with debtor nations is quite revealing and not one you might think. Much of these ‘new’ ideas being floated come in almost whole cloth from Jubilee Plus, a leading anti-globalization pressure group whose very name you would think would be anathema within the hallowed halls of an ostensibly pro-capitalist organisation like the IMF purports to be. In fact what is clear is that Jubilee Plus and the IMF are just different sides of the same pro-stasis coin, profoundly hostile to dynamic free trade networks and in favour of state centred status rather than value based economics.
It says much about the inevitable evolution of the IMF from a supposed facilitator of the global capitalist economic order to being little more than the financial arm of a network of pro-stasis organisations underpinning almost every kleptocratic state on the planet. For as long as the IMF is not just happy to prop up heavily regulated force based value destroying economies of the sort favoured by Jubilee and its ilk, there is little motivation for financial institutions to tailor their lending to the economic realities of a nation’s governance. Yet there is always the fond hope that while the IMF ponders its restructuring, a few really large international lenders will feel some serious pain.
What is really needed is for a few nice large international names to go belly up as there are few things that get the financial world’s attention better than that. I am thinking of people like Citigroup, FleetBoston, Banco Bilbao Vizcaya and Santander Central Hispano, who are all massively exposed to the mess in Argentina… sadly this is probably not going to happen but if it did, what we would have is a clear causal link established between a willingness to lend to kleptocratic governments and disaster. This in turn would impose a real cost in terms of an inability to borrow on governments which pursue anti-economic statist/stasist policies.
Just as companies with bad ideas must be allowed to go broke, so must governments. Sovereign default can be very invigorating to the cause of liberty and advocates of true non-crony capitalism should oppose any institutions which seek to ameliorate the link between government actions and the consequences of those policies. And if those governments, such as in Argentina, are democratic then all the more reason for allowing the voters of that country to reap the bitter consequences of their theft-by-proxy mandates. Let the financial tumbrils roll and lets see whose heads get cut off without the Scarlet Pimpernel of the IMF to come to the rescue.
Pakistan has a very large expatriate community scattered across the world, particularly in the UK and the USA. The peoples of the sub-continent also have a deeply engrained and entirely laudable distrust of governments poking around in their affairs, which is why the hawala system of moving money around globally is so popular with people from that part of the world.
In recent weeks there has been a huge inflow of capital from the Pakistani diaspora back to Pakistan due to the scrutiny of US investigators looking ostensibly for Al Qaeda funds. Of course there is widespread and quite justified belief amongst Pakistani businessmen that where the anti-terrorist investigators tread, the IRS will not be far behind looking to see what they can confiscate. Sub-continent businessmen have been on the receiving end of shakedowns like that from potentates, princes and nations for centuries and have well honed cultural reflexes in such matters. The simple solution: move your money where the US authorities cannot see it, by bank transfer if possible or via the invisible hawala system if not.
Networked distributed capitalist systems like this are extraordinarily resilient and are fueled by deep seated and entirely admirable non-deference to state authority. Just as the justified fight against Al Qaeda is also being used to fulfil an unjustified a wish list of civil liberties abridgements, so too are the statist enemies of free trade on both left and right using it to move against the sort of small scale (though large in aggregate) trans-border capitalism at which people from the Indian sub-continent so excel. It is for reasons of control that Big Capitalism and The State get on so well: bureaucrats can meet with a few hundred CEOs of vast companies and reach understandings to their ‘mutual benefit’ (though not to anyone else’s). Hundreds of thousands of small scale truly capitalist ventures with trans-border cash flows however are impossible to even monitor, let alone control: which is of course why they are such a good thing.
French Prime Minister Lionel Jospin has demanded an end to free(ish) trade in favour of a global system of ‘managed trade’ called mastered globalization. In a typical stream of anti-life economics and adulation of force based resource allocation, Jospin states that he, and people like him, should have a say in what Americans or British or Japanese or Nigerian or Lebanese or Croatian people can trade with each other across borders and under what conditions. When he says “mastered globalization”, no prize for guessing who he has in mind to be the ‘master’.
Jospin is a man who is responsible more than any other political figure in the EU (and that is saying something) for people like me being fined and harassed by EU states for trying to do business within the EU because I am an outsider, just another Slavic white nigger girl. Naturally he takes much the same view of Africans and Asians who try to do business in the EU.
He called for donor countries at the Economic and Social Council in Paris to commit to “reduce poverty by 50 per cent until 2015”. He could of course do this at a stroke by resigning from office along with all the other lying Socialists, Social Democrats (socialists), Democrats (socialists), Liberals (socialists) and Christian Democrats (socialists) across Europe who prevent so much of the world from making a living due to their trade barriers that discriminate against us. If that happened, I guarantee poverty would be reduced by 50 percent by 2015.
If you want a glimpse of the future, here is a truly astonishing article that I must say confirms many of my views about spontaneous networks.
The online fantasy game EverQuest lets players create and control characters – or avatars – within a fantasy world called Norrath. Characters gain skills and possessions that they can then trade with other players using the game’s currency of “platinum pieces”. However, many EverQuest players have found this process too complicated and have instead opted to sell their assets for real money though trading web sites such as eBay
Read the whole article, it is thought provoking stuff with real-world implications.
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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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