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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A further example of “why-oh-why-are-we-not-able-to-return-to-1890?” type commentary from paleo-conservatives (small c, as this applies to card-carrying Labour supporters as well as Tories), appears in the Thursday, January 3 edition of the Times newspaper (UK). Written by David Selborne, a leftist historian with strong authortarian leanings, in The Tories’ future can be found in their past, he chides the Tories for their concerns with freedom and urges them to come full-on and support the public sector instead.
As an example of Bourbon-style learning nothing and forgetting nothing, this takes some beating. (Consider the vast erosion of civil liberties and the Common law in the UK over the past 20 years). Selbourne has a valid point in bemoaning the neglect of civil society (Edmund Burke’s ‘little platoons’), but like most statists misses the obvious point that it has been the growth of the state, such as the monopoly education system, that has wreaked so much havoc. The poor man accuses the Tories of imposing market disciplines on schools. If only that were the case! I think we should arrive at a new name to describe the habit among such folk of accusing X of precisely the very opposite of what they are doing. Call it “false market fundamentalism syndrome,” perhaps.
The value of money has been settled by general consent to express our wants and our property, as letters were invented to express our ideas; and both these institutions, by giving a more active energy to the powers and passions of human nature, have contributed to multiply the objects they were designed to represent.
– Edward Gibbon
…when it was never actually operating in a free market? Over on AintNoBadDude, the indomitable Brian quotes part of an e-mail of mine but also takes the view regarding the Enron fiasco.
I still maintain my position that Enron is a failure of free markets, but I’m more concerned with the bad impression something like this leaves in people’s minds. If nothing much happens in the way of prosecution, the case for open markets will be harder to make in these industries.
Well I certainly agree that incidents like Enron crashing and burning does not help the case for free markets, but the reason for that is folks do not seem to understand that heavily regulated markets, whilst they are certainly a form of capitalism, they are in fact not free markets, they are (obviously) regulated markets.
Thus what Enron’s failure suggests is not that free markets do not work but rather regulating a market sector like energy in the way it is currently regulated is a failure. Here is a novel idea: how about actually completely deregulating the power sector (for starters) and make the market, er, free. What is the worst that can happen? Maybe Enron will go broke if subjected to the full force of market pressures… oh, I forgot, it already did.
California’s power industry provides us with another lovely example of what happens when heavily regulated markets are required to respond to dynamic circumstances… and it ain’t pretty. Either abandon the pretence that the market is ‘free’ and in effect nationalise the power sector, or let the market do what it does best and stay the hell out of the way. The alternative, like so many half way measures, is to get the worst of both worlds: bloated corporations who do not fully control their own businesses and who are also not fully vulnerable to more agile corporate predators and new market entrants.
Regulating fixed infrastructure sectors of an economy because they are said to either be ‘natural monopolies’ or because they are ‘strategic industries’ rather misses the point: they are actually not natural monopolies if you have a large (preferably global) market of power companies. Functioning fixed infrastructure for which there is a demand does not just vaporise if the owning company goes belly up in the fish tank… other people will most certainly leap into the breach and take over the assets (plus the associated revenue streams from users), hopefully at fire sale prices, and thus life goes on. That might not be the case in Nigeria or Romania or Myanmar, but in a sophisticated and well developed Western economy it most certainly is.
If it is indeed a ‘strategic’ industry, then why encourage a few fat sluggish players to develop who, if they cock things up, fall with rather a big crash (i.e. Enron). Surely it is better to allow full global competition to ensure no player can get so damn important.
Enron in the USA and RailTrack in the UK are two classic cases in point not of ‘free market failures’, but rather of regulated market failures. If all you have to do to make things work better is to impose layers of cunningly crafted regulations, then I suppose that explains the longevity of the Soviet Union and why China is the world’s wealthiest country… oops, sorry, wrong parallel universe.
Some people ask:
“Why shouldn’t our government keep out products from third world countries? We don’t owe them a living.
That is right, we don’t. What we owe to them, and to our own people too, is the ordinary right to buy and sell what they please, along with all the other ordinary rights to life and respect for property. Tariffs against African imports mean that we in Britain pay more than we ought and the people in Africa are arbitrarily forbidden from bringing their wares to our attention – it’s up to British individuals whether they buy or not.
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.
There is an excellent article on the Ludwig von Mises Institute website by Sean Corrigan called Worse than Recession.
Economies do not subside because demand wanes – we could all use a shiny new car, or a beautiful new house pretty much any time. However, in a world where means, unlike wants, are not infinite, we have to be able to offer something in exchange. We do that by first profitably producing things other people require, at a price they are willing to pay, not by stamping our feet and making demands like a petulant 5-year-old.
This is ‘economics for grown-ups’. Read the whole article, it is good stuff.
There is a splendid little article about Frédéric Bastiat (1801-1850) by Gary M. Galles which give a good overview of what the man was all about.
I have always though modern anti-statists would do well to emulate Bastiat, because as well as being extremely coherent, he was a very witty satirist (for example his Petition of the Candlemakers for state protection against the unfair competition of the sun). Nobel Laureate F.A. Hayek called him a “publicist of genius.”
or Fred Bastiat gets all warm, loving and huggy with Natalie…
Arbitrage itself is not a zero sum game as the buying/selling of both sides of the arbitrage adds liquidity to the market, which adds value to the market itself by making trades easier for all participants and reducing volatility.
As for ‘arbitraging’ sovereign services, anything which reduces the distortions of the state by reducing the power of the state to do, well, much of anything, is hardly a ‘zero-sum-game’. Allowing the market to actually work better adds value that would otherwise be lost to the state. Government by its nature destroys wealth by using force to allocate resources, thus removing the ability of those resources to flow where they otherwise would have been employed with profit.
Frederic Bastiat wrote in 1850 about ‘that which is seen, and that which is not seen’, in which he explains how we can see how the state allocates resources which it has appropriated and we can see how it results in supposed productive activity. But what we do not see is what those resources would have done if allocated by the market if the state had not appropriated them. If the resources could have be used to create what the government wants at a profit, then why have the government do it at all? If the resources could not have been employed to create it at a profit, then clearly the actions of the government result in wealth destruction.
So I would contend anything people can do to keep the means of production out of the hands of the state, far from producing a zero sum game, actually adds to the total sum of wealth by allowing those means to engage in genuine wealth creation.
Capitalism, when warm, loving and huggy… or cold, bad tempered and grumpy, is a splendid thing because it creates wealth whilst not actually giving a damn. It is rather like the way the wind can move a sail ship forward if the ship is sailed correctly or sink it if the ship is sailed poorly. On the other tentacle, government, even when warm, loving and huggy, makes us all poorer, rather like a dreaded in-law who comes to visit and just will not go away again.
As for my glee at the idea of driving the tax men of several nations into a confused state of mental collapse, now that is a metacontext thing. It’s just the way I see the world.
…is not so completely wonderful as all that. As I understand it arbitrage is a zero sum game. As I never tire of pointing out – um, no, as I’m sick and tired of pointing out but keep doing it anyway – the wider world of laissez faire is a win-win game. Warm. Loving. Huggy. Capitalism. It’s a metacontext thing, Perry, like in your opening essay.
… it can also lead to an interesting world view.
Arbitrage is an artful way to make money. When two (or more) items have a historical range of price relationship between them, temporary changes in these relationships provide an opportunity for profit. Often the relationships between the two different products is obscure, very indirect and sometimes quite counterintuitive. Yet many an arbitrageur (or just ‘arb’ as they are often known) has grown slowly and unflamboyantly wealthy, not in the high drama the great bull or bear markets, but just by watching relative price movements in products as diverse and seemingly unrelated as soybean oil and pork belly futures.
The same approach can be taken in other areas of endeavour too.
Globalization has brought many interesting and exciting things in its wake, not to mention hitherto unprecedented prosperity to more people on the planet than ever before. Capital is now almost totally fungible at the push of a button and this has had the effect of creating an interesting market. The sovereign law market.
I wrote about the most glaring example of this yesterday. States like to pass laws that say what their subject populations can and cannot say, write or publish. Yet now, people who wish to publish views that their local laws say are illegal have merely to host them on a server in some other country and viola! The ‘illegal’ views are on display for anyone who wishes to read them and there is not a damn thing the state can do about it. Information too is now fungible: if you can’t publish a dead tree pamphlet, a website will do just fine.
Which brings us again to laws. It use to matter very little in a nation what the laws were in some other country. But in this era of downloadable virtualized products, excellent communications, cosmopolitan entrepreneurship, ubiquitous spoken English and mobile capital, there is increasingly little reason why a business should be set up in a place which chooses to slather on tax and regulatory burdens. We are entering an era of the arbitrage of laws. Are the employment laws better in the Philippines or India? India eh? Ok, lets relocate our call centre from Los Angeles to India. What about corporate taxes? Ok, move the company’s brass plate to the British Virgin Islands. Where are the best programmers? Prague? Ok, lets outsource to a Czech codehaus…they even have the best beer there. Where will our data be safe? USA? Ok, I know a nice server farm in Fresno…yes, they have their own power generators…etc.
Rather than ‘investing’ a business in a single ‘national’ economy, the sovereign law arbitrageur modularizes and virtualizes and invests wherever their particular needs are best met by the state for that aspect of their business. No longer does he have to take a one-size fits all/one nation fits all approach. Analogous to arbitrage, this approach does not yield the big bucks won or lost by hitching one’s fortunes to a single state…yet by simply opting out of unreasonable laws by moving modularized companies to where they are best looked after (i.e. left the hell alone), capital is allowed to work more effectively.
The future is dispersed, virtual, anational and the bits send each other e-mail in English…even when one bit is in Calcutta and the other in Prague and they are talking about a client in New York. Of course an added bonus is driving the theft enforcement arm of several states utterly crazy trying to figure out not just how to tax you but just who the hell ‘you’ actually are!
The future is closer than you might think.
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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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