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In many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing. – Economist Assar Lindbeck, which seems a timely reminder in view of this absurdity. Some actually take the view it is worse than bombing. July 20th, 2019 | 15 comments - (Comments are closed)
 A new kind of capitalism. A new way to measure progress. An end to the obsession with growth. We know what they really mean. Once in a while they spell it out nice and clearly.
Very unlikely, I would say.
The state telling the private sector where to invest its money. Fascinating; and I am sure far more productive than the private sector deciding where to invest its money. Why have billions of investment decisions made by millions of people when three posh blokes obviously know better? A different kind of productivity! Greener productivity!
This is just more of the state deciding where to spend money.
I sense a but coming…
Oh, it will achieve the rapid reduction of something all right.
Why can’t well all just get along? Also, bring back rationing!
To each according to his need.
Just when you thought central banks were a bad idea, someone finds a way to make them worse.
Ok, no more Mr Nice Guy, I guess.
I am sure it will all turn out lovely. Who is saying all this? Some crazy fringe lunatic everyone will ignore? I hope so but I am not sure. It is in the New Statesman, circulation 35,000. Paul Mason used to be economics editor of two state-funded TV news programmes, Newsnight and Channel 4 News. He is not nobody. People will be listening to him. He might be saying things that even more influential people want him to say. It is a bit of a worry. The thing is, even if the end of the world is now imaginable, even if climate change threatens an end to universal human rights, an end to development, and “the fracture of globalisation and multilateral systems” (whatever that means); even if it really is as bad as they say: making ourselves less free and therefore poorer is only going to exacerbate it. Economic growth is more important, not less, because richer people can build infrastructure to overcome the environment. Richer people can move around. Economic growth means more people (even poor people!) get richer. When there is a natural disaster in a poor country, far more poor people are harmed than are when there is a natural disaster in a rich country. That is the difference that old fashioned, bog-standard, neo-liberal economic growth makes. That is why I am against Paul Mason’s brand of communism: because by reversing ordinary economic growth it will be more harmful than the IPCC’s most dire predictions about climate change. There is not even any reason to suppose that freedom and growth is incompatible with reducing carbon emissions: solar energy is undergoing something of a Moore’s law cost reduction; new technology means using energy more efficiently. And there are undoubtedly ways to turn things around that Paul Mason has not though of. He thinks a few hundred human brains can direct “millions of human brains” to solve problems; but that is not how it works. Millions of human brains are very good at solving problems if they are free to figure things out for themselves. June 27th, 2019 | 55 comments - (Comments are closed)
“They’ll often talk about anything they do apart from making a profit, which is the central purpose of a business and which is what drives businesses forward.” – Liz Truss, UK Treasury minister, reflecting on how many business leaders today seem embarrassed and incapable of talking about building wealth, and would rather talk about how they want to give it away, or pander to environmental pressures, etc. It is refreshing to see a UK minister giving this mindset hard treatment. It would be good if this happened more often. (I am writing these words from Singapore, which I am visiting for a business trip. The city-state that does not appear to have quite such a cringe about capitalist success.) May 27th, 2019 | 19 comments - (Comments are closed)
Here is very British YouTuber Dr Jake explaining the tax implications of monetising a YouTube channel: On having to pay an accountant, file paperwork for self-employment, spend hours finding and filing receipts, throw himself on the mercy of a Her Majesty’s Revenue and Customs amnesty, pay hundreds of pounds in back-dated tax and spend hours every year filing paperwork so he can pay a large proportion of the small income he gets from his hobby business to the state, he says:
I would go on an extended rant about the unseen consequences of all this, but as usual, even thinking about tax and its complications has sucked out all my enthusiasm for anything. I think I will go and have a cup of tea instead. May 16th, 2019 | 16 comments - (Comments are closed)
At a news conference last week in Brussels, Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, admitted that the goal of environmental activists is not to save the world from ecological calamity but to destroy capitalism. “This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution,” she said. Referring to a new international treaty environmentalists hope will be adopted at the Paris climate change conference later this year, she added: “This is probably the most difficult task we have ever given ourselves, which is to intentionally transform the economic development model for the first time in human history.” The only economic model in the last 150 years that has ever worked at all is capitalism. – quoting the remarks of Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, in 2015. h/t David Bolton May 3rd, 2019 | 39 comments - (Comments are closed)
“When I hear businessmen speak eloquently about the `social responsibilities of business in a free-enterprise system,’ I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned `merely’ with profit but also with promoting desirable `social’ ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously – preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” If you want to wind up a certain kind of activist in the realms of modern investment, one of the quickest ways to get their pulse rate up is to quote the late Chicago economist above about what he thought was the sole responsibility of business owners. He stated that this was to maximise shareholder value. Period. To do anything else is tantamount to an act of theft:
This seems fair enough to me and stated with Friedman’s admirable clarity. The key is that the purpose of the firm is set by the folk who created it and those who own it. If it meets customers’ needs it will thrive, and if it doesn’t, it goes out of business. If you and I, dear reader, found a business to sell chocolate ice cream, at what point do we suddenly become “responsible” in some sense to “society” or “the environment” or “God” in how we run things unless we have expressly chosen to make those considerations part of our business mission? It is crucial to be clear on this point. If a group of individuals band together to create a corporation that expressly states that it shall distribute 30 per cent of profits to a specific charity/cause, or that it will source its supplies from a particular group on ethical grounds, or hire as equal a balance of men and women as possible, regardless of other considerations, then anyone who becomes, say, a shareholder in that business cannot complain if things go wrong. And in fact there are more and more cases of firms that go out of their way to brandish their ethical principles, with varying levels of credibility or cant. Also it turns out that firms which are run by honest people, publish transparent accounts and don’t treat staff like crap tend, according to some metrics, to outperform their peers over the long term (see a study claiming this here). As Adam Smith might have noted, if people pursue their rational self-interest it tends to be the case that dealing with decent, honest people tends to work out better than dealing with shysters. In my present working life I am bombarded with press releases and material from investment firms talking about the wonders of environmental, social and governance-related (ESG) investing, and also what is called “impact” investing (putting money to work to achieve a specific result, both financial and non-financial). To the extent that fund managers use their market muscle to achieve these goals in a free market rather than bring in the State to do their bidding, that’s all fine by me. After all, why should not, say, a libertarian fund management firm be able to state that it will refuse to invest in any business that knowingly produces services/products that threaten privacy and expand the reach of the state, such as firms that act as contractors to certain governments? (How about Classical Liberal Wealth Management Inc?) In other words, in this view the purpose of a firm or other legal entity is to enable the wishes of its creators to be brought about, whether making a profit, advancing world peace, spreading the ideas of Ludwig von Mises or whatever. There will be investment funds that will want to focus on holding stakes in firms, be they listed, or unquoted, that focus 100 per cent on becoming more valuable and profitable no matter what else it does, because those investment funds’ clients expect and hope to fund a decent retirement, for example. In an ageing population, beset by growing strains on public finances, it is going to be difficult sometimes to square some of the supposed high-minded desires of corporate social responsibility activists with the desires of millions to have something to live on in old age. The point is that balancing those things must ultimately be the investors’ decision, not that of a government. The issue becomes more problematic when government steps in. Firms that claim CSR is good for the shareholder in the long run may simply be rationalising what they have to do anyway by force of law. Investor pressure to save the earth as well as make money may be misguided in some ways, but at least it is not coercion. But things take a different turn when the state intrudes. An article here by Quinn Connelly makes this point well:
To sum up, ideas such as ESG investing or corporate social responsibility can in some ways sit alongside an entirely free market view of the world, but I am wary. In a recent phone call, one advocate of these ideas talked about how “we are in an era of late-stage capitalism”. I pointed out to this person that such a term has been used as long as capitalism has been a word. The phone call did not go well. April 18th, 2019 | 48 comments - (Comments are closed)
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – Frederick Hayek, The Fatal Conceit: The Errors of Socialism April 18th, 2019 | 4 comments - (Comments are closed)
Capitalism in America: A History. By Alan Greenspan and Adrian Wooldridge. I recently read this book, published a few months ago, and it is written by a senior journalist who is political editor of the Economist, and former Federal Reserve Chairman Alan Greenspan. Given their respective occupations, I had a rough idea of their broad ideology (a general predisposition towards free markets, private property and limited government) and on the whole I enjoyed reading this book a great deal. Their core thesis is that America has been as successful as it has been because it allows a great deal of “creative destruction” – new technologies and business models disrupt and replace older ones, causing pain for specific groups but big benefits for the wider population over time. America is so big, and people have traditionally been so willing to move around to find work, that the “creative” side wins over the “destructive”. They observe the back-and-forth process of how there have been periods of intense growth and upward progress, such as the post-Civil War boom, the rise of the great business tycoons such as the Rockefellers, and then the push-back of anti-trust and the Progressive Era, William Jennings Bryan and his “cross of gold” hysteria. We get the Roaring 20s, and ooops! the Great Depression, followed by WW2 and the post-war boom; the troubles of the late 60s, then 70s; the Reagan era, supply side tax cuts and the dotcom boom. For a while, people are diagnosed with something called “affluenza”. And finally, the 2008 crash happens and there’s all the angst over declining productivity and worries about skyrocketing debt. The most impressive thing about this book in my view is the way an enormous amount of information, some of it arcane, is conveyed into a fast-paced narrative. This book is written very well and packed with anecdotes and even a bit of sly humour. There are some standouts: the book gives a marvelous account of the agricultural technologies and innovations that turned the Great Plains into the breadbasket of the world; its understanding of business models and mass production techniques is first class. It largely absolves the likes of Rockefeller, Carnegie and the rest of the “robber baron” tag and suggests that much anti-trust doctrine is bunk. Later, in discussing the present controversies over Facebook and other “Big Techs”, it is similarly sceptical about whether state bust-ups of such entities is a good idea. The book points out how, by the late 19th Century, the US government was so small relative to today’s that the largest department of the Federal government was the Post Office. It generally praises the idea of the Gold Standard – Wooldridge and Greenspan are pretty rough on Bryan and others who think that printing money is a solution to economic problems. They are also pretty harsh on F D Roosevelt, pointing out that during the 1930s, unemployment averaged in the double-digit percentages, and that much of the New Deal was, on its stated terms, a failure. They give Roosevelt stick for his vindictive acts and foolish interventionism – they realise that his genius, if we can use that word, was inventing a myth about himself and in telling people that he was going to make sure everything was OK. Needless to say, the narrative gets more awkward when it covers the period when Greenspan, a man who in his youth was an acolyte of Ayn Rand and an advocate of gold-backed money, became Fed chairman. The book argues (page 385) that critics cannot prove that the 2008 financial crisis can be blamed on loose monetary policy. Well, how jolly convenient! They say that the Fed’s ability to set interest rates, and influence borrowing costs for those with mortgages, etc, was largely restricted by the global “savings glut”. (I will come to this a bit later.) To a great extent, they blame the 2008 disaster on government-subsidised/supported sub-prime mortgages, excess confidence by bankers in risk models and the sheer complexity of financial products, such as in the derivatives markets. All these criticisms of the financial system prior to the collapse of Lehman Bros. in September 2008 look valid but there is also a problem. A problem to overcome, the authors say, is how rising entitlement spending (Social Security, Medicare, Medicaid) has “crowded out” private savings and that, over a period of time, savings as a share of total GDP has declined. Coupled with this, and with rising regulation (which they rightly attack) has been less overall capital investment, leading to lower productivity growth. When people talk about “stagnant” wages, it is sub-par productivity that is largely to blame. Okay, so low savings are a problem. If it is true that insufficient private sector savings is a problem to be fixed, how come the “glut” of savings in the years leading up to 2008 was a problem? If Chinese/other savers were pouring genuine savings (not central bank confetti) into the West, and investing in real capital, then why would this be an issue (other than a dislike of the origins of the savings)? When do we know that there is a “glut” of savings if, in other parts of the narrative, Greenspan/Wooldridge say there are insufficient savings because of a state “crowding out” effect? Of course, had Fed interest rates been higher than they were, yield-hungry Chinese savers might have put even money into the US, but then again it might have chilled the housing market enough to halt some of the damage. Such points aside, Capitalism In America is a good study of some of the big shifts in the US economy since the Republic was born. April 17th, 2019 | 16 comments - (Comments are closed)
An interesting item on the Guido Fawkes blog:
A point worth making that goes way beyond current political fights is that it has become something of a cliche that young adults, in particular, are so annoyed at the lack of affordable housing, or worthless higher education qualifications + debt, that they are all hot for the 1970s tribute band routine of Corbyn in the UK or, for that matter, Bernie Sanders in the US. The media (and often the conservative bits of it) appears obsessed with running stories about the latest dumb statements of someone such as Alexandre Ocasio Cortez, the young Congresswoman in the US, or surveys about how young adults all want socialism. But from my admittedly impressionistic stance, I am not seeing an upsurge in enthusiasm for state control, rationing of resources, bureaucracy, etc. A poll conducted by Gallup in 2005 showed how lots of young US males wanted to start their own business. A more recent study from 2016 shows that a large number of Millennials, that generation which a Gen X-er like me likes to poke fun at, want to create their own firms. It seems to me that any half-intelligent politician (that’s going to be a small population sample, ed.) should tap into this and stop pandering to the idea that the “young” all have a crush on Big Government. What I suspect is going on is that they dislike Bigness per se, not always coherently (Big Business is downright good if the bigness comes from superior performance rather than political favours), and want lots of choices and options in their lives. So smart policy, including around issues such as civil liberties, should play to that. It depresses me how our current political class seems so keen, for example, on regulating the internet and the like, because this is exactly the sort of issue that young adults, given their distrust not just of business but very big techs such as Facebook (even though they use it) get fired up about. One would think, therefore, that tapping this distrust makes sense. After all, even if you have decidedly mixed views about a character such as Julian Assange, the Wikileaks man who was arrested in the UK yesterday, it is hard not to notice that a lot of people admired how he poked the establishment (well, at least that is what he claimed), in the eye. We are living at a time when there is a lot of dislike of established ways of doing things and this is something that thoughtful libertarians must embrace. Related thoughts from the Institute of Economic Affairs. April 12th, 2019 | 43 comments - (Comments are closed)
The Independent reports, Let Us Vote: New campaign launched to give everyone living in UK the right to vote in elections
The “Let Us Vote” campaign’s own website is here. What was your first thought upon reading this proposal? What would it have been ten years ago? My first thought was this was David Lammy’s way of ensuring he never again loses another referendum. (My second was, “Leave campaign: use this on C2DE voters.”) Ten years ago I might have said, “It’s a difficult question”. I do not think I was ever unambiguously in favour of complete open borders on libertarian grounds but I knew plenty of people who were and I was open to persuasion. It was seen as one of the questions that sorted the committed Libertarians from the dilettantes. That, I think, is where my instinctive casting of the question in religious terms came from. My impression is that my loss of belief in free movement of people is shared by many. Is it shared by you? Or have you kept your faith strong? Have you converted to this belief? April 11th, 2019 | 75 comments - (Comments are closed)
According to this report by Techcrunch, the technology publication, a bi-partisan agreement in Congress (usually a bad sign) means that a tech solution enabling taxpayers to prepare their annual returns for no charge has been blocked. The tax preparations industry, which is huge, has objected. Sometimes the sheer brazenness of lobbying in the political systems of the world befuddles even a long-term observer of such things such as me. We should not be surprised, really. There is a large industry of people who help others navigate the reefs and shoals of taxes, and one suspects many of them fear things such as simpler, lower and flatter taxes because if people can file a return on a single sheet of A4 paper, or its internet equivalent, then much of this sector is, to put it in non-technical terms, fucked. April 10th, 2019 | 23 comments - (Comments are closed)
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