I’m not joking. I wrote last year about how many of the international bureaucracies are blindly asserting that higher taxes are pro-growth because government supposedly will productively “invest” any additional revenue. And this reflexive agitation for higher fiscal burdens has been very prevalent this week in New York City. It’s unclear whether participants actually believe their own rhetoric. I’ve shared with some of the folks the empirical data showing the western world became rich in the 1800s when fiscal burdens were very modest. But I’m not expecting any miraculous breakthroughs in economic understanding.
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…of backwardness, protectionism and cronyism. Sorry, Italy, I love you in so many ways but this is just Third World: The International Business Times reports, “Italy court bans Uber across the country over unfair competition for traditional taxis”
April 9th, 2017 | 29 comments - (Comments are closed)
 I liked this statement by Julian Jessop, chief economist (recently appointed) of the Institute of Economic Affairs, the classical liberal think tank in the UK:
March 29th, 2017 | 8 comments - (Comments are closed)
The facts are unambiguous: despite public perceptions to the contrary, extreme poverty has declined significantly, to the point where its end may actually be in sight. So next time you hear someone bemoaning a supposed rise in world poverty, encourage them to have a look at the evidence for themselves. March 21st, 2017 | 7 comments - (Comments are closed)
Debt is the Fed’s basic problem, and it doesn’t know how high rates can go without triggering a financial crisis. And even if the Fed could make an assessment for America, there is the knock-on effect of the Fed’s interest rate policy on foreign dollar borrowers, as well as on the Eurozone and Japan. China has indirectly added to the West’s problems by being the largest component of global economic growth. Her massive credit expansion is contributing to higher interest rates elsewhere by financing imports, commodity stockpiles and driving up prices. It is the lack of ability of the ECB and the Fed to raise interest rates sufficiently to counter higher rates of price inflation that’s becoming the most pressing challenge. March 20th, 2017 | 49 comments - (Comments are closed)
I like those elongated cakes with raisins in them referred to on the package as “finger madeleines with raisins”. A few days ago I purchased another stash of them, from the Afghan-run corner shop nearest to me. They looked like this:
Sorry about the strange blue reflections of something blue in the transparent but shiny packaging, but it is important that you realise that this is a photo of these finger madeleines before I opened them. Same sized package. Same price. But, six empty spaces where there used to be six finger madeleines. Twenty four finger madeleines instead of thirty finger madeleines. We are seeing quite a lot of this in the UK just now. Soon the packages and/or the prices will change, but meanwhile, the quickest way to adapt in the short run is just to reduce the amount in the package. Brexit is not proving to be an economic catastrophe, and I remain very optimistic about it in the longer run, that being why I voted for it. But it is proving something of a dislocation in the short run, if only because the sort of people whose job it was to foresee it mostly did not foresee it. I don’t blame them for this. I did not foresee Brexit either. I merely voted for it. March 19th, 2017 | 43 comments - (Comments are closed)
For decades, often in word but always in deed, politicians have told voters that government debt didn’t matter. We, and many economists, disagree. Yet even if the politicians were right, the absence of available creditors would be an insurmountable problem—were it not for the Federal Reserve. But when the Federal Reserve acts as the lender of last resort, unpleasant realities follow. Because, as everyone should be keenly aware, the Fed simply prints the money it loans. A century of arguing about how much to increase spending has left us with a debt that dwarfs the annual economic output of the planet. A Fed loan devalues every dollar already in circulation, from those in people’s savings accounts to those in their pockets. The result is inflation, which is, in essence, a tax on frugal savers to fund a spendthrift government. March 12th, 2017 | 20 comments - (Comments are closed)
If you haven’t already partaken of this bit of video, then you really should. It lasts just under twenty minutes. Tim Harford is speaking, in 2011, at some gathering of the clever and the smug, but it’s better than that. The name H. R. McMaster comes up several times, and this is, among other things, a very good quick way to learn why McMaster’s appointment by President Trump as his National Security Adviser might turn out to be such a very good one. It certainly explains why this appointment is already so very popular. You don’t have to believe that the USA rearranging matters in faraway countries is always or even ever a wise policy to get the points that Harford is making. Harford also mentions, in passing, Hayek. From this, you may guess that this is a talk about decentralised decision making, and how on the spot knowledge, again and again, trumps the wisdom of the Central Committee or the High Command. If that is your guess, you would not be wrong. The story that Harford tells reminds me of another transformation of policy that happened in China, and gave rise to what is now called the Chinese economic miracle. This miracle is now starting to look rather less miraculous, but it was still a massive improvement over what preceded it. That change too is usually attributed to a change of top leadership and of its top-down policies, but that policy also, I seem to recall reading, began at the bottom of the chain of command and in spite of the chain of command. I even seem to recall having linked to stuff about that from here. Yes, here is that posting, about teeth of all things, and here is the article at Planet Money that the posting linked to. It’s the same story as Harford tells in the above-linked-to video. February 23rd, 2017 | 17 comments - (Comments are closed)
The result of [the ‘sharing economy] is that in many ways, private tech companies have ended subsidising new forms of public services, for the public good. That ought to make them the darlings of the Left. Yet unfortunately, the Left just can’t rid itself of its urge to regulate, legislate and tax. And in their efforts to thwart consumer freedom, they have a useful ally in the shape of a legal framework which was developed for the analogue age. Uber, for example, is the poster child of the sharing economy. Yet 2017 is make or break year for its European ambitions – and at its core is an age-old political battle of Left versus Right. This battle isn’t on the streets of San Francisco or London; Uber has already won over consumers. Instead, the fight is moving to a soulless courtroom in Luxembourg. The question is whether the company is a technology or a transport company; and the answer is incredibly complex. February 18th, 2017 | 15 comments - (Comments are closed)
Below is an interesting riposte to the idea, entertained even by pro-market folk such as Kevin Dowd in a recent study of the 2008 banking crash, that a way to make banks more prudent in lending and savings policy would include weakening limited liability of the shareholders and even removing, in whole or in part, banks from listed markets, returning them to more like partnerships, so that we come back to some purer, saner age. It is not quite so simple. The article is from Tim Worstall:
In the US, meanwhile, Donald Trump has won some free market points – for now – by promising to reform, and hopefully roll back, the monstrosity that is the Dodd-Frank legislation of 2011. February 15th, 2017 | 31 comments - (Comments are closed)
When I was a teenager doing GCSE Science we had a guest speaker come in and talk about what I now know to be The Limits to Growth. We were told about peak oil and how oil production doubles every n years and blah blah blah and it sounded pretty convincing at the time. Fortunately I did not pay it much heed, much as I instinctively did not really care about acid rain or the hole in the ozone layer which were the subject of geography lessons around the same time. It was not until years later I found out about the Club of Rome. I still do not know how, exactly, that guest speaker came to be in that science class, but in retrospect it sounds pretty sinister. I like the band Muse. Their
Of course, as someone at genius.com points out, we have the sun, which should last long enough. I was reminded of all this in an instant messenger chat with Perry Metzger today. He was talking optimistically about solar power. I did a search to check that I was not just imagining that anyone ever took second law arguments about economics seriously. I found a paper.
Perry M said, “if all else fails, we can always use the hot air produced by leftists as a power source indefinitely.” I shared that link. He replied, “that paper alone, Rob, could power London for a month.” February 9th, 2017 | 47 comments - (Comments are closed)
An argument I have come up against recently, in this apocalyptic book by James Rickards, is that free trade, as classically defended by David Ricardo with his famous Law of Comparative Advantage, only works in theory because the freedom to move capital and factors of production around means the “playing field” of the market is never “fair”, hence tariffs/other controls are just to re-set the game. Straight off, this sounds bunk to me, not least because free movement of capital is part of what capitalism (clue is in the word) is all about. Capital, both in its physical and human form, goes to places where it can earn the highest rate of return. This is how, to summarise massively, we got from the caves to the skyscraper. If a businessman cannot use his capital where it works most effectively, it would render much investment pointless. And if it is wrong for capital to move around because it somehow undermines some sort of “fair” trade, then this applies not just to between nations, but inside them, too. Ah, but I hear the Trumpistas cry, what about those evil currency manipulators gaming the system in their favour? The answer is that if the Chinese or others want to send us cheap stuff, made even more dastardly cheaper by currency manipulation, it means consumers don’t have to earn so much to buy imports. True, in the short-term it means that some jobs will be lost because of the cheap imports, but then again the pay packages of millions of consumers stretch a bit further. The pain of the affected industries is easy to see and makes for great TV and campaign spots for a Donald Trump or Bernie Sanders (whose views on trade are identical); the costs to consumers from protectionism is not easy to visualise. Also, if China, for example, sells or “dumps” cheap steel on the world market, manufacturers in the West who use steel will see their costs fall. It is worth nothing that when in the early Noughties George W. Bush slapped tariffs on steel, it “saved” some US steelmaker jobs, but cost many jobs in sectors where steel is a factor of production. Finally, here are more thoughts on the idea that free capital movement somehow dents the case for trade trade, via Gene Callahan over a decade ago:
February 2nd, 2017 | 46 comments - (Comments are closed)
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