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 perceived ills of Anglo-American shareholder capitalism shown up in the bursting of the 1990 stock market bubble are not therefore a sign of some decrease in corporate morality – though there have been some clearly illegal practices which are rightly being dealt with by the courts – but due to the perverse incentives created for managerial `rent seeking’ by the regulations limiting hostile takeovers, and the unintended effects of fiscal policy through the double taxation of dividends. With the double taxation of dividends due to end, if all the regulations preventing hostile takeovers can also be repealed, the unregulated market for corporate governance would again provide checks on predatory managements. Executive compensation will begin to fall, accountants will have less pressure to cook the books, and the Anglo-American corporation would pursue the innovation, efficiency, and profitability that has till now been its hallmark.”
– Deepak Lal, from Reviving the Invisible Hand, page 202. (The book was first published in 2006.)
Why you should feel cynical about government projects, part umpteen thousand.
New York State’s Governor, Andrew Cuomo, proudly tweeted this today:
“Right now, there is a lot of cynicism and skepticism about our projects. We’re going to restore credibility. #2ndAveSubway will open Jan 1.”
He is referring, of course, to the imminent opening of a small segment of New York City’s long planned Second Avenue Subway.
Let us recall that planning for the Second Avenue subway began in 1919. That’s quite literally just short of a century ago.
Let us recall that construction began in 1972. That’s 44 years ago.
Let us recall that what is opening on January 1 is not even remotely a full Second Avenue subway. It is just three stations, at 96th, 86th and 72nd streets.
Let us recall that to get just these three stations, and just since the latest phase of work resumed in 2007, $4.5 billion, that’s billion-with-a-b, have been spent. That’s $1.5 billion per station. That’s $3.75 billion per mile for the 1.5 miles built to date, by far the world’s most expensive subway line.
The line has about 13 other stations to construct according to current maps, so completing this single subway line would cost about another $20 billion dollars. If we judge on the basis of the per-mile cost of Phase 1, the seven miles still remaining would cost another $26 billion. However, for projects like this, costs generally go up with time, not down, so the price may even be far worse.
No, Andrew Cuomo, this minor expansion of the transportation network, which is not yet remotely complete after a century of work, which has cost an astonishing sum and will cost vastly more if it is to ever be complete, has only reinforced cynicism, and has done nothing to restore credibility in government projects whatsoever.
The New York City subway system was mostly built privately, until the government forcibly took it over. Since the takeover, the system has stagnated, leaving a major metropolis with a public transportation network that has barely been improved since the First World War.
The system is grotesquely filthy, so noisy that scientific studies say routine users suffer hearing loss, is slow, is unreliable, is vastly overcrowded, often reeks of human excrement, is a sweat-box throughout the summer months, and yet, in spite of huge numbers of passengers, loses money year after year.
So what would I do to fix it? That should be obvious.
We’re living longer lives these days, we’re working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises – not to produce inheritances, but to produce incomes in retirement. And rises by potentially at least more than 100% of GDP.
We can’t see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.
– Tim Worstall
Tim Worstall:
Some say that membership of the Single Market, the ability to export without facing tariffs, is so important that we should accept the freedom of movement. My argument is exactly the opposite. I’m not against freedom of movement, regard it as being economically and morally useful in fact. But then some large percentage of my fellow Britons don’t think that way. My objection though is to the Single Market idea. For it isn’t just a system allowing tariff free exports. It’s an entire system for governing and regulating the participating economies.
Just as an example, one that rather boggled the mind this morning, there’re rules about when a supermarket can offer you free parking (that in itself will boggle the mind of many Americans, that parking must be paid for at a store?). If you go and buy whiskey, diapers and beef they can stamp your ticket, give you a voucher, and you get free parking. If your purchases include formula milk then they cannot stamp your ticket and you cannot get free parking. And yes, this is a result of an EU law. Must do wonders for adoptive mothers, those who simply do not produce enough milk and so on. But the entire ruling system of Europe thought this was important enough that there must be a law about it.
And the final sentence of Tim’s piece is the crunch argument for me as to why the Single Market is a cruel hoax (and Mrs Thatcher, who signed the Single European Act in 1986, kicked herself for not grasping this). We are told that to have access to the Single Market and the supposed benefits of such membership, “We” (Britain) “must” (because it says so, apparently) accept regulation of everything, down to the size of the plug on electric kettles, the rules governing sales of vitamins, the lot. And while no-one should have any illusions as to zeal with which local politicians in the UK might want to regulate these things, it is a million miles easier to resist such nonsense at the national level than at the supranational one, not least because MPs cannot hide behind the “Brussels made us do it and anyway we need to because of the Single Market” line they come out with.
Free of the EU, we are free of a great mass of legislative empire building that has, as such examples show, tiddly-squat to do with trade, commerce and entrepreneurship.
Of course, this debate does not touch on the fact that at the global, not European level, there are all manner of intergovernmental agreements and treaties that will continue to affect us in or out of the European Union. I can think, for example, of a global system coming into force called the Common Reporting Standard, a bland term that describes how scores of governments, ranging from the likes of Singapore to Germany, will swap financial data with one another to hunt down alleged tax evaders. And in one of those beautiful ironies, the US, home to Delaware, one of the most secretive legal jurisdictions on the planet, isn’t a signatory, and under Mr Trump, isn’t likely to be.
I believe in making a bit of a fuss about visiting pro-free-market luminaries. Our movement needs celebs, and one good way to get celebs is to make our own people into celebs. One more photo of whoever it is, on a blog, won’t turn him into a celeb on its own, but every little helps. So, below is a photo I took last week, of Robert Lawson, during the Q&A after a talk that he gave at the Adam Smith Institute office in Great Smith Street, on the subject of the Economic Freedom of the World, and more to the point, on the measuring of it:
He looks like he’s conducting an orchestra, doesn’t he? Actually, he was drawing graphs in the air in front of him. The lighting in the ASI’s upstairs premises where this talk took place prefers to light the walls rather than the speaker, so that was one of the very few semi-adequate photos of Lawson that I managed.
This other photo, on the other hand, which showed the final graphic that Lawson gave us on one of those big telly screens that used to cost a fortune but which are now ubiquitous (thank you: economic freedom), came out much better, because the screen supplied its own light:
Free The World indeed.
This work by Robert Lawson, putting numbers to which countries are doing what in the realm of economic freedom, should not be confused with that being done by a rival enterprise, the Heritage Foundation.
It’s good that there is competition in this important intellectual arena, but to me it is very confusing, and I don’t think I am the only one thus confused. The ASI email about the event included the words “Economic Freedom of the World Index”. But googling for that before the event took me to this Heritage site. On the subject of this rivalry, Lawson was very polite, and I think we all sensed some behind-the-scenes animosity there. He described the Heritage Freedom Index as somewhat more speculative and opinion-based and less based on actual data sets, supplied by others, than his own efforts. “Black box” was the phrase he used, by which he meant that it is harder to scrutinise how the decisions were arrived at in the Heritage process than it is to scrutinise the Fraser Institute process. In contrast, all the data that Lawson referred to in his talk, with his other graphic offerings on the screen above, is publicly available.
Here is a .pdf of the Economic Freedom of the World 2016 Annual Report, which tells the story as of 2014, which I believe is the latest date that Lawson has done the sums for. Scroll down to page 8 and you get the big national league table. The positions I notice are: Hong Kong in the lead, the UK at number 11, USA at 16. Hong Kong is top every time. The UK is holding about steady. The USA has been falling steadily during the last couple of decades or so.
Lawson also drew our particular attention to that remarkable ex-USSR-possession, Georgia, which is trying to do a Leicester City and is currently at 6. (Heritage doesn’t include Georgia in its top 10.)
And so on. Hours of fun to be had. The more serious point is that economic freedom the world over had been rising healthily until about 2010, but is now flatlining.
True Believer Austrianists might have winced a little at Lawson’s determination to be empirical, to gather evidence, to test theory against fact. He was quite explicit that social science, broadly defined (in the German manner) to mean systematically gathered and systematically tested knowledge about how the world works, is something that is entirely possible. He pointed out that economics is not the only science that is unable to conduct all the experiments it might like to, but instead must mostly depend on theories, and on observations to test those theories. When was the last time you saw an astronomer conducting an experiment with some planets or stars?
But, please don’t take my word for any of this. Thank goodness for those websites, because if you really want to get to grips with all this stuff, you need not depend on me to tell you about it. All I really want to say here is: interesting man, interesting talk, and well done the ASI for hosting it. Apparently Lawson was only here because he wanted to be at this sporting event, last Sunday. If so, then thank you: sport.
The following article over at the CapX site explains why the UK should go for unilateral free trade immediately, and summons up arguments deployed a century and a half ago by the likes of Richard Cobden, and Sir Robert Peel, the Conservative prime minister of the time (who had a rather stronger grasp of political economy than, I suspect, any member of the present government):
I trust the government … will not resume the policy which they and we have found most inconvenient, namely the haggling with foreign countries about reciprocal concessions, instead of taking that independent course which we believe to be conducive to our own interests…[L]et us trust that our example, with the proof of practical benefits we derive from it, will at no remote period insure the adoption of the principles on which we have acted… Let, therefore, our commerce be as free as our institutions. Let us proclaim commerce free, and nation after nation will follow our example.
And these comments from the author of the CapX article, Louis Rouanet, who is a student in Paris, strike me as crucial:
A unilateral free trade program is very simple: the British Parliament declares the abolition of all tariffs. To avoid a race in non-tariff barriers, the Parliament can pass a law declaring that every product which conforms to the EU norms and regulations can be sold freely in the UK. This should not be a problem since the UK still is a member of the EU.
By Parliament’s act, most of the “non-tariff barrier” problem withers away without any need for regulatory harmonisation. If the EU legislator considers it necessary to regulate the curvature of vegetables, so be it! But, although EU producers will be free to sell their product in the UK, the British legislature may deem it unnecessary to regulate its producers in the same absurd way.
The advantages of this approach are many. First, the UK can have free trade now instead of waiting through years of negotiations. No need to wait for bureaucrats to agree on which laws we burden consumers and producers with.
Read the whole thing, as they say.
I received the following e-mail from Airbnb:
The Airbnb Community Commitment
Hi,
Earlier this year, we launched a comprehensive effort to fight bias and discrimination in the Airbnb community. As a result of this effort, we’re asking everyone to agree to a Community Commitment beginning November 1, 2016. Agreeing to this commitment will affect your use of Airbnb, so we wanted to give you a heads up about it.
What is the Community Commitment?
You commit to treat everyone—regardless of race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation or age—with respect, and without judgment or bias.
How do I accept the commitment?
On or after November 1, we’ll show you the commitment when you log in to or open the Airbnb website, mobile or tablet app and we’ll automatically ask you to accept.
What if I decline the commitment?
If you decline the commitment, you won’t be able to host or book using Airbnb, and you have the option to cancel your account. Once your account is canceled, future booked trips will be canceled. You will still be able to browse Airbnb but you won’t be able to book any reservations or host any guests.
What if I have feedback about the commitment?
We welcome your feedback about the Community Commitment and all of our nondiscrimination efforts. Feel free to read more about the commitment. You can also reach out to us at allbelong@airbnb.com.
The Airbnb Team
I have added emphasis to the words religion, gender identity and judgment as they particularly leapt out at me. So I am being told by Airbnb that I must not judge someone based on a prescribed list of things, some simply matters of genetics or location, but others being ideas someone has chosen to believe or adopt, which is a very different category to race for example. This is the first time I have ever had a company or indeed anyone ask me to sign an agreement to interact socially in a certain manner as a precondition to doing business, or they will cancel any existing bookings I might have in their system and prevent me from making any in the future. Well that is their prerogative of course, but does anyone else find this utterly bizarre?
Now I have travelled to a great many places on this planet over the years (well, not by Michael Jennings standards perhaps, but most would say I was very well travelled). I am also a straight white atheist who thinks all religion is arrant nonsense. And yet I have stayed in hotels, motels, yurts, boats and b&bs owned by Christians, Jews, Muslims, Buddhists, Animists, Homosexuals, Heterosexuals, and goodness knows Whateversexuals, and never once had any problems due to the owner’s religious beliefs or personal peccadilloes, because I am really a very tolerant person. And yet none of the proprietors have required me to sign an agreement not to ‘judge’ their religion or what they do in bed, so such topics really never came up, which is just as well because when I am asked what I think, I typically say what I think (unless the person is pointing a gun at me).
But if a hotel ever sent me a confirmation e-mail for a booking and included a rider stating: “as a precondition of this booking, please confirm that you will not judge our religious beliefs…” or perhaps “as a precondition of this booking, please confirm that you will not show bias against my demands to be called Doris even though I have a beard and a baritone voice…” well my terse reply would be: “Cancel reservation”. Yet this has never actually happened, because most people who run hotels or B&Bs are just not that stupid. Perhaps making such demands does not seem like unhinged behaviour at Airbnb HQ in San Francisco, but that is indeed how it strikes me.
And so even though I have never once in my entire life had a problem renting a room anywhere in the world, I will be closing my Airbnb account, deleting their app, and telling Airbnb to get stuffed for their sheer effrontery and presumptuousness.
Economist have taken positive empiricism one step beyond and formulated economic theory from empirical regularities; Okun’s law, the Phillips curve or, more recently, the popularity of Rogoff and Reinhart’s debt-to-GDP tipping point. Economists, also, have little restraint in throwing up graphs showing empirically causal relationships between economic variables.
This is, however, taking economics way beyond what it can do, yet, few professional economists take to the airwaves to denounce this bastardisation of the science. Empiricism can support an economic theory, but it cannot prove or disprove an economic theory.
– Frank Hollenbeck
Ben Chu in the Independent describes 5 possible Brexit outcomes. The only interesting ones are 4 and 5.
Brexit 4 is, “Leave the single market and customs union with no free trade deal in place and trade with Europe under World Trade Organisation rules.” Brexit 5 is, “Leave the single market and customs union with no free trade deal – but unilaterally scrap all import tariffs.”
He thinks 4 will make us poor, and 5 is politically impossible because the exporters will make a fuss. I think we will end up with something between 4 and 5, with lots of bluster and threats but ultimately low-ish tariffs because British and EU politicians are not completely self-destructive. But I am a very optimistic person. Of course the tariff structures will be ridiculously complicated and riddled with special interest exceptions.
This is funny, from Brexit 3, which is a comprehensive free trade deal that will somehow require a strong customs border: “There would additionally have to be a customs border between Northern Ireland and the Republic, with potentially serious political consequences.” I think any such border would be for appearances only and eyes would be blind to any goods moving across it. This is because trade deals are not really there to improve anyone’s economic prospects. They are to win favour with voters, so only outward appearances matter. They do not need to be properly enforced. Nobody in charge actually cares about smuggling.
Incidental note: I was thinking of this song when I wrote the title.
Postscript: Further to that, and with apologies to anyone not familiar with the best Megadeth album:
Give me sov’renty, give me liberty,
True autonomy, unilat’rally,
Strong economy, Brexit if you please,
Master all of these, EU on its knees
I master five Brexits, I master five Brexits
I’ll get my coat.
Ok, maybe the time as not quite arrived just yet but it is an idea I have long liked, and it seems I am not the only one:
You could open up futures markets in passports, you could have derivatives.
– David Card, professor of economics, U.C. Berkeley
The notion gives me the giggles and it has much to commend it. Yes, I used to be a futures trader 😉
What do you think is going to happen with the economy?
Disaster.
What do you mean by disaster?
Depression, unemployment, reduction in living standards, banks going bust, hundreds of thousands not being able to pay their mortgages. Perhaps even the breakdown of the state.
Where?
Just about everywhere in the Western/developed world.
Why do you think that?
Because of government deficits, government debts, private debts and money printing.
And why should that lead to disaster?
Because eventually people will stop lending to the government. At which point the government will be unable to pay it’s bills. At which point it will have to stop spending money on things like pensions, health, education, defence. At which point you’re going to get riots.
What from old people, sickies and children?
More from people who thought they might need the state at some point in the future.
Anyway, can’t they just print the money they need?
Well, they’re already doing that. But money printing eventually leads to inflation. Inflation dislocates the economy. It becomes impossible to plan because you no longer know how much you can buy for and how much you can sell for. At that point you no longer know what activities are profitable and what unprofitable.
But there’s been plenty of printing in the last few years and very little inflation. Hey, look at Japan.
Maybe. There’s been plenty of inflation in assets such as houses, shares and precious metals. Indeed, according to Jesse Columbo there’s hardly an asset class out there that isn’t currently in a bubble. And bubbles eventually pop.
Do they? I give you Japan again.
Yes, they’ve been printing money and keeping it all together for 25 years. But there’s been no growth.
And anyway they are getting ever more desperate. At time of writing they are considering helicopter money. This is part of a progression from low interest rates to no interest rates to negative interest rates.
So, they will have negative interest rates and then they will have ever-more negative interest rates and where Japan goes we will follow.
Yes, but… oh I don’t know. It just doesn’t sound right.
 Where the Japanese lead we follow. Perhaps not so neatly.
Theresa May:
Government can and should be a force for good; the state exists to provide what individual people, communities and markets cannot; we should employ the power of government for the good of the people. Time to reject the ideological templates provided by the socialist left and the libertarian right and embrace a new centre ground in which government steps up – and not back – to act on behalf of the people.
Guido:
Claiming to reject ideology is nonsense – May is advocating an ideology of “centrism”, statist, intervening in the economy, acceptance of perpetual borrowing and over-spending, coupled with greater intrusion by the state into the lives of individuals. Remember her Snoopers’ Charter, giving the state powers to intercept personal online data of every individual. Her conference speech last year, lest we forget, was panned by the Institute of Directors and described as “chilling and bitter”. May, whilst claiming the state is a “force for good”, is proposing to force companies to list foreign workers, an ominous and pointless intervention in the private contracts of business. She will also hint this afternoon at imposing price controls on energy companies, another interventionist policy for which the Tories rightly monstered Ed Miliband. Thatcher wanted to “roll back the frontiers of the state”. May wants “government to step up, not back”. So who do you vote for now if you want a balanced budget, free markets and to get the state out of your life?
Quite.
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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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