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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Too good not to share. From the excellent Cafe Hayek blog.
Dear Mr. Trump:
You insist that we Americans are harmed whenever foreigners take actions that result in us getting more imports in exchange for our exports. I ask that you, with your own money, prove that you really believe the economic principle that lies at the root of your insistence.
If you’re correct that people are impoverished when they pay lower prices, and are enriched when they pay higher prices, then you can easily augment your personal fortune by demanding that the suppliers from whom you purchase the steel, cement, and other materials used to construct Trump buildings raise the prices they charge you for their merchandise. The higher they raise the prices they charge you to carry out your economic affairs, the wealthier you’ll become because you’ll be increasingly reluctant to purchase their offerings. In the limit they can charge you prices so high that you’ll buy nothing from them! How great would that be?! And the possibilities don’t end there! You can even further expand the Trump treasure by lowering the prices – even to $0 – that you charge your customers for hotel rooms and the other goods and services that you supply.
Just think of the additional wealth that will come your way by your being, as a buyer, dissuaded by high prices from purchasing goods and services from people not named ‘Donald Trump,’ and, as a seller, by the hordes of customers who will demand to consume almost limitless quantities of the wares that you make available at prices of $0.
Who knew that getting rich is so easy?!
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
Russ Roberts’s EconTalk is a wonderful thing, I have been listening to it on and off for a few years now. One of the great things about it is that despite being a libertarian, Roberts is always happy to expose himself to new ideas and challenge his assumptions.
I have recently taken to listening to some of the earlier episodes and found myself listening to what happens when you have price gouging laws – or “anti-supply” laws as I prefer to call them.
His interviewee, Mike Munger, explained how there was a hurricane in Raleigh, North Carolina. The roads were blocked, there was no electricity and there was a shortage of ice.
Ice may not sound that important but it is. Not only does it help to preserve food but it also helps to preserve some medicines like, for instance, the insulin needed by diabetics.
Some “yahoos” – Munger’s term – saw an opportunity to make money. They got themselves a truck, loaded it with ice and some chainsaws and proceeded to drive towards the centre of Raleigh. If they found the road in front of them blocked they chopped up the fallen trees and carried on.
When they got to the centre of town they started selling the ice. Usually, ice sold for $2 a bag. They were selling it for $12. Very soon a queue appeared. Then the police arrived. Citing price-gouging laws they arrested the men and impounded the truck.
And here’s the kicker: as the truck was towed away the people in the queue applauded the police.
So, here we have an example where the gap between cause – the price gouging laws – and effect – the lack of supply – is instantaneous. And yet people still support the law.
Words fail me.
Reports of company meetings are usually a bit dull – those from a hundred years ago even more so. So why I bothered to read this one I don’t know. It concerns Farrow’s Bank, a small bank that despite there being a war on seems to be doing just fine.
“So”, I wondered, “what happened to it?” My assumption was that it got swallowed up in one of the gazillion or so mergers that have taken place in the banking sector in the last century or so.
Well, not quite. Actually, in 1920 it went bust. Spectacularly.
It turned out that at no point in its 13 or so years in existence as a publicly-listed company had it made a profit. By the very time this company meeting was taking place losses were routinely being covered up by inflating asset values.
So, were there any tell-tale signs that all was not as it appeared? Obviously with accounts that were largely fictional it would have been difficult to tell from the numbers. But were there other clues?
It is difficult to tell from this distance but a few things stick out. The first is that, the chairman and founder, Thomas Farrow, prior to founding the bank wrote a book entitled The Moneylender Unmasked in which he criticized the methods of moneylenders. Was he, perhaps, a gamekeeper turned poacher? – someone who had worked out all the tricks of the dishonest and then applied them for his own benefit. I doubt it. More likely, I suspect, that his ideas were nonsense in the first place and the acid test of their commercial implementation simply proved it.
The second is that one of the depositors described the Chairman’s speeches as “sanctimonious” and “treacly”. Does this, perhaps, suggest a lack of attention to the business of making money?
The third, was his fullsome praise for the then Minister of Munitions, David Lloyd George. Businessmen don’t usually praise the government, far less individual government ministers. I could say a lot more about that particular minister but I’ll save that for another time.
 The Times 5 August 1915 p2
Krasimira is gloomy about the future. She doesn’t think Greece will implement the necessary reforms and will, in the end, have to leave the eurozone. As ever, she views the situation through a Bulgarian prism. “Greece has received €30 billion from Europe,” she says. (In fact the figure is far higher). “That’s more than seven other Balkan countries have received put together — I saw it on Bulgarian TV. You’ve got to pay back your debts in order to take more loans. If I ask you for a loan you’ll give it to me; if I can’t pay it back you wont give me any more.”
She has a final comment — on the EU subsidies. “In Bulgaria the state doesn’t give subsidies to the farmers.” She points to some sprinklers watering the garden. “So what you see here: water being wasted, you’ll never see in Bulgaria. My brother has 2,200 hectares there and grows corn and wheat and he is not allowed to overly water them, he has to rely on the weather. If it’s not good he has a problem.”
“Yes, the subsidies have made Greek farmers spoiled and wasteful. But since Bulgaria joined the EU and started receiving subsidies you’ve seen the same thing — people receiving subsidies and using them to buy houses and consumers goods instead of investing the money.”
The EU as resource curse: it’s an old tale — and one that seems to have had disastrous effects for Greece, which for years grew fat on easy money. Now in its time of crisis it must watch its poorer, leaner neighbor to the north further compound its deep, almost existential, despair.
– David Patrikarako, from the article Greece vs Bulgaria
An economics joke, drawn to my attention by my friend Jesse Forgione:
Krugman and Bernanke are walking down the street and see a pile of dog shit. Bernanke says “I’ll give you twenty thousand dollars to eat that pile of shit.” Krugman does it, gets paid, and they keep walking. After a while they see another pile of shit on the road. Seeing an opportunity for revenge, Krugman says “Tell you what, I’ll give YOU twenty grand to eat that pile of shit.” Bernanke does it, Krugman gives him back the money, and they keep walking. After a while Bernanke says “I’m feeling pretty sick. We both ate shit and neither of us is any richer.” Krugman answers “You’re missing the bigger picture. We’ve increased GDP by forty thousand dollars and created two jobs.”
So many economists today spend more and more time mastering higher-level mathematics and econometric techniques that they simply never master basic microeconomics. These economists (from my reading of him, I judge Piketty to be among them) take their fluency in statistics and their skill at quantitative-data gathering for being a fluency in, and skill at doing, economics. They are mistaken. And while their error is too-often masked to the general public by their formal credentials as professional economists, their error is never hidden from genuinely skilled economists such as Deirdre McCloskey.
– Don Boudreaux, of Cafe Hayek. The whole item is worth a read, as is the McCloskey item at the Cato Institute to which he links. And let’s not forget Samizdata’s own Perry Metzger’s marvellous “shoe event horizon” takedown of Piketty a few months ago.
While it is perfectly reasonable to expect companies to obey the law in the countries in which they operate, the rage against Uber highlights how stifling regulation of economic life can be. Prior to the emergence of Uber, complaints of never being able to get a cab during peak times were common in every major city in the world. Uber’s sidestepping of licensing laws and other regulations that limit enterprise has enabled it to increase supply and meet demand.
What’s more, Uber’s cheaper fares have saved customers money, expanded our transport options and provided a source of income for a whole new sector of drivers. While the debate about Uber drivers’ pay and employment rights rumbles on, it is clear that banning the service, and forcing these drivers to go through the same costly licensing systems as everyone else, does no one any favours.
It is the competition that Uber provides that is driving its popularity with drivers and customers. But this is precisely what is enraging licensed taxi drivers.
– Rob Harries
From the “it’s just a temporary emergency created by the need to suppress vicious anti-social elements, and we will restore things to normal after the crisis has ended” department:
Venezuelan farmers ordered to hand over produce to state.
I’m certain this new measure will finally end the reign of terror of the hoarders and restore food to Venezuelan homes.
Meanwhile, a word about toilet paper. The capitalist propaganda machine outside of the Bolivarist Paradise has been telling people that toilet paper is now largely unavailable for purchase in the country. But, does man really require toilet paper to be happy? A few centuries ago there was no toilet paper at all – indeed, mankind survived for most its history without toilet paper. The desire for toilet paper is simply a form of manufactured desire created by capitalist marketing and advertising – the production of a want in people for a product they don’t actually have a real use for. The creation of toilet paper despoils forests and the landscape, is unsustainable, and it is only to the good that Venezuela now leads the world in eliminating this scourge from our midst.
(See also: What Socialism Has Done To A Supermarket in Venezuela.)
Paul Johnson, writing in the Times about the minimum wage (“Why it’s a gamble to follow Ikea on higher pay”) talks some sense but puts the cart before the horse:
It is a bet that forcing companies to increase wages will force them to increase productivity. If you have to pay £9 an hour then you’ll be forced to invest in the training and the machinery to ensure you get your money’s worth. Indeed this could be one of the reasons why productivity in France is so much higher than in the UK. With high minimum wages and extensive labour market regulation French companies can only survive by being highly productive. On the other hand that same regulation probably partly explains higher French unemployment.
Of course French workers are productive. The people who would have been the least productive French workers aren’t workers at all. Thanks to the minimum wage they’re unemployed, except for a little light rioting.
However Mr Johnson’s penultimate sentence cannot be faulted:
The minimum wage as it stands is widely seen to have been a success.
Everyone loves a feelgood story, and to increase the minimum wage feels so good. How vividly one imagines the joy of the hardworking night cleaner as he counts the extra in his meagre pay packet! In contrast, how dim and watery is the mental picture of the, um, potentially-but-not-actually hardworking unemployed person who might theoretically have benefited from a job at the till at a supermarket but now there’s an automated checkout machine instead. She’ll never know. The supermarket chain are not such fools as to announce that the reason for them scaling back their hiring plans is that they would rather not pay their employees any more. They will present automation purely as a benefit to the customer. The customers will continue to curse at the words “unexpected item in the bagging area” and moan about what a pity it is that they don’t have real human beings at the till like they used to, especially since that nice Mr Osborne put up their wages.
An afterthought: Oh, and about that hardworking night cleaner… six months after he was interviewed by the BBC saying what a wonderful difference the extra pay would make to his life, he was let go. Nothing personal, but what with the rising wage bill, the only way for his employers to keep within budget was to cut the frequency of cleaning. The BBC were long gone. Warmhearted people continued to feel good about how companies were finally being made to pay a “decent living wage”.
If the project itself would add value then it should be built, recession or no. And if it doesn’t add value then it shouldn’t be built, recession or no. There is no room left for the argument that it should be built because recession.
– Tim Worstall, on the ASI blog writing “Keynesian infrastructure spending might not be the answer you know“
Obama collecting personal data for a secret race database, reports the New York Post.
A key part of President Obama’s legacy will be the fed’s unprecedented collection of sensitive data on Americans by race. The government is prying into our most personal information at the most local levels, all for the purpose of “racial and economic justice.”
Unbeknown to most Americans, Obama’s racial bean counters are furiously mining data on their health, home loans, credit cards, places of work, neighborhoods, even how their kids are disciplined in school — all to document “inequalities” between minorities and whites.
This Orwellian-style stockpile of statistics includes a vast and permanent network of discrimination databases, which Obama already is using to make “disparate impact” cases against: banks that don’t make enough prime loans to minorities; schools that suspend too many blacks; cities that don’t offer enough Section 8 and other low-income housing for minorities; and employers who turn down African-Americans for jobs due to criminal backgrounds.
So they want to push banks into making more loans to minorities who tend to lack good credit histories. What could possibly go wrong? When companies like Wonga encourage poor people to take out loans they cannot afford, it’s called loan sharking.
As with my previous post, I first learned of this story via the Drudge Report, which seems particularly good at sniffing out and really making public stories of this type in which momentous developments were previously “made public” in a purely technical sense by bland official reports. “You will be assimilated” was the catchphrase of the Borg, a “collection of species that have been turned into cybernetic organisms functioning as drones in a hive mind called the Collective”, formerly thought to be fictional.
I have been reading Derek Wilson’s book about The Plantagenets, which is a succinct, blow-by-blow history of England’s monarchs from the beginning of the reign of Henry II in 1154 to the death of Richard III at Bosworth in 1485 at the hands of Henry Tudor. It’s good. All the various blows are briskly and engagingly described. If that’s the sort of book you are looking for, look no further.
In 1471, it seemed at the time as if the fighting had ended. The chapter covering 1471-1485 begins thus (on page 259 of my paperback edition):
After half a century of governmental breakdown, baronial strife and dynastic uncertainty the country needed internal and external peace and a firm hand on the tiller, and Edward IV certainly settled things down for a dozen years. …
But as anyone familiar with Medieval English history knows, and as Wilson then of course immediately relates, the fighting wasn’t quite done. This same paragraph then continues:
… However, following his death at the age of 41 his family managed to tear itself apart, provoke fresh conflicts and pave the way for a challenge from a minor branch of the Lancastrian dynasty, something which had up to that moment seemed inconceivable.
But then, Wilson switches in his immediately following paragraph to a different story:
Beyond central politics profound changes were taking place in these years. Commerce – especially the trade in woollen cloth – flourished, and a wealthy capitalist, mercantile class emerged. Renaissance influences from the continent began to affect cultural life and provoke new patterns of thought. But most revolutionary of all was the appearance of cheap books from the new print shops, which brought the world of ideas within the reach of many more people.
Now I want to make it clear that I have no major complaint to make about Derek Wilson, or his book. His aim with it was to tell the story of the Plantagenet kings, and he succeeds very satisfactorily. What I am here regretting is the absence of a point which he might have made here, maybe in a mere couple of phrases. I am not accusing Wilson of failing to understand the point I am about to make. I am merely noting that, for whatever reason, this is a point that he does not, at this highly relevant moment in his story, make himself.
Wilson could have connected the two paragraphs above, with half a sentence which added something along the lines of: “Perhaps partly because the aristocracy were consuming their energies fighting each other rather by meddling with commerce …”, and then noted that commerce at this time flourished.
For my point is that this royal “hand on the tiller” that Wilson says the country so much needed can sometimes be rather too firm.
→ Continue reading: An infirm hand on the tiller has its advantages
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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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