Saturday, the German government closed its last four nuclear power plants, finally fulfilling Angela Merkel’s Fukushima-era promise to destroy her nation’s most abundant source of safe, clean, cheap power — in the middle of an energy crisis. To fill the giant hole in the nation’s energy portfolio, the famously “environmentally conscious” Germans will be burning more coal, a degree of stupidity almost impossible to fathom. In America, this specific genre of Clown World policy was last observed at the Diablo Canyon power plant, which the state attempted to shut down in the middle of its own series of energy-related crises. At the last possible moment, following a tremendous groundswell of counter activism, that decision was reversed. But today, with the activist group “Friends of Earth” trying to override this rare California flirtation with logic, and with activists around the world celebrating the end of German nuclear power, rational policy is once again on the wrong side of political momentum. So let’s just break it down: poverty and global warming are both real, and they exist because of “environmentalism.” If you stand opposed to nuclear, you are either 1) too dumb to comprehend the risks inherent of the technology, 2) dedicated to some nefarious ulterior motive, or 3) pseudo-religiously obsessed with the belief mass murder is not only inevitable, but necessary to keep the human population “in check.” There is no steelman for these positions. The debate is over. Nuclear is the way.
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April 20th, 2023 | 11 comments - (Comments are closed)
 “The Soviet Union was world-renowned for maths and science instruction but that failed to translate into a strong economy. Similarly, the UK has some of the top universities in the world yet has experienced stagnant growth for the last decade. Prosperity requires creating the right institutional environment for entrepreneurship, not dictating curriculums from the top.” Matthew Lesh, Director of Public Policy and Communications, at the UK-based Institute of Economic Affairs, the UK think tank. (The quote is from an emailed press release I was sent today.) He responded to UK Prime Minister Rishi Sunak’s comments on the case for extending the teaching of maths and how far too many people think it is okay to be poor at the subject. (I used to be poor at maths, but certainly did not wear that as a silly badge of pride.) Lesh’s point, however, is certainly worth focusing on. Being good at certain subjects and having knowledge about subjects is not the same as having a flourishing economy, particularly if one has oppressively high taxes, heavy regulations, spending on flashy projects such as HS2 that crowd out private investment, etc. At the margins, having a more maths-literate population might have a positive effect if, for example, more people can get their heads around statistics – and how they can be manipulated – and important concepts for business and finance such as compound interest, for example. Of course, in an age when the teaching of STEM subjects (Science, Technology, Engineering and Mathematics) gets more attention, this all fits. Here is a paper from Stanford University about maths skills and economic growth. I do worry that Mr Sunak, in his understandable and laudable desire to encourage teaching and better grasp of such subjects, can come across as assuming that this might be a sort of silver bullet to the UK’s economic woes. As the Lesh comment about Soviet Russia shows, having lots of maths whizzes in a country is no good if the underlying economics is poor. And by the way, a lot of those Russian maths aces, such as those of Jewish descent, emigrated to Israel as soon as they could, which explains, among other things, why Israel has been a STEM and start-up powerhouse. On a final point, I remember some years ago (I cannot find the link, sorry) watching a televised talk by Michael Collins, the Apollo 11 and Gemini astronaut, given at MIT. He talked about teaching, and about why there needs to be another “E” in the STEM acronym: E for English. There’s no point in having all this knowledge if you are lousy at communicating it. He’s right. An example of how to communicate complex ideas brilliantly and clearly is that of Edward Chancellor in his recent book The Price of Time, where he writes about interest rates, and why manipulation of them is dangerous and a folly that goes back centuries. It is an outstanding case of clear exposition, fascinating facts and an enjoyable tone of voice. April 17th, 2023 | 23 comments - (Comments are closed)
“Over the next few years, all those heavily subsidised plants in the US, Germany and France are going to come on stream, selling chips into a global market where there are too many of them and prices are tumbling. The losses could be vast. Taxpayer money will have been put to terrible use and, in the UK, Treasury officials will perhaps be quietly breathing a sigh of relief that we were too hopelessly disorganised. There is a lesson to be taken, not least at a time when when `industrial strategies’ are more popular than ever. Just because a product is important it does not mean any particular country has to produce it. And if demand is growing, it is safe to assume private companies will be capable of meeting that need without help from the state. Too often, governments end up subsidising the wrong industries at the wrong time. They have a poor record of picking winners, and should instead set low and fair taxes, lower tariffs, keep competition open, and break up any cartels. Once they have done all that, the market can decide which are the industries of the future.” – Matthew Lynn, Daily Telegraph (£). My only quibble with the quote from this excellent article is that his support for trust-busting activity needs to be qualified with the point that a lot of anti-monopoly activities by governments are often based on a misunderstanding of competition as a static game, not a dynamic process through time. We see this regularly in the recent wailing about Big Tech. (See an article here.) April 11th, 2023 | 10 comments - (Comments are closed)
Those were reportedly the last words of General John Sedgwick at the Battle of Spotsylvania Court House in the American Civil War. (Wikipedia boringly says that he did complete the sentence. Just.) General Sedgwick was a brave man to stride along the front like that. He sought to encourage his men, some of whom had been seen to flinch as the Confederate bullets landed all around. I hope our Scottish readers will forgive me if I say that, though all the hearts that beat under Scottish skies are brave, not all of them are quite as brave as General Sedgwick. But some are: “Deficits are nothing to be afraid of”, writes Jim Byrne for Bylines Scotland. You see, taxes don’t fund spending and a sovereign government can create new money to pay off its debts whenever it likes and so all Scotland needs to do make its deficit disappear is declare independence. This is called “Modern Monetary Theory”. Mr Byrne posts a link to a 14-page Bank of England document that, he says, shows that the Bank agrees with him. Which does make one wonder why the Bank doesn’t just declare “the deficit is nothing to be afraid of, let the rejoicing commence”. Unless it’s a case of “Gary, no”? April 10th, 2023 | 25 comments - (Comments are closed)
April 9th, 2023 | 7 comments - (Comments are closed)
I am saddened to read that Nigel Lawson, former UK Chancellor of the Exchequer, and an articulate advocate of the UK’s departure from the EU (and also a rigorous debunker of global warming catastrophism), has died at the grand age of 91. My condolences to his family and friends. It is ironic that he fell out with Mrs Thatcher in the late 80s over the issue of the UK joining the Exchange Rate Mechanism in Europe. He was opposed to the euro, but saw ERM entry as a necessary way for the UK to try and control inflation. In that sense he was a fixed-exchange rate man, and in the 19th century he’d have been a Gold Standard defender, I suspect. In the end, he was at one with Mrs T. on the dangers of a centralising Europe. And of course, in his time at 11 Downing Street, he cut top rates of tax and simplified the system dramatically. Alas, his successors haven’t continued that trend. Lawson was also the intellectual driving force behind privatisation of state-owned businesses, and while arguably not enough was done to promote competition, the overall benefit in my view was considerable. His speech explaining why the UK had to leave the EU remains, in my mind, one of the most brilliant and succinct explanations for why this was the right course. He focused, rightly, on the issues of democratic accountability and freedom. Right to the very end, his mind was as sharp as those of all too many in power are blunt. April 4th, 2023 | 8 comments - (Comments are closed)
As a “lukewarmer”, I am more of a believer in climate change than many here. One thing that pulls me towards scepticism is the habitually dishonest language used by advocates of measures against climate change. Take this BBC article: “Climate change: UK risks losing investment in net-zero race, MPs warn”. It says,
The BBC article makes me want to riff on Mary McCarthy’s famous quip about Lillian Hellman – every word in it is a lie, including ‘and’ and ‘the’. In particular, the words “race”, “investment” and “jobs” are all used in a sense that means the opposite of their usual meanings. “Investment” means something you buy in the hope that its price will rise so that you can sell it later as a profit. The “investment” the article talks about is simply spending. Argue if you wish that it is justified spending, but that doesn’t make it investment. The article, taking its tone from the government, talks about “green jobs” as if they are a good thing. As Tim Worstall often points out, all jobs are a cost not a benefit. Perhaps a necessary cost, but a cost. And the purest, costliest, unbeneficialliest jobs of all are jobs that are created solely to comply with government regulations. Not unexpectedly, the people who get these make-work jobs like having them, because they get paid. But the money to pay their wages has to come from somewhere. It comes from (a) taxes, i.e. making everyone a little bit poorer, and (b) companies diverting money that could have been truly invested in making or doing things that people actually wanted made or done (which would have created genuine new jobs) into the hamster-wheel of fulfilling green regulations, filling in government forms to say that they have done so, paying to be trained to fill out the forms, paying protection money to Green organisations to get a little green smiley logo saying they comply, and so on and on and on. What’s wrong of the word “race” in the phrase “net-zero race”? This word is dishonest because a race is meant to indicate a competition in which some prize or benefit is won by whoever is fastest – and in which said prize or benefit goes in lesser degree or not at all to the other competitors. In this case “the race to net-zero” is a race to lose benefits, a race in which the prize is being hobbled. That is still true even if one accepts the necessity of being hobbled. The choice of the US to hobble itself first by passing Biden’s “Inflation Reduction Act” (another example of dishonest language) hands a competitive advantage to the UK, so long as we do not do likewise. As to why the race to net zero is a racist concept, only a racist needs such an obvious thing explained. March 30th, 2023 | 27 comments - (Comments are closed)
“A bank without a chief risk officer is a bit like a football team without a left tackle. It’s not the sexiest position on the field, and most fans couldn’t recognize him without a helmet, but what the left tackle does is crucial. He’s the guy protecting the quarterback’s blind side when a 250-pound pass rusher is trying to pulverize him. Silicon Valley Bank not having a chief risk officer for a brutal year in tech was the equivalent of that left tackle walking off the field during a blitz.” – Ben Cohen, Wall Street Journal ($). He is reflecting on how Silicon Valley Bank did not have a chief risk officer in place for eight months. The reason why classical liberals should focus on this aspect of the bank’s demise is because at the moment there are calls for yet more rules and regulations on banks. But the problem in my view is that there are plenty of rules, but they aren’t often enforced consistently, or intelligently. (Apologies to non-followers of NFL football, but I think you get the point of it.) But Cohen adds this important caveat, which is another twist on the whole “moral hazard” argument that we hear about a lot when banks fail: “The existence of a chief risk officer created the appearance of proper oversight and satisfied regulators, but having someone to police risk meant the traders actually taking those risks might have felt they didn’t have to be so vigilant.” Hmm. So in the end, having a CRO in place might, ironically, make a bank even more cocky because of the assumption that there is a person there to keep everyone on-point. March 24th, 2023 | 14 comments - (Comments are closed)
“Deposit insurance is a cancer at the heart of the capitalist system, destroying its ethical foundations. Rich depositors should not be able to secure returns, in the good times, for investing in fundamentally riskbearing activities (which fractional reserve deposits are, by their nature) but then be bailed out by the government when times are tougher. And banks are the largest allocators of capital in the economy – so this fundamental injustice gets spread across the entire economic system.” – Andrew Lilico, The Sunday Telegraph (£) A problem in much of the West is that the large investors who have been bailed out, such as those who did so via Silicon Valley Bank, or Credit Suisse, etc, is that they tend to be politically quite powerful. A lot of the north Californian business class, for instance. And it tends to vote Democratic. March 21st, 2023 | 25 comments - (Comments are closed)
Far from robbing anybody of surplus value, Capitalism is like a benevolent ancestor who, instead of consuming all the port that he could get – as some ancestors did – laid down an enormous cellar of it for the use of future generations. And every one who is now alive in this country, and millions abroad likewise, are now able to help themselves to bottles of the grand old vintage then laid down and now ready for us, crusted, fruity, full of ripe flavour and rich bouquet. For none of us could have been so well off, and many of us could not have been born at all, if Capitalism had not done this deed, and done it judiciously and well. – Hartley Withers, The Case for Capitalism, 1920 p239. Withers was editor of the Economist between 1916 and 1921. It’s a good analogy, or ought to be. It ought to make you think of science, shipping, railways, hospitals, educational institutions. Unfortunately, in my case it – especially the “rich bouquet” bit – makes me think of sewers. March 20th, 2023 | 16 comments - (Comments are closed)
The idea of creative destruction in capitalism is frequently bandied around, particularly among techies, but rarely is it ever allowed to work its magic in today’s world, where seemingly everyone is looking for a handout, from the biggest auto companies to the tiny little community coffee bar at the end of the street, and from the wealthiest financier to the poorest welfare claimant. – Jeremy Warner, Daily Telegraph (£). The title of his article, which is about the federal government protection of depositors in Silicon Valley Bank, is “Capitalism is dead unless institutions that take bad bets are allowed to fail, nobody ever learns the lessons”. March 15th, 2023 | 33 comments - (Comments are closed)
But we shouldn’t be surprised by these occasional eruptions. First, banking is a confidence game. We’ve decided as a species that it’s safer to keep our money in a bank rather than say, at home, in our mattresses. Maybe it’s the confidence inspired by the marble bank façade, or the huge, 10-foot-thick steel door to the vault over in the corner. But here’s the fallacy in that logic: in our fractional banking system, one in which banks are only required to hold a fraction of their deposits as reserves, the money—our money—that we think is safe and secure is not even at the bank. And whether it is safe and secure is a matter of a myriad of factors that a depositor has nothing to do with, and no control over. “In other words, in our fractional banking system, the mirage of safety and security is a clever and extremely persuasive narrative created to get us all to put our money in a bank thinking that a bank is the safest place to put our money. Even the banks that we perceived to be the most august—Lehman Brothers, Merrill Lynch, Bear Stearns—turned out to be elaborate and highly sophisticated houses of cards. – William D Cohan, a writer at the “Puck” collection of columnists on various financial matters. (It is behind a registration wall, and free for seven days.) March 13th, 2023 | 26 comments - (Comments are closed)
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