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If I emerge from the front door of my block of flats, but then realise that I have forgotten to bring my camera with me, then, unless I am in an extreme hurry, I turn around, go back up the five flights of stairs to my home, and get my camera. I cannot bear to be out and about in London without it, being a ever-more voracious photographer of whatever I see on my perambulations that interests me, and that’s more and more, the more I think of different interesting things to keep track of.
Plus, I just know that if I am not careful in this way, then the one day when I do not have my camera with me will be the exact day that an Airbus 380 on its way into Heathrow gets into trouble so serious that it is visible even to me, and plummets down into central London.
One of the things I like to photograph is the front pages of newspapers, because of their often amusing or arresting headlines. I mostly do this in the shop where I often buy my monthly copies of the Gramophone and the BBC Music Magazine (by “music” this magazine means classical music) and my weekly copies of the Radio Times, so the proprietor doesn’t mind me photographing other things. He knows that I am not going to buy any of these newspapers, but that I might be about to buy something else, and that I regularly do, even if maybe not on that particular day.
And, I take a lot of other photographs, of such things as cranes, bridges, Big Things, roof clutter, signs and notices, and other digital photographers, especially when they are engaged in photographing such things themselves, or in photographing themselves.
All of which is my explanation of why I took the photo below (on March 14th 2014) but then forgot about it, until I went trawling through my photo-archives seeking something else entirely:
I couldn’t find that exact story on the www, but here is the Evening Standard version of the same thing.
For me, this is always an interesting moment in the see-saw that is now British politics, between regimes which contrive as much government as the voters feel they can afford and regimes which unleash more government than the voters feel they can afford. (The option of having less government than the voters feel they can afford, is not, alas, considered worth offering.)
I cannot remember to the nearest year when the Blair/Brown regime was reported as having pushed public sector pay above this same mark, contriving a country in which public sector workers were, on average, reported to be getting more than private sector workers, but I do remember noticing that moment, and thinking it of some significance.
And this latest little tilt in the balance between production and predation strikes me as significant also, and worth noting here even if the announcement happened a couple of months ago. Just for now, for the time being (or so it says in the newspapers): production gets you better wages than predation. Good.
I know, I know. As good news comes, this is pretty small stuff. After all, even this feeble milestone took them four years to get past. As “austerity” goes, it is very mild indeed. But it is good news, I think. And I particularly enjoy being told it by a newspaper which so obviously disapproves of the story that it is telling.
Japan is currently in the process of monetising its vast debt (in plain English, printing money). To get some scale of the issue, check out this following news report from the Japan Times.
Japan’s national debt hit a record-high ¥1.025 quadrillion at the end of March, up ¥33 trillion from a year earlier, the Finance Ministry said on Friday. The central government debt, which increased ¥7 trillion from the end of December last year, kept rising mainly due to ballooning social security costs in line with the aging population. The balance of government bonds, financing bills and other borrowings crossed the ¥1 quadrillion mark for the first time ever at the end of June 2013.
Here is a definition of what is a Quadrillion. Even at the dollar-yen exchange rate of one dollar buying 101 yen, this is a scary, but also barely comprehensible, sum of money. That leads me to the view that the public no longer can really get to grips with how massive debt, both in funded and unfunded, forms is, and indeed with the very notion that a lot of this debt is not even “on the balance sheet”.
Speaking in this video, Steve Baker makes a point that cannot be made too often:
It’s a crazy thing. In most price systems or most parts of the economy, people understand that it’s wrong to plan prices. So here we are, we’ve had chaos in the credit markets, and the credit markets are centrally planned by a cooperating international network of central banks, committees of planners, who deliberately alter the height of interest rates. And we don’t make the connection that central planning causes chaos. And it’s just a really simple thing, and it’s true in money and banking and it’s true in everything else.
Making our case on financial matters can get difficult, because it can quickly get bogged down in arcane detail. Talking about the interest rate as a politically imposed price works well, because the idea is so clear and so straightforward.
Baker has just been voted onto the Treasury Select Committee. I know very little of the inner workings of Britain’s Parliament, but those who know better about such things I tell me that this is a very big deal. The Guido Fawkes blog certainly thought this circumstance worth a passing mention. This man is making headway.
When I first heard the newly elected Baker talking about what he hoped to accomplish, he sometimes sounded like he thought that the Keynesian/Quantitative Easing door was so rotten that it might only need a few good kicks to be destroyed. Well, hope springs eternal and this door was and is very rotten indeed, but it is also very powerfully defended. Baker now talks like a man who is definitely in for the long fight. Good.
Some of these claims are false. Some reveal more truth than the writers intended:
Lowest labour cost in Asia.
Highly qualified, loyal and motivated personnel. Education, housing and health service is provided free to all citizens. As opposed to other Asian countries, worker’s will not abandon their positions for higher salaries once they are trained.
Lowest taxes scheme in Asia. Especially for high-tech factories. Typical tax exemption for the first two years.
No middle agents. All business made directly with the government, state-owned companies.
Stable. A government with solid security and very stable political system, without corruption.
Full diplomatic relations with most EU members and rest of countries.
New market. Many areas of business and exclusive distribution of products (sole-distribution).
Transparant legal work. Legal procedures, intellectual rights, patents and warranties for investors settled.
“Saving is mostly just delayed consumption, as generations of economists have taught, and the only way for capital to grow exactly at the interest rate is for nobody to consume it. Every bit of consumption pushes down the growth rate of capital.”
Garrett Jones, who has written a gently devastating review of a much-heralded book, Capital in the 21st Century, by someone called Thomas Piketty. The reason it is worth drawing attention to it is that this is the sort of book that you just know is going to get bandied about in the usual quarters as a source of supposed wisdom, when in fact its central contention is based on sand. In some ways, the claim that the rich get so proportionately rich that they gobble up the rest of us, so to speak, is hardly a new assertion. Piketty has repackaged it and added in new supposed facts to make the case.
Over to Jones:
There’s an extra reason to think that capital isn’t going to permanently grow at a faster rate than the overall economy: Piketty says it won’t. He places great weight on the mainstream economic idea that in the long run the natural tendency of market economies is for capital and the economy to both grow at the same rate, whatever that rate turns out to be. That “twin growth rate” might be high if population and technology are advancing quickly, or it might be low if both are in the doldrums, but there’s no inherent tendency for capital to outpace the economy forever, even when Piketty’s “central contradiction” of high interest rates holds.
The reason is simple. If the first machine is more productive than the second (i.e., diminishing returns), and if machines wear out and fall apart at a fairly predictable rate—a depreciation rate, in accounting-speak—then it’s a safe bet that in the long run capital and the economy will grow at about the same rate. Double the machines mean double the machines wearing out, so at some point you have so many machines (and houses and outdated software and office buildings) wearing out each year that a nation spends an enormous economic effort just replacing them. And of course if interest rates are high, business owners look for alternatives to capital (such as workers); private demand for capital thus shrinks. So growing replacement costs and the quest for cheaper alternatives both make it hard to imagine capital growing as far as the eye can see. I’ll spare you the math, but it’s getting harder all the time to see a central contradiction.
And then there is this paragraph, containing a nice little nugget:
But while Piketty’s contradiction is less an iron law and more a chalkboard speculation, there’s still plenty of room for class warfare in our future. A final way to see if capitalists are going to exercise unprecedented influence in the economy is to see whether their share of the economy is at unprecedented levels. Here, Piketty’s arduous historical research pays off. For the two countries for which he has data going back more than a century—Britain and France—the answer is clear: Capitalists are claiming a substantially smaller share of the economic pie today than they did in the mid-19th century. Back then capital income was a bit more than 40 percent of total national income. Now it’s a bit under 30 percent. So if capitalists—savers, landowners, entrepreneurs, and all the rest—are going to become a bigger deal in the future, they’ve got a long way to go before they’re at 19th-century levels. (Emphasis added to original.)
The author is fair in pointing out that there are useful insights in the book, although given that its central contention appears to be a crock, that is not a lot of praise.
A few days ago I had a bit of a rant about a UK-based academic, Danny Dorling, who among other things seems to be scathing about those academics who have the effrontery to challenge egalitarianism, at least of the sort enforced by the coercive power of the state. Dorling is that rather perplexing example of a certain intellectual: penetratingly sharp and illuminating on some issues (he is marvellous about population control characters and some of his statistics are very interesting) but flat-out bloody awful in his political economy. (He describes David Ricardo’s crucial Law of Comparative Advantage insight as “infamous”.)
As example of the latter, he writes about the implications of a decelerating population growth rate for retirement systems, such as tax-funded pensions and retirement ages:
“Retirement ages may have to rise, although if far more of us did useful work rather than working simply for the profit of a few others, retirement age need not be raised much, but we are going to have to learn to share better.” (Page 327).
When someone works to obtain something of value by providing something/service to another, it is called trade. Both sides are better off than they would otherwise be from doing this – they profit – since otherwise there would be no point in doing so. So, Professor Dorling writes a paragraph about “useful work” as if it is opposition to the notion of profit, not perhaps stopping to wonder whether the word “useful” is question-begging. Useful to whom? If I can write a news article, mend a fence, take packages to firms as a courier or work in a metal-bashing factory, all of these things might be useful to someone so much that they are willing to pay me enough to be worth my time and trouble, and profit me to that extent, and so on. It might be more useful for me, perhaps, to spend my time writing books about population, about how we should “share better”, and so on, but since these things might be thought of as totally bloody useless to others, I might have an issue in being able to make a living out of this unless I am lucky enough to not to have to earn a living with the free consent of my fellows. Luckily for Professor Dorling, who is paid a salary as an academic by the taxpayer, and who might also make a few quid selling his books and doing lecture circuits and so on, he can make a living, although we taxpayers might suggest that some of that money spent on supporting the lifestyles of this man might be more “usefully” employed on something else.
And that is the craziness of it. When a significant portion of the UK electorate is supported by the coercively funded payments of others who toil in the evil capitalist system, the former will contain people who, even if they happen to look and sound clever with their academic honorifics, be utterly ignorant of the most basic facts of economic life.
Discussion point: one of the Professor’s contentions is that highly unequal societies are far more environmentally destructive than egalitarian ones, although I find his reasoning a bit odd. (Correlation is also not causation). Surely, if you have a society where wealth is relatively evenly spread, but where people consume lots of stuff, that could be more destructive than a less equal one where people nevertheless had to be careful about the environmental costs of their actions. What Prof Dorling seems to be saying is that it is high levels of consumption that is the issue; some of his attacks on the mega-rich seem to be as much aesthetic as driven by environmental concerns. He also claims that unequal societies have higher birth rates than egalitarian ones – he may be right about that – but again, his contention begs the question as to why this is a bad thing so long as production is able to keep pace and if the standard of living of even the poorest person improves at a healthy clip. I cannot help but wonder whether Prof. Dorling is an egalitarian first and who wants to use the Green argument to bolster it. In other words, he is very much the face of the modern Left and different in many respects from old-style Marxists. What he has in common with such people is the unspoken – or even spoken – belief in the need for the supposed chaos and venality of the market to be replaced by the rule of people such as themselves.
Incoming from the IEA, alerting me to a short IEATV performance by Matt Ridley, in favour of fracking.
In Britain fracking will be easy, cheap, safe, and it will mostly to be done in the North. It will create just the sort of wealth we now most want, in just the sort of places we now most want it. Not even our current crop of environmentally deluded politicians will be able to resist this entirely benign process for very long.
I am anything but an uncritical admirer of Ayn Rand, but one of many things that she got very right was her characterisation of the opponents of liberty as being anti-industrial. These people just do not like ingenious and complicated and clever and ever-improving technology, however much humans might benefit from its implementation, in fact the more it helps humans the more the anti-industrialists hate it. They prefer economic primitivism and damn the body count. Rand first started saying this at a time when many collectivists were still claiming, in all sincerity, to know, even better than free marketeers, how to get the world’s economy motoring along. But as that latter claim has faded, the anti-industrialism that Rand already saw has become more and more obvious and obstructive to human progress.
Remember that Rand had emerged from the USSR, which once upon a time worshipped technology, until the kopek began to drop that it knew frack all about how to do it and to how make it better. Remember all those posters with belching factory chimneys. Remember all the lies about steel and tractor production. Time was when collectivists claimed to be able to make all this stuff happen even better.
Not any more, as listening to Matt Ridley talk about fracking, and the myths and falsehoods upon which opposition to it is now based, reminds us.
I decided to pick up a copy of a book by Leftist academic Danny Dorling, called Population 10 Billion: The Coming Demographic Crisis And How To Survive It, while I was at the Hay book festival towards the end of last May. I wangled a corporate invite to the event and must say that I thoroughly enjoyed it.
Professor Dorling (Professor of Human Geography at the University of Sheffield, a former government advisor, Honorary President of the Society of Cartographers, etc, etc.) is eminent, although I hadn’t previously heard of him. And what intrigued me enough to buy his 438-page book is that the message, at least at first glance, seemed to be a refreshingly non-doomongerish one.
But… and there is a big “but”. Professor Dorling is perhaps sufficiently aware that being an anti-gloomster has its costs if you want to get on in academic circles, and certainly if you want to get lots of jobs advising policymakers about this or that disaster that has to be avoided by lots of state activity. And the ultimate nightmare for such a person is to be dubbed a “denier” and be put in the same bracket as the sort of lowlifes who deny mass murders of Jews in Europe and so on. And he certainly doesn’t want to be mistaken for any kind of apologist for capitalism and liberal free market economics. Oh good god, no! So rather than calling himself an “optimist” (terribly out of fashion) or a pessimist, he is a “possibilist”.
Now, Samizdata readers, you might think the preceding paragraph is a bit unkind. How dare I suggest that Prof Dorling says what he does due to worrying about his academic career and bank balance? Well, I might have been gentler on him had I not seen plenty of evidence from him about his desire to play the man, not the ball, so to speak.
To give some flavour of where he comes from, consider this:
“People who doubt that social inequality is a great problem can become exasperated when they cannot convince others of their views. When they find that their opinions are generally regarded as abhorrent and they cannot publish them in refereed journals, some turn to writing for right-wing think tanks and discover that they could in just a few weeks `knock out reports that would be presented at high-level meetings… and earnestly discussed in the press and in radio interviews. [They say] It was exhilarating to find an audience.’ Although it might be exhilarating for the former academic involved, it can be highly confusing for those who have to listen to half-formed ideas knocked out in a couple of weeks by someone who does not understand when their peers repeatedly tell them that there is a problem with what they are proposing.” (Page 130).
Prof. Dorling quotes Peter Saunders, who is has moved rightwards from the Left; he has committed the thought crime of casting doubt on aspects of British egalitarian post-war policy, and has ruffled feathers by a critique of a recent book in this area, called The Spirit Level. (You see Saunders’ website here to get a handle on just how much of a serious academic he is. His career has been every bit as distinguished as Dorling’s, if not more so.) There is something particularly nasty about Dorling’s words: the lazy, supercilious tone; the jeering claim that Saunders’ views and those like his are just blown together in a few days, and the assumption that anyone who challenges egalitarian ideas is “abhorrent” and therefore unfit to have their views published in peer-reviewed journals. It perhaps does not cross this man’s mind that because so much of modern academia has become an echo-chamber of the Left, that any academic with an ounce of independence of mind must go and write for some alternative institution in the hope of entering debate (as Peter Saunders did and explains in an account here of what happened to him.)
His book is full of ex-cathedra statements about equality. Much of his argument is that unequal societies are more wasteful than egalitarian, more tightly planned ones. He is very much a “watermelon” – green and red. Above all, Professor Dorling likes to get personal: For example, on page 5 he launches into the “Rational Optimist”, Matt Ridley, sneering that due to Ridley’s posh background and former chairmanship of the near-bankrupted Northern Rock, “it is not hard to mock his views”, but then goes on hastily to state “that they need to be taken seriously because they are part of the current mantra of many at the top of the tree.” Oh how jolly noble of him. If it were really the case that Ridley’s “rational optimism” is the dominant mentality of our government and its advisors, rather than the mishmash we have in the UK coalition government, I’d be much happier.
The ironies abound. Professor Dorling likes to play the high-level academic, but he also wants to take on views he disagrees with often by recourse to argument from motive. He wants to make out that he is an ultra-serious academic, but the book (which is a good read in some ways, if you can stand the bias) is full of such ad hominem digs at those he disagrees with; his discussion of nuclear energy, for example, includes suggestions that those who favour it are just motivated by money.
In other words, Professor Dorling is a bit of an arse. I want my money back.
Creating more value in an economy would do more than wealth redistribution to combat the harmful effects of inequality.
– Tyler Cowen, in a review about a much-discussed book by Tom Piketty on the subject of inequality. Piketty favours a lot of heavy state activity to control and reduce said inequality. Now, it is easy to just default to the standard libertarian line and say that fretting about such inequalities is just an excuse for a statist power grab. The fact is that the sheer gap in wealth we can see today is a reason why, however mistakenly, idealistic, smart people are fearful of, and hostile towards, laissez-faire capitalism. So it is worthwhile to keep making the economic, philosophic, and political case for why coercive measures to reduce inequality is bad and dangerous.
I could not resist adding in this paragraph from Cowen:
The simple fact is that large wealth taxes do not mesh well with the norms and practices required by a successful and prosperous capitalist democracy. It is hard to find well-functioning societies based on anything other than strong legal, political, and institutional respect and support for their most successful citizens. Therein lies the most fundamental problem with Piketty’s policy proposals: the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power — and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.
Money buys success in football and several clubs now have more money than United. From 1997 through 2004, United topped the consultancy Deloitte’s “rich list” of European football clubs ranked by revenues. In 2012-13, United dropped out of the top three for the first time since Deloitte began compiling the list. Real Madrid, Barcelona and Bayern Munich now have higher revenues. Moreover, Chelsea, Manchester City and Paris Saint-Germain have oil-rich owners who pump money in rather than sucking it out. By the logic of the market that means there are six clubs in Europe more likely to win the Champions League than United. In the domestic league, by the same logic, the club’s natural position is now third behind Chelsea and Manchester City. (Less wealthy Liverpool will probably win this season’s Premier League, but their overachievement is probably unique in recent English history.) United’s biggest problem isn’t David Moyes. It’s money.
– Simon Kuper, writing about the sacking by Manchester United today of David Moyes, manager since last July. Kuper, who writes in the Financial Times, has also co-authored a study examining the linkages and correlations between success on the field and money in the bank. Short summary: the link is very strong but not totally bomb-proof. (In other words, if you support a relative minnow as I do, you can still live in hope.)
This is from that haven of supercilious argumentation, the Financial Times:
Only The Ignorant Live In Fear of Hyperinflation. (Paywall protected). The article is by Martin Wolf, whose confidence in the benign force of central banking remains undimmed, nay, is enhanced, by the events leading up to and after 2008.
Here are a couple of paragraphs that I can extract for you:
Understanding the monetary system is essential. One reason is that it would eliminate unjustified fears of hyperinflation. That might occur if the central bank created too much money. But in recent years the growth of money held by the public has been too slow not too fast. In the absence of a money multiplier, there is no reason for this to change.
In other words, if the ignorant masses can be told about how spiffing modern fiat money systems are and how they are managed, we’d be all a lot happier.
A still stronger reason is that subcontracting the job of creating money to private profit-seeking businesses is not the only possible monetary system. It may not be even the best one. Indeed, there is a case for letting the state create money directly.
Put the state in charge of increasing/cutting the volume of money in the system. I am sure that will work like a charm. What could possibly go wrong?
Okay, enough of my sarcasm. Now, it may well be that fears of hyperinflation are unwarranted. It is entirely possible that in the West, we face a Japan-style multi-decade period of stagnation rather than hyperinflation. The structure of the economy, even demography, can have an effect on how quickly/slowly money moves around the system. Despite various central banks – particularly in the case of Japan – printing money in vast amounts, it may be that we should not be concerned about what the State is doing, and continues to do, to money.
But it is worth noting that since 1971, when Nixon severed the gold link to the dollar, although that link had been dead in all practical terms for a while, the dollar has lost about 85 per cent of its purchasing power. And much the same can be said of the fiat money systems in force around the world. No doubt the FT thinks this is nothing to bother about. Weimar? No chance of that happening again, old boy. Too many clever people working in the central banks to let that happen again. Trust us, stop worrying and it will all come out in the end.
The irony, of course, is that people who tell us to stop fretting about the central bank buggeration of money and the need to put even more State control over all this are the same as those who say it is folly not to be scared witless by AGW, or by whatever fashionable panic happens to be out there (particularly when it is associated with calls for governments to “do something”). But if people are fearful of something caused by states with their monopoly powers, then the FT’s reaction is a typical example of what we get.
“Those soaring incomes of the top 0.01% are only going to apply to those very few indeed who can make that leap from performing on the national to the global stage. And there’s really not enough of such people that I think it’s something that we’ve got to worry about. 0.01% of the US population is, for example, 3,000 people. Seriously, what does it actually matter to the rest of us what they earn? Especially as they’re not earning it by moving from taking 10 cents each to a $1 each off each of us 300 million, they’re doing it by moving from taking that same 10 cents each of each of us and then making up the other 90 cents by taking fractions off the other 7 billion people on the planet. As I say, this isn’t a foolproof, watertight, explanation of what’s going on. But now we’re seeing that it is the top 0.01% taking that extra income the evidence is at least consistent with my explanation. That it’s all being driven by globalisation: and as such there’s not a dang thing we want to do about it.”
– Tim Worstall. Yes, you may have noticed that I spell globalisation with an s, not a z. Pax Americana hasn’t yet spread to my London-based laptop.
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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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