Commerce is real. … Aid is just a stop-gap. Commerce, entrepreneurial capitalism, takes more people out of poverty than aid, of course we know that.
– Bono
Madsen Pirie concurs.
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Appropriately enough, in a discussion about (Nobel laureate) Paul Krugman, someone mentioned a speech by (Nobel laureate) Hayek that he gave after winning the prize:
This works for all kinds of lauded experts, not just in economics but in climate science, nutrition, psychology and education, for example. July 24th, 2013 | 18 comments - (Comments are closed)
 Great minds think alike: I had been meaning to fisk Jesse Norman’s recent defence of the idea that companies have wide social and other “duties” – not just to that nasty stuff about doing what the owners want – but Tim Worstall, at his Adam Smith Institute perch, beat me to the punch. (As readers might have noticed, my Samizdata productivity has been hit by my being very busy at work, and, er, lots of trips abroad lately.) Here’s Tim:
Here is Norman’s original article – in the Daily Telegraph – so readers can judge for themselves whether Tim Worstall has him accurately pegged. He has, in my view. Companies have no broad “duties” if you believe in private sector, and in a civil society based on voluntary relationships. That means if I set up a firm, with capital of mine or entrusted to me by others with their consent, then apart from not breaking rules about force, fraud, etc, there is nothing else one is required to do. Professor Milton Friedman has this all understood years ago. The proper response to calls for “corporate social responsibility” is “fuck off”. When Norman talks of a “corporate duty” in some broader sense, he makes no attempt, from what I can see, to validate that by reference any fundamental principles. He is, I see, the author of a new book about Edmund Burke, and he uses Burke quite clearly to push against all this terrible “individualism” (ie, belief in personal freedom) and suchlike that he sees as causing all our problems. Never mind that libertarians/classical liberals have plenty to say about the benefits of a community based on voluntary interaction, not coercion. (How many more times does this have to be explained to the dullards who keep banging on about how we are “atomists”?). It is also well worth remembering that Burke was not a “Conservative” in the sense people today understand it; he was “Old Whig” and friend of the likes of Adam Smith and David Hume, and had little time for economic intervention. To get back on the nub of the tax/company issue, as Tim Worstall says, if big firms are able to use their accountants and advisors to get around onerous local tax laws, then perhaps Norman and his fellow MPs should consider whether to make local tax laws as simple, and as low, as possible. Another point he ought to consider is something that Worstall again writes about on a regular basis: tax incidence. Companies are not people: if you tax a firm’s profits, then those taxes are paid by people in some way. The taxes are passed on in the form of lower dividends, lower capital gains, crappier products, lower wages paid to staff, shoddier products and services, etc. Norman should consider the sensible ideas of the 2020 Tax Commission. Norman is a member of a political party that, however dimly, ought to be aware of such basic facts. Yes, I know that many of the Cameroons are utterly useless, but there surely are enough bright Tory MPs who can take Norman aside and explain the basic facts of economics to him. I can think of several MPs well suited to the role. Does Norman have Steve Baker’s contact details? Addendum: I suppose some on the libertarian camp might argue that calls for corporate duties are what you get when firms receive subsidies, privileges from the state of various kinds, soft loans from central banks, etc. But the solution is not to grant these things in the first place. Simple. July 19th, 2013 | 30 comments - (Comments are closed)
An agency of the US Federal Government, the Economic Development Administration, has as its stated aim:
They also want to make, “Investments that promote job creation and economic prosperity through projects that enhance environmental quality and develop and implement green products, processes, places, and buildings as part of the green economy.” After discovering malware on some computers, they started destroying all their IT equipment:
The cost of the entire episode, including hiring contractors and obtaining temporary replacement equipment was $2,747,000. This figure will be added onto the USA’s GDP, of course. But we all know that this is not really an exception to the rule that government agencies do the exact opposite of their stated intentions. See also coverage of this story at Forbes and The Register. By the way, does it even make sense to attempt to promote both job creation and economic prosperity in the same breath? July 10th, 2013 | 18 comments - (Comments are closed)
Yesterday, I encountered this Economist advert (one of this set), in the tube, which included the following argument that booming Chinese investment in Africa is bad for Africans:
My immediate reaction was that elephants should maybe be farmed. That would soon get the elephant numbers up again, and it would also be good for Africans, because it would provide them with lots of legal jobs. If you google “elephant farming”, you soon learn that an argument along these lines already rages. People much like Doug Bandow (and like me) say: Why not farm elephants? And people like Azzedine Downes, as and when they encounter this elephant farming idea, are enraged:
I’m afraid that Azzedine Downes is going to hear this notion, seriously argued, again and again, unless he covers his ears. I think I get where he is coming from. Killing elephants, for any reason, is just wrong, like killing people. Downes doesn’t spell it out, because he is not in a spelling things out mood. (“I don’t really know where to start.”) But it seems to me that what we have here is the beginnings of the idea that certain particularly appealing and endangered and human-like animals should have something like a right not to be killed, just as you and I have such a right. If someone kills us, the government will, depending on its mood, go looking for who did it and maybe, if it catches the miscreant in question, punish them in some way or another. Killing elephants, says Downes, is likewise: murder. See also: whales. Farming a bunch of humans for their bodily organs would also be murder. A kidney farmer pointing out that he was raising his clutch (herd? pack? flock?) of humans not just for the serial killer hell of it, but in order to profit from selling their kidneys, would make things worse for himself, legally speaking, because this would provide the jury with a rational motive. Motive is not justification. Motive gets you punished, not acquitted. In the matter of elephants, pointing out that farming elephants for their tusks might, given the facts on the ground in Africa, be the difference between African elephants as a species surviving, and African elephants being entirely wiped out by ivory poachers (for as numbers diminish, so prices will rise and rise), or perhaps entirely replaced by a newly evolved species of tuskless elephants, is, for Azzedine Downes, entirely beside the point. Farmers killing the elephants for their tusks doesn’t solve the problem, any more than the slave trade solved the problem of slavery. The problem of slavery was slavery, and the problem here is people killing elephants, which they would do even more of if they farmed them for their tusks. This is absolutely not just about the mere survival of a species. It is about not doing something morally repugnant. The elephants must be saved. They must not be murdered. End of discussion. Thoughts anyone? How about the Azzedine Downes tendency proving their love of elephants by buying lots of elephants, and large elephant habitats, and then spending more money protecting the elephants from ivory poachers, but without farming them or otherwise exploiting them, other than as objects of photographic devotion by tourists. Presumably this is sort of what they are already doing, even as the idea of people owning elephants sticks in their throats, just as does the idea of people owning people. Here’s another thought. How would Azzedine Downes feel about elephants having their tusks removed and sold on to Chinese ivory carvers when the elephants die but not before they die? Die of natural causes, I mean. As a matter of fact, are the tusks of elderly elephants, just deceased, still worth enough for that to be any sort of economically viable compromise? And as a matter ethics, would the Downes tendency tolerate even that? Elephant tusk donor cards? Well, not really, because how would you know, in this new world of elephant rights, how the elephant or elephants actually felt about such a scheme? In this connection, the recent proposal that humans should be presumed willing to part with any or all of their useful-to-others organs when (as above) they die but not before they die, unless they explicitly say otherwise by carrying a non-donor card, is surely relevant. Another thought: Will it soon be possible to make something a lot like ivory with 3-D printing? Or with some sort of magical bio-engineering process? Perhaps, but if so, that would presumably take much of the fun out of ivory. But then again, so might ivory farming, if it got too efficient. Perusing the Samizdata postings category list reminds me that maybe similar considerations apply, or soon will apply, to hippos. Time for me to stop and for any commenters, who want to, to take over. June 28th, 2013 | 58 comments - (Comments are closed)
If big government were the key to economic success, France, with more than half of its GDP accounted for by government, would have rapid economic growth rather than an unemployment rate of 11 percent and negative growth. Yet France, Britain and the United States are demanding that the low-tax jurisdictions increase their taxes on businesses. They also demand more tax information sharing among countries. The officials of the G-8 assure us — as if they think we are all children or fools — that sensitive company and individual tax information will be kept confidential and not be used for political targeting, extortion, etc. The U.S. Internal Revenue Service had a reputation for being less corrupt and less incompetent than tax agencies in many other countries, which only illustrates how low the global standard is. – Richard Rahn, the Tyranny of the Taxers June 18th, 2013 | 4 comments - (Comments are closed)
There is, in this world, something called the Budweiser trademark dispute. The giant American brewery Anheuser-Busch produces a beer named Budweiser, an industrial mass produced lager that is not greatly revered by beer connoisseurs but which sells in large quantities, and a brewery called Budweiser Budvar Brewery in the Czech city of České Budějovice (Budweis in German) produces another beer called Budweiser, which is considered an excellent beer by most beer lovers. The two breweries have been fighting in courts throughout the world with respect who has the right to the name Budweiser ever since the end of Communism in Czechoslovakia. In some countries the Americans have won and the Czechs have had to find a different name, and in others the Czechs have won and the Americans have had to find a different name. In Britain the courts have made the eminently sensible ruling that both brewers can use the name and drinkers are smart enough to be able to tell the difference, but I don’t believe this has happened anywhere else. Beer lovers are often sympathetic to the claims of Budvar, because the beer is better and because it actually come from Budweis, and this is therefore the “Original Budweiser”. This is not really true, however. Anheuser-Busch started brewing the American Budweiser in 1876, due to the fact that the beers of Budweis were famous, including amongst German Americans. However, the Budvar brewery did not exist at that point. This brewery was not founded until 1895. At some point after that, they also started using the name Budweiser, possibly because the name had been given further fame by Anheuser-Busch. At least to some extent, the Czechs at Budvar may have started using the name because of the use of it by Anheuser-Busch, and not the other way round. Budvar was founded by ethnic Czechs, and the only reason they would have had for using a German name was that the German name had already been made famous by other brewers. However, what of those earlier beers from Budweis, responsible for Anheuser-Busch starting to use the name? Well, there is another, much older, brewery in Budweis / Budějovický Budvar. This brewery, known as Budweiser Bürgerbräu until 1945, made beer in Budweis under the Budweiser name at least as early as 1802. It is almost certainly this company’s beers that Anheuser-Busch was copying when they started using the name “Budweiser”. This brewery was run by ethnic Germans from its founding until 1945, after which it was taken over by ethnic Czechs and de-germanised. The brewery is now called Budějovický měšťanský pivovar, which is a precise Czech translation of its original name. When de-germanisation took place, the brewery ceased using German words and names, including “Budweiser” (it regained some interest in using them post-1989). However, this brewery has by far the strongest claim that it produces the beer that is the original Budweiser. That said, the trademark battles between the other two, larger companies have been so ferocious that Budějovický měšťanský pivovar has stayed clear of them, despite apparently having a stronger claim to the name than either of them. The brewery is quite a substantial one, and produces a significant quantity of (excellent) beer. It sells the beer under a variety of names including Crystal, Samson, B.B. Bürgerbräu, Boheme 1795, and more. It only uses the word “Budweiser” in places where trademark law is weak. This is why I took the above photo, in Tbilisi in Georgia last month. It was certainly not the first time I had consumed beer from the brewery that actually gave us Budweiser, but it was the first time I had ever seen beers from that brewery actually using the word. It is not the most prominent word on the label, perhaps, but it is still prominently there. June 13th, 2013 | 37 comments - (Comments are closed)
If you doubted that the €uropocalyse was at hand…
… well everything is going to be okay after all then! Thank goodness for that!
June 9th, 2013 | 5 comments - (Comments are closed)
The flood of revelations about the sheer scale of NSA information theft… direct server access without an individual court order whenever the NSA wants something from Microsoft, Google, Yahoo, Facebook, Skype*, PalTalk, YouTube, AOL and Apple… has made me wonder if savvy non-US based business might not be able to market their services as explicitly non-US. Just imagine the possible tag lines:
…or tapping into a bit of anti-Americanism never hurt the bottom line…
… which is not to say such services cannot be marketed to Americans…
The creative possibilities are endless and anyone who cannot leverage this into internet gold is not trying hard enough! Capitalism for the win!
*= Skype, originally a Luxembourg based company, was purchased by eBay in 2005 and then Microsoft in 2011. June 7th, 2013 | 28 comments - (Comments are closed)
The British government wants to “eradicate undernutrition globally”. It has a department for it. This can not be good. There is also a committee of MPs who have released a report. There is an argument in the report that since the population is expected, by Benny Dembitzer as far as I can tell, to increase to 9.3 billion people by 2050, and since consumption of meat is increasing, that there is going to be a general food shortage. Meat is singled out for being an inefficient use of resources. From the report:
Note that the Food Ethics Council is funded mostly by the Joseph Rowntree and Esmee Fairbairn charitable trusts. Even private organisations can be wrong. So why is pasture livestock “less problematic” than grain-fed? Note 69 points to question 62, part of a series of testimonials which seem to make up most of the evidence used to make the report. I’ll highlight the most fun bits.
It is mostly incoherent ranting. Are they arguing for less intensive farming of animals to solve the problem of too much meat consumption, or something else? I’ll see how far I can get by assuming that this is about using resources in the most efficient way. It seems to me that if people are hungry they will start to bid up the price of grain and stop buying meat anyway and that the problem will solve itself. I am not sure why pasture livestock is preferable. I suspect it is even less efficient than grain livestock, assuming all land is equal. It may be that grain for humans is always more efficient than grain for animals, however since there is land that is not suitable for grain that might as well, in that case, be used for livestock. There is also a hint here that grain production needs more water. But all this is a non-problem in a free market. In a free market the land is always used in the most efficient way and whatever shortages of grain or water come about will move the prices and hence the demand automatically. This seems to be a big problem with the concept of “sustainability”. If you think that current levels of meat production are unsustainable, then if you are right they will not be sustained. If you are right, it doesn’t matter what anyone does. Coming up with innovative policies to reduce the consumption of meat seems to be a bit pointless unless what you really want is to reduce the consumption of meat even if you are wrong about its sustainability, or you are concerned about being blamed by the voters for its un-sustainability. I rather think that it is sustainable and we will end up eating less meat anyway to please these sustainability “experts”. If some fundamental resource shortage does increase the price of food, an interesting question is at what point does food become so expensive that it takes more than one person’s labour to produce enough food for one person? I expect with 9 billion people (some of them rather more clever than the assembled committee members and witnesses at making food production more efficient) we are still a way off mass malnutrition caused by resource shortages. At some point hydroponics and 3D farming become cost effective. Still, the rest of the conversation is a fascinating insight into the minds of the elite:
Do these people listen to themselves? Meat is cheap and ubiquitous therefore we need to eat less of it. Climate change!
Do not underestimate the power of these people. They may seem like idiots and professors talking nonsense among themselves but look what they have done with smoking. In 1999 I had to change seats on an aeroplane because there was too much smoke. Now people are cast out of society for lighting up at the far end of the empty railway platform. And it started like this. Lots of conversations like that, then the report, now the news articles. Say the headlines: “Families should only eat meat as an occasional treat because the surge in global demand is unsustainable, according to a committee of MPs.” They are making the idea seem normal.
The thing about food waste is that there is no such thing. There is a rational economic decision to choose excess food production to optimise for something else instead. In my house I sometimes buy or cook more food than I need because the computing resources needed to calculate exactly the correct amount are more expensive than the food that is thrown away. Everyone else is making similar choices. If the government invents innovative new policies to reduce “waste” X they necessarily make Y more expensive and thereby allocate resources less efficiently than before. If existing policies are found to cause market distortions that cause food to be thrown away that would not be absent the policy, then these should of course be abandoned. But this should be applied generally to all policies that distort markets.
Don’t we have market solutions to this already? Speculators?
Good thinking. Don’t stop there. Let me help you along. What do biofuel targets have in common with food waste targets and meat production targets? The above is a lesson in how the ideas of certain classes of people – academics; politicians; journalists; social scientists – become law. These are the early stages, but something is afoot. June 4th, 2013 | 30 comments - (Comments are closed)
You are not supposed to take money away from the competent people and give it to the incompetent so that the incompetent can compete with the competent people with their own money. That’s not the way capitalism is supposed to work. – Jim Rogers tells Zero Hedge what he thinks of bank bailouts. (Thanks to Adam Gilhespy for spotting this.) May 30th, 2013 | 8 comments - (Comments are closed)
The End of the World Club (there seem to be quite a few – can’t find a link to the one I mean) is a bunch of Austrianist-inclined people who meet at London’s Institute of Economic Affairs every few weeks to talk about the state of the world, and than afterwards maybe drink and/or dine locally, to try to cheer themselves up again. Simon Rose, the guy who runs the End of the World Club, has asked me to kick off the discussion on the evening of May 28th. The following is a hastily typed summary of what I have in mind to suggest that we all talk about. I emphasise the “hasty” bit. Under comment pressure I will surely want to modify or even abandon quite a few bits of what follows. My number one purpose here is not to be unchallengeably right about everything, although you never know your luck; my number one purpose is to provoke thought and talk, by looking at the world from a slightly different angle to the usual angles. It began as a mere email to Simon Rose, but as you can see, it got a bit out of hand. My email to Rose will now be the link to this. Since it’s the “End of the World” Club, I thought it might make sense to think about optimism and pessimism. Is that title (“End of the World”) for real? Or is it playfully ironic? How optimistic or pessimistic are we End-of-the-Worlders about the near future, and the longer term future? How optimistic or pessimistic about the near and longer term future are our statist adversaries? How much difference does that make to anything? In recent decades, it has been the Austrian School who have been most rationally and persuasively pessimistic about the short run (by which I mean the next few years and the next, say, couple of decades). And it has been the politically middle-of-the-road statists who have been most unthinkingly optimistic, first, that no sort of economic catastrophe was coming, and now, when they try to be as optimistic as they can about the catastrophe (that has happened despite their earlier unthinking optimism) not getting any worse. Austrianists, in contrast, regard the present turmoil as proof that they were and remain right about everything, and that their pessimism, now, about the short term (and actually not that short term) future will accordingly also be entirely justified. Austrianists are mostly pessimists now. (Think Detlev Schlichter.) But they are optimistic about their own thought processes, in which they have absolute confidence. But when it comes to the bigger picture, it is the broader free marketeer tendency who are now the optimists. Socialists used to be optimistic, about how their socialism would make humanity materially better off. They were only pessimistic in the sense that they feared that they might never be allowed to do socialism. But about half way through the twentieth century, socialists stopped saying that they would do affluence better than capitalism was doing it, because the claim that capitalism wasn’t doing affluence was becoming absurd. Instead they turned against affluence. They became economic pessimists about their own policies, in other words. But they stuck with their policies and turned their backs on the idea of mass affluence being a good thing. The Green Movement, which is what socialism has mutated into, is a huge surrender on the economic policy front, and an attempt to engage with the world on a quite different front. Socialists have surrendered the happy future. You have to listen a bit carefully to hear this. It took the form of a huge change of subject, from making the future happier, to making it more virtuous and poverty-stricken. They used to like affluence. Now they trash it. (Have a listen, for instance, to this excellent Jeffrey Tucker talk.) They used to be leading us towards an imaginary heaven on earth. Now they claim merely to be saving us from an equally imaginary hell on earth (and thereby are actually trying to create a real one). I am optimistic that this imagined hell on earth is also now on the way to being abandoned (see, e.g., this blog posting by Pointman). (What will be their next Big Tyranny Excuse?) Meanwhile, classical liberals (as opposed to the illiberal liberals of our own time) note how free market ideas have raised humanity from abject poverty to a standard of living that was formerly unimaginable even for kings and emperors. Some free marketeers are rationally optimistic (to echo Matt Ridley‘s recent book title) that life will continue to get better, despite everything the statists and socialists now try to throw at it. Other free marketeers are now supremely optimistic that free market policies will work superbly, provided those policies are followed. Think J. P. Floru (an earlier speaker to the End of the World Club – very eloquent, very confident, I was there). Conditional optimism, you might call this. This is the same optimism that the socialists had a hundred years ago or so. It is very potent. The future will be wonderful, but only if you join our cause and help us save this wonderful future from being trashed by our malevolent, idiotic adversaries. In the first half of the twentieth century free marketeers were much more tentative and intellectually timid. They often agreed that material progress would only happen if big government (with or even without big business) made the running, but argued for freedom anyway, as something that should be sentimentally preserved despite its economic cost. No wonder they did so badly. But free marketeers are now the optimists. In the long run this means we will win. Discuss. See also: optimism (even irrational optimism) as a technique for success, individually and collectively. See also: pessimism (even (especially?) rational pessimism) as a recipe for failure, individual and collective. That is pretty much it, and is surely more than enough to keep us talking for however long is required. Email me (you surely know how by now) if the End of the World Club is of interest, and I’ll pass it on. May 14th, 2013 | 15 comments - (Comments are closed)
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