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[youtube http://www.youtube.com/watch?v=UZap5n3zGZ8&w=560&h=315]
Sometimes, a straight, even dryly-written news-wire report can tell you about the vastly different interpretations of certain issues out there. This Bloomberg report about the world of “offshore money” is a classic case in point. The whole article is worth reading, but this caught my eye:
“According to Tax Justice Network, a U.K.-based organization that campaigns for transparency in the financial system, wealthy individuals were hiding as much as $32 trillion offshore at the end of 2010. Fewer than 100,000 people own $9.8 trillion of offshore assets, according to research compiled by former McKinsey & Co. economist James Henry.”
That is one hell of a contrast. You have the TJN’s $32 trillion, or $9.8 trillion. Take your pick.
Suppose TJN is correct. $32 trillion is a lot of money. And I ask myself how on earth a leftist campaign group such as the Tax Justice Network comes up with that figure. According to Wikipedia’s page on the size of the global economy, the latest available figure for the value of total GDP, based on the 20 richest countries, is $18.8 trillion. So maybe there is a “long tail” of money from smaller economies, but even so, it is a bit of a stretch to arrive at $32 trillion, and then to assume that this money is all parked, or routed via, offshore centres. And even if some of this huge amount of money does pass via offshore centres (such as Bermuda, Caymans, Jersey, Delaware, Zurich, Geneva, and er, cough, London) it does not stay there, but is invested in various places. (What would be the the point of just stashing money in a nice Caribbean island rather than putting it to work?)
I have come to the conclusion that while some of the concerns about offshore wealth might be justified if we are worried about finances of criminals and the like, some of the amounts being bandied about are so vast that the credibility of the attacks is seriously compromised. And I remain convinced that much of the current furore about the offshore world is based on a desire by some policymakers to stamp out tax competition and create a sort of global fiscal cartel.
I looked at my screen this morning and saw this…
BILLIONS was temporarily wiped off the US stock market last night after hackers broke into the Twitter account of the Associated Press and announced that two bombs had exploded at the White House, injuring Barack Obama
Sayeth the news article and my immediate thought is… why?
If the White House… hell, let us think big… and indeed all of Washington DC was fortuitously tragically blasted into a huge smoking crater by an unexpected meteorite, killing every politician, government functionary and policy wonk who works there, surely that would be a economic windfall that should add billions to the US stock market, at a stroke removing a significant portion of the most active members of the parasite class from the world’s largest economy.
Just sayin’
One of the many excellent things about the excellent Indian Premier League is the opportunity that it has given to West Indian cricketers to do great things on a cricket field, as impressive as the great things done by their great fast bowlers in the 1970s and 1980s. There are now about half a dozen West Indians making their mark on the IPL. It is no exaggeration to say that what the Indians are doing is saving the West Indies for cricket.
Not that long ago, there was talk of West Indians, dispirited by the failure of their players to do the sort of grafting you have to do to do well in five day international cricket matches in places like England, giving up on cricket altogether, and switching to basketball, or some such American alternative.
Not now. The innings of Chris Gayle in this game, which I am now watching (thank goodness for the recent multiplication of digital TV channels in the UK) on my telly, open mouthed, is already the talk of the West Indies. Got to be. I don’t know what time of day it is over there, but trust me, they are awake and cheering themselves hoarse. As of now, Gayle is 154 not out, off 54 balls. Even if you know nothing of cricket, know this: that’s dynamite stuff. Gayle is only a handful of runs away from breaking the record for the biggest twenty-twenty innings ever, set in the very first IPL game by a guy from New Zealand.
Yes. West Indian IPL Commentator: “This is now the highest score ever in all twenty-twenty cricket.” Gale 161 not out. And counting.
West Indian IPL Commentator: This is now the biggest twenty-twenty total ever. 251-3 and counting. The South African AB de Villiers has just got out for 31, made in 8 balls. South African cricket has been somewhat in the doldrums ever since the Hanse Cronje match-fixing scandal, and the IPL has been a shot in the arm for South African cricket also. They are now the top team in the world, at test cricket. Twenty-twenty mania hasn’t done them any harm either.
Globalisation, commerce, free people spending their own money on what they love, previously poor countries getting rich, individual people in previously poor countries getting rich, by cheering up the entire world – well, my version of the entire world anyway. I love it. Love it. Opposition players all clustering around Gayle to shake his hand. 175 not out. Kiwi Commentator: “You’ve broken record after record tonight. It was one of the best innings anyone here has ever seen.” Amen.
I just wish that more of my fellow countrymen could see all this. The English continue to talk head-in-sand nonsense about the IPL. In this silly piece, David Hopps talks about the IPL being “an essentially trivial Indian T20 tournament”. As so often, the word “essentially”, as the late Kingsley Amis observed many years ago, here means “not”.
There is actually an Englishman playing in this match, Luke Wright of Sussex. And good on him, because he has had a pretty good IPL so far, once he got to play. Good on him today, because he bowled in this game, and his bowling figures were: 4-0-26-1. In a game like this one, those are impressively normal numbers, even if the reason Wright did that well was that he was bowling some of his overs just after Gayle got to a hundred, and Gayle was having a bit of a chill, man.
Lovely.
LATER: The Guardian sums it up.
This is a lovely couple of paragraphs by Tim Worstall at the expense of that hardline opponent of global free capital movements, and socialist, Richard Murphy:
The major driver in growth is that two thirds of humanity are moving from 16th century peasant destitution to the 20th century petit bourgeois pleasures of three meals a day. As long as no one fucks that up with a Courageous State we can expect the global economy to expand 8 to 10 times in the 21st century just as it did in the 20th.
We do, after all, have a very large intergovernmental commission looking at these sorts of things for us. The IPCC it’s called. And such economic growth is actually one of their starting assumptions. No, really. so who are you going to believe? A retired accountant from Wandsworth or the scientific consensus?
When a blogger refers to a pit of bias and political intrigue like the IPCC to make a point against an attacker of low taxes and tax havens such as Murphy, it is really the end of the road.
As the editor of CityAM points out, getting the narrative right is essential. The Left is great at understanding this, whereas classical liberals/libertarians have tended not to be, although part of it comes down to numbers of people. That is why it is essential, in my view, for people who want to push the tide of affairs in a better direction to break into the MSM, as well as keep pushing new channels of media in the internet age.
With that thought of narratives in mind, it seems to me vital to keep pushing back at the idea that 2008 was caused by “unregulated capitalism”. It is utter nonsense. And the “Austrian” school is the best place to go in figuring this out:
Austrian economists were among the main critics of the pre-2007 economy and financial system – there, were, of course, critics from other backgrounds too – warning of the absurd monetary policies being pursued by central banks, of the moral hazard from the authorities’ interventions, and of the hubris inherent in many mathematical financial models. Neo-Hayekians criticised Alan Greenspan and Ben Bernanke long before it became fashionable to do so, blaming them for the dot.com and housing bubbles. Austrians were aghast at the bailouts.
Hayekian ideas form the basis for an alternative intellectual framework being developed by a record number of scholars, especially in eastern Europe, the US, Latin America and even China. They are looking at ways in which market institutions can be harnessed to prevent another crisis, tackle the environment and find better ways of providing welfare, education and health. Politics is in a deeply statist phase. Eventually, however, the tide will turn, and Thatcher’s guru will be celebrated once again.
Heath is right – we are in a statist phase right now, not just in the UK. Perhaps the turning point may come from a country that hasn’t been considered. Maybe, for example, one of the continental European nations takes a dramatic turn towards sanity, although at present the odds look low on that. I still think Asia is going to be where the impetus will come from. Consider what might happen if China, India or, say, Indonesia adopts a gold-backed currency and other radical reforms. If Asian policymakers quote Hayek and Mises more than, say, Keynes or Krugman.
Hong Kong’s example of vibrant, laissez faire success eventually changed the mainland of China. Could Asia eventually force the old West to change course and come to its senses?
Philip Booth, of the Institute of Economic Affairs (peace be upon him), has this excellent article about the mix of reforms enacted in the 1980s, which have come in for some criticism from those who claim it contributed to the late unpleasantness in 2008. He refers, in particular, to the “Big Bang” reform changes to the City of London.
So, two things are clear when it comes to Thatcher’s legacy. In many respects she increased regulation of the financial sector in ways previous governments had not considered. Secondly, the most important feature of the Big Bang was that it took regulatory responsibility away from the markets and gave it to the state. In this area Thatcher was a pragmatist, not an unalloyed free market supporter. If these policies led to the crisis, those on the left have some thinking to do.
As always, whether looking at the Cold War, or financial crisis of 2008, or other issues, it is crucial to see how certain groups are trying to “shape the narrative”. The reactions to the death of Mrs T. are a textbook example of how these sort of things play out. Someone should make a film about it.
Since the Cyprus crisis the price of Bitcoins has rapidly increased. Felix Salmon wrote one of the better articles about this. But the article has its problems.
He opens by talking about someone who lost all his Bitcoins when his computer was hacked. This is avoidable by storing funds in an off-line wallet, which is just a file containing a private key used to transmit funds. It is not much different from storing gold, except that it takes up less space, backups can be made, a thief would need to both steal your wallet and know your password, and it is possible to pay money in to an off-line wallet. You only need to expose your wallet to the Internet to pay money out of it. All this requires a certain amount of skill and knowledge but so does any method of storing value.
Salmon uses the word “anonymous” carelessly. Bitcoin is not anonymous and not intended to be. It is pseudonymous. Every transaction is visible, and it is possible for the government to find out, for example, which bank account was used to buy some Bitcoins. You can probably take steps to make this so expensive that law enforcement could not afford it. But that is a practical point, not a mathematical one, and it would be a mistake to think that anonymity is built in.
Salmon complains that Bitcoin needs too much technical expertise to use. But not everyone need use Bitcoins directly for them to serve as a store of value, any more than people need to handle physical gold themselves. That one has the option to do so if one does not trust others is nice, but trusting others for convenience is possible too. If Bitcoin were widely adopted, I would expect to see secondary currencies backed by Bitcoin to be used as cash, and the equivalent of Visa and Paypal to be implemented by someone.
Salmon points out that the value of Bitcoin is very volatile and closely tracks media coverage of it. This is because there is a fixed supply (there will only ever be 21 million Bitcoins) and new people are still discovering the currency. After every media report the number of people who want Bitcoins increases. Once everyone knows about it who would want to buy it, the price should settle down as the overall demand for money is not so volatile.
Salmon’s main point is that Bitcoin is doomed to fail because as it is adopted its price will increase rapidly, which hyperdeflation will mean no-one spends it. But such a situation can not persist; as soon as the price settles spending will resume.
Although I am optimistic, there are plenty of ways it could fail. Something better might come along, or governments may attempt to put a stop to it and may succeed enough to make it fail.
Or in twenty years’ time you could find yourself having bought one 21-millionth of the global money supply for a very good price. 😉
There has been a lot of commentary in the general news recently about Bitcoin, the digital currency that its creators and users hope will have the same, inelastic qualities ascribed to such things as gold. At a time when mainstream, fiat money has seen its value trashed in certain cases by central banks’ money-printing policies, it is easy to see the attractions.
But what the hell is Bitcoin? How does it work? And what do free marketeers of an “Austrian” bent make of it? Well, here is an essay by Jeffrey A Tucker, which I think is well worth reading.
Bitcoin is certainly making the news at the moment, judging by some very sharp market movements over the past day or so. Even if it turns out not to be quite as successful as hoped, if it sparks off more thinking about alternatives to government funny-money, that has to be a good thing.
A Bitcoin hedge fund has been set up in Malta. I am actually going down to Malta in May for a few days – perhaps I’ll look up the managers there to find out more.
David Stockman has written a controversial Op Ed piece entitled Sundown in America that was published last Sunday in the New York Times.
I’ll quote the opening paragraphs to give a taste of the content:
The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.
Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.
I’m not certain I agree with all of it — his political prescriptions towards the end seem especially suspect — but it is absolutely worth a read.
Update: Stockman addresses critics, including Paul Krugman (who in typical fashion fired off a torrent of mocking ad hominems instead of a response), in this interview with Marketwatch.
It appears that it isn’t merely the U.K.’s “Conservative” party that has difficulty recalling 2008, a year now so distant as to be beyond the memory of living politicians:
Obama administration pushes banks to make home loans to people with weaker credit
I’ll give the devil his due — Marx said it best in The Eighteenth Brumaire of Louis Napoleon when he noted that history repeats itself, “the first time as tragedy, the second time as farce.”
Last night being the last Friday of March, there was a meeting at my place, as already flagged up here. But it was also Good Friday, so I did a bit of extra hustling and emailing around beforehand to ensure some kind of turnout. It worked. Great talk, and there were nine libertarian-inclined Londoners present in the form of: two Americans, a German, a Frenchman, a Spaniard, a New Zealander and three Englishmen.
I neglected photography at the January meeting, which I already regret, and did hardly any better at the end of February. This time I tried harder, this being one is my favourite snaps from last night:
Those are two of the three Englishmen who were present, the other being me. On the right there is speaker for the evening Richard Carey, and on the left Simon Gibbs, both of Libertarian Home fame. Gibbs was not rudely ignoring the conversation and catching up on his emails; he was looking up names and titles that were being mentioned in the conversation. I particularly like the potato crisp in Carey’s left hand at the very bottom of the picture.
The talk was everything that I personally was hoping for. There was lots of biographical detail of who the key early Austrians were (Menger, Böhm-Bawerk, Wieser) and what kind of intellectual context they were operating in and what they said. And then the same for the later figures of note (von Mises, Rothbard). Other twentieth century figures were mentioned. Given how admiringly Carey spoke about him, I was particularly intrigued by Frank Fetter, only a name to me until now.
Carey made no attempt to disguise the fact that he is a recent arrival to the task of getting his head round Austrian Economics, which for me was a feature rather than a bug, just as I thought it would be. And he made no attempt to suggest that he understood more than he actually did about the subject. His talk entirely lacked that sub-agenda that you so often sense with some speakers, that half the point of telling the story is to tell the story, but the other half of the point is to prove how very clever and well informed the speaker is, more so than he actually is. That Carey had no time for such nonsense only made me admire his intellect all the more.
I had been expecting that the abstract theorising about what it all meant, what the intellectual guts of it all consisted of, would come at the end. The economic way of getting stuff versus the political way, trade versus stealing, individualism versus collectivism, the subjectivity of value, and so forth. Actually that bit came, at some length, at the beginning, so much so that I at first feared that all that biographical detail that I had been so looking forward to would be somewhat skated over. But all ended well, and I learned a great deal.
I did not record this talk in any way. However, Simon Gibbs, the man on the left in the picture above, has already invited Richard Carey to do a repeat performance of this talk for Libertarian Home, and a video camera will presumably then be running. Meanwhile, I am very happy for Carey to have given this talk a first outing in friendly surroundings, and for him to get some early feedback on it. I find that I am making a point of getting speakers to speak about things they’ve not spoken about before, but will undoubtedly be speaking about again, for just these sorts of reasons.
Two books were mentioned in the course of the discussion afterwards that I intend to investigate further.
Christian Michel mentioned this collection of lectures by Michel Foucault, in one of which he apparently said something embarrassingly (given the kind of people who were listening) nice about the free market as the only place where freedom actually happens, or some such surprising thing. I’ve already emailed Christian asking for chapter and verse of the quote in question.
And second, Aiden Gregg (who is an academic psychologist and who has already been fixed to speak at a later one of these meetings) mentioned the writings of somebody called Larken Rose, a new name to me, and in particular this book, which appears to cover similar ground, albeit in a somewhat different style, to that discussed in Michael Huemer’s The Problem of Political Authority, which has been written about here recently.
Evenings like this don’t have any immediate world-changing impact, but every little helps.
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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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