We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
|
Detlev Schlichter’s latest posting – Stimulus, to infinity and beyond – is up.
Beginning:
There was a beautiful symmetry to last week’s policy announcement by the Fed. Precisely a week after the ECB had pledged its commitment to unlimited purchases of Euro Zone government bonds, the Fed declared that its new round of debt monetization – ‘quantitative easing’ or QE3 – would be open-ended.
Unlimited, open-ended. The concept of stimulus has certainly evolved since the crisis started.
End:
This will end badly.
Nothing to add to that myself. Other than: do what I am about to do, which is to read the whole thing.
Economic wisdom from a rather surprising place:
Since 2007, 15 bridges have collapsed in China. Only three of them were more than 15 years old at the time of their collapse, according to a report by the Shandong Business Daily.
On Aug. 24, a 330-footlong approach ramp of Harbin’s Yangmingtan Bridge fell over, killing three and injuring five. The bridge had been in use less than a year and is the eighth bridge collapse in China this year. The Harbin administration has so far not openly addressed the case.
Zhao Wenjin, the lead commentator of Lanzhou Daily, commented on the incident, saying, “With each collapse, we need to reflect: why are we chasing GDP?”
According to a Jingyang Net report, Wang Yang, Party secretary of Guangdong Province, said at a provincial Party meeting in 2009: “Sometimes the GDP number looks good, but it didn’t really create wealth for society. It was, instead, a waste of society’s wealth.
“For example, building a bridge creates GDP. When the bridge collapses and is taken down, it creates another addition to the GDP. When the bridge is rebuilt, more GDP is created. As such, one bridge resulted in three additions to the GDP. But it was a tremendous waste of resources.”
Mainland media Chinese Business Daily said that sticks and pebbles were found in the concrete that made up the Yangmingtan Bridge, and the metal wires on the surface were also not tied together properly.
The headline above the article that the above paragraphs come from reads: Frequent Bridge Collapses Help Boost China’s GDP.
My thanks to Sean Corrigan of the Cobden Centre for sending out the multi-recipient email that told me about this story.
I wish more people had the commonsense of this man:
“I bought and sold FB shares as a TRADE, not an investment. I lost money. When the stock didn’t bounce as I thought/hoped it would, I realized I was wrong and got out. It wasn’t the fault of the FB CFO that I lost money. It was my fault. I know that no one sells me shares of stock because they expect the price of the stock to go up. So someone saw me coming and they sold me the stock. That is the way the stock market works. When you sit at the trading terminal you look for the sucker. When you don’t see one, it’s you. In this case it was me.”
This are remarks, reported by Bloomberg, of a man called Mark Cuban, who owns a US basketball team. He could have pointed the finger at the various Facebook honchos, or blamed the fiasco of the Facebook IPO on the Nasdaq, or some eeeevil Wall Street bankers, or some-such, but he didn’t. He knew that buying shares in a newly listed firm is risky; it is particularly risky in such a relatively novel field as social media where the revenue model is not always very clear to discern.
The FB share debacle is a million miles away from the sort of loss that happened because of, say, a Ponzi fraudster such as Madoff, or the like. FB put itself up in the public market; a lot of people said how splendid this was going to be, and some rich people got richer, some lost a lot of money, and others have broken even. That’s how it is.
And he returns to find the state of the world slightly worse. Things were, of course, pretty bad to begin with, so that’s like Hell being slightly hotter.
The idea that all this monetary madness is only temporary, only to help us get out of the crisis, and that the central banks have an ‘exit strategy’ – a term that I have not heard or seen in any discussion of central bank policy since spring of 2011! – is getting less tenable by the day. There is no exit strategy. Not in the US, not in the UK, not in the Euro Zone.
Calling Mitt Romney. Don’t worry about losing. Worry about winning.
I just did a recorded interview (for the Cobden Centre) with Patrick Crozier, and experienced the mystery that is Doctor Theatre. This is when you are ill, but performing. For the duration of the performance, the illness goes into a state of voluntary liquidation. As soon as the performance ends, back comes the illness.
I still have the remnants of a cough. When talking at all volubly, I have to stop from time to time, to cough. Except that during this performance, I did not cough once. As soon as the official part of the conversation stopped, I coughed, and Patrick said: that’s the first time you coughed during this entire conversation.
I talked about all this happening before it happened, with another friend. I thought that might spook it. But no. It happened exactly as predicted.
As to whether the conversation I had with Patrick, without coughing, was any good and at all worth listening to, that’s another matter entirely.
The internet has a standing order from me to send me any news stories it has about 3D printing, and I am beginning to get a feel for how this story is playing out. (Maybe, what do I know?, etc.)
My first guess was that 3D printers are something like laser printers, which would accordingly soon enter all our homes, but I now think that’s wrong. 3D printing is not an enhancement of domesticity, or not yet. It is already, and has been for quite a few years, a technological development technique, and it is now morphing into a manufacturing technique, which is what most of the news stories are about. Here’s this new thing they are making with 3D printing! Wow!
But it’s “they” who are doing this. Only a minority of people reading or hearing these stories now want to get their hands on this kit themselves. If there is a parallel with personal computing, then 3D printing is still at the stage when mad techno-hippies were buying the first cheap (-ish) computers to play with in their dad’s garages, and learning how to program them, circa 1977(?). The only – although it was one hell of an “only” – killer app there was for those first small computers in those early days was if you wanted to learn how a computer worked.
Consider the following news story, from the Daily Mail. It seems that someone somewhere has worked out how to “print” a new kind of bikini, out of 3D nylon. Many may be excited by this story, such as women seeking nicer bikinis, and men needing a techno-excuse for drooling over the female bodies involved in advertising the bikinis, but while there may be a small stampede to the bikini shop to buy such new garments, this story will surely not cause any stampede to techno-stores to buy bikini-printers.
I wrote everything else in this posting before reading this piece by Ryan Whitwam, but he says pretty much what I say here. → Continue reading: 3D printing won’t be domesticated any time soon (but then again how it might)
I seem to recall someone (one of our commenters here?) saying that George Soros is the nearest thing in reality to a James Bond villain.
So I guess we now know which football team we here do not now support.
Well played Everton.
There is something grimly amusing at reading Matt Yglesias, purveyor of conventional (ie, wrong) thinking on matters economic, getting a bit sniffy about the way in which certain commentators, such as Bryan Caplan, cite the great insights of the 19th Century French thinker, Frederic Bastiat (well known to this blog, of course):
“Bastiat’s alleged broken windows fallacy involves simply assuming that there’s no such thing as genuinely idle resources or an “output gap.” In that context, yes, it’s a vibrant intuitive depiction of crowding out. But this doesn’t counter any Keynesian or monetarist points about the viability of stimulus during a recession induced by nominal shocks, it involves assuming that no such recessions can occur even though they plainly do. In defense of Bastiat, at the time he was writing the modern industrial business cycle was a very new thing and the vast majority of economic ups and downs were caused by things like bad weather which—as you can see in the corn futures market today—is indeed a decisive consideration in an agricultural economy. But that’s no excuse for people sitting around in 2012 to be pounding the table with an old book that’s non-responsive to modern issues professing to be baffled why people don’t find it more persuasive.”
The point is that the issue of “idle resources” or an “output gap” only makes sense if you start from the position of assuming that there is an optimum amount of economic activity to be had, and that supposedly clever central bankers (try not to laugh please) know what this “gap” is and have the skills to fill it. Given the manifest failings of Keynesianism – and arguably also some of the cruder forms of monetarism – it seems those who want to push this approach are under an onus of proof.
Yglesias also writes about one of Bastiat’s most famous satires of businesses, the one where he mocks firms that ask for protection against competition: the “candlemaker’s petition”:
“The best example of this is probably “The Candlemaker’s Petition” which is a pretty hilarious satire of rent-seeking. And obviously rent-seeking is a real thing, worthy of being satirized. But there are no political controversies for or against pure rent-seeking. The candlemakers’ petition is a devastating satire of pharmaceutical companies’ endless lust for patent rents, unless you happen to think that pharmaceutical patents and the monopoly rents they generate are a crucial engine of R&D funding and life-saving research. Are the pharmaceutical companies right? I think it’s questionable, but I also don’t think you’ll find the answer in Bastiat.”
That is quite cute and he has a decent point – not all requests for protection of a business are, ipso facto, wrong, but this does not really work as a smackdown.
The argument for patents (and as we know, classical liberals have sharp disagreements about intellectual property rights, as shown by the likes of Greg Perkins, say, or Tim Sandefur, or this guy), is that they are incentives to capture the commercial use of an idea for a specified period of time on the basis that creating such property rights in commercial inventions increases the likely existence of said in total, which is different from tariffs, where there seems to be clear evidence that such things reduce the overall economic pie. (Critics of IP sometimes argue that it stifles overall innovation, but I have seen no conclusive evidence either way.) Thinking of Bastiat’s satire, it does not really, in my view, mean that I would scorn a firm or individual for seeking to protect an original idea from being copied by someone else without payment. In any respect, the presumed “rent seeking” failings of IP (and there are problems) can be seriously reduced by reforms, such as granting patents to independent inventors of a gadget, greater disclosure of invention processes in patent filings, an efficient secondary market in IP, shorter IP durations, and so on.
It is good that those of us who venerate Bastiat are forced to think through how his ideas apply to such matters, even to the point of working out if he has any weak spots. But I don’t see that Yglesias has landed the killer blow that he thinks he has. And he cannot just write Bastiat off as a witty Frenchman whose insights are out of date. They are screamingly relevant, just as Adam Smith and others of that vintage are.
I suppose it is good that Mr Bastiat is getting up the noses of some folk. That counts as progress. There’s plenty more where that came from.
(I realise that this is the second time in a row I have written something with a French angle. A pity that French president Francois Hollande does not share the wisdom of Bastiat.)
Update: Caplan responds with some more observations on how policy wonks live in the sort of bubbles that need to be pricked.
I am now recovering from an illness. While ill, the only thing I could manage to pay much attention to, other than the various pains in my head, was the Kevin Pietersen Affair, the contemplation of which, to an England cricket fan like me, is a not dissimilar experience to that of being ill.
Today at Lord’s, the sacred home of cricket, England are embarking on the third and final game in their five day test cricket series against South Africa, but without Kevin Pietersen. Pietersen scored a brilliant century in the previous game. But no, he is not injured. He has been dropped.
Pietersen sent out disloyal tweets about the England captain and coach, for which transgression he did apologise, but too late. You can read the details, in the unlikely event that you want to, in media reports like this one, where phrases like “underlying issues on trust and respect” appear.
Where my interest in all this (I could write about it for ever) and the interest of Samizdata readers (who would presumably prefer me to keep a lid on it) may overlap, or so I hope, is in the big picture background to all this. Which is, in a word: India.
From time to time, usually, as now, from a writer trying to use such circumstances as a metaphor, you read about planetary objects being subjected by much heavier objects in their vicinity to gravitational forces so severe that different parts of the smaller planetary object start to be pulled in different directions, perhaps so severely that the smaller object threatens to fly into pieces. This is what is now happening to cricket in England, under the influence of that much larger cricketing object, cricket in India. Cricket is now like a solar system, and the quite big planet that is England cricket is being yanked about by the gravitational forces being exerted upon it by the Sun. And that Sun is: India.
The background to the argument between Kevin Pietersen and the E(ngland and Wales) C(ricket) B(oard), the people who run the Engand cricket team, is that Kevin Pietersen desires to be both an England international cricketer, and also to maximise his income (and also enjoyment and ego-massage) from cricket by all other available means, while nevertheless contriving somehow not to drop dead from physical and mental exhaustion. In particular, Pietersen yearns to be both an England cricketer and a fully paid up (very well paid up indeed) player in the Indian Premier League, the Indian twenty overs tournament that takes place in April and May of each year.
The ECB treats the IPL as just another foreign cricket league, concerning which they need to care very little. It’s a nuisance to their arrangements, but no more. They do not – or such seems their attitude – need to contrive any “window” to allow England cricketers to neglect their early season England cricket in order to cash in from a meaningless foreign slogfest, and then allow them time off from England games, or preparations for England games, so that they can avoid becoming completely exhausted. They pay England players well, and that should be quite enough, is their attitude.
But for any cricketer good enough or lucky enough to get a contract to be part of it, the IPL can be the difference between an anxious transition, when the time comes, from professional sport to the rigours of real life, and being financially secure for life, especially if he does well in it and gets asked back several times. During the limited time when Pietersen was able to play in this year’s IPL (he had to leave before the tournament ended), he did very well, scoring another brilliant century, for the Deccan Chargers Delhi Daredevils.
The over-arching fact about cricket now is that the IPL is not just another tournament in a faraway country. It is the first great assertion in the cricket world – the cricket world – of the massive economic power of Indian cricket fandom. As I never tire of saying in my various cricket blog postings, there are more cricket fans in India than there are people in Europe. I remember when the millions of India were famous only for starving. Now, these same millions are striding towards twenty first century affluence. And they are taking cricket with them.
If India really, really wants to watch you play twenty twenty cricket for a month and a half, at a time when cricket in England is only getting started in weather that is often vile (despite anything the Met Office may have told cricket people about such months getting warmer), then if you are a cricketer, you really, really want to say yes. → Continue reading: Kevin Pietersen and the rise of India
A Reuters columnist says that markets have yet to face up to the fact that there could soon be a “glut” of oil. In other words, the scarcity-mongers are mistaken.
“A final conclusion to draw from the next oil revolution is a little more existential. This is yet another reminder that what both common sense and expert consensus assure us to be true very often isn’t. It was obvious that efficient markets worked and financial deregulation would stimulate economic growth, until the financial crisis and the subsequent international economic recession. It was equally apparent that we were running out of oil – until we weren’t.”
Quite. In these depressing times, it is easy to miss the positives.
Peter Schiff is an economics guru held in high esteem by several of my libertarian acquaintances, and he is is starting a gold-based bank.
The good news:
You can open accounts in dollars or gold bullion at the new Euro Pacific Bank Ltd, launched by Peter Schiff. this is an awesome idea
You can even get a “gold debit card” that you can use anywhere in the world. It’s backed by actual gold, which converts to whatever currency you’re needing at the time you visit an ATM.
The bad news:
There’s one catch if you are an American: you can’t open an account at this bank if you’re a U.S. citizen.
U.S. security laws have become so intrusive, burdensome, and expensive to comply with, that it made it difficult for Schiff to offer the services in the U.S. So, Schiff opened his bank offshore, in St. Vincents and the Grenadines. It operates outside the jurisdiction of U.S. security regulations, and does not accept accounts from American citizens or residents.
In the comments on my previous posting here, about what went wrong and when, much was made of the idea that in addition to knowing what went wrong it would help a lot if we can also say how to put it right.
Personally, I believe that “politics” is never going to sort this mess out, certainly not politics alone. What might is people just recreating the gold standard on a freelance basis, by such means as joining in with enterprises of the sort described above.
Yes, governments can shut such things down, as the above report makes abundantly clear. But if large numbers of people start placing side bets in enterprises of this sort, then it starts to become politically hazardous to just forbid such arrangements.
One of my favourite slogans just now is: “This isn’t gold going up; it’s the dollar (the pound, the euro, the yen, the whatever) going down.” That is because I consider this to be the basic idea behind a non-state imposed (which is the good kind of) gold standard. When large numbers of people measure state fiat currencies by how badly they do against gold, rather than gold by how “well” it is doing against this or that collapsing currency, then that is surely the beginning of the end for these currencies.
One of my understandings of the current financial mess that the world is in concerns when the various contending diagnosticians think that the rot set in. The earlier the more Austrianist, seems to be the rule.
Instapundit recently linked to a piece by James Pethokoukis concerning the diagnosis offered by Robert Hetzel.
Hetzel thinks the problems only got seriously serious around 2008. Until then, it had been a bit up and down, but nothing that bad. But then, in 2008, the Fed, and central banks the world over, adopted money supply policies that were too restrictive. By not creating enough more money at that moment, the Fed turned a little temporary difficulty into a far bigger difficulty.
I’m not an expert on this stuff, but this is similar to what Milton Friedman et al said about what triggered the Great Depression, is it not? Hetzel is, I presume, some kind of Friedmanite Monetarist. He reckons he knows exactly how to skipper the nationalised industrial ship that is money. I reckon he doesn’t.
For if Detlev Schlichter and the other Austrianists are right (I think they are), the rot set in a long, long time before 2008. The idea that, if things had been handled just that little bit more deftly in 2008 all could have been well – bar a slight bump or two – is just wrong. The world by then was full of bad investments, and these investments were – are – going to have to be liquidated if the world economy is ever going to start motoring again. Encouraging even more bad investment, which is what Hetzel is saying should have been done, would only have made the grief still to come that much more grievous.
Whether James Pethokoukis agrees with Hetzel with anything resembling the vehemence with which I disagree with Hetzel, I do not know. Perhaps he just wants an excuse to blame everything on President Obama.
But if the Austrianists are right (they are – reprise), it goes way back, to Nixon and before, to the very creation of central banks as a means of sucking wealth out of economies (traditionally to wage war) without people getting the chance to complain too loudly in some sort of parliament. The idea that Obama, or for that matter George W. Bush, could have entirely solved the world’s present financial problems, i.e. solved them without any political grief, is absurdly mistaken. They could make it worse and they both did, with only a bit less Hetzelism than Hetzel now thinks they should have perpetrated. The idea that, with one Hetzelian bound, they could have freed us all from any grief is crazy.
As is the idea that dumping Obama and replacing him with someone less malevolent, anti-American, socialistic, Christian, atheist, Muslim, environmentalist, Chicagoan, incoherent, lazy, golf-loving, devoted to black magic (take your pick), will fix everything.
In my opinion dumping Obama would be better than not dumping him. But doing this could merely be the difference between jumping off the cliff instead of sliding down it.
|
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.
|
