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.
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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):
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”:
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. August 20th, 2012 | 39 comments - (Comments are closed)
 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 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 August 16th, 2012 | 20 comments - (Comments are closed)
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.
Quite. In these depressing times, it is easy to miss the positives. August 14th, 2012 | 16 comments - (Comments are closed)
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:
The bad news:
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. August 10th, 2012 | 16 comments - (Comments are closed)
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. August 9th, 2012 | 30 comments - (Comments are closed)
The investment strike is one the government would do well to bust, writes Michael Burke in the Guardian. When I read the headline I gave him the benefit of the doubt. The Guardian subs do not cope well with nuance. But the headline fairly represents the views of the man:
I bet them fancy-pants government ministers are kicking themselves now they see how easy the solution is. You just redefine thousands of separate people and organisations not wishing to risk their money in the present economic climate as a ‘strike’. Then you break the strike. Don’t knock Mr Burke’s logic – when the British government redefines pretty much any behaviour it does not like as ‘terrorism’ and then uses anti-terrorism powers to suppress it, the tactic seems to work just fine. August 4th, 2012 | 20 comments - (Comments are closed)
There is controversy over empty seats at sold out events at the Olympics. People who could not get tickets are annoyed to see them. The way that tickets were sold is odd. I know people who applied for tickets in ony the events they were interested in and were allocated no tickets. I know other people who applied for lots of events and got tickets they were not interested in. It would not surprise me if some of those empty seats belong to people who decided against going to events they had tickets for because they were not interested enough. The tickets were sold this way to stop the prices getting so high that poor people could not afford them. The tickets can not be transferred for the same reason. The trouble is that you either have a market or you have a lottery. There are no other choices, no matter how you try to dress it up. The trouble with lotteries is they do not allocate resources efficiently. July 29th, 2012 | 15 comments - (Comments are closed)
“What I find fascinating is how many intelligent people are willing, even feel urged, to provide intellectual support for a system that is not the result of intellectual discourse but came about – rather non-intellectually – through sheer power politics, opportunism and hubris, and that is evidently failing. Our financial system (or non-system) offers a great example of Nietzsche’s dictum that investigating the true origin and the true motivation behind things most often leads to surprising results. The purpose and the clever design that most people later believe to be behind various institutions are often only projected onto them with hindsight.” As regular commenter “Laird” said the other day, compared to the chicanery that is modern central banking, the row about the LIBOR business is small beer indeed. July 27th, 2012 | 3 comments - (Comments are closed)
From Foreign Affairs:
This is one of the best and most incisive explanations of what is wrong with the current system of averaging out interbank rates – as done via the British Bankers’ Association – and what needs to be done to avoid a repeat. Refreshingly, the article, written in the sort of publication that policymakers read, does not call for more regulation, which is definitely not what is needed. July 25th, 2012 | 13 comments - (Comments are closed)
I have been playing on my Asus Padfone (review to follow) with an app called Zinio, which lets users buy electronic versions of print magazines. It came with a free sample of the November 2011 edition of India Today. As far as I can tell the magazine is run and written by Indians. According to Wikipedia it is published in Hindi, Tamil, Telugu and Malayalam as well as English. So I imagine it provides some kind of snapshot of the opinion and thinking that is going on inside India, rather than an outsider’s view. The cover story was about cotton farmers who are committing suicide because they can not pay their debts. A boxout by Dhiraj Nayyar entitled “Government the Culprit” reads:
This seems like sound thinking so far. I wonder why the Indian government would restrict export of cotton. While Bt cotton is resistant to pests, it is not resistant to droughts. So crops still fail.
I am not so sure about this appeal to government bailout schemes. The implication here is that the government is wrong to favour seeds from certain suppliers. There may be rational reasons for doing so, such as seed quality, or there may be political connections with certain suppliers. I imagine that a free market solution, such as insurance or futures trading, would be more likely to make only rational and proportional restrictions. Could the government scheme be crowding out such solutions? In any case, I am encouraged to detect a somewhat pro-free-market stance in a mainstream magazine in India. July 24th, 2012 | 4 comments - (Comments are closed)
The stifling impact of being run by so-called “moderates” continues. On the BBC TV this morning, the programme is leading with the fact that a government finance minister, some hopefully soon-to-be-gone creature called David Gauke, is attacking people who have ever paid a builder, plumber or garage mechanic in cash so as to avoid paying VAT. Mr Gauke told his TV interloctor, in words that may haunt him, that he has never done any such a naughty thing, oh no. The context for this is that the UK government has recently announced a campaign against what it defines, with worrying vagueness, as “aggressive avoidance” schemes. Not just “avoidance”, which is what happens if you hold a tax-advantaged fund such as a Self Invested Personal Pension, or if you do not smoke (avoiding tobacco duty), or don’t drive (avoiding petrol tax) or drink (etc). No, “bad avoidance” is if you structure your financial affairs in such a way as to pay as little tax as you can do so without actively defrauding anyone. An interesting notion. As we know, the UK comedian Jimmy Carr was recently hit by exposure of his tax-planning, and other celebs and sports folk have sometimes got into similar sorts of arrangements. In as much as governments need to exist at all – and I am not an anarchist – there is a legitimate argument about the least-bad way to do this, and the simpler and flatter the tax regime is, the better. A huge chunk of this tax planning industry from which people like Jimmy Carr make use would vanish in a puff of smoke if our system was overhauled on the sort of lines recently proposed by the 2020 Tax Commission. The trouble with the stance taken by Mr Gauke is that he presumes that there is some correct chunk of our wealth to which the State has presumed to take a share, and that any action we take to avoid tax might increase the tax burden paid by our fellow citizens. But what this man seems to ignore is, a), that an economy is not a static pie where my action must negatively affect someone else (that old zero-sum problem again), but an economy is something can grow through mutually beneficial trade, and that that, b), in a tolerably free society, the level of tax that citizens will pay has its limits, even if people don’t go in for some of the more artificial wealth structures to minimise tax (bearing in mind that it costs money to get an accountant/lawyer to set these schemes up). Also, suppose that, instead of getting a builder into do a bit of work for cash to smarten up my flat or tackle an issue, I try and get a mate around to do the job for me in return for buying him a nice bottle of wine or editing some material for him/her? Is this not also wrong in the eyes of Mr Gauke? I guess it is. Even before I have done anything, the State is saying: “I want a piece of whatever action you engage in”. Taken to extremes, this penalises work over leisure. It is not surprising what the results are. At root, this is a matter of basic political philosophy. In the main (there are exceptions), the current Conservative Party and its Liberal Democrat coalition partners subscribe to a deeply paternalistic, communitarian outlook of the sort that Barack Obama, in his recent communitarian-leaning “you did not build that” speech, could identify with. This is also a sign of how under Cameron, the Tory party has reverted to the older, more trade-disdaining traditions of old and away from its Thatcherite strains. How’s that working out for us? People who make a living by getting paid in cash to fix windows, respray cars or mend pipes are not an evil. In the vast majority of cases, they are doing something about which someone like David Gauke, David Cameron or Barack Obama have been ignorant of all their lives: earning a living, and providing people with goods and services in a free market. They might as well try and understand life on Mars. It is shame we can’t send them there. Update: The Daily Telegraph weighs in. It is not impressed by Gauke. July 24th, 2012 | 20 comments - (Comments are closed)
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