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]
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If we immerse ourselves wholly in day-to-day affairs, we cease making fundamental distinctions, or asking the really basic questions. Soon, basic issues are forgotten, and aimless drift is substituted for firm adherence to principle. Often we need to gain perspective, to stand aside from our everyday affairs in order to understand them more fully. This is particularly true in our economy, where interrelations are so intricate that we must isolate a few important factors, analyze them, and then trace their operations in the complex world.
– from the Introduction of What Has Government Done To Our Money? by Murray Rothbard. To read the whole thing, go here.
I link a lot to the sayings and doings of Steve Baker MP (that being the last time I mentioned him here), so this time I will be brief, and only say that I like the phrase “new money being loaned into existence”. The piece this phrase appears in is entitled Could this be a second crisis of state socialism? If you are already saying to yourself something along the lines of: “yes I rather think it could be”, you will, you will be unamazed to learn, find yourself in agreement with Mr Baker.
“American economist Scott Sumner has recently argued that the Fed cannot be blamed for the inflation that led to the Wall Street Crash because the money supply measures that reveal the inflation were not publicly available at the time. As Robert Murphy has responded, the fact that doctors of the time didn’t understand bacteria does not affect the cause of deaths during the bubonic plague. Whether we “blame” central bankers or not is really a secondary consideration to our attempts to understand what happened and why. By assigning blame we suggest that the Fed should have done better. It encourages us to think “if only it did X everything would be ok”. But the problem isn’t that individuals focused on the wrong targets, and the solution isn’t to work out how they can improve. The lesson should be that the nature of central banking – the attempt to centrally plan the monetary system – imposes an epistemic burden on policymakers that they cannot possibly ever fulfil. The Fed wasn’t to blame for the crisis, because any argument for what it “should” have done is insincere. We should absolve it from culpability, and remove the shackles of expectation that we place upon it. It did the best it could be expected to do. And that wasn’t enough.”
– Antony J Evans, economist and what I would call a “sensible-shoes Austrian”.
“One of the more unexpected things I discovered as CEO of a pharmaceutical company was that I had to think as much or more about the federal government than I did about our competition. I had known on an intellectual level that government was involved in the private sector in a great many ways, but it was only when I was actually in business that I felt the full impact.”
Donald Rumsfeld, Known and Unknown, page 253. He is describing his time in the private sector during the late 70s and 80s, and emerges as quite a firebrand for supply-side economics (he got to know Arthur Laffer).
Whatever you think of Rummy as a defense secretary (under the Ford and George W. Bush administrations), he comes across as a formidable man of US public and commercial life.
Here is something that I wrote about the FDA and associated drug regulation issues a while ago here.
“Open-source intelligence has always been crucial, but for most of the cold war it was neglected by western intelligence agencies,” says Calder Walton, a research associate at Cambridge University and author of the book Empire of Secrets, to be published in 2013. “That was the archetypal intelligence war: intelligence necessarily involved information that couldn’t be gained from any other source — human agents or telephone tapping.” That doesn’t mean covert intelligence was more effective, though: Daniel Moynihan, a former US senator, compared CIA reports gathered from secret sources with Soviet documents recovered after the fall of the Berlin Wall and found they significantly overestimated Soviet capabilities. But he discovered that western think tanks using publicly available material, such as the RAND Corporation, were much more accurate. US diplomat George Kennan estimated in 1997 that “95 per cent of what we need to know about foreign countries could very well be obtained by the careful and competent study of perfectly legitimate sources of information open and available to us”.
Excerpt from an article in Wired, the tech and futurism magazine, about a Swedish investment firm, Recorded Future, that is taking the use of social networks and other systems to new heights in its attempt to get a jump on the market. In the process, it sheds new light on how the intelligence-gathering process works.
Here’s another couple of paragraphs:
The 20 employees of Recorded Future aren’t foreign-policy experts. They aren’t traders either, but if you’d started using Recorded Future’s predictions to buy US stocks on January 1, 2009, you would have made an annual return of 56.69 per cent. (The S&P 500 had an annualised return of 17.22 per cent over the same period.) Between May 13 and August 5 this year, as markets behaved with vertiginous abandon, their strategy returned 10.4 per cent; in contrast, the S&P 500 lost 9.9 per cent of its value. They’re data experts: computer scientists, statisticians and experts in linguistics. And in the data, they think, lies the future.
All Recorded Future’s predictions, whatever the field, are based on publicly available information — news articles, government sites, financial reports, tweets — fed into the company’s own algorithms. The result, it claims, is a “new tool that allows you to visualise the future” — one that is changing how government intelligence agencies gather information and how giant hedge funds place bets. On its website, Recorded Future states: “We don’t grant interviews and we don’t issue press releases.” But behind closed doors, the company is developing the technology that has been described be one tech blog as an “information weapon”.
The businesses was founded by a chap called Christopher Ahlberg, a former member of Sweden’s special forces and a serious entrepreneur. In its own way, this article is just another example of how Sweden is not quite the socialist nation that it is sometimes said to be, either by its starry-eyed admirers or detractors. There is a lot of entrepreneurial zest up there in the frozen north, it seems.
When I heard Gordon Kerr speak in the House of Commons a week ago, I wished that he had done so with a microphone attached. Very early this morning he spoke in public again and this time he did have a microphone attached, because he was on Bloomberg Television. Turn up the volume on your computer and you’ll find it a lot easier to hear what he said this morning than I did last week.
Kerr confirmed my definite impression that the Austrianist team is now starting to win this argument. (By “this argument”, I mean, approximately speaking, this argument.)
Whereas regular academic economists talked about how this banking crisis was all over bar the recovery in 2008, the Austrianists have consistently predicted further disasters. As these disasters have duly occurred, the books and writers and ideas that the Austrianists keep referring to in their increasingly frequent public performances (Kerr mentions Hayek in this performance) are now breaking out of their academic-stroke-hobbyist ghetto and reaching the mainstream.
My favourite moment in this quiet little early morning Bloomberg TV conversation was when the man whom Kerr was arguing with said: “But if banks told the truth about the value of their assets, that would cause chaos.” His argument being that therefore making the banks tell the truth is a disastrous policy. Which it sort of is. But Kerr’s point, the point made by all Austrianists, is that disaster can’t now be avoided. The decisions that have made disaster inevitable have all now been made. By postponing the recognition of disaster, you only make it all the greater when it finally erupts.
Intellectual self-confidence is hugely important in a battle of ideas, such as we are witnessing now. The Keynesians, anti-capitalists, the more-of-the-samists, the borrowers-and-spenders and the rest of them, all want to believe that capitalism has to be managed by them if it is to work properly, in approximately the manner in which these people manage it now and have been managing it for the last few decades. Some of them still want to believe that capitalism itself ought to be smashed up, and entirely replaced by a planned economy. But how many people really think that this kind of thing would actually make the world more prosperous? The point is: the hatred of truly liberated, untramelled, uncontrolled, un-managed capitalism is all still there. But, the conviction that there is a superior statist alternative, not strong before this crisis became evident but briefly puffed up by the early stages of the crisis, is now fading away in front of our eyes.
Passionate and sincere belief in a viable, partly or wholly statist alternative to capitalism used to exist, in the early part of the twentieth century. Then, Marxists really believed that capitalism was colossally wasteful and inefficient, as well as colossally cruel and unjust and unfair, and that replacing it with a world run by small clumps of smart people with dictatorial powers, based in small but dictatorially powerful offices, would genuinely be a colossal improvement. They really and truly thought this. They believed it with the same certainty that naval tacticians, then and since, have believed (rightly) that vulnerable merchant ships are safer, during a merchant shipping war, if they all sail together in a convoy, rather than if every merchant ship sails alone. That being one of the arguments they used. This colossal Marxist and statist intellectual self-confidence was contagious and, when crisis hit Russia during World War 1 and the West at the end of the 1920s, it was hard to resist.
Now it is the Austrianists and only the Austrianists who have any genuine confidence in the correctness of their own ideas. Tiny in number but growing in number by the day, we Austrianists (I count myself a very junior member of this team – a fan rather than any sort of player) truly believe that we are right about how the world works, and about how it could eventually be made to work a lot better. This is why we are winning.
By winning, I don’t just mean convincing of our rightness third parties with no stake in how things are being done now and no power to make any difference, although that also will happen, in the fullness of time. I mean making our now hugely powerful opponents (powerful in the sense of having the power to go on doing huge damage) realise that they themselves are entirely wrong, and that we Austrianists, who until recently they had never even heard of, are right. I mean especially them. The bewildered onlooker tendency, vastly more numerous than any of the intellectual teams directly involved in this debate, is likely to remain confused about all this for a much longer time. They’ll only hear about this argument after we have won it. But the powerful people who presided over this long catastrophe, and who made and continue to make it ever worse with their ever more panic-stricken decisions, are mostly going to emerge from the wreckage with no doubt in their minds that their Austrianist critics understood everything far better than they did. They may not admit it out loud, still less formally surrender, although there will probably be some very public changes of mind. But most of these people will know in the privacy of their own minds that they were utterly defeated, by events, and by those who proved with their prophecies, observations and post mortems, that they understood these events, as they did not begin to until it was far too late.
It was like this with that earlier collapse of statist power, the fall of the USSR. The people who presided over that collapse had no doubt concerning the inferiority of their own economic arrangements, which was a big part of why those arrangements collapsed. It wasn’t merely that Soviet communism collapsed because it was hopeless. It collapsed because the Soviet communists who ran Soviet communism themselves came to realise that Soviet communism was hopeless.
Perhaps this is why Gordon Kerr talks so quietly. He is right. He knows he is right. He feels no need to shout.
Allow me also to remind you about Jamie Whyte‘s recent radio performance. He also spoke with utter certainty in the rightness of what he was saying, and he never once felt the need to raise his voice either.
LATER: Steve Baker MP comments.
Immigrants are incoming assets … in a global economy, their labour is vital both to tackle severe skills shortages and to fill long-term vacancies. Immigrants are not taking jobs that British workers could fill, but jobs which British workers are unable or unwilling to do … the idea that immigration is an intolerable burden on the taxpayer and the welfare state is baloney. Immigrants give far more than they take. It is estimated that they make a net contribution to the economy of £2.5bn …
– House of Commons Speaker John Bercow in an article in the Independent in 2005, quoted by Henry Oliver today in Adam Smith Institute’s Pin Factory Blog.
Since Detlev Schlichter is discussed frequently around here, I thought it might be interesting to write a summary of some of the arguments from his book, Paper Money Collapse. Of course I am summarising my understanding of the arguments, so caveats about my fallibility apply; errors and omissions are mine.
He begins with a description of money. It is the medium of exchange. It needs to be something people agree on. Ideally there will be a fixed supply which is infinitely divisible. Precious metals fit the bill. Schlichter distinguishes between exchange value and use value. It is possible to use gold for jewelery and electronic components, so it has use value. But as soon as it is used as the medium of exchange it is the exchange value that dominates. Money has value because it can be exchanged for goods and services.
When people say they want more money, what they usually mean is that they want more goods and services. Nevertheless there is a demand for money as a store of readiness to exchange, in preparation for near-future purchases or unexpected needs. Within the limits of his means, a person can hold exactly the money he wants at any time. If he wants more money, he stops buying stuff and perhaps starts selling it. If he wants less money, he buys goods and services.
If demand for money falls, then more people want to buy goods and services, so prices go up and the purchasing power of a unit of money goes down. This continues until the reduced purchasing power of money causes people to want more money. If the demand for money increases, then more people want to sell goods and services, so prices go down and the purchasing power of a unit of money goes up. This continues until the demand for money is met. In this way, the purchasing power of money changes almost instantly, so the demand for money is met almost instantly. There is no need to create money to meet the demand for money.
Does this cause prices to be volatile? Perhaps, but Schlichter argues that it is impossible for a central authority to control the supply of money quickly enough to counter changes in demand for it. The only way they can measure these changes is by observing prices. By the time the price has changed so that it can be observed, it is too late. He also points to empirical evidence that suggests that prices are more volatile when central banks control the supply of money. → Continue reading: Summarising Schlichter
A few minutes back I was glancing through Chinese trade statistics, in an attempt to put together the hopefully reasonably detailed post on what is going on in China that Brian has been nagging me to write.
With respect to Europe, the stat that pops out is that Germany runs a significant trade surplus with China, but that the eurozone as a whole and even more the EU as a whole runs a large deficit. Trade patterns with China are responsible for part of the immense stresses that now exist on the €uro. The German surplus puts upward pressure on the currency at the same time that the southern deficits put strong downwards pressure on it.
One thing that comes up is the “Hong Kong Problem” in the statistics. Many containers of Chinese exports from the factories of Shenzhen and Dongguan are carried over the border into Hong Kong, and are then shipped from the port of Hong Kong. Others are carried to the port of Shenzhen and then exported from China directly. Which port is chosen determines whether the export shows up in China’s trade surplus with America or whether it shows up in Hong Kong’s trade surplus with America. It is not difficult to simply consolidate the numbers, but this is not always done, and figures are sometimes misleading because of this. The two ports of Hong Kong and Shenzhen are only a few miles away from each other, and are at present third and fourth in the list of busiest container ports in the world, but would be the busiest by far if counted together. I had seen the port of Hong Kong many times prior to my last visit to the area in 2008, but I was curious about the port of Shenzhen, so I visited the Yantian district of Shenzhen.
After I wandered down the roads between warehouses and goods yards full of containers for a time, and took many photographs through gates, a man in a uniform gestured to me to stop and went of to consult with someone else in a more impressive uniform. At this point I thought it would be good to make myself scarce, so I departed rapidly down the road and out of the container port. (I sent a text message to a private equity fund manager friend of mine in South Africa, who urged me to keep taking photographs, as he was interested in seeing them, and because “Mike, your safety is something I am entirely willing to risk”).
 But anyway, I made myself scarce. A half hour later I found myself walking along the shore past a rusting Russian aircraft carrier, which was apparently the centrepiece of a bankrupt, cold war themed theme park named “Minsk World”. After a while of this, I departed for a different area of Shenzhen, and somehow managed to end the day drinking a weissbier served to me by a young Chinese woman wearing a dirndl, while sitting on the deck of a boat that had once been Charles de Gaulle’s private yacht.
However, it was a good day. It is only on very special occasions that life gets this weird.
When buying two old Soviet aircraft carriers from the Ukrainians, the Chinese claimed that their reason for doing this was to convert them into tourist attractions. Reputedly, the actual situation was that they hoped to learn as much about aircraft carriers from them as possible, and then refit them as actual aircraft carriers. Upon discovering that they were in fact large and immense floating pieces of rust that had actually not been very good aircraft carriers in the first place, in a possible attempt to save face, the Chinese did attempt to convert them into tourist attractions after all. Thus the two Soviet military theme parks, one in Shenzhen based around the Minsk and the other in Tianjin based around the Kiev.
 
Both subsequently went bankrupt, a day out while looking at rusting remnants of the Soviet Union not apparently being a big attraction for the young Chinese. The Kiev carrier in Tianjin has apparently been subsequently converted into a hotel. The Minsk in Shenzhen continues to rust.). The Chinese in 1998 purchased the incomplete Admiral Kuznetsov class carrier the Varyag, which was at that point floating somewhere in the Ukrainian waters of the Black Sea. The carrier was officially bought by a Macau based tourist venture, with the pretext being that it would be converted into a casino. In this case, though, it remains in the hands of the Chinese military. After a (very) lengthy refit, it may one day enter into service in the Chinese navy.
All evidence is that the Chinese did in fact purchase Charles de Gaulle’s yacht with the intention of turning it into a floating Bavarian beer bar, however.
The pessimism expressed here for some time about China is now being expressed more widely.
Yesterday, via one of my favourite blogs, that of Mick Hartley (I especially like Hartley’s own photos), I found my way to some other photos by David Gray, of China and its newly minted ruins of the last decade and more. My favourite of these is the very first in the set displayed at the end of that link, which has what it takes to become “the” Chinese picture for right now.
It looks very impressive from a distance …
… but if you look at it closer up, it turns out to be a structure constructed by an idiot, full of steel and concrete, accomplishing nothing.
A few weeks ago, Samizdata’s travel and much else besides correspondent Michael Jennings, who has (of course) recently been in China (he has recently been everywhere), was talking of doing a piece about the mad building spree now, still, going on in China. I’d still love to read such a piece, but I fear that Michael may have missed that particular boat, in terms of revealing anything very shocking.
Happily, he did comment at length on an earlier short Samizdata posting about the Chinese construction bubble.
“All corporate taxes fall on households in the end. Companies might be convenient places to get cash from but they are not the people actually carrying the economic burden. It is some combination of shareholders, workers and consumers that are carrying the burden: those getting the social services which they are unable to fund.”
– Tim Worstall, dealing with yet another piece of nonsense from that over-blown socialist buffoon, Richard Murphy. I have to admire Tim’s stamina in how he relentlessly mocks and refutes the rubbish from Murphy. But someone has to do it.
This afternoon I visited the office of The Real Asset Co, and talked with Ralph Hazell (CEO), William Bancroft (Head of operations), and Jan Skoyles (Economist). I have hardly begun to digest the lessons I learned from what they told me. But in the meantime, let me at least supply a link to this video interview that Jan Skoyles did with Steve Baker MP, our favourite politician by some distance here at Samizdata. Jan Skoyles is living proof that you can earn a living as an “economist” without knowing an enormous pile of things which are not so.
More and more, I find myself fearing that Baker is just too good to be true, and that some frightful skeleton will one day soon come tumbling out of his closet. I have absolutely no rational basis for such fears. It is just that the man is a politician.
I recall sitting next to Baker at a Cobden Centre dinner about a year ago, and rather rudely telling him that I expect from him: absolutely nothing, on account of him being a politician. He has already far surpassed my wildest fantasies. This video interview once again had me blinking in disbelief at the sheer uncompromising sensibleness of what he was saying. I did take a nap earlier this evening. Was I dreaming again? Apparently not.
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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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