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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“So you live beyond your means and rack up a bunch of bills you can’t cover. So you go to your rich uncle. He’s tapped out, alas. And tired of supporting you. So he goes to his rich uncle who’s even richer and known for his desire to keep the family name unsullied. But what if he’s tapped out? Those are my thoughts when I read this story that Sarkozy is supporting Merkel in getting the IMF to bail out the Greeks. The IMF is the richer uncle. Eventually the other guy runs out of money. We’re going to have to start borrowing from Mars or Venus soon.”
– Russ Roberts, at the Cafe Hayek blog.
Lord Stern would have us believe that ‘arrogance’ undid the recent attempted power grab known as the Copenhagen Conference.
Strangely the public unravelling of the entire political and cultural narrative of global warming does not so much as get a mention in passing, as if ‘Climategate’ can be wished out of existence and with a Triumph of the Will, time itself can be rolled back to pre-hack days.
I really, really hope that Nick Clegg, leader of the UK Liberal Democrats, does not hold the balance of power at the next General Election, if this Spectator article, “Can Nick Clegg Sing the Blues?”, is a guide (the article is behind the Speccie’s subscription firewall).
Mr Clegg, the article says, is trying to reach out to supposed Conservative voters by arguing for tax cuts. But as is clear, the cuts are only for low-earners and not for anyone else (I certainly do support tax cuts for the poor, in case anyone brings this up). He wants, for example, to impose a so-called “mansion tax” on properties worth £2 million or more and wants to raise the level of capital gains tax from its current 18 per cent to 50 per cent – a huge jump – on those whose annual income is £150,000 or more. In other words, CGT will skyrocket for the sort of entrepreneur who can, or hope, to make a decent capital gain on a business that has been launched. As the supply-side school of economists likes to point out, once depreciation for wear and tear and inflation is taken into account, a 50 per cent CGT rate can in fact be more like 70 per cent, largely nullifying the gain and likely to hammer entrepreneurial activity. Given that top earners are already due soon to be paying 50 per cent income tax, not to mention other tax hikes, the process will drive yet more folk abroad and deter wealth creators from coming into the UK. The likely upshot of this will be a less active stock market – which will hit pension fund investments – hardly a great idea from the LibDems’ point of view – and likely as not, erode, rather than acquire, more revenues.
There is also a quote, on page 14 of the magazine, that also proves to me that Mr Clegg is a numbskull: “The Tory inheritance tax cut, he said, would help people who don’t actually spend their money, they just squirrel it away'”. In other words, if you have wealth, either from your own efforts or from inheritance, and save it – you are a parasite, a dead weight. Mr Clegg clearly thinks that saving is bad, that “hoarding” of money in a bank account, or whatever, is a terrible thing, and that we should all be spending our money like mad down the High Street. Maybe he thinks it would be better if trustafarians were all down the dog track or the casino rather than sitting on a portfolio.
It is almost hard to summon breath to point out that it is precisely the high level of consumer spending, funded by debt rather than by real savings, that in part explains much of the current economic mess. We need to encourage, not discourage, savings. And given that as folk get richer, they typically invest and “hoard” a relatively high percentage of wealth, it is folly to hit them since they are a key source of capital for future investment. Folk on low incomes, by contrast, have low savings for the rather obvious reason, of course, that they struggle to make ends meet with what little income they have.
In fact, if the Tories have any sense – not much unfortunately – they should boldly confront the insane, Keynesianism-on-drugs mindset that says that spending is always a good thing and that savers are all rich, selfish bastards who should be taxed. Many years ago, FA Hayek likened this form of economic thinking to quackery. As usual, the great Austrian economist was being far too polite.
Personally, I’d like to see some Congressmen forced to testify before a panel of car dealers, about the budget deficit’s Sudden Acceleration Problem.
– Instapundit reflects on the travails of Toyota.
Last night I listened to this podcast, in which Patrick Crozier interviews our own Michael Jennings, globetrotter extraordinaire, about how the English Premier League (i.e. soccer) is followed with a passion in faraway countries of which most English people know very little, and of which many English soccer fans would be rather scornful, if they gave them any thought.
Points made (recycling (and expanding upon) Patrick’s blog posting on it): that the Premier League is a big deal in Asia (and Africa); that it’s really big; how it got that big; why the 39th game is going to happen (because so many English clubs are strapped for cash); and how it might be done fairly (not hard to contrive if they really want it).
I enjoyed it very much. Did you know that there are firms in Vietnam which reach potential Vietnamese customers by putting signs up at English football grounds? Me neither.
Over at Devil’s Kitchen, the blogger uses justifiably salty prose to describe what he thinks of Nick Clegg, the leader of the Liberal Democrat Party, after Mr Clegg gave various proposals for taxing City bankers and the like, including such brilliant ideas as raising the rate of capital gains tax to 50 per cent on top earners, in line with the new, 50 per cent income tax rate due to kick in at the start of April. Clegg gave an interview to the daily freesheet, CityAm.
Clegg, let us not forget, could be in a position to be an important power-broker if the outcome of the next UK general election produces a hung parliament in which no one single party has an overall majority. Given that both the Tories and of course Labour have shown no reluctance to pander shamelessly to anti-banker, anti-capitalist sentiment, it is likely that if any of these parties gets into bed with the LibDems (a truly gruesome thought, Ed), that such “bash-the rich” crapola will get worse. So we can expect the exodus of wealthy people from this country to continue if this sort of zero-sum economics nonsense holds sway.
Under trade descriptions legislation, the LibDems’ own brandname would be declared as false advertising. Liberal they are certainly not.
Eric Raymond has a thoughtful and compassionate article at his blog about two people he knows who are down on their luck in the US economy. They are not uneducated bums, or lacking in motivation. But they are examples, he says, of how the rising costs of hiring and firing people has, when coupled to other factors, meant that many people will not enjoy the benefits of any subsequent economic recovery. Money quote:
“I now think the increasingly jobless recoveries from the last couple of downturns were leading indicators. The end of the post-New-Deal fantasy that we could increase the friction costs of capitalism without limit, regulating and redistributing our way to prosperity, is hurtling towards us like a dark sun. A and B are two of the luckless bastards who are spiraling down its gravity well. Multiply them by ten million to see what it’s like when the contradictions of socialism on the installment plan come home to roost.”
I tend to associate labour market rigidities with Western Europe – where high levels of unemployment have persisted alongside relatively high GDP growth (that’s assuming you believe government GDP figures, Ed). It is tragic that the same process is at work in the US, at least if Mr Raymond’s article is indicative of a broader trend.
“Here the most fundamental relevant principle is the one discovered by Bastiat: economic value lies in service; an economic exchange is an exchange of services, each valued more highly by its beneficiary than the alternative situation in which the service is not performed. We are accustomed to talking about “goods and services”, of course. But the distinction, while perfectly all right in its place, does not reflect anything fundamental – rather, it obscures what is fundamental. When A buys some object, x, from B, what he gets from B is the right to use x. That is what it is to “have” x, in normative terms.”
Jan Narveson. His essay – which touches on an old bugbear of mine (!) – nicely slices through the fallacies that people engage in when they disparage services as opposed to manufacturing or other, more supposedly “real” kinds of wealth, as happened on the thread in this article.
There is an interesting debate going on at the Econlog blog about whether there is anything like a “meritocracy” in the market. (My short answer: it is a mixture of luck and merit, but I am not sure about the ratio between the two). Rather than me weigh in, I just wanted to point to what I consider to be Bryan Caplan’s insightful comments. I also liked the comments in the associated thread by a character with the name tag of “MernaMoose”.
It may not always be the case that the hardest working folk make the biggest bucks, but it generally operates that if people think it does, then the system as a whole generates a bigger pie in which many of those who have worked hard to maximise their talents do well. After all, fatalism (“why should I bother since it is all down to chance?”) tends to correlate, from what I can see, with a less prosperous society in general. Unfortunately, there will always be the hard cases where the supposedly worthless celebrity earns gazillions while the hard-grafting nurse gets paid a lot less. (Although in my experience, some of these celebs have worked incredibly hard to get where they are). But in a society based on voluntary exchange and where no central authority gets the potentially horrendous power to decide who has made the most use of their talents (assuming such talents can be known in advance), that situation is inevitable. Being philosophical about such things, such as watching a trust-fund brat sailing through life while someone else has to slog away for a relatively small income, is hard, I know.
I have started reading the book, Crashproof 2.0 by Peter Schiff, and I thought I would register some early impressions.
He is a guy who was once mocked for daring to suggest, only a few years ago, that the buildup of debt in the US and parts of the West, and its reliance on what amounts to “vendor financing” from Asia, was bound to end in tears. It did. “Vendor financing”, by the way, relates to the practice of a firm that offers temporary loans to the consumers of its own products. This, more or less, says Mr Schiff, is what happened in the past decade or so: Western consumers bought cheap products from China; Western manufacturers went bust or offshored production to Asia; China used the foreign earnings from its exports to buy up Western debt, enabling even more Western consumer spending, fuelling even more Chinese exports……until the whole process when up in smoke. (This process was aided by an artificially weak Chinese exchange rate, not to mention the recklessly loose monetary policy of the Fed.) So far, so good: Schiff makes a lot of sense in debunking all of this.
But then there is a rather rum argument. Schiff says that somehow, this process was bad because as a result of the low-cost production from China and other parts of the world, US manufacturing jobs were replaced by allegedly lower-paying, crappier service sector jobs. (It is simply assumed that non-manufacturing jobs are worse than manufacturing ones). This sounds a bit like the sort of attack on globalisation I have heard made by such economic illiterates such as Lou Dobbs of CNN. I was a bit surprised that an Austrian-leaning writer such as Schiff should be making it. If the service sector can generate wealth for those who work in it, what is the problem? If, in a proper free market without the distortions of fiat money etc, certain manufacturing jobs were to be done by low-cost nations and other jobs by us, how is this a cause for Apocalyptic treatises?
Another query I have is this: if the Chinese/whoever are earning real income by selling us stuff, and then use that real income to lend us money that is used to fund investment in things that will create wealth in the future, again, how is this a problem? Sure, if that Chinese money is simply fuelling consumer spending and encouraging feckless spending and low savings – which is what did actually happen, I can see the issue. But lending money for productive purposes is hardly an evil. In the 19th Century, for example, the UK, with its wealth generated in the Industrial Revolution, was a net investor into countries such as the US, Canada and Argentina. I guess the trick is to make sure that the money lent for productive purposes is money derived from genuine savings, not funny money.
Maybe Mr Schiff will answer these points later in the book.
Football: is the bubble about to fade and die?, asks Jim Thomas. No Jim Thomas, it is not. It may be about to burst. But bubbles don’t fade. Further figures of speech surge forward. “Damp squib”, “Macbeth levels of scheming”, “weathering the storm”, “walking towards the precipice”, “belt tightening”. Mix and mismatch at will.
Aside from this linguistic oddity, this short piece is quite interesting, listing some of the financial grief now afflicting various English soccer clubs. Thomas singles out Arsenal and Aston Villa for praise. Apparently, they have not been spending loads of money recently, hence their ability to weather the storm, avoid the precipice, etc.
Are you bored with Climategate? And bored with me writing about it, again and again? Yesterday, fellow Samizdatista Michael Jennings told me he is. I understand the feeling, and would be interested to hear if any of our commentariat shares it, but as for me, I can’t leave this thing alone. I mean, this is now the biggest single battle between the forces of light and the forces of darkness, and the forces of darkness are now in definite, headlong, ignominious retreat. I for one do not feel inclined to stop shouting about that any time soon.
However, I do agree that things are now moving on, and that is what this posting is about.
I will start by saying that AGW, as an acronym, is incomplete. We should really have been talking, throughout the Climategate campaign, not about “AGW” only, but about ICAGW. As in: Immediate and Catastrophic Anthropogenic Global Warming. And a good way to describe the current state of the debate is that we are now witnessing the removal of the I from that acronym. → Continue reading: Climategate and the retreat from Immediate
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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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