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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Tory MP Douglas Carswell, who is one of the relatively few good guys in that party, in my view, has this blog post about a recent proposal on how to make the banking system more robust, as made by the “Austrian”-leaning organisation, the Cobden Centre. I am not entirely sure about the use of the word “democratise” here in relation to banking; however, I guess this is how Mr Carswell is trying to popularise the basic idea of making banking more solid.
Truth be told, if your average citizen really reflected on what a controlled fiction fractional reserve banking really is, his or her hair would turn white in seconds.
Thanks to my old Libertarian Alliance mate, Tim Evans, for the pointer.
Toyota is recalling thousands of motor vehicles around the world to deal with certain problems, such as possible brake failures. The story was the lead item on the BBC TV news today, not surprisingly, given the large number of people who now drive Toyota cars. On one level, this issue is being billed as a terrible embarrassment for the Japanese company, but to an extent I find the comprehensive recall of the cars to be a pretty good example, in fact, of how private businesses with a huge brand-name investment have to act when their products have a problem. Can you imagine, say, a government department doing such a massive “recall” of a failed policy? With private business, the penalties for failure are bankruptcy. For government, the consequence of a mess is often more of the same, only with more lumps of taxpayers’ money. To put it more technically, there is little in the way of a negative feedback loop when governments are involved.
As an aside, and yes, I know this may seem a bit mean-spirited, but I cannot help reflect that the problems of the Prius cars add to what has been a terrible time for the Green/AGW alarmists. The Prius is very much the car that guilt-ridden, Greenie types like to drive. As the snows continue to fall, who wants to drive one of those machines right now? And in any event, they are just pig-ugly. Time to fire up the Aston Martin, Carruthers.
Every now and again I have one of those “It’s amazing what you can buy nowadays” moments, when I am confronted with some aspect of the modern world that is working really well. As parts of it most definitely are, even as other aspects of human civilisation remain shambolic or worse. So it was yesterday, when I saw and snapped this, through a rather grubby and blurry shop window, just across from the ticket barriers at Piccadilly tube station:
 I know. 32 gigabyte SD cards have been around for months, and for many were no big deal in the first place. I actually seem to recall seeing a 64gb SD card yesterday also, somewhere in Tottenham Court Road, but for some reason this didn’t amaze me so much, probably because the price was so huge that I wasn’t so gobsmacked by it. It was the fact that the above 32gb SD card wasn’t just in existence, somewhere foreign and only reachable via the internet, but in existence right there in a pokey little shop window like this one that hit home to me. This was a 32gb SD card, and it was no big deal. That was why, for me, it is such a big deal. For me, all this is amazing. I can remember having a hard disc in my PC that was only 30 megabytes. → Continue reading: A 32gb SD card!
Tom G. Palmer, a writer I greatly admire, nicely calls out some rather boorish behaviour by the leftist writer, Jonathan Chait. I am a bit surprised: I always figured that Chait was one of the more reasonable leftists, so it seems a bit disappointing that he is a sneering jackass.
Mr Chait’s powers of reasoning are in any event, somewhat over-rated. I fisked something by him in relation to the Great Depression some time ago.
Given that we think, as most of us seem to do, that the production of such goods as cars, vacuum cleaners, and frozen vegetables should take place in a regime of market competition, why do so many among us nevertheless agree that it makes sense to exclude the production of money from these same forces? Why must the production of money be entrusted to a monopoly called the central bank?
– My thanks to Jerzy Strzelecki for drawing my attention to this mises.org piece by him, written when the recent banking tumult was at its most tumultuous, entitled The School of Salamanca Saw This Coming. Quite brief and well worth a read. You don’t have to believe in God to understand phrases like “usurpations of God’s knowledge”.
“When one studies the history of money one cannot help wondering why people should have put up for so long with governments exercising an exclusive power over 2,000 years that was regularly used to exploit and defraud them.”
F.A. Hayek, Denationalisation of Money: The Argument Refined. Page 33. Published by the Institute of Economic Affairs and Ludwig Von Mises Institute. The book is quite challenging and complex in some of its arguments, but I find the broad thrust of it – that competition is good for currencies as it is for other aspects of economic life, to be unanswerable.
Tim Worstall takes a look at what sort of thoughts rattle around inside the head of the man likely to be Britain’s next finance minster, George Osborne. He does not like what he sees, and in the process, makes this vital point:
“What in buggery are “intrinsic values”? If we’re all the way back to Thomas Aquinas and “true value” then we’re about to march off a very steep cliff. For there isn’t and aren’t any such things. The value of something depends upon the value of everything else: we cannot say that 1 kg of gold is worth $12,000, or x tonnes of wheat, or y tonnes of fresh water or z numbers of smiling babies, without having some idea of the relative values of fresh water and smiling babies. Which in turn depend upon the state of knowledge (medical knowledge tells us what our forefathers did not know, that unfresh water leads to definitely not smiling and in fact dead babies) and the state of technology (how much effort do we have to put into freshening water to get smiling babies?) and indeed where we are at any one time (less effort if we’re by a clear mountain stream, more if we’re on a boat out in the ocean). Values are thus relative, always, all the time, not intrinsic.”
Or as PJ O’Rourke once put it when taking Marxist economics (surely a contradiction in terms, Ed) apart, the problem with the left, in general, is that they cannot accept that the value of anything in a market is ultimately no more or less than what a person wants to pay for it. That makes such leftists angry. Well, that’s life.
The Nobel Prize winning economist and columnist, Paul Krugman, does his best to annoy crusty free market ideologues such as myself with his sheer, implacable wrongness. It stuns me that the craziest remark in the post I link to here is not actually made up, but something he actually wrote.
Perhaps he should do Saturday Night Live.
Well, continuing in my theme of talking about folk heading off to mountainous nations with more sensible tax laws than in the UK, I see that Sir Simon Jenkins thinks that Britain would be well rid of the thousands of financiers and other folk who are threatening to leave the UK because of high taxes. Jenkins is a rum fish: he is often quite astute in pointing out, for example, the damaging impact of regulations on certain industries and in some ways his instincts are quite liberal in the old, proper use of that word. But he also thinks that tax rates don’t really matter. To hell with ’em, he says: these bankers are just bluffing:
“There may be someone out there outraged at paying 10 per cent more in tax from an enormous income, and equally outraged at his firm being taxed on his enormous bonus. Of these a few may be so outraged as to uproot their families, desert their friends and go into exile — before they find that a £2 million London house costs £9 million in Geneva. If they can do their business entirely online, why be in London at all? But I doubt if there really are 9,000 such sad, migratory souls.”
Jenkins needs to get out more. There are indeed thousands of people who are not amused at the prospect of having their wallets so comprehensively lifted. In my travels and through work in the media and wealth management sector, I can tell Sir Simon that the exodus of folk is not a mirage. It is happening. Note the lazy assumption that because these evil bankers are paid so much, it will not make any difference if the state seizes another 10 per cent of their annual income. In fact, once changes to pension allowances, thresholds and National Insurance are taken into account, the top rate of income tax in the UK will be more than 60 per cent in marginal terms for anyone earning more than £150,000 a year. That tax bite is higher than will be the case on top earners in France, if my memory serves. Way to go, Mr Brown! But what is objectionable about Jenkins’ reasoning – if we can dignify his comment by such a word – is the idea that such folk have no right to be outraged at having almost two-thirds of their income above a certain level seized, at source. The assumption is that no-one really “needs” all that filthy lucre and should be jolly grateful that they do not have to surrender even more. The unconscious collectivism is all too evident.
The consider this classic:
“We used to get the same tax-dread from the British film industry, howling at being taxed like ordinary mortals. Yet the last time Britain made really good films, in the Sixties and Seventies, marginal income tax was 80 per cent. In 1986 the Big Bang transformed the City of London, leading to German, Swiss and American banks pouring into London. It ensured that the City, then languishing under competition from abroad, would flourish. At the time, marginal income tax was not 40 per cent or 50 per cent but 60 per cent.”
That is a silly argument. No-one is claiming that if taxes rise, that the economy collapses overnight – the damaging effect can take quite a while to have its effect. But have its effect it did. Many of the stars of 1970s films, such as Michael Caine, Peter Sellers, Sean Connery, Richard Burton, Roger Moore, did not live in the UK for part of the period that coincided with confiscatory tax rates. Sellers, for example, ended his days in Switzerland.
“It was not until two years later, in 1988, that the chancellor, Nigel Lawson, cut the tax to 40 per cent. By then Margaret Thatcher was so fearful of over-heating the economy that she pleaded with him that 50 per cent was enough. It was not Thatcher who cut the tax, as Johnson keeps saying, but Lawson. It led to inflation, boom and bust.”
Well, if Mrs Thatcher really did think that 50 per cent was “enough”, then all I can say is that I am glad Mr, now Lord, Lawson, prevailed. If the state takes a smaller chunk of a person’s income at source, that does not necessarily fuel inflation – since before the tax was cut, presumably the money being seized from such taxpayers was being spent on something else. In fact, I would add that one of Mrs Thatcher’s faults was her support for mortgage interest tax relief, which encouraged people to over-extend their borrowing on property and helped fuel the housing boom of the late 1980s (UK regulations restricting house building did not help either, but that is another story).
Finally, there is this:
Bankers can drift around the tax havens of the world while we are stuck in London but I don’t see why I should pay off their gambling debts with my taxes when they will not pay them too. If they storm off in a huff, good riddance. I don’t want such people investing my money.
Here he is confusing good arguments – no bailouts for failed bankers – with a sort of vengeful “fuck-you!” spite against bankers in general. If Sir Simon wants to make the case against “too big to fail” bailouts of bankers, argue for a genuine free market in banking rather than the statist, moral-hazard disaster we have now, and insist that the Keynesian madness now in vogue be challenged, I will be cheering him on. I suspect I might have to wait a while.
I would like my first post on Samizdata to be something of lasting utility, and a link to a fact-packed post on a new blog might be just the thing. Super-Economy (wonderfully subtitled ‘Kurdish-Swedish perspectives on the American Economy’) kicked off with a broadside against the egregious Paul Krugman. Krugman had said in his New York Times column that the US has lessons to learn from the EU because the latter’s growth has been as good – well, almost – as that of the US recently.
He demonstrated this by comparing US GDP levels with – incredible but true – three European cities: London, Paris and Frankfurt. Tino, the blogger, comes back not just with the obvious rebuttal of a comparison between a country and three of the world’s wealthiest cities but with tables comparing the US, its individual states and the countries of the EU. You can find, for example, that the UK ranks below Missouri in terms of GDP per head – but at least we are above Alabama, which beats France. In fact the UK has a GDP per head of $35,669 as compared with $45,489 for the US. The average for the EU15 is $33,452.
Tino also tabulates GDP per head of various ethnic groups in Europe and their transplanted kin in the US. The average Brit is two-thirds as productive as the average ‘British-American’. The ethnic angle is what would have interested Steve Sailer, where I saw Tino’s blog linked (Sailer is indispensable – one of the few bloggers whom I read every day).
The differences Tino lists are huge enough to overwhelm any cavilling about definitions or methods. File the tables and use them as intellectual ammunition against anyone who argues that left-leaning Europe is better at capitalism than the US is.
I was reading the Telegraph and came across this gem…
HMRC inspectors have started the crackdown in a bid to tackle tax evasion, which loses the economy around £3billion a year.
Huh? So that £3 billion that does not get paid to the state is a “loss to the economy”? How does that work exactly? Do the tax evaders burn that alleged 3 billion quid in their backyards to make sure that if they can not keep control of the money they earned, no one else will? Is that what Christopher Hope is claiming?
In what way is money not paid to the state, but instead allocated to some other economic activity chosen by the person whose money it is, a “loss to the economy”? Does Mr. Hope think taxing people’s money creates more net wealth (or indeed any net wealth) compared to money left untaxed for private wealth creation? Really?
On the front cover of the current edition of the Economist people are given a “Bubble Warning“. If one reads the article to which the front cover refers, one is informed that the massive monetary expansion (i.e. creating money from nothing) and fiscal deficits of various governments, but particularly the United States and the United Kingdom, have artificially maintained false values in assets – in everything from shares to housing and commercial property. A vast bubble economy – an unsustainable mess that these governments have no real plan to deal with.
I admit that I read Economist articles (when I read them at all) through a deep red haze of rage – but I think I would have spotted the words “we are very sorry we gave governments such bad advice all through the current crises” and I do not remember them being there. For, of course, it was the Economist itself (along with the rest of the establishment) that pushed the policies of bailout (TARP and so on) and “stimulus” that have meant that markets have not cleared, mal-investments have not really been liquidated and the bubble economy now stares us in the face.
The economic crises of 2008 was caused by the general increase in the money supply pushed (each time they “saved the world” i.e. prevented a clear out of mal-investments, year after year) by Central Banks – particularly (but certainly not exclusively) by Alan Greenspan of the Federal Reserve. The role of the Fed in general is explained in Thomas Woods’ work “Meltdown”, and the political reasons why the increase in the money supply flowed especially into the housing market are explained in Thomas Sowell’s work “Housing: Boom and Bust”.
In 2008 is was no longer possible to avoid a terrible economic slump. That chance was lost when Greenspan (and his fellow government Central Bankers) had “saved the world” by avoiding (by increasing the money supply) the painful but needed clearing of the market and liquidation of mal-investments – which they did again and again over the years, with each time they did leaving the bubble economy worse than it was before – putting off the problem (and making it worse) not solving it. → Continue reading: The hypocrisy of the ‘Bubble Warning’ in the Economist magazine
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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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