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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I like this article by Tim Cavanagh over at Reason’s Hit & Run blog:
This is the problem with the new declinism. With no compelling vision of the apocalypse that doesn’t involve zombies, cyborgs, or outlaw bikers, we tend to miss something obvious: The problem isn’t that things are collapsing. It’s that not enough things are collapsing. General Motors, AIG, and the government of California have committed enough errors to merit immediate extinction, but there they still are. Yet the political establishment continues to argue that the market needs to be prevented from delivering rough justice to sinners. President Obama, who one year ago gave us a worst-case scenario in which an unstimulated economy might hit 8 percent unemployment by this year, now presides over 10 percent unemployment but tries to bamboozle us with counterfactuals like this doozy from the 2010 State of the Union address: “If we had allowed the meltdown of the financial system, unemployment might be double what it is today.”
He’s making a good point. Much of the current mess has been caused by policymakers, such as Greenspan/Bernanke at the Fed, or our own benighted Gordon Brown, trying to “rescue” a failed system by throwing huge amounts of money into the system to prevent disaster, only to build up even greater woes in the future. Going bankrupt is never nice, but by freeing up resources and more to the point, by making people learn from their mistakes, it is a healthy process. To borrow from Karl Popper, if we don’t allow bad investment theories to be falsified by events, then the market will fall short in one of its most powerful functions, of generating valuable new information.
Incoming email from fellow Samizdatista Michael, just received:
This morning, I forgot to pack the charger for my laptop before heading for the airport. Therefore, once the battery had run down, I was faced with the real possibility of being without a computer for a week.
The horror, the horror.
Obviously, this could not stand, so I needed a charger. I had to do this is Rzeszow in Poland, or perhaps in Lviv in the Ukraine tomorrow. (Lviv is a bigger city, but Ukraine is a more backward country). After trying a few local stores, and a branch of Media Markt (the German equivalent of Curry’s), I eventually found a universal laptop charger. I found it in a branch of an obscure, East European chain named “Tesco”. The price was very reasonable, too.
“Markt”? Is that proper spelling, or just email spelling?
I have no idea whatsoever why so many people in places like London find the spread of Tesco – really a wonderful company – to be such a bad thing.
Well, here are some ideas. They are snobs who only want good stuff to be available to richer people such as themselves? They are anti-capitalist scum who hate humans and want humans to die out, but only after they have died first? They oppose international free trade in food (or in anything) and blame Tesco for it? They used to run inefficient food shops that sold stale and overpriced food, until Tesco drove them out of business?
I’m sure commenters can suggest further motivations for Tescophobia.
Allister Heath, over at CityAM, the free daily newspaper with a strong financial twist, seems at times to be about the only journalist in London making a robust case for free market capitalism, limited government and low taxes. Given how such a message is almost deemed off limits these days in the Conservative Party, and even City types seem shy about doing so, Allister’s editorials are a rare blast of good sense. He’s on good form today with this:
“Economics is not always intuitive – and that is what makes it such a fascinating and important discipline. Take what economists call “incidence” – the study of who actually bears the burden of a particular tax. It is obvious enough that employees pay income tax. But it is much harder to actually work out who really ends up paying for other taxes; voters are often fooled into thinking that somebody else, usually big business, is being hit by higher taxes while in fact it is them who are picking up the tab, albeit in a way that is impossible to detect.”
Exactly. With a lot of economic arguments, such as law of comparative advantage, the insight is not immediately obvious. That is why, for example, protectionist politicians can win votes by claiming that those evil foreigners are “taking our jobs” – it takes a bit of understanding to see the fallacy in this. And the tax incidence issue that is highlighted here is a good one. There is not just a tax incidence effect where a tax on a sector, such as banks, hits everyone. There is also regulatory incidence too. I don’t know exact numbers, but all the various health, safety, equality, and other rules that are imposed on firms add greatly to the total cost of buying a product. Consider how much of the regulatory burden, for example, translates into the actual price you pay for a car, fridge, or even step-ladder.
So the Tories, in their bid for power, want to impose a tax on banks, and imagine that most voters will cheer and say, “good on yer iDave, give the banks a hard time!” and then fail to join the dots when they wonder why the interest on their accounts is so poor, or why it seems a bit harder to get a loan these days or why buying foreign exchange appears to be a rip-off.
Recently I’ve been suffering from shingles, hence my silence here in recent weeks. Shingles has been no fun, but it would have been even less fun had it not been for Indian Premier League cricket on the television to take my mind off my discomforts. For the last forty and more days, there’s been at least one twenty-overs-each-way slogfest every day, and often, as yesterday, two. The last Brian Micklethwait posting here, written originally for here but then featured here (which cheered me up a bit just when I most needed that – thank you JP), was about the IPL, and about one of the things I most like about the IPL, namely the fact that it involves lots of Indians getting rich and being happy.
I know what people mean when they claim that IPL-type cricket – slam bang, slog slog, all over in three and a half hours – is very unsubtle compared to proper day-after-day first class and test match cricket. I know what they mean when they say it’s not real cricket. But for me it’s real enough, and I like it, just as I like pop music and classical music. I also like very much that ITV4’s IPL coverage is free. I have never subscribed to Sky Sports, because that would mean wasting forty quid a month on a very few sporting events that I care about (mostly test match cricket in my case), and then, even worse, being tempted to waste the rest of my life watching a lot of other sporting nonsense, just so as not to waste all that money. If only I could spend a tenner a month and get all the best cricket, but nothing else.
But there is still a price to be paid for IPL watching, in the form of adverts between overs, advertising logos all over the players’ shirts, and constant commercial self-interruptions by the numerous, obviously very well paid and hence thoroughly compliant commentators. Nothing exciting ever happens in IPL without it being described as a “City moment of success”, whoever or whatever “City” (“Citi”?) might be. All catches are described as being “carbon” Kemaal (sp?). Actually it’s Karbonn – a mobile phone enterprise, I think. And there is a big blimp that hovers above the grounds with “MRF” on it, which is something to do with a fast bowling scheme paid for by a rubber company, that the commentators talk about incessantly for no reason except that they have been commanded to. But I don’t care. For me this is all part of the Indians making money angle. And if all the Karbonn City Moment of Success DLF Maximum (a six) Maxx Mobile Time Out (a bigger than usual advertising break) crap gets too annoying, then I wait an hour or two and instead watch my recording of it all, fast forwarding through all the commerce. Which is also a way to waste less of my life. This didn’t matter when I was ill. Wasting my life watching cricket games all day long was all I was capable of, other than sleeping and being depressed. But now, as I improve, that’s an important consideration. → Continue reading: IPL and the changing culture of cricket
One of the interesting exhibits in the pantheon of attempted explanations for the current financial crisis is the Kingdom of Spain. Spain had a massive real estate driven asset bubble, which has since collapsed. There is high unemployment, horrible public sector budget deficits, and lots of abandoned, half built housing projects around the coast. (In January, I struck up a conversation with some Australian engineers at the next table in a restaurant at lunchtime in the business district of Hanoi. Upon asking them how business was, they told me that there are lots of construction projects going on, but they were being undercut on price by Spanish and Italian companies. When domestic demand collapses, you look elsewhere).
And yet, Spain has not had a financial crisis. Spain’s banks are generally solvent and in good shape. One explanation of this is that financial crises in other economies are more a symptom of the economic crisis rather than its cause. Asset bubbles end badly. Government overspending has consequences.
One of Spain’s banks, Grupo Santander, has been expanding steadily throughout the world for a little over a decade. Unlike certain other banks of an expansionary nature (Royal Bank of Scotland, cough), Santander did not combine the acquisition of foreign banks with stupid lending, and so when the global banking sector fell in a heap a couple of years ago, Santander did what sound companies often do, and went looking for cheap assets. These included the small UK bank Alliance and Leicester, and the branch network and savings business of Bradford and Bingley (after its toxic assets had been nationalised by the UK government). Santander was an attractive buyer from the perspective of the UK government, as its expansionary frame of mind meant that it was unlikely to close branches and shed lots of employees.
My general inclination here is to compliment the management on running a good business. However, there is something disturbing, just the same. I have felt this for a while. Spanish financial institutions (and in truth Spanish organisations of all kinds) have a thing for building office complexes in the suburbs of Madrid that look like something out of a James Bond movie. It would be mean to say something about lingering residues of fascism here, so I will not do this.
However, the new headquarters (er, sorry, I mean the Ciudad Grupo Santander) shown in the above video really does appear to be a doosey. Professor Parkinson would no doubt have something to say here, but I feel oddly positive. However much I sometimes think that people who make corporate videos of this kind are best when placed on the B-Ark, being driven around by bright red Spanish banko-robots is certainly going to make marketing visits to foreign financial institutions a lot more fun. (Do they bring in Lewis Hamilton to race them on AGM day? Jokes about “augmented reality” in banking could go on and on, too).
It’s a shame that they have to build this sort of thing in Madrid, though. Building it (perhaps on an artificial island?) next to the private zoo in King Alfonso XIII’s weird coastal folly in the actual Ciudad (non-Grupo) Santander would be fitting, in some unexplainable way.
Link via Bruce Sterling.
This headline caught my eye:
Alan Greenspan to Testify on Subprime Lending, Securitization, and GSEs, Wednesday, April 7
Shame he was not grilled a bit more about the Fed’s free-money policy that fuelled much of the credit crisis back in the days leading up to the housing bubble. Goodness knows what his old mentor would have made of this charade.
One of the tedious features of that TV phenomenon, the celeb chef, is how so many of them go on and on about the wonderfulness of buying local ingredients, implying that those evil, globalised behemoths – supermarkets – grind the faces of farmers, sell insipid products to the masses, etc. Like the US blogger Timothy Sandefur, I tend to take a dim view of those who turn up their noses as the many benefits of trade and the division of labour. And Mr S. has spotted this rather grimly satisfying story.
As I have said before, people who refer to such things as “food security” or the supposed joys of self sufficiency can sometimes overlook the fact that Man’s best insurance policy against shortages is a global division of labour when it comes to producing food.
“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.
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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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