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.
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“It’s a sincere question: What have been the truly innovative, groundbreaking or even unconventional big public policy ideas to come out of this administration? Are there any? Because from where I sit, it simply looks like Obama takes existing, conventional, liberal ideas – some of them very, very old – off the liberal pantry shelf and hawks them like it’s new inventory. Where’s the evidence that Obama’s “mastery” over public policy has translated itself into creative approaches? Not in the stimulus from what I can tell. Maybe there’s something impressive to tout in ObamaCare, but Obama didn’t actually have much to do with the crafting of ObamaCare – a fact Wilson acknowledges. Was his genius to be found in shovelling cash into Solyndra and other embarrassing white elephants? Was he the guiding intellect behind a green jobs program that has produced dozens of jobs in places where it was supposed to create thousands?
And if he’s such a genius about public policy, why did it take him so long to discover that there’s no such thing as “shovel ready jobs”? You don’t have to be a Jedi Master of public policy to have known that.”
– Jonah Goldberg, over at the National Review’s Corner blog. I think the same question might be put to pretty much any of the major political figures of our time.
Do you think that the people occupying Wall Street are all idiots, parasitical permanent students, studying nothing of value, and demanding everything in exchange for that nothing? See also the previous posting, and its reference to “the zombie youth of the Big Sloth movement”.
Maybe most of the occupiers are like that, but this guy seems to have grabbed the chance to say something much more sensible. Fractional reserve banking (evils of). Gold standard (superiority of). Bale-outs (wickedness of). Watch and enjoy.
What a laugh (in addition to being profoundly good) it would be if the biggest winners from these stupid demos were Ron Paul, and the Austrian Theory of Money and Banking.
“Why did Steve Jobs do so much of his innovating in computers? Well, obviously, because that’s what got his juices going. But it’s also the case that, because it was a virtually non-existent industry until he came along, it’s about the one area of American life that hasn’t been regulated into sclerosis by the statist behemoth. So Apple and other companies were free to be as corporate as they wanted, and we’re the better off for it. The stunted, inarticulate spawn of America’s educrat monopoly want a world of fewer corporations and lots more government. If their “demands” for a $20 minimum wage and a trillion dollars of spending in “ecological restoration” and all the rest are ever met, there will be a massive expansion of state monopoly power. Would you like to get your iPhone from the DMV? That’s your “American Autumn”: an America that constrains the next Steve Jobs but bigs up Van Jones. Underneath the familiar props of radical chic that hasn’t been either radical or chic in half a century, the zombie youth of the Big Sloth movement are a paradox too ludicrous even for the malign alumni of a desultory half-decade of Complacency Studies: They’re anarchists for Big Government. Do it for the children, the Democrats like to say. They’re the children we did it for, and, if this is the best they can do, they’re done for.”
– Mark Steyn
On the subject of Steve Jobs, here is – to my pleasant surprise – an excellent and insightful piece by BBC correspondent Justin Webb. Good for him.
I submitted a comment to this blog, “From Poverty To Power”, by Duncan Green, who is involved with the Oxfam International website. Oxfam International, I should point out, is a highly political non-government organisation that promotes what seems to be a distinctly anti-trade, anti-capitalist agenda. He supports the idea of a tax on global financial transactions, that has sometimes been dubbed a “Robin Hood tax” (rob the rich and give to the poor, geddit?). Samizdata readers will know the blogger, Tim Worstall, well, who leaves a typically well-argued comment on the piece I link to. I decided to have a pop myself. I have no idea if my comment made it on (I used a different ID). Here it is:
“I love the way that some here dismiss Tim. For those who don’t know, he is an entrepreneur and I suspect, knows more about economics and business than most of the folk on this board. His point seems to be unanswerable: taxes are a cost. Indeed, that is often their point.”
“For instance, we tax alcohol and tobacco, for example, to drive down consumption for health reasons. Policymakers support imposing tax “costs” on certain items of consumption to reduce turnover. Sometimes, it is argued by people that property should be taxed more to discourage speculation in property, etc.”
“So it seems fairly clear that taxing financial transactions will mean there will be fewer transactions overall, and that the volume will decline. This will, as Tim Worstall states, reduce liquidity, widen the bid-offer spreads in financial markets for things such as currencies, bonds, equities, commodities and so on. It will therefore be more expensive for people to obtain mortgages, buy currencies when on holiday, and so on. Of course, the tax will affect groups differently – that is another issue. But there will be considerable knock-on effects.”
“Alan Doran: It is no doubt true that some funds will migrate to “rogue” tax havens where FTT does not hold sway. Well, a less negative way of putting it is that people do business where it is cheaper to do so, ie, where there are lower taxes. That is what is meant by economic freedom.”
“An example of this is when, in the very late 60s, a change to the US tax treatment of bonds encouraged the development of an offshore eurodollar market in London. Capital migrates. If people want to stop or cut financial transactions and prevent trade, they should be more honest about it.”
The idea of a financial transaction tax, or “Tobin Tax” (named after the economist, James Tobin) has been knocking around for some time. The Economist had a good item on it back in 2001.
Separately, Oxfam’s socialist tilt has been noted for a long time.
Yes, on Tuesday 11th, at around teatime, at the House of Commons, Steve Baker MP, Tim Evans and Detlev Schlichter (the links because both of the gents in the bold and blue lettering have had recent (favourable) mentions here) will be asking: Is the global economy heading for monetary breakdown?
I’m guessing the answer is going to be: yes. Although, I’m already imagining a comedy sketch where the first two say, actually, we’ve changed our minds, the answer is no. The world’s currencies are all absolutely in the pink. Quantitative Easing is working a treat. We can all relax. And Speaker number three finds himself forced to agree with the first two. “Guys, you’re right. My book is rubbish.” If only.
Please spread the word about this event, not just so that people in the London area who are able to attend it may be persuaded to do that, but so that people all over the world may learn that ideas of monetary sanity are being argued for inside the House of Commons.
Rudy Guede gets 30 years for the murder of Meredith Kercher.
On appeal he incriminates Amanda Knox and Raffaele Sollecito, in contradiction of his own first testimony. This claim buys him a reduction of 14 years in his sentence.
Knox gets 26 years, Sollecito 25, on the basis of Guede’s evidence – and bungled police forensics.
After Knox and Sollecito have lost four years of their lives, the courts admit there was never any significant evidence against them and acquit them.
In Seattle a crowd cheers. In Perugia a crowd howls.
The British redtops are beside themselves. All gibber that Meredith Kercher has been “forgotten”. One puts a headline over Knox’s picture: “Meredith Who?”; as if these words come from her. One shows a photo of Knox, elated at getting her life back, and describes her as “grinning from ear to ear” – which, as we know, is something bad people do when they’re gloating over some undeserved gain.
Amanda Knox is home in Seattle. She has to live with the lingering ghost of a possibility that the Italians may yet demand that she go back. But at least she doesn’t have to worry about a European Arrest Warrant.
What an insane, vicious farce.
“The boost to growth from more monetary easing and more deficit spending – naturally always transitory and the source of further misallocation of resources – will be ever more faint and short-lived. Instead of igniting a new false boom, a progressively larger share of the policy stimulus will simply evaporate in the service of maintaining the accumulated misallocations, of avoiding a correction of artificially raised asset prices and of bloated balance sheets. As the manufactured recoveries get weaker, fiscal deficits get larger as a result of the combination of ongoing welfare state outlays and futile Keynesian stimulus spending.”
(204-205)
“Given the theoretical analysis in this book and the consistently devastating historical record of state paper money, it is remarkable that those who advocate commodity money today are either marginalised as slightly eccentric or made to extensively explain their strange and atavistic-sounding proposals while the public readily accepts a system of book entry money in which the state can create money without limit. The global financial crisis that commenced in 2007 is a case in point. The crisis constitutes a thorough and illustrative indictment of the alliance of state and financial industry, of a system of expanding state paper money and government-supported fractional reserve banking. Yet, the political class and the media managed to put the blame on capitalism and on greedy bankers.”
Paper Money Collapse, page 243, by Detlev Schlichter. I single out these quotes for touching on two key issues: the declining effectiveness of Keynesian stimulus spending – assuming it was ever valid in the first place – and the fact that the public, aided by the political classes, have, with some exceptions, managed to completely misunderstand our present crisis.
This book is not comforting reading, nor is it always easy to read. You have to concentrate. But it is a “must-read”. For me, one of the most valuable insights of this book is how it explains how the general price level in an economy can appear to be stable but that injections of fiat money into the system can derange relative prices for consumption, intermediate and production goods. This point is vital. It explains why those central banks, such as the Bank of England, got dangerously complacent in the 90s and noughties when the inflation targets they had been set appeared to behave. But all the while, the surges in money supply growth created a bloated financial sector and property market bubble.
He also rebuts the argument, sometimes used by opponents of commodity, or “inelastic” money, that a growing economy needs a growing supply of money to ensure stability. Untrue. At most, an expanding economy, with growing innovation, division of labour and productivity growth, should see a mild deflation over time (which is good for people who want to save by holding cash). But as Schlichter explains, there is no reason in logic or evidence why a mild price deflation should hamper economic progress once people get used to the idea that their money will buy a rising stock of goods and services through time. He uses the analogy of computers. In recent times, the hourly wages needed to buy, say, a mobile phone have slumped. Has that stopped people from going out and buying these devices? Of course not.
Schlichter’s explanation of how fractional supply banking works is crystal clear and, in my view, he explains it slightly better than say, Murray Rothbard did in his The Mystery of Banking, although the latter book is still well worth reading. And Schlichter’s style is more sober and less brash in its tone than the approach adopted by Thomas E Woods in his book about the crash, although Woods’ explanation of Austrian business cycle theory is pretty good.
All these books are useful for driving home key points about how we have arrived in our current pass. Schlichter, precisely because he used to work in the investment management business for so long, speaks not as an ivory tower academic, but as someone who has been on the practical side of finance. He knows that much of what appears to be “free market banking” is anything but; in fact, as he describes it, much of what now goes on in Wall Street, the City or wherever is a hybrid of market and state planning. In its way, it is profoundly corrupt. Schlichter also mentions how such a large chunk of the economics profession is locked into the philosophy that drives the current system – without it, many of these people would have to do something else for a living.
Perhaps the scariest part of his book is when Schlichter points out that the derangement of the capital system in the West is worse than in the late 1970s, when the-then Fed chairman, Paul Volcker, pushed up interest rates to record highs to purge some of the malinvestment and rottenness from the system. The cigar-chomping Volcker was a brave man, and he had the support of the-then presidents Carter and Reagan (Carter sometimes needs more credit than he gets). I cannot see any such central banker now receiving such support for this sort of thing. Instead, we’ve got ourselves “Helicopter Ben”.
Paper Money Collapse is one of the best books to come out of the financial crisis, maybe the best so far.
“Nobody ever asked why Steve Jobs kept working after he was rich. Everyone understood.”
– Virginia Postrel, writing about the computer entrepreneur and business visionary, who died yesterday.
Every so often a big news story develops, or at any rate a story that a lot of people are saying is a big story, and I miss the bus, so to speak. At first I ignore it, in this case because it seemed a small, local American matter of no great interest to me, and then, when I keep on being told, by people whom I respect, how significant the story is, the stories I do read don’t make much sense to me, and often hardly any. Having failed to grasp the fundamentals of the matter at a time when that was what everyone who cared was talking about, I never from then on got told about them. In more recent reports, the fundamentals of the story are assumed, rather than spelt out again and again. Consequently, as far as this story is concerned, I lack any sense of the big picture, and each further burst of paintwork that someone adds to the big picture only adds to my confusion.
So it has been with “Gunwalker” (aka “Fast and Furious” which I assume is the name given to the operation in question by those responsible for setting it in motion), which is a story about American government officials selling guns to bad Mexicans, and other Mexicans (Good ones? Other bad ones?) being killed with these guns. I think. Instapundit seems to have linked to stories about this story on an almost daily basis, ever since it became a story, most recently here and here.
Rather than meander on at greater length about what (this being my entire point here) I do not understand, let me state my request simply. Could our ever industrious and informative commentariat take it in turns to try to explain this story to me, and why it matters, as if explaining it to someone who knows nothing about it. Because that, pretty much, is what I am.
I am particularly interested in what the possible motivations of the accused government officials might have been. What nefarious, illegally money-making motives might they have had? But also: What honourable but undiscussable motives might they have had? What greater good might they have been pursuing with the apparent evil that they seem to have been presiding over?
Instapundit is fond of comparing Gunwalker with Watergate, on account of nobody having been killed by Watergate, but on account of it having mortally wounded the Presidency concerned. He presents Gunwalker as a story involving, among other things, blatant mainstream media bias.
But I am also reminded a little bit of that Arms For The Nicaraguan Contras thing that Reagan got accused of. That never bothered me too much, because however illegally Reagan may have acted in obtaining the arms in question, arms for the Contras sounded good to me, given the people that the Contras were said to be fighting against, and who was supporting the people that the Contras were said to be fighting against. And it never bothered Reagan too much because Reagan was not only a genius in general but also a genius in particular at appearing to be the opposite of a genius, with no clue as to what his underlings got up to and therefore who couldn’t be blamed for anything they did that was considered bad.
But, although apparently a fairly typical affair of state, this Contragate (?) matter was used by the then left-dominated media to badmouth Reagan. Could this be what the right-leaning alternative media are doing now with this Gunwalker thing? Using it as a stick to beat Obama with, when actually there are quite good reasons for what has been going on? Or are there extremely good reasons to bang on about this thing? These are not statements disguised as questions, they are actual questions. I do not know. But, I now find that I would like to.
Peter Thiel, the founding CEO of PayPal, has an essay up that makes the contention that the pace of technological innovation in the West, for various reasons, has slowed. He argues that this paradoxically may explain why, in the absence of serious tech change, investors are instead drawn to the dangerous finangling of asset markets such as property, and have fallen prey to the easy charms of high leverage. It is quite an interesting idea.
Here is an interesting couple of paragraphs:
“The most common name for a misplaced emphasis on macroeconomic policy is “Keynesianism.” Despite his brilliance, John Maynard Keynes was always a bit of a fraud, and there is always a bit of clever trickery in massive fiscal stimulus and the related printing of paper money. But we must acknowledge that this fraud strangely seemed to work for many decades. (The great scientific and technological tailwind of the 20th century powered many economically delusional ideas.) Even during the Great Depression of the 1930s, innovation expanded new and emerging fields as divergent as radio, movies, aeronautics, household appliances, polymer chemistry, and secondary oil recovery. In spite of their many mistakes, the New Dealers pushed technological innovation very hard.”
“The New Deal deficits, however misguided, were easily repaid by the growth of subsequent decades. During the Great Recession of the 2010s, by contrast, our policy leaders narrowly debate fiscal and monetary questions with much greater erudition, but have adopted a cargo-cult mentality with respect to the question of future innovation. As the years pass and the cargo fails to arrive, we eventually may doubt whether it will ever return. The age of monetary bubbles naturally ends in real austerity.”
It does rather go against the ideas of Matt Ridley about whom Brian Micklethwait writes below on this blog. Ridley’s take on the pace of events is far more optimistic: he does not, for instance, share the gloomy outlook on food production that Thiel makes.
This rather gloomy “are the easy economic gains gone for good?” theme was also made recently in the Tyler Cowen book, called The Great Stagnation. Here is a somewhat critical review by Brink Lindsey.
Dale Halling, an entrepreneur and scourge of things such as the Sarbanes-Oxley Act and anti-patent campaigners, has his own take on why the pace of innovation in the US may have slowed.
I can see why a certain gloom might set in. Many of the innovations we see today, especially in things such as consumer electronics and mobile phones, don’t have the majestic appeal of a space rocket, tall building or breakthrough in medicine. But these things are continuing: materials science, for example, which is an area that is not very “sexy” (to use one of my least favourite epithets) is full of innovation. And there are the developments in biotech and nanotechnology, to take other cases. And let’s not forget that even in the midst of the Industrial Revolution, some people claimed that all that could be invented had been.
And here is another example of the sort of concern that gets aired about where all the big inventions have gone, taken from The Money Illusion blog:
“My grandmother died at age 79 on the very week they landed on the moon. I believe that when she was young she lived in a small town or farm in Wisconsin. There was probably no indoor plumbing, car, home appliances, TV, radio, electric lights, telephone, etc. Her life saw more change than any other generation in world history, before or since. I’m already almost 55, and by comparison have seen only trivial changes during my life. That’s not to say I haven’t seen significant changes, but relative to my grandma, my life has been fairly static. Even when I was a small boy we had a car, indoor plumbing, appliances, telephone, TV, modern medicine, and occasional trips in airplanes.”
The worry is, of course, that in a world of low innovation and weak genuine economic growth, political fighting over the economic pie becomes nastier, and certain groups find life becomes very uncomfortable. Not a happy thought.
The principal argument I used to put which the pro Euro Labour, Liberal Democrat, CBI and TUC forces found difficult to counter was the simple proposition that joining the Euro was like taking out a joint bank account with the neighbours. You were likely to ruin a good friendship with them, when you fell to arguing over the size and use of the overdraft. This unfortunately sums up the Euro crisis. Greece, Spain, Italy and Portugal want to use the common overdraft or borrowing ability to excess. The Germans do not want to help pay the interest and sustain the joint credit rating, but they are being drawn more and more into doing just that.
– John Redwood.
I like the joint bank account analogy.
As the scientific forester may dream of a perfectly legible forest planted with same-aged, same-species, uniform trees growing in straight lines in a rectangular flat space cleared of all underbrush and poachers, so the exacting state official may aspire to a perfectly legible population with registered, unique names and addresses keyed to grid settlements; who pursue single, identifiable occupations; and all of whose transactions are documented according to the designated formula and in official language. This caricature of society as a military parade-ground is overdrawn, but the grain of truth that it embodies may help us understand the grandiose plans [for a planned society] we will examine later. The aspiration to such uniformity and order alerts us to the fact that modern statecraft is largely a project of internal colonization, often glossed, as it is in imperial rhetoric, as a “civilizing mission.” The builders of the modern nation-state do not merely describe, observe, and map; they strive to shape a people and a landscape that will fit their technique of observation.
[…]
The more static, standardized, and uniform a population or social space is, the more legible it is, and the more amenable it is to the techniques of state officials. I am suggesting that many state activities aim at transforming the population space and nature under their jurisdiction into the closed systems that offer no surprises and that can best be observed and controlled.
– James C Scott, ‘Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed‘ (1998)
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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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