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If you want to make money, work directly with money. – Bernie Cornfeld’s explanation of Jonathan’s puzzle. Financial markets seek meaning, and discount luck. Financiers are therefore in a strong position to get rent from their luck as well as their brains. And a lot of other people’s money passes through their hands, so they do not have to worry about cashflow much. December 17th, 2006 | One comment - (Comments are closed)
 There is an article in the ‘Independent‘ regarding the report stating that the case made by HMG for attacking Iraq and deposing the Ba’athist regime was a big fat pack of lies. And, if your primary justification for supporting bringing down Saddam Hussain was the threat of WMDs, then this is probably alarming new (and that was indeed the core of the UK and US government’s case). If however your reason for supporting the ouster of Saddam Hussain was not the same as Tony Blair or George Bush… who cares? Sure, I bought the logic of Saddam having a WMD programme as his behaviour seems to suggest it, but that was always just one of many reasons to want him gone. Those of us on record as taking a rather different line regarding the main reason to go in (i.e. he is a mass murdering tyrant and deposing him will not start WWIII) are unlikely to lose much sleep over these revelations. The article says the government lied. Well I’ll be, the government lying? Who’d a thunked it? No, if you supported getting rid of Saddam Hussain because you see deposing tyrants with volunteer armies as a good in and of itself, and would rather see your tax money spent on that rather than all the other crap it gets spent on, do not need to change their position one whole hell of a lot due to this. Really if you did not (and do not) buy the argument that leaving the mass murderer from Tikrit and his psychopathic sons in charge would be ‘okay’ and in the interests of people in Iraq, then the UK and US governments problems are of only incidental interest. Am I happy about how the post-war insurgency has been handled and the preposterous obsession with imposing ‘democracy’ in a tribalised society? No, not at all, and I am astonished that the US seems to have unlearned so many of the lessons of the Vietnam War… but in the overall scheme of things I am still of the view that the world is better off without Saddam Hussain. In fact, seeing Tony and Dubya in political difficulties as a consequence of their own mis-judgements is hardly bad news but is perhaps the best of all possible worlds. Saddam gone, the home grown US and UK Big Government administrations in trouble… yeah I can live with that. December 17th, 2006 | 56 comments - (Comments are closed)
Frank Johnson (journalist, editor, columnist and all round newspaper man) has died at the age of 63. Mr Johnson was of working class origins in the East End of London and left school at 16. However, he never viewed any of this as a reason why he should be hostile to high culture and from his boyhood was a great admirer of opera and ballet. Indeed Frank Johnson was fond of pointing out that many individuals among the working classes were once a lot more cultured than their self declared friends of more fortunate birth gave them credit for, with (for example) the biggest sales among early recordings of music being for serious works, and many men whose hands were hard often being also very well read. Mr Johnson was no friend of the left – either in the Labour party, or of those in the Conservative party who were patronising statists (always out to ‘help’ the poor with more government spending, taxes and regulations). Nor was Mr Johnson afraid to write unpopular things. For example he pointed out that for working men in the south of England and in the Midlands, the 1930’s were not a time of collapse, indeed that Britain did better in terms of the rise of real incomes in the 1930’s than National Socialist Germany – and vastly better than FDR’s vaunted ‘New Deal’ United States. As for the sacred cow of British politics – the Welfare State, Frank Johnson pointed out that it is not a matter of it being “something designed in the 1940’s which must be adapted for changing times” (as cowardly people on the conservative side of British politics used to like to put it), but something that had a powerful negative side from day one, both collectivising hospitals that had been provided free for the poor by charitable effort and helping to destroy the tradition of self help and mutual aid that had once been the greatest aspect of the working classes (of course such things as the Friendly Society movement had been undermined by government activities all the way back to the early schemes of the ‘New Liberal’ government that was elected in 1906). Even the supposed higher living standards of the 1940’s being an illusion – the war time “prosperity” (boasted of by upper class leftists like A.W. Benn) being a matter of American aid and eating our overseas investments. And the post war time being a matter of rigged stats (claiming that wages were higher than the 1930’s whilst ignoring real inflation – i.e. the black market price of rationed goods) and neglecting future investment. Although it is worth remembering that government spending on the Welfare State started off in a very small way (the real economic harm of the late 1940’s being nationalization, general high taxes and high government spending and the vast web of regulations by which the “educated” men in Whitehall told everyone else what to do and what to do). The real growth of the Welfare State and, more imporantly the changes it was making in the British character (as opposed to such things as the decline of the Friendly Societies and other voluntary associations), did not really even start to be seen till the 1960’s Mr Johnson remembered the “stoicism of the London working class” (of course he accepted it was more than the London working class – but he was a Londoner), as to what there is now it is best to say nothing. I will miss Frank Johnson. December 16th, 2006 | 3 comments - (Comments are closed)
Considering that investment bankers at places like Goldman Sachs and Morgan Stanley are paid the sort of money that sounds like a respectable cricket score, economics writer Arnold Kling asks the question: why is the supply of people to do this job not rising in response to a very juicy lump of money? It is a good question to ask. For the sort of money on offer, even a maths dunce like your humble scribe might want to learn to do the job and start figuring out the the clever-dick arts of hedge funds, credit derivatives and leveraged buyouts. So why is the supply not rising? I think some of this may be caused by a lack of talented folk coming out of our education system, but that cannot really explain it over the long-term. It may be that getting the level of experience to do these jobs is quite high, raising the scarcity and hence the massive rewards. Of course when these guys get fired for failing to perform, this rarely bothers people who get upset about the big salaries. These guys have a rather, er, different take on the matter. December 16th, 2006 | 19 comments - (Comments are closed)
It is snowing.  It may be that this is the first snow of the winter, or at least that at does not snow here all that often, because the locals seemed quite excited about it, but did not seem to be particularly well prepared for it.  I am here for a few days on my way to Australia for Christmas. So far Seoul seems to be very modern. The new Incheon airport is superb – a wonderful contrast to the horrors of Heathrow yesterday. Like Tokyo, it is a fine city to discover on foot, as there are all kinds of interesting little restaurants, shrines, and all kinds of things down little narrow streets. More from me over the next few days… …At least, I hope so. Due to the fact that Korea uses some of the world’s weirdest electricity (220V 60Hz), it did not really occur to me that they would use a standard (continental European) type C plug, so for some idiotic reason I failed to bring a type C adaptor, although I brought most other adaptors known to man. Therefore, until I find an adaptor or a power cable with a different plug on it or something, I have only the small remaining amount of electricity I brought with me from England to power my laptop. In the morning I will go to what my guidebook describes as “the largest electronics market in Asia” where I can hopefully solve this problem. I will also see if it is genuinely larger than electronics markets I have been to in other parts of Asia, and I shall also contemplate the question of where any other bigger electronics markets that are not in Asia might be. December 16th, 2006 | 18 comments - (Comments are closed)
I am just about to go out to nail some final Christmas shopping but if anyone is feeling all warm and generous, they can always buy me one of these. I promise I will send a very fulsome thankyou card. “Stunning” does not even come close to describing how magnificent the new Aston Martin is. No wonder the makers of the Bond movies keep going back to the marque. Isn’t rampant capitalism just great? December 16th, 2006 | 7 comments - (Comments are closed)
The Irish government has this week succeeded in their plans to help restore a monopoly in health insurance, as the main private insurer was yesterday forced to withdraw from business, leaving the state behemoth with only one tiny rival left to prevent it from controlling the market. Risk equalisation payments which cost them a million €uro every week left BUPA with no choice but to leave. For those unacquainted with the health insurance market, risk equalisation is a device designed to underpin community rating: a regulation of health insurance whereby the level of risk a consumer poses to an insurer must not affect the premium paid; i.e. everyone must be offered the same products at the same price regardless of their age, gender, or personal health characteristics. A sceptical observer might wonder why a healthy young person should have to pay the same as a sick geriatric, or in what sense this is really insurance at all. Well, the justification given is that, without this scheme, and the associated regulations of lifetime cover and open enrolment, no-one would be willing to offer sick or old people a health plan they could afford. Therefore, the argument goes, it is acceptable that young people are overcharged in order to prevent this. Community rating is designed to produce inter-generational subsidies, and is a clear example of cradle-to-grave statism. However, community rating alone does not fully prevent competition – it is possible for more than one insurance company to offer community-rated products simultaneously, as indeed was the case in Ireland for the last ten years. It’s a heavily regulated market (imagine if car insurers were not allowed to discriminate according to the risk profile and vehicles of their customers, or house insurance had to ignore the likelihood of flooding or earthquakes in any particular area), but we proved that it can exist sustainably. So, to really cut out competition, there are several other things you have to do. The first thing that the Irish government did for the last number of years was to give its dominant state provider preferential treatment with respect to the requirements of its solvency reserves. While that did hurt the private operators, it did not totally force them out of business. So our supposedly pro-market government decided to trigger risk equalisation: a device which is theoretically meant to correct discrepancies between customer bases by forcing insurers with younger customers to subsidise their rivals with older, costlier, riskier members. In our case, what it actually did was threaten the main private insurer with having to subsidise its wealthy state rival with nearly three times its operating profits, for little discernible reason and despite clear, logical protests from professional economists in Ireland’s major universities (for example listen to this file). The result of all of this: BUPA is forced to quit, leaving increased power to the state company. According to leaked documents, this company is preparing to increase its premiums by 15% each year over the next three years, clearly exploiting its position of power to the fullest. The public has been duped, and has absolutely no clue. What’s more, no-one is going to stand up for them. An Taoiseach (Prime Minister) Bertie Ahern revealed his lack of understanding of the issues by launching an ignorant attack against BUPA. The powerful trade union controlling the state monopoly then announced that it would fight against any efforts to break up this company into competing units. And the mainly left-wing opposition has, predictably, come up short in its handling of this issue. My question is this: what would you call a private business that was able to intimidate and then forcefully eliminate anyone who dared to compete with it? That’s right, you would call it a highly organised criminal outfit. So why is the government any different? December 15th, 2006 | 16 comments - (Comments are closed)
I oppose arts subsidies not only because arts subsidies are thieving from people who do not want art thank you very much, although it is that of course. I also oppose arts subsidies because I really like art and I think arts subsidies damage art, by separating artists from audiences and by separating nob audiences from yob audiences, the aristocracy from the groundlings. With arts subsidies, you get High Art in one tent – precious, clever, obscure, self-regarding and pretentious, and expensive; and Low Art, brain-dead trash, in the other bigger tent. Without arts subsidies, they all go into the same tent and you get, well: Shakespeare basically. Shakespeare, nineteenth century classical music, the great nineteenth century novelists, twentieth century cinema (before that too got to subsidised into Posh and Trash), twentieth century pop music, all that is artistically vibrant, fun and profound. So, arts subsidies are really bad, both morally and artistically. And the good news is that, at any rate here in Britain, they are about to be “cut”, which is a cultural word meaning “not increased very much”. And who or what do we have to thank for this semi-excellent circumstance? Why, the Olympic Games:
This is especially good news when you bear in mind that “so long as the country is paying for the Olympics” and “well beyond 2012” actually mean “for ever”. December 15th, 2006 | 8 comments - (Comments are closed)
P.J. O’ Rourke has a book on Adam Smith’s Wealth of Nations. This looks like the ideal Christmas gift to give someone who might be undecided politically, has an open mind and can be moved by the wisdom of a man who persuades with wit rather than the blunderbuss of masses of statistics or over-preachy bromides. I must say I really enjoyed O’Rourke’s little gem “Eat the Rich”, which is still available and which came out a few years ago. He may have veered away from the uber-hilarious form of books like Parliament of Whores, Republican Party Reptile or the Batchelor Home Companion, but it is good to see that O’Rourke is still writing and making people think and laugh at the same time. His is a special and all-too-rare talent. December 14th, 2006 | 4 comments - (Comments are closed)
This is bloody clever:
I came across this story while browsing through the weekly magazine, The Business (which has been re-launched from its previous format of a Sunday newspaper). The story says that the cement’s amazing properties were discovered quite by accident and emerged from nanotechnology research undertaken by an EU-funded project (good grief, something positive via the EU, Ed). The Business article says that the photocatalytic cement building materials can get rid of up to 80 percent of air pollution. The applications of the new kinds of materials technologies coming out from the worlds of nanotech and beyond are legion. I particularly like the idea that concrete, which normally turns a sort of gunky, greyish colour in Britain’s damp climate, could stay a more pristine colour thanks to stuff like this. One of the reasons why so much modern architecture is so crap is not just the basic shapes of the buildings but the materials they are composed of. I wonder whether it gets rid of grafitti, though. (Update: another story on the subject) December 14th, 2006 | 8 comments - (Comments are closed)
An unsavoury developement of Le Web 3 in Paris, a conference about and for bloggers organised for the third time by Loic Le Meur of Six Apart. I have always considered Loic as one of the clued up people in this area and I will give him the benefit of the doubt as to what really happened. Politicians are a toxic breed. Dealings with them tend to backfire and so I’ll wait to hear his side of the story. Jackie has more on this. Following a link from her post, I came across a comment that captures one of the fundamental differences between the Anglosphere and ze Europe.
December 14th, 2006 | 13 comments - (Comments are closed)
One of the reasons why I like the idea of a “flat tax” is that, by sweeping away all the existing loopholes, it removes a whole group of people who have a vested interest in pushing for special treatement from the Inland Revenue and instead creates a simpler system that is far easier to run, less distortive of economic activity. As a libertarian, of course, my main aim is to see the overall burden come down rather than be flatter; the flatness of the tax code is not, ultimately, as important as its weight. One of the groups that have managed to chisel a tax break out of finance minister Gordon Brown is the domestic film industry. Apparently, the End of Civilisation As We Know It may possibly be arriving soon if we no longer make movies in England. It is all tosh, of course. Many British actors, directors, producers, technicians and photographers work all over the world, very successfully too. While financed with U.S. money and so forth, many of the biggest hits in recent years have had strong British themes, such as the Harry Potter series, and even the latest James Bond movie. Boris Johnson has a nice article demonstrating the absurdity of trying to define what is a “British” film for the purposes of qualifying for tax treatment. Just get rid of these loopholes and focus on cutting taxes across the board, Boris. And please do inform your statist-minded Tory leader, David Cameron, about that aim. December 14th, 2006 | 14 comments - (Comments are closed)
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