If you were ten times richer would you be ten times better off? Because I think the answer is “no”. Which kind of undermines the argument about inequality which seems to be getting quite an airing these days.
The wars waged by England during the era of Liberalism to extend her colonial empire and to open up territories which refused to admit foreign trade, laid the foundations of the modern world economy. To measure the true significance of these wars one has only to imagine what would have happened if India and China and their hinterland had remained closed to world commerce. Not only each Chinese and each Hindu, but each European and each American, would be considerably worse off.
von Mises, “Socialism” p208 (translation of 2nd Edition, 1932, Liberty Fund)
Don’t anyone tell the Rothbots.
From an article entitled: Conventional Education Will Go the Way of Farming. Heh.
Because if the state taxed the people any more they would starve. And when people are in danger of starving they get rebellious.
I read somewhere (and it could be true) that as recently as 1900 50% of household incomes went on food.
Howard Katz thinks not much:
“The period of the early 1930s was one of the best (economic) times in American history...”
And he has some data to prove it. What do I think? I have no idea.
The argument against deflation (if I’ve got it right) is that people will hold on to their money in the expectation of even lower prices in the future. In other words that if they wait long enough they will be able to buy more. What is the difference between this and having a positive real interest rate?
This is a rather striking posting. It was put up the day of the Katyn crash although it was clearly written beforehand.
Poland is today the most capitalist country in Europe
They kept that one quiet.
Poland’s economy grew at roughly a 5% annual clip until 2008. That’s when – instead of tying its currency to the euro – Poland allowed the zloty to depreciate when the financial crisis hit. As a result, the country enjoyed 3% growth in 2009, and is slated to do at least as well in 2010 and 2011.
The budget deficit is currently 2.5% of gross domestic product (GDP), mainly because – at 18% of GDP – central government spending is extraordinarily low by European standards.
Now, if that’s true that really is great news. The key word in this is “if”. The author appears to have something to sell so you have to take it all with a pinch of salt. Can anyone out there shed some light on this?
I thought I'd do some googling. Which is easy. But actually coming up with an answer proved anything but. Here's the best I could find:
5. Beat severely; slang.
So, that's what they mean.
“Blanchflower is an enemy of the people.”
So says Alice. And she’s right.
Explanation: Inflation is rampant, interest rates are too low and need to go up. But Blanchflower thinks they should come down. Dumbass.
America is a great country1. However, it is not a perfect country. One of the things that gets my goat about it is how Americans commonly refer to the American War of Independence (which is what it was) as the American Revolution (which is what it wasn’t)2.
The Boston Tea Party as the world’s first anti-globalisation riot.
1. See America is a great country, by me.
2. A little challenge I like to set people who think it was a revolution is to see if they can come up with ways in which after the war Americans were freer than their British counterparts. I get a lot of mumbling and very few answers.
Yesterday, the oil giants Shell and BP announced record profits. One oil industry analyst put it down to high oil prices. All the oil companies were doing was watching the money roll in. Which prompted the usual whining about “obscene/outrageous” profits etc.
I am against this whining as I believe that profits are good1. However, I have to confess that I am a bit stumped to say why bumper profits are so good in this case. I find it difficult to see where the value has been created. I suspect that the value was created a few years ago when these oil companies invested heavily in new capacity (although I really have no idea if they did or not). The profits they are enjoying now is simply the payback for risks they took then.
If so, then they are richly deserved.
Or maybe, actually, they didn’t invest nearly enough which meant that oil demand exceeded oil supply leading to the increase in price. Sure, that meant that their profits went up but not by as much as they might have done.
...when even the winos can eat in style:
In the environs of Vauxhall yesterday evening, I noticed two of the local gentlemen of the road, settling down for a picnic on a random street corner near Tescos. And why not enjoy these lengthening evenings, I thought, even if it is still a bit chilly for me to contemplate an al-fresco affair. They had a Tesco bag with them and as I passed I noticed among the usual cans some little round tubs. They weren’t, were they? They were…
Yep, one of them had brought dips. Tesco value, mind you, rather than Tesco’s Finest, but dips all the same. It’s good to know they’re not spending all of it on booze. I’ve always thought that Vauxhall’s tramp population had a certain style…
And three cheers for Tesco.
I haven’t quite finished Adam Tooze’s The Wages of Destruction: The Making and Breaking of the Nazi Economy but I think it is worth posting an interim review of this monumental3 economic history of the Third Reich while the stuff at the beginning of the book is still fresh in my mind.
The thing that most struck me - and rather unsettled me - was Tooze’s description of Hitler’s underlying philosophy. The rabid anti-semitism is as well known as it is bizarre - how exactly you convince yourself that Jews run capitalism as well as communism is beyond me. But it’s the stuff about empire and economics that is was surprising.
Hitler’s Weltanschauung goes like this:
- I want Germany to be rich
- I look around the world to find examples of rich countries
- I find Britain, France and the United States.
- They all have empires1.
- That’s why they’re rich - certainly not this liberal economics nonsense which is just there to pull the wool over the eyes of the workers
- Therefore if Germany is to be rich she must have an empire
- We can’t go North, West or South.
- Therefore, we must go East.
- Sure, there are people in the way but we will treat them just the same way as the Americans treated the Indians or the British treated the, er, Indians.
Project One- “Construction on the £4.3 billion Heathrow Terminal 5 complex began in 2002. Since when, the project has successfully moved 9 million cubic metres of earth; erected the roof of UK’s biggest free-standing building; transported the 900-tonne top cab of a new 87m high control tower 2km across the airfield; bored over 13km of tunnels for rail and baggage; diverted two rivers; and installed over 30,000 sq metres of glass facades. All T5’s footprint is contained within a former sewage works at the western end of the existing airport, situated between the two runways, adjacent to the M25.
With 366 days to go (leap year in 2008), over 90% of construction-related work is complete and the project remains on time and on budget.”
Project Two- The £800m Wembley stadium finally opened for business. It’s nearly seven years since the last game at the old stadium. The project has been delivered a year late, and around £200m over budget.
Actually, it’s even more than £200m.
- ‘Vietnam troop commander William Westmoreland gruffly announced during one commission hearing that he was not interested in leading an army of “mercenaries.” Friedman coolly replied, “Would you rather command an army of slaves?”’ From a Reason bio of Milton Friedman (hat-tip: A&L)
- “In the first government defeat, the Lords voted to rule out using sexuality, criminality and cultural or religious beliefs as grounds for diagnosing a mental disorder.” Yes, you read that right.
- Squander Two fisks Tony Blair. At some length. He also defends Blogger from the techno-snobs. I am inclined to agree with him. The days of the permalink crisis are long gone.
- Jackie reviews an Unquiet Mind by Kay Redfield Jamison, a psychiatry professor who also suffers from manic depression. Jackie also manages to get to the root causes of gang culture in a sentence:
One of the girls made a good point about the fact that lots of the boys who have these guns are more afraid of those around them than they are of the law…
- The other week I linked to some colour photos of Russia from the 1900s. Here are some (coloured rather than colour, I suspect) from the 1890s.
What do you think of the new title for the spot formerly known as “Weekly Round-Up”? Cool or what? Anyway in case you haven’t already read them, here are a few of the items that caught my attention this week. Let’s start with a few quotes:
- “But what does freedom mean if I can´t slaughter my own pig in my back yard?”, a Romanian farmer learns about the downside of EU membership.
- “‘Global warming’ does indeed present a grave threat; as a tool of political power it is a threat to freedom, prosperity, trade, progress and all the health, wealth and happiness that those things make possible.” Thaddeus Tremayne vents the finest spleen in the blogosphere.
- “...if I may generalize about all computer geeks - is that they really like to overexplain the fucking shit out of everything.” Jackie adds that this also applies to hist and pol geeks. Warning noted.
And now for the serious stuff:
- Squander Two wanders into the abortion debate, makes some not entirely unreasonable remarks and ends up being called a misogynist, a wingnut and a Jew-hater. I knew he was the guy to do the Transport Blog redesign.
- McDonald’s, bad for agenda-driven documentary makers but, thankfully, not for normal people. And their coffee, apparently, tastes better than Starbucks’.
- Boris Johnson’s article on why women aren’t marrying these days - he thinks they’re all too well-educated (what, in state universities?) - is creating a bit of a buzz. For what it’s worth I think the answer is a lot more prosaic: housing is just too expensive, meaning that very few men can support a family on their own income. No prospect of a family = no point in being married. Abolish planning - that’s what I say.
- Harry Phibbs wonders if Doughty Street is the future of TV. Well, if it is, I’m a dinosaur. But he does at least give us this:
One irony was that among the coverage 18 Doughty Street launch was given was a hostile item on Channel 4. Krishnan Guru-Murphy declared: “They won’t have any obligation to be impartial or accurate.” This is astonishing audacity. Does anyone really imagine Jon Snow votes Tory?
- Chilling news on global warming. Scientists must say what politicians tell them to. In a similar vein (or should that be vain?), Al Gore agrees to an interview with his fiercest critic and gets a mysterious bout of cold feet.
- Oh dear, what a mess we free marketeers get into when trying to explain away highly-taxed Sweden’s economic success. Here’s Johann Norberg predicting disaster tomorrow. It’s always tomorrow, isn’t it? My best guess is that Sweden is just a bit odd. Whatever the case may be it’s an experiment that no one else has ever been able to repeat.
- Just to prove the virility of their continuing intellectual self-confidence, the former democracy of Belgium and that great model of Europeanism has banned the number 18.
- And finally… do check out these colour photos from Russia in the 1900s. For example:
I have just finished listening to Brian Micklethwait’s podcast with Leon Leow. A bit late in the day, admittedly - it was recorded about a month ago - but none the worse for that. Actually, it’s rather better than that. It’s really very good. The centre of their discussion is Leow’s research into what makes countries rich and what makes them poor. Make that statistical research. What is interesting is that Leow sticks to the statistics even when it leads to conclusions he would normally disagree with.
The other big surprise (sort of) is education. Now, while I am against state education I am by no means against education as such. But it turns out that it either (I can’t quite remember what he said) doesn’t matter or actually makes you poorer.
A nice surprise was that race makes no difference.
The biggest factor in prosperity is the rule of law. Get that right and you should be OK. That was no surprise to me at all but it’s always nice to hear.
One of the amusing parts of the discussion was the way Leow managed to keep his temper in the face of Brian’s frequent enthusiastic interruptions. London libertarians are used to the idea that Brian’s Brain runs considerably faster than his mouth (which itself runs quite fast enough) but it can be quite disconcerting at first. So congratulations to Leon.
Update Oh crap, I’ve spent Louw wrong the whole way through.
This is not an entirely new theory. I've heard it before and it made me wonder if (at least) one of the Nazi motivations for going to war in 1939 was that they had run out of things to steal from the Jews.
About a week ago I put up a posting on corporations. In it I mentioned that Chris Dillow of Stumbling and Mumbling didn’t like them but that I wasn’t quite sure why. Suitably prodded Mr Dillow sought to explain himself.
For the most part I just don’t understand what he is saying. Well, that’s being polite. Readers are welcome to speculate on the precise meaning of: “Markets are democratic”, “the cult of the CEO”, “the ideal-type big business”, “statistically significant alpha” but I can’t be bothered. If it sounds like gobbledygook it probably is. Actually, that’s not quite true. He did provoke me into finding out what “rent-seeking” means. It means getting the government to put your competitors out of business.
The few bits I did understand, I have either dealt with or don’t seem terribly important. Some corporations spout gobbledygook. Apart from being a bit rich, it doesn’t seem to be any big deal. If they spout gobbledygook to me I simply take my business elsewhere. Corporations are hierarchical. Again big deal. If they are big enough, they seek to put their competitors out of business. Again big deal. It is a characteristic of all big institutions. The problem here is not the institutions as such, but the power of the state.
Are corporations ie limited liability companies, a bad thing? Stefan Molyneux (who has a pretty good series of MP3 talks) thinks so (hat-tip Jay Jardine). So, it would appear, does Chris Dillow, although I can't quite be sure because while he's in favour of the market and against "business", he hasn't (as far as I know) elaborated on the matter.
Molyneux's argument seems to boil down to this:
- Corporations ie limited liability companies, are creatures of the state
- They enjoy privileges ie limited liability, that other organisations don't have
- They are efficient at what they do
- They are easy (for the state) to tax and (because they are efficient) bring in enormous revenues
- They are very powerful, using that power to get what they want out of Congress (in the US example)
- What they want, usually, is to exclude the little guy
- This they achieve by getting Congress to approve subsidies and regulations that aid corporations and harm sole traders
I am not quite sure where medium-sized corporations fit into Molyneaux's scheme of things.
For good measure I could also chip in the argument that the real problem with corporations is that in a world dominated by corporations states are reluctant to allow anything else.My thoughts:
- It can't see anything philosophically wrong with corporations
- It may be possible that corporations could exist without the state
- It seems to me that corporations have achieved a great deal
- This is really an issue of size rather than type
- The real problem is the power of the state
So, you can't see anything "philosophically" wrong with corporations?
- The state may allow them to exist but ultimately no one is forced to deal with them, so it seems to me that I can hardly object to them
Corporations without the state?
- All you actually need for limited liability is an agreement with your creditors that your liabilities are limited. The list is probably not that great including, for the most part, banks, suppliers and employees. All of these people already have contracts with you - usually written - so, it wouldn't be all that difficult to write in a clause to all those contracts on liability in the event of insolvency.
But who would deal with you?
- Well, you'd have to offer something in return. Independent auditing of the accounts might be one. Higher prices (in the form of higher wages or interest rates) might be another. Presumably, these things exist right here and now - assuming, that is, that creditors have some reason to doubt whether they will get their money back or not.
But you say only "possible"?
- Well, the big fly in the ointment is that (to the best of my knowledge) no corporation has ever existed without the state's say-so. Of course, it is possible that the state (normally) banned corporations - or in some other way made it impossible to create them - and so special legislation was needed. The other possibility is that people did try to create them and failed.
The great achievements of corporations...
- Oh, railways, drugs, computers, cars, cheap food etc. Just a few things.
So, it's size rather than type?
- Yes, it's the big ones that are the worry - no one is particularly worried about the political influence of the local panel beaters. Anything big, whether it be a religion, a media organisation, a paramilitary organisation or a trade union will attempt to throw its weight around. Corporations are no different.
So, the state should attempt to keep things small?
- It can try but I doubt if it'll succeed and even if it does succeed that is likely to be a bad thing. Size has its uses. There are such things as economies of scale and there are other advantages. I rather like the fact that as a consumer I can walk into a McDonald's on the other side of the world and order something familiar.
But you doubt if the state will succeed?
- Government action seems to me like squeezing a tube of toothpaste. Sure one part will go down but the tube will pop up somewhere else. For instance, in the UK campaign donations above a certain size were banned so all of a sudden political parties started accepting "loans".
So, what can be done?
- Not much. A separation of powers and a written constitution help but ultimately the price of freedom is forever making the case for it.
A McC ponders housing policy. He thinks the tower blocks of the 1960s were dreadful but he has doubts about both the affordability, suitability and durability of the “luxury” appartments that seem to be going up all over the place. He thinks there will come a time when people once again want spacious houses.
- like most people I agree with him that the tower blocks of the 1960s were, in the main, dreadful
- they were dreadful because, in the main, they were built and funded by the state
- I rather like “luxury” apartments
- The affordability argument is a red herring
- I really don’t know if it is true that lots of things are being built to a poor standard these days or indeed to a poorer standard than in the past. It would be interesting to find out
- Apartments do not have to be rabbit hutches
- I don’t know whether people want to live in spacious houses or not (I suspect they do)
- The way to find out is to abolish planning
So, it’s all the fault of the state?
There are plenty of perfectly nice privately-owned and customer-financed high-rise blocks in the world. Perhaps not so many in London (I wonder what the status of the Barbican is?) but plenty in North America. There are also plenty of rotten low-rise estates owned or funded by the state
So, why is state housing so bad?
For much the same reason that most state enterprises are bad
So, why is the “affordability” argument in respect of luxury apartments a red herring?
Because although few can afford luxury apartments by increasing supply they help to reduce prices.
So, apartments do not have to be rabbit hutches?
No, according to a friend, in Singapore the average appartment is the same size as a 3-bed semi over here. Probably doesn’t have a garden, though. Even so, Singaporeans seem to find them perfectly adequate for bringing up families
How would abolishing planning help to find out what people want?
Because the abolition of planning would create a market in housing. Developers would be free to experiment with all types of building in all kinds of places. The varying profitability of these developments would tell them what was the best compromise between what people want and what they can produce
Why would profitability tell us what people want?
Because profit is good
All men pay for sex, often with ear-ache, or with dinner, dresses, jewelry or just jobs around the house. The distinction between explicit prostitution and these transactions is one of fine degree only.
Chris Dillow. Discuss, as they say.
As for the paucity of economic statistics for the colony, Cowperthwaite explained that he resisted requests to provide any, lest they be used as ammunition by those who wanted more government intervention.
From the obituary of Sir John Cowperthwaite, father of Hong Kong’s economic boom
They found a couple of Doctor Who clips and the (Doctor Who) world goes nuts.
Found? Yes. The BBC wiped the original tapes, so it’s a big thing in the Doctor Who world when they find even clips (these ones seem to be no more than about 12 seconds in length).
Wiped them? Why? It’s a long story and there is more than one version of it knocking about. One involves simple incompetence. Another involves a far more convoluted and elevated variety.
Further evidence that the state is useless, then? Maybe. But we should always bear in mind that commercial TV managed to wipe almost (if not all) of the first season of the Avengers. Though, that was in the very early 1960s. The Who episodes that the BBC wiped stretched from 1964, through to 1973. We should also, perhaps, bear in mind that Doctor Who might not exist at all if it wasn’t for the nationalised broadcaster.
So, why the nuttiness? Coz we care. Actually, I don’t get all that excited. It just serves to remind me of how sad and angry I am that the episodes were wiped in the first place.
So, they were really good then? Ah. Not necessarily. The Power of the Daleks (from which these clips were taken) is a classic. I think it is my absolute #1 favourite Who serial of all time. It’s almost Shakespearean. Actually, you can understand it, so in that respect it is rather better than Shakey. But others, hmm, well...dodgy sets, dodgy accents, dodgy acting, dodgy scripts, dodgy sound. Mind you, seeing as they were pumping out something like 48 episodes per year I think some leeway has to be given. By comparison, this year’s series ran to a grand total of 13 episodes.
Hang about. How come you know all about the Power of the Daleks if it has been wiped? Ah, through the wonders of reconstruction, string and sealing wax.
So, if they weren’t all that good, why are you so upset? It’s because I trusted them. It’s because all through the Seventies I thought: “One day, I will, if I choose, be able to see all the old episodes. The good ol’ BBC is keeping good care of them just for me. I am so glad we have a nationalised broadcaster. Wouldn’t happen if we were all commercial like the Americans.”
Wrong, Crozier. Wrong.
My argument is that freer is better. So, how might that apply to New Orleans?
I should begin by stating that I don’t think that individuals and companies acting in the usual way would work. Every landowner building his own levee could get rather expensive. And what’s the use of a great levee if your neighbour’s property turns into a foul-smelling toxic swamp? No, you’re going to need some kind of super-landlord.
Imagine that New Orleans had never existed. Imagine also that the state chose to do nothing other than enforce contracts.
New Orleans Inc (NOI, the super-landlord) is created.
It asks the question - is it worth it? Let’s assume the answer is yes.
It buys the land it feels it needs.
It erects levees
It then sells leases on the land inside those levees. The contract will be something along the lines of: you pay us a sum of money (a ground rent) each year and in return if your land floods we will pay you some sum in compensation.
NOI will make damn sure that the levees are fit for purpose. Why? Because the costs of compensation will be enormous and a huge deterrent against getting things wrong.
Oh, but they’re insured. Yes, they will be but on what basis? Insurers are going to look into this carefully. They don’t insure for free. If they do, they go bust. They will ensure that their likely pay outs are less than their premiums.
But what if NOI gets it sums wrong or conditions change like, for instance, as happened, the Mississippi started to rise? You would have to write into the leasehold contracts some sort of clause stating that if the ground rent ever increased NOI would offer to buy back the property at some sort of market price (that being the market price before conditions changed, of course).
But who would decide this market price? Initially NOI would make an offer. The leaseholder would be free to accept or reject it. If he felt it was too low he would be free to pursue his case through the courts on the grounds that NOI was in breach of contract. That’s the state’s courts, by the way. Remember, enforcing contracts is the only thing the state does.
But that would be far too expensive for most landowners, wouldn’t it? Not necessarily. Not if they go down the class action route.
But all this is assuming that New Orleans hadn’t already been built. Would this still work under current conditions? I don’t see why not. Again it is a question of buying up the land.
But what if someone won’t sell? NOI doesn’t have to buy everything - just enough to make a reasonable profit. There may well be a few hold outs but they’re not that big a problem.
But if there are a few hold outs won’t that encourage everyone else to hold out in the hope that they get a free ride? Possibly. What NOI would have to do is to buy options to buy (if that is not too confusing). They would approach every landowner and ask them at what price they were prepared to sell. They would then draw up an option to buy the land at that price. Obviously, they would have to pay out some money for this privilege. Then, having got all the options, NOI could decide which properties they wanted to buy and whether it was still worth it - in just the same way they would have done if New Orleans had never existed.
OK, that’s the theory but what about the practice? Er. I am not aware of too many examples either of success or failure. Why? Probably because the state never leaves alone for long enough to allow these sorts of things to develop. The Voluntary City gives the example of the Chicago Central Manufacturing District. There are plenty of privately-run gated communities in the United States. It would be interesting to know how the reclaimed parts of the Netherlands and Eastern England were organised.
“If the reason for contracting out is that public prisons are run poorly, why should we expect government to do a better job at writing contracts?”
Alex Tabarrok. To which one commenter suggested outsourcing the contracts.
Chris Dillow asks why it is that it is so difficult to shrink the state. He goes through the usual public choice arguments before examining the argument that free marketeers simply haven’t made the case very well. And, he thinks he knows why:
My theory is that they’ve failed to address the case for egalitarianism. Rather than show that small government is consistent with equality - because it allows tax cuts or higher benefits - they have preferred to rubbish the notion of equality. In doing so, they have given the impression - which is wholly incorrect - that limited government is merely the self-interest of the rich.
One of the main reasons I believe in freedom is because I believe it leads to equality. One of the real world observations that sustains me in this belief is the comparison between some cleaners I know and any member of the upper-middle class. The cleaners are well-fed and well-clothed. They own lots of modern gadgets. They jet off to exotic destinations and they drive a new car. All things provided by the market. The areas in which they don’t do so well are things like education and housing things either provided by the state or heavily influenced by it.
Having mentioned cars, I thought I’d mention the thrust of an article (sorry, can’t remember where) I read some time ago. The article was making the point that being rich doesn’t make you that better off. Compare, say, a £100,000 car with a £10,000 car. A Mercedes S-Class is only marginally better than a Ford Focus and in some ways, such as fuel bills, considerably worse.
From Mr Free Market.
It is not from the benevolence of the programmer, the graphic artist, or the sys admin, that we can expect our web pages, but from their regard to their own interest.
Certainly not the sys admin. Mark Holland updates Adam Smith.
We’ve been here before:
When industries leave Sweden for Eastern Europe or China a lot of people ask what Swedes are going to do in the future. We don’t know of course. About three quarters of all the goods and services we use today didn’t exist in any form 100 years ago. And the jobs of the future will be to produce and sell things that don’t exist today.
In response to my question about why things went pear-shaped so quickly after the departure of Calvin Coolidge, N (yup, that’s the name he gave) e-mails to tell me that it was all the fault of the Federal Reserve. He also points me to Murray Rothbard’s America’s Great Depression.
Now as regular readers will know I am rather down on books, as far as I am concerned if it isn’t on the web it doesn’t exist (histories of WWI excepted, of course). Fortunately it does exist and it’s right here (warning: big PDF).
In Googling I also came across this quote:
Old myths never die; they just keep showing up in college economics and political science textbooks.
Those who say money can’t buy happiness just don’t know where to shop.
From the ASI Blog