Trade restrictions and dehumanisation

Tariffs are simply taxes but one can see why subsidies are, in the eyes of some, somewhat justifiable (though they still remain morally reproachable). However, a closer examination of both reveals the problematic, degrading moral assumptions that their imposition necessarily presupposes (along with all protectionist policy). Protectionist policies are, more often than not, designed to protect domestic industry. The argument is usually phrased along the lines of “protecting our farmers’ jobs”, “our workers’ jobs”, “our manufacturing industry”. It all boils down to protecting the jobs of domestic citizens; this is essentially nationalism in benevolent garb.

‘Protecting’ farmers, for example, from the competition of comparatively cheaper foreign imports imposes costs upon domestic consumers (whose range of choice is restricted and who are forced to pay higher prices). However, protecting domestic farmers over foreign farmers via tariffs, subsidies and other trade restrictions presupposes a key value judgment by elevating domestic farmers’ jobs’ intrinsic worth over foreign farmers’ jobs’ intrinsic worth. There is no real economic reason for this since this is one topic that all economists agree on (except, perhaps, for some agricultural economists based in rural and/or semi-rural communities); that is, that there should be free trade between countries – rather, this is a question of politics.

Systemically, it is an issue of agricultural land usage rights; after all, if farmers could diversify the use of their land, then they would no longer need subsidies (since their income stream would no longer be limited solely to farming) – hence, they are also tools of perpetuating political dependence. There is also the issue of food security but this is reflective of the prevailing war-ready/war-preparing psyche and artificially reduces the costs of going to war in the first place (an obvious cause for concern in the long-run). In this case, the criteria for elevating the political worth of a person boils down to voting rights, nationality, culture, ethnicity etc. rather than the simple fact of the personhood they are naturally endowed with.

Those who lobby government to redistribute wealth argue that it is unfair that people can be so privileged or downtrodden merely through birth. However, tariffs and subsidies are essentially income redistributions in at least three ways; firstly, from taxpayers (taxes fund subsidies), secondly, from consumers (tariffs make products more expensive and reduce a range of choice) and thirdly, from foreign producers (by making it infeasible for them to export and thereby make a living). Through capitalising on the shaky, divisive social construct of nationality and citizenship, protectionists have successfully increased tax revenue and subtly assaulted the intrinsic worth of human life. Is this redistribution of income really worth moral retrogression?

A plain pack of lies

BBC News tells us that: “A law introducing plain cigarette packaging in England and Wales could come into force in 2016 after ministers said MPs would be asked to vote on the plan before May's general election.” We really are seeing the thin end of the wedge here as yet another misjudged interference in the free market looks set to take place. The confusion that people like Public Health Minister Jane Ellison harbour is that they only seem to think of smoking in terms of bodily damage. Yes, if you only want to think about smoking in terms of the effects of physical degeneration on body parts, then cigarettes are a terrible thing, and plain packaging can be argued for on those (albeit flimsy) grounds. But only a fool would do that. Jane Ellison is presumably aware that many people still smoke even though they have full knowledge of how bad cigarettes are for them. With this knowledge she ought to have a clue that there is a reason people smoke in spite of knowledge of its degenerative effects – they enjoy doing it. Clearly people who voluntarily hand over money to buy and smoke cigarettes have accounted for cigarettes being bad for your health, but have still concluded that the positive effects of smoking outweigh those negatives. Ben Southwood's blog on smoking is particularly appropriate here.

Contrary to the 'plain packaging' lobby's misapprehension, it is trivially obvious, that smoking is only entirely bad for you if you forget all the reasons that it is good for you. The trouble with going down this road is that if you consider only the costs, then just about everything is bad for you. Take drinking water. By only counting the costs you'd find drinking water is a pretty disagreeable action - it brings about increased urination, it causes time lost in the toilet, it engenders increased chlorine levels in your stomach, and it causes gradual damage to your detrusor muscle in the bladder. Drinking water - one of the most innocuous activities we can undertake - has risks and it has costs, but no one thinks it's bad for you in net terms. Quite the contrary, in places where water is scarce we do all we can to make it plentiful.

Governments interfere too much by focusing only on costs and ignoring benefits. It’s unsurprising that people like Jane Ellison want to trespass into other people’s free choices so much – she’s only aspiring to do what the state does on a frequent basis.  This is the simple and straightforward reason why I'm a libertarian, and why I hold the view that a small government is best. People know how to run their lives better than any government. That's not a blanket truism, but it's true for the vast majority of people, and it's true in the majority of ways that relate to how we live our lives by making cost-benefit analyses and exercise our freedom of choice. Politicians are quick to interfere or ban things that have costs, which often involves failing to appreciate that humans can decide for themselves whether those costs are worth paying.

Because it is impossible for the state to know how much every individual values health, exercise, weight training, smoking, alcohol, and so forth, it is impossible for the government to know better than its citizens what is good for them. A good government would understand this, and seek to minimise its involvement in our lives to enhance our welfare and liberty, as the quality of welfare and the benefits of liberty are synchronised to enable people to voluntarily undertake the activities they prefer.

Another strange idea to reform the housing market

It does continue to amuse us, watching the contortions that people twist themselves into in their attempts to reform the housing market. As opposed to, you know, just getting on with issuing more planning permissions so as to bring down the price of housing. The latest one is that self-builders should be treated as special little snowflakes with their own, special snowflake, planning permissions system:

But we also need to reform the land market, to make it dramatically easier for those without much capital to buy a plot of land and commission their own homes – either individually or as a group. All political parties pledge theoretical support for custom and self-build, and the government’s “Right to Build”, which allows people to buy council land on which to build their own houses, is a first step. But systemic change is needed to create a market providing land specifically for custom and self-build housing.

Let’s create a new land use class in the planning system “C5 Custom build”. In effect, that would create a parallel land market that differentiates between a house built as a speculative asset, and a house built as a place to live. Let’s create space for both, and see which works.

There's only one problem with this suggestion. Which is that we don't in fact want a special class of planning permission for self builders. What we actually want is simply the issuance of more planning permits. For as is entirely obvious to everyone the price of housing in the UK is determined by a shortage of said planning permissions. So, therefore, we don't want the creation of a special system for special snowflakes, we simply want the loosening of the planning permission system as a whole. And then indeed self builders can run alongside more commercially minded organisations and may the best man win.

Oxfam, capitalism, and poverty

After Thomas Piketty's Capital in the 21st Century told us about rising inequality, it's perhaps unsurprising that a new report from Oxfam tells us the global 1% will soon own half of all the world's wealth. But things are not quite as they seem. Oxfam's figures look at net wealth, implying that Societe Generale rogue investment banker Jerome Kerviel is the world's poorest person, and Michael Jackson was afflicted by the direst poverty before he died.

Ivy League graduates about to start a job as an investment banker at Goldman Sachs are judged far poorer than rural Indian farmers with the tiniest amount of capital.

Seven point five per cent of the poorest tenth of the world live in the USA, the figures say, almost as many as live in India.

And the claim that 85 own as much as 3.5bn is even more misleading, since the bottom 2bn don't have nothing, but negative wealth—something like $500bn of it.

What's more the global 1% probably contains more Times readers than CEOs or oil sheikhs—you need own a house worth around £530,000 to enter it.

All these facts skew Oxfam’s figures to make them astonishingly misleading.

Better figures tell a completely different and far more optimistic story.

Global poverty has actually fallen enormously with the rise of global capitalism. The fraction of the world's population living on less than $2 a day (measured in constant dollars) has crashed from 69.6 per cent in 1981 to 43 per cent today.

Even if you take out India and China, where the most spectacular improvements have been made, and look only at Sub-Saharan Africa, the worst-off region, there have been improvements. From 1981-2006 8.6 percentage points fewer were living on under $1 a day and 4.9 percentage points fewer were living on under $2 a day.

In virtually every respect global poverty is falling and poor people are living longer, better lives. That is less sexy than Oxfam’s claims, but at least it is true.

Logical Fallacies: 2. Runaway Train

https://www.youtube.com/watch?v=L2-Umtmd6x4  

Madsen Pirie introduces the second in his series on logical fallacies - this one is the Runaway Train.

You can pre-order the new edition of Dr Madsen Pirie's How to Win Every Argument here

Celebrating the success of the free school system

This is a welcome success in the free school system that we should celebrate:

The government’s flagship free schools programme has been dealt a blow with the announcement that a third school is to close after a damning Ofsted report found that leadership, teaching, pupil behaviour and achievement were all “inadequate”, the lowest possible rating.

Durham Free School, which has a Christian ethos and opened in September 2013, has had its funding agreement terminated after being put in special measures by the schools watchdog, Ofsted, after an inspection in November.

It follows the closure of the Discovery New School in east Sussex, which was forced to shut last year because of poor standards, and the partial closure of Al Madinah in Derby, the country’s first Muslim free school, which had to close its secondary school after a critical Ofsted report.

No, we haven't gone mad. We really are using the failure of a school or three to celebrate the success of the system. Because this is actually the point of said system. People get to try out new things. Some of those new things will succeed, others will not. But this is exactly what we desire to happen. To have people try new things so as to see what will succeed and what will not.

This is also the defining feature of this capitalism/free market hybrid that should be the prevailing ethos of our society. That failure quickly becomes obvious and thus fails and fails fast. All experimentation will produce failures and without experimentation there will be no advances. So, we desire a system that experiments and one that quickly identifies those inevitable failures, closes them down and gets on with another round of experimentation.

TYhis is just what the free school system does: it's therefore a success story that a failure has been spotted and dealt with. Because that's the damn point.

Restating the case for freedom of speech

One thing that’s becoming clear in the aftermath of the Charlie Hebdo tragedy is that when it comes to mockery, a lot of politicians and spokespeople have the backbone of a paramecium.  All these people trying to defend us against the insensitivity of mockery have missed something vitally important: Not only is there usually nothing wrong with mockery, there is, in actual fact, often something very good about it – because mockery is frequently a powerful tool for highlighting the absurd and the inane. In such instances the reason mockery usually cuts so deep to offend is that it is exposing some absurdity or inanity in the belief held. To silence mockery is to be in danger of suppressing the wit that exposes the kind of beliefs that can only be held by surrendering the mind to reject evidence and rational enquiry. If we rightly endorse free speech as one of the great human necessities, we should insist the same kind of endorsement for mockery too. Free speech is one of those issues about which it is difficult to say anything original. It has been written about so well by people like John Milton, Voltaire, John Stuart Mill, Thomas Paine and George Orwell. John Milton's Areopagitica is perhaps the best of all works on this - being acutely perceptive not just about free speech but about the need for a free press too.

Alas, even though these great men make it difficult to say anything original on free speech, if what they've said has been forgotten by modern politicians to the extent that the qualities they propounded are gradually being eroded away by our ever-increasing nanny state authorities, there will always be the need for a reminder.

The general wisdom that has been distilled from these great writers on our liberty of free expression is that we will not agree with every opinion being proffered, but we should defend everyone's freedom to proffer those opinions. We should do this not just to protect the right of the person with the opinion, but also to protect our right to hear opinions too. In other words, in denying someone the right to voice an opinion, we at the same time deny ourselves access to that opinion, so we decline the opportunity to hear something that may differ from the consensus or challenge widely held viewpoints.

We may not agree with everything we hear, and some of the things we hear may be vile, controversial or damn stupid, but we do ourselves an injustice if we fail to hear the dissenting voices, because even the most discordant and discrepant opinions may contain within them at least a grain of truth. Therefore we should be impelled to consider them carefully, for in doing so we force ourselves to question how we know what we do and whether the sources from whence our knowledge came were reliable and verifiable.

When it comes to free speech and mockery, then, so long as no threat is being made, or slanderous or libellous lie about a person being told, or employer/employer protocols breached, it is in our best interests to have complete freedom to say/write/draw whatever we wish, however controversial or repugnant.

Sadly, it becomes ever more apparent nowadays that these important principles regarding free speech are being gradually forgotten, or in some cases deliberately eroded away, by the kind of charmless busybodies who would call for the arrest of a Tweeter or the sacking of an MP or journalist or the condemnation of a satirist who says, writes or draws something they don't like. As is evident to anyone with even the sketchiest understanding of human nature and basic philosophical familiarity, the more censorious we become the more we become prisoners of our interference.

One cheer for democracy

Today (20 January) is hailed in the UK as Democracy Day – the 750th anniversary of the establishment of the first parliament of elected representatives in Westminster. Let's not get too dewy-eyed. We classical liberals are democrats, but we are sceptical democrats. Yes, some (minimal) functions require collective action. We think that the public, not elites, should make those decisions - and that representative government is probably the best way to do it. But we are fully aware hat the democratic process is far from perfect. It is not about reconciling different interests (as markets do), but about choosing between conflicting interests – a battle in which only one side can win. Democracy is tainted by the self-interest of electors, of representatives and of officials; it can produce deeply irrational results; and all too often it leads to minority groups being exploited, and their liberties curbed, all in the name of ‘democracy’.

That is why democratic decision-making must be bound by certain rules, and should focus, with precision, only on those issues that cannot be decided in any other way. Many people (and almost all of those who happen to be in power) argue that more and more things should be decided through the democratic process. But that means deciding them through the political process; and politics is not always a benign force. The more things that are decided politically, the easier it becomes for the rights and liberties of individuals to be eroded, and for minority groups to be exploited or suppressed by those who are wield the coercive power of the state.

But rights and freedoms are for everyone: they are not a matter of numbers and majorities. Election success does not license the winning majority to treat other people exactly as it chooses. The power of majorities needs to be restrained.

That restraint really has to come from within the understanding and culture of the people. A constitution might curb the excesses of politicians for a while, but even countries with seemingly strong liberal constitutions are not immune from rapid increases in the size of government and from the erosion of individual rights and liberties by majorities. Constitutional freedoms are hard to protect if the general public loses its understanding of their importance and its will to protect them. Let's hear it for Limited Democracy Day.

Never mind the quality of the Green New Deal just feel the width

The Green New Deal has another of their little reports out. Essentially saying the same as all of the previous ones. Print more money to spend on all that Caroline Lucas holds dear. But it really does have to be said that the level of economic knowledge that goes into these reports is not all that high. We've for some years now had the egregious Richard Murphy shouting that we should just collect all hte tax avoided and evaded in order to beat austerity. He not realising that collecting more tax is austerity. For it reduces the fiscal stimulus as it reduces the budget deficit. And of course, there's a similar gross error in this latest report:

No Need to Repay QE Since QE involves a central bank putting new money into circulation by creating e-­‐money and using it to buy assets, this will not increase Europe’s debt levels according to the originator of the term ‘quantitative easing’, Professor Werner, Director of the Centre for Banking, Finance and Sustainable Development at the University of Southampton. He states that since the central bank can simply keep the assets on its balance sheet then there is no need for taxpayers to pay or to expand public debt. The assets should simply stay on the central bank balance sheet. Furthermore, this debt, which would be owed by the government to the central bank would not have to be repaid, as Adair Turner, the former Chairman of the UK Financial Services Authority has made clear. In the European context, the EIB is the European Union's bank, owned by and representing the interests of the EU Member States and so the debt that the EIB would incur through Green Infrastructure QE would also not have to be repaid.

Well, according to that first paragraph I've no need to repay my mortgage as I used the loan to buy an asset. But leaving that aside note the deep appreciation of matters economic on display here.

QE is the central bank creating money to purchase assets. Therefore the EIB can and should do this. But the EIB is not a central bank with money creating powers. It's an EU development bank that borrows on the usual capital markets for funding. The EIB simply cannot do QE because it's not a central bank.

We might not expect any more insight than this from a combination of Caroline Lucas, Richard Murphy and Colin Hines. But Larry Elliott has always been rather more sound than this: is he still with this group or has he left in disgust?

Cameron's 'full employment' pledge isn't very convincing

Earlier today in Ipswich, Prime Minister David Cameron pledged to turn Britain into a nation of “full employment”, aiming to overtake Germany for the top percentage of people in work. From the BBC:

The PM is aiming for Britain to have the highest percentage of people in work of any developed nation.

Labour said the Conservatives' promises would sound like "empty words" to the unemployed or those on low pay.

Mr Cameron's goal of "full employment" would involve the UK, currently 72%, overtaking Germany's 74% in terms of the percentage of people in work, said BBC assistant political editor Norman Smith.

There is no timescale, but it is an "aspiration which he wants to achieve", he added.

It’s a nice ‘aspiration’ sure, but Labour’s not the only group to think these are ‘empty words’ coming from the PM.

Why?

His pledge to bring full employment to Britons includes measures to increase the number of start-up loans provided by the government, as well as plans to invest in infrastructure, which he hopes will attract business and support new apprenticeships. But no word about changes to the minimum wage. Not a word about the personal allowance or National Insurance tax.

Research that my colleague Ben recently highlighted shows what a negative effect the minimum wage can have on unemployment – it's estimated that “minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point(s)” in the United States during the late 2000’s.

What’s more, a job is significantly less valuable to the newly employed if she is still unable to provide for herself and her family. At the same time the PM scraps the minimum wage, he should raise the tax-free personal allowance to the Living Wage, taking the poor out of tax completely. National Insurance tax should also be scrapped for low-earners, as it works as just another form of income tax.

A backtrack on minimum wage increases combined with pegging the personal allowance and NI to a Living Wage would be a serious indication of Cameron’s commitment to ‘full employment.’ But while he continues to spout plans for increased government spending and building, I remain unconvinced.