Blog Review 846

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It's an old old story. If you're facing string economic pressures then something has to give. Interest rates and exchange rates work. But when changes in those are not available, you have to fall back on changes and reductions in nominal wages (as well as changes in real wages). Such changes are not a pretty sight in democratic nations.

The latest bank bailout is Her Majesty's version of AIG. Like it worked so well when it was just AIG without  Her Maj, right?

So do we want nationalisation or nationalisation with due process?

After all, property rights are essential not just to liberty but to any pretence of a functioning economy.

You don't have to be entirely an Austrian to see that there are merits to certain Austrian ways of looking at events.

Just how independent is a "charity" with an income of £500,000 a year, less than £5,000 of which comes from voluntary donations?

And finally, past thoughts on geoengineering.

Obama: The politics of hope

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The sycophancy surrounding yesterday’s concert in honour of Obama was quite beyond what any sane person should be able to stand. Even if you are not familiar with the music below, the titles will give you a clue to the theme of the evening, celebrities worshiping at the feet of the new President:

  • “Higher Ground" - Usher, Shakira and Stevie Wonder
  • "A Change Is Gonna Come" - Bettye LaVette and Jon Bon Jovi
  • "Lean on Me" - Mary J. Blige with Herbie Hancock
  • "One Love" - Will.I.Am and Sheryl Crow
  • "The Rising" - Bruce Springsteen
  • "Shower the People" - James Taylor, John Legend and Jennifer Nettles
  • "Pride (In the Name of Love)" - U2

Let it not be forgotten that the man that stands before you is a politician. Celebrity has its place, but surely not here. It is a sad reflection on many people in the world that they are investing so much hope in one man, charming as he undoubtedly is. Ronald Reagan - who was as far as politicians go, as good as it gets – made this offhand comment that should be borne in mind: “Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first." He really did not go far enough. After all, the oldest profession is usually a free contact between two consenting individuals, whereas the second is the forced consent of the majority upon the individual with the small recompense of a vote every few years.

The fun police

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Last night More4 aired their latest documentary: ‘The Fun Police’. The programme followed a number of Health & Safety officers on their daily routines. Although the essence of the documentary was light-hearted entertainment, dryly mocking the characters being filmed, in truth it exposed serious inefficiencies and losses caused by health and safety regulation.

One scene showed an officer going to a small, independent workshop. He walked in and after a short inspection declared that the manager would have to stop using two large cutting machines –if he refused, he was threatended with prosecution. The look of shock and disbelief on the owners face was in stark contrast to the lack of regard and respect the Health & Safety official showed towards his business and employees. Small firms are facing tough times. By enforcing such regulation so stringently, the government isn't helping.

The Fun Police also showed the excessive resources the government wastes on regulation such as health and safety. At one point, an H&S officer wanted to know what glues were used in a local nail parlours (as some glues have been banned in the US), despite the glues still being legal in the UK. She entered one parlour loudly declaring that she was a H&S officer in front of numerous customers. When she was greeted with a less-than-impressed manager she began to threaten him with a legal action – all this was unnecessary and totally at the cost to the taxpayer.

The absurdity of it all was illustrated perfectly by a traditional village donkey show where children could no longer ride the donkeys; instead, the children were replaced with inflatable toys – all in the name of regulation. Increasingly, it is clear that government seems hell-bent on restricting both our businesses and our fun.

Flying high

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altTheir heads rose from amongst the manure strewn cabbage patch as the rumbling sounds grew ever louder. The bright shiny tubes ascended to the heavens.  Distracted from their picnic on the heath by the disturbance, Islington's middle classes were under threat. Both of these groups have found a common ground. They hate the idea of Heathrow expanding. The former because they believe that their cabbages will wilt. The latter,  wealthy enough to travel regardless of cost, are tangled in a web of armchair environmentalism.

What of one of the common claims that it will drastically increase carbon dioxide emissions? Well as things stand, the UK’s total aviation emissions (including non-UK flights, 2006 figures) stands at 6.4%, or 36  million tonnes. To put this into perspective, that’s 0.128% of the total global COs emissions. Even if one runway increases aviation’s carbon dioxide output by 100% it will stand at a quarter of a percent of the total global output. Over the next decades aeroplanes are destined to become quieter (excepting the A380) and cleaner, as airlines respond to demand from users, airlines and people on the ground.

We now have to suffer at the hands of their crass stunts for the next few years as billions of our money is wasted on attempting to achieve the building of a runway.

Blog Review 845

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It isn't quite true to say that a bank which is insolvent has no value. Strange thought, but true all the same.

We'll have an inaugural speech tomorrow and there will be many ooohs and aahs. Here's Milton Friedman's response to an earlier such speech which got a lot of such adulation.

The perils of this libertarian paternalism.

Apparently simple economics is beyond the ken of our own bureaucratic paternalists.

The joys of fiscal stimulus. We've had at least three such stimuli in the past 8 years: guess how well they worked out?

A site that you really do want to contribute to. Keeping track of those charities which are simply mouthpieces for government propaganda.

And finally, fare thee well, Tony Hart.

Britain, immigration, jobs and jacquboots

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Britain's Home Secretary Jacqui Smith wants to create more jobs for British workers. She doesn't want them going to these nasty foreigners who keep coming over here and snapping up the best placements. So she wants to make firms advertise job vacancies at JobCentres first, and try that, before offering a job to non-residents. The government says that this could mean 60,000 or more jobs going to Brits rather than foreigners.

This smacks of posturing, like Gordon Brown's famous 'British jobs for British people' speech of a year back.It took about twenty seconds for the European Union to point out that such a policy was illegal – jobs in any EU country have to be open to residents of any other EU country. (Though try to get a good job in France and you will quickly find whether the reality matches the rule.)

The trouble is that government officials tend to treat politicians' headline-grabbing soundbites seriously, and actually try to put them into practice. Doing so this time would be a very bad thing.

Smith is focusing on all those people who come from non-EU countries – the sort who cause her department so much trouble, even at the best of times. Firms, she thinks, should be forced to discriminate against them, and hire them only when there is no alternative.

This is a Jacquboot policy. We are supposed to be opposed to discrimination. And I can't see what business it is of the government who firms choose to hire. Left to their own devices, businesspeople will hire the workers they think are best for the job. So the job will be done better, or cheaper, and British business will benefit from it – which means the nation as a whole becomes more competitive, trade expands, and we all benefit. If firms are forced to hire particular workers just because politicians demand it, then they'll be getting second best. Already, many companies hire foreign workers because they find them not just willing to work for less, but willing to work harder or longer than many of their British counterparts.

Perhaps the possibility of being pipped to a job by some non-Brit might be a useful lesson to us all, that in Brown's fake boom we all got rather flabby and lazy, but the key of keeping a job in this competitive world is hard work.

The big government tipping point

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In this article for the Wall Street Journal, Peter Wehner (a senior fellow at the Ethics and Public Policy Center) and Paul Ryan (a US Republican congressman) argue that socialized healthcare is a big government 'tipping point'.

They are right. In the article they point to Britain, saying that:

Once a large number of citizens get their health care from the state, it dramatically alters their attachment to government. Every time a tax cut is proposed, the guardians of the new medical-welfare state will argue that tax cuts would come at the expense of health care -- an argument that would resonate with middle-class families entirely dependent on the government for access to doctors and hospitals.

Sound familiar, anyone?

Of course, there is also another way in which socialized healthcare alters the relationship between the individual and the state, one which Wehner and Ryan don't mention. That is that once the government is in charge of your healthcare, they think they have a right to tell you how to live your life. Don’t smoke, don't drink, don't eat salt or sugar or fat, exercise, etc, etc! Pretty soon they get tired of telling you what to do and start trying to bully you into it with taxes, regulations, and 'social-stigmatization'.

Perhaps this is what Ayn Rand was getting at when she said, "The difference between a welfare state and a totalitarian state is a matter of time."

Obamania!

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I think there is something very wrong with the hype surrounding Barack Obama and his forthcoming inauguration. The whole thing seems to me more fitting to a totalitarian dictatorship than a great democracy, more like a monarch’s coronation or a Roman general’s triumph than a swearing-in ceremony for an elected president.

Take the cost of the event for starters: $160 million (ten or eleven times what it cost to inaugurate Clinton and Bush). Hardly what taxpayers fork over their hard-earned cash for, is it? And then consider that there will be 40,000 security personnel at the inauguration – more than the number of troops the US has serving in Afghanistan. The outgoing President has even declared a ‘state of emergency’ in DC. Kathryn Muratore got it right on LewRockwell.com when she said:

Welcome to the inauguration of the "leader of the free world." You may only enter the city through these designated roads and transit systems. You will only have access to the inauguration after passing through a security checkpoint, where you will be treated with suspicion. There will be thousands of armed men surrounding you at the ceremony and parade. But, hey, that's the price of freedom!

I’m sure that if the founding fathers could see it, they would be absolutely sickened.

And of course, it isn’t just the event that is the problem – it’s what it says about America and its relationship with its politicians. The whole thing verges on deification, as though the president is some mystical and all-powerful being who can and should solve everyone’s problems for them. Cato’s Gene Healy calls it ‘The Cult of the Presidency: America’s Dangerous Devotion to Executive Power’, which strikes me as pretty apt.

When you look at a spectacle like this, is it really any wonder that politicians get such inflated opinions of themselves and their abilities?

Blog Review 844

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That coming stimulus plan in the US. Amazing how much the list looks like all the things that various lefties have wanted for ages rather than, you know, a stimulus.

We know why the politicians are converted: they get to spend lots of other peoples' money. But why are so many economists now recent converts to Keynes?

Not good news for the German economy....and looking back at the past performance, what were the benefits of Rhineland capitalism again?

We can indeed solve poverty: why not simply kill the poor?

This bad bank idea being floated at present. While our most recent Laureate did like Gordon Brown's last idea, he doesn't like this one.

A website you don't want to miss. Free and open conversation with New Labour.

And finally, useless superpowers.

The importance of sunk costs

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George Monbiot manages, surprisingly, to address the correct point here:

That the Conservatives, following the Liberal Democrats and the Greens, can outflank Labour so easily on this issue shows how attached the governing party has become to "sunk costs". By this I mean the lobbying power of companies which have already made their investments and want to squeeze every last drop out of them before they expire.

George Monbiot has, unsurprisingly, however managed to address it in the wrong manner.

Now it is true that it's a fundamental tenet of decision making that you shouldn't consider sunk costs. What you've already spent on something shouldn't cloud your judgement as to whether you should spend more on it, for example. Throwing good money after bad is not to be recommended after all.

However, we do indeed want to think about the type of sunk costs that George is referring to when we adress the thorny subject of climate change. The cost of whatever it is that we do (assuming that we do anything at all) is going to be massively influenced by whether we think about all of the investments we have already made or not. No, not quite "sunk costs" in the sense of those we shouldn't be thinking about but the costs we have sunk in assets that are still viable, still operating.

Whatever it is that we do to create non (or low) carbon emission energy generation, just as an example, should be done in sync with the requirement to replace our current energy generation system as it wears out. We shouldn't simply tear down what works now and replace: we should wait until it needs to be torn down anyway and then replace with whatever new system we decide upon. This is true of all of the various measures suggested. We really don't want to throw away hundreds of billions of pounds worth of currently operating infrastructure and build it all again: we want to wait until we have to replace it in the normal cycle and then do it in the new manner.

And it isn't just "companies" which want to squeeze every last drop out of such things. We all want to get those last drops for it is we who have paid for the originals (people being the only people who can actually pay for anything, companies simply being a convenient legal fiction) and we who will have to pay for the new.

If we throw away hundreds of billions of assets that are still adequate and functioning then we will make ourselves poorer by precisely those hundreds of billions we are throwing away. Which really doesn't sound like a very good idea.