Quotulatiousness

May 15, 2025

“You can earn a degree in economics without ever encountering the Depression of 1920-1921”

Filed under: Economics, Government, History, USA — Tags: , , , , — Nicholas @ 03:00

Most modern economists focus on the lessons learned (and not learned) from the Great Depression, but as John Phelan points out, a better learning experience occurred nearly a decade earlier:

Warren G. Harding, 14 June 1920.
Library of Congress control number 2016828156

In July 1921, the United States emerged from a depression. Though the economic statistics of the time were rudimentary by modern standards, the numbers confirm that it had been bad.

By one estimate, output fell by 8.7 percent in real terms. (For comparison, output fell by 4.3 percent in the Great Recession of 2007-2009). From 1920 to 1921, the Federal Reserve’s index of industrial production fell by 31.6 percent compared to a 16.9 percent fall in 2007-2009. In September 1921, there were between two and six million Americans estimated unemployed: with a nonagricultural labor force of 31.5 million, this latter estimate implies an unemployment rate of 19 percent.

“In this period of 120 years,” wrote one contemporary, “the debacle of 1920-21 was without parallel”.

And then it was over. From 1921 to 1922, industrial production jumped by 25.9 percent and residential construction by 57.9 percent. Manufacturing employment increased by 9.5 percent and real per capita income by 5.9 percent. The 1920s began to roar.

What caused the crash of 1920-1921? Why was it so short? And why was the economic recovery so vigorous?

[…]

Bust to Recovery

As output slumped and unemployment soared, there were those urging action. In December 1920, Comptroller of the Currency John Skelton Williams wrote:

    It is poor comfort to the man or woman with a family denied modest comforts or pinched for necessities each week to be told that all will be, or may be, well next year, or the year after. Privations and mortifications of poverty can not be soothed or cured by assurances of brighter and better days some time in the future. Our hope and purpose must be to forestall and prevent suffering and privation for the people of today, the children who are growing up and receiving now their first impression of life and their country.

No such policies were forthcoming.

In October 1919, Woodrow Wilson, then entering the last year of his presidency, was incapacitated by a stroke and his administration ground to a halt: “our Government has gone out of business”, wrote the journalist Ray Stannard Baker.

Wilson’s successor Warren G. Harding, who took office in March 1921, supported Strong’s policies, noting “that the shrinkage which has taken place is somewhat analogous to that which occurs when a balloon is punctured and the air escapes”.

While lower prices meant reduced incomes for some, they meant reduced costs for others. Eventually, producers and consumers started to buy again. By March 1921, lead and pig iron prices bottomed out: cottonseed oil, cattle, sheep, and crude oil followed by midsummer.

The higher interest rates had attracted gold. From January 1920 to July 1921, foreign bullion augmented the American gold stock by some $400 million to $3 billion. By May 1921, 80 percent of the volume of Federal Reserve notes was supported by gold. Interest rates could fall.

In April, the Federal Reserve Bank of Boston cut its main discount rate from 7 to 6 percent. The Federal Reserve Bank of New York followed suit next month, cutting from 7 to 6.5 percent. The Roaring Twenties began.

The Lessons

Students of macroeconomics will learn about the Great Depression of the 1930s. They will learn that many of the policies routinely used to fight downturns now — fiscal stimulus and expansive monetary policy — were forged in those years. You can earn a degree in economics without ever encountering the Depression of 1920-1921. Yet, initially, it was as bad as that which began in 1929 but ended more quickly and was followed by a rapid recovery.

Whereas the policymakers of the 1930s — led by the defeated vice-presidential candidate of 1920, Franklin D. Roosevelt — diagnosed the economic problem facing them as unemployment and deflation, those of 1920 diagnosed it as the preceding inflation. Where policymakers of the 1930s used cheap money and government spending to boost demand, those of the 1920s saw this as simply repeating the errors which had created the initial problem. To them, there could be no true cure that didn’t deal with the disease, rather than the symptoms.

It is for history to judge who was correct, but it’s undeniable that the recovery of the Depression of 1920–1921 was immensely stronger and faster than that of the Great Depression. Ironically, this may be the very reason it is often overlooked in history and economic courses.

An additional lesson of eternal relevance can also be drawn: successful solutions will be those which are based on a correct diagnosis of the problem.

May 12, 2025

The rise of the Hansa

Filed under: Economics, Europe, Germany, History — Tags: , , , , , — Nicholas @ 05:00

At Works in Progress, Agree Ahmed describes the conditions in northern Europe in the Middle Ages that helped create the Hanseatic League:

Today, we typically think of coalitions in the context of modern electoral politics. So it might be surprising that one of the greatest case studies in the history of coalitions is a community of medieval German merchants known as the Hansa.

Starting as individual traveling traders, the Hansa built up coalitions for collective bargaining, collective action, and collective security. Through this process, they formed Northern Europe’s first ever long-distance trade network.

Without corporate structures, they built supply chains that distributed goods between Northern Europe’s major ports, with capillaries that spread into each city’s hinterlands. Without formal territory, their laws governed trading hubs spanning thousands of miles, from London all the way to Western Russia. And, despite being composed of hundreds of member cities, the Hanseatic League had no head of state. Yet the Hansa still managed to sign treaty after treaty with foreign rulers and, a few times, even fought (and won!) wars.

[…]

Better climate, more arable land, and better farming techniques lifted Europe’s crop yields to above subsistence levels for the first time since the Roman period. After several centuries of decline, Europe’s population grew from 18 million in the 600s to over 70 million by the 1300s – nearly triple the population of the Roman period. The nutritional surplus allowed for Europe’s first significant artisan class since the Roman empire. Each town had common craftsmen like blacksmiths, leatherworkers, and carpenters. But local skills and resources allowed for the emergence of specialized crafts, which were unique to specific regions and could therefore be traded.

Tax-hungry lords across Europe began to set up permanent marketplaces for their growing communities. And so hundreds of towns formed in Europe, filled with workers who had flocked from countryside manors. These towns were the first substantial permanent markets in Northern Europe’s history.

As production accelerated, so did shipping. The warmer climate meant waterways in the North and Baltic Seas were navigable for longer stretches of the year. Meanwhile innovations in boatmaking dramatically improved shipping capacity. Excavations of the few surviving ships from this era show that, in the span of a few centuries, vessels tripled their average tonnage from 10 to 30 while dropping the number of rowers required by a factor of four.

The breakthrough in tonnage starting in 900 can be credited to the knarr, a Viking-style ship that was shorter and wider than the longboat that preceded it, allowing it to load substantially more cargo with a smaller crew. Prior to the knarr, trade convoys had to carry cargo on longboats, which were agile but could only carry small fractions of what the knarr could.

A model knarr in the Hedeby Viking Museum in Germany.
Image Source: Europabild via Wikimedia.

When Northern Europe’s first long-haul merchants set off on their voyages, they faced a world that had not yet been ordered for trade. Sailors had to worry about pirates in the Baltic and shipwrecks at icelocked winter ports.

Riverways gave merchants access to inland communities, where they could find products at lower prices to then sell for a profit in major port cities. But riverside towns were more interested in their own engineering projects or grinding their grain and so would block rivers with dams and water mills, and they would redirect water to irrigate fields.

And even if a river were clear of obstructive mills or dams, it might be heavily punctuated by toll stations. The Rhine River, a key shipping artery that connected inland Germany with the Baltic coast, had tolls approximately every five kilometers.

Under the laws of the Holy Roman Empire, the right to collect tolls on the Rhine could only be granted by the Emperor. But unauthorized tolling stations, or tolls levied in excess of what was authorized, were so rampant that the malpractice had a name: the lonia iniusta (Latin for “unjust tolls”). Some local authorities enforced toll collections along rivers by running chains from bank to bank, making it impossible for a boat to pass without paying. Others would patrol the river on their own boats and deny vessels passage until they paid up.

In the first four years of the Great Interregnum Period (1250–73), when the Empire had no emperor, the number of toll stations on the Rhine doubled to 20. This is the origin of the term “robber baron”: local barons, operating out of riverside castles, would set up illicit toll stations and demand significant shares of merchant cargo in order to pass.

The journey on land wasn’t much easier. Toll booths were similarly common. Nominally, these were to pay the landowner for the maintenance of the roads and bridges but in reality they were usually left dilapidated. Merchants voyaging on land had to load their wares on the backs of mules and horses (which were about a third the speed of ships). The narrow widths of medieval roads meant these caravans stretched out in long lines, leaving animals and cargo physically exposed. These vulnerable, slow moving, value-dense caravans attracted bandits who roamed the isolated roads between towns. It was nearly guaranteed a caravan would face an attempted robbery – either illegally by bandits or (somewhat) legally in the form of a toll shakedown – over the course of a sufficiently long trip.

As a matter of safety, Northern European merchants learned to move together in armed groups. These traveling merchant bands were called hansas, a Lower German word meaning “company” or “troop”. When a hansa formed for a trip, they elected an alderman (literally “elder man”) who would speak on behalf of the group to the various authorities – lords, princes, bishops, and other rulers – they might encounter along the way.

Once they completed the arduous journey, the merchants had to deal with the local governments of their destination cities, each of which had different and constantly changing laws. To protect the local merchants and craftsmen within their city walls from competition, princes might demand exorbitant taxes from foreign merchants or deny them access to the city altogether. Merchant bands had to negotiate collectively to secure the right to trade within each city in which they wished to conduct business. And if they made it into the city walls, they might not make it out: capricious lords might suddenly imprison foreign merchants (as happened to German merchants in England in 1468 and Novgorod in 1494), raid their offices, or seize their merchandise.

Local laws threatened foreign merchants more than they protected them. Most town courts, themselves newly formed, had minimal experience adjudicating long distance commercial disputes. When such disputes did arise, courts could take weeks or months to arbitrate them, and were heavily biased towards locals over foreign traders. Without sovereign states, merchants were left dealing with a fractured landscape of town courts, where each market had its own idiosyncratic laws. And because foreign traders could evade punishment by fleeing overseas, courts in England, France, Italy, and the Holy Roman Empire often collectively punished foreign merchant communities for the unpaid debts of their countrymen.

The lack of early medieval records makes it difficult to quantify just how much Northern European commerce grew as a result of continuous long distance trade. Before the late medieval period, Northern Europe’s archaeological record of trade shows just several dozen sites known as emporiums: small, temporary settlements outside of towns where foreign merchants traded with locals. But starting in the late medieval period (1300 to 1500), Lower German merchants began to change this.

H/T to Niccolo Soldo for the link.

May 11, 2025

Will Amtrak survive the DOGE treatment?

Filed under: Economics, Government, Railways, USA — Tags: , , , — Nicholas @ 03:00

J.D. Wong outlines Amtrak’s never-ending financial difficulties:

“Amtrak” by Mike Knell is licensed under CC BY-SA 2.0 .

Founded 54 years ago, Amtrak set out on a bold adventure to see if passenger trains could be profitable. Fast forward to today, this experiment has been unsuccessful. Politicians have often crafted routes to win votes rather than attract riders. As a result, Amtrak has been squandering taxpayer money since its start in 1971.

Take, for instance, the Infrastructure Investment and Jobs Act of 2021. It allocated a monumental $66 billion to bolster passenger rail. Yet, even with this backing, Amtrak’s losses soared from $1.12 billion in FY2019 to $2.12 billion in FY2024. This financial drain isn’t new; America’s passenger trains have lost money for 79 years.

Amtrak asserts that it is “on-track to reach operational profitability”. Yet, this is a bald-faced lie. While Amtrak reported a loss of $705.2 million for FY2024, it didn’t include:

  1. $966.2 million in depreciation;
  2. $447.3 million in “Project Related Expenses”;
  3. $314.1 million in state subsidies, which it classified as “revenue”;
  4. $26.9 million in Office of Inspector General funding

By omitting these costs, Amtrak paints an optimistic view of its financial health. In reality, Amtrak needs larger subsidies than ever before. In fact, Amtrak has been deceiving Congress with its “path to profitability” since 1990.

Although Amtrak touted a “ridership record” for FY2024, this figure is misleading too. Ridership numbers don’t reflect the average length of each passenger’s trip. A more insightful metric is passenger-miles, which measures how far people are traveling. In fact, Amtrak only transported 6.54 billion passenger-miles in FY2024. This is a decrease of 3.40 percent since FY2013.

Amtrak often attributes its financial struggles to its long-haul routes. Yet, the outlook is even bleaker for its short-haul, state-supported routes. Amtrak reported a $251.5 million loss for these routes in FY2024. Yet, with $314.1 million in state subsidies included, the true loss hits $565.6 million. This represents a shocking 94 percent increase from the $291.7 million lost in FY2019.

Amtrak’s advocates often cite highway “subsidies” to explain its financial debacles. But Amtrak guzzles about 39 times more subsidies per passenger-mile than highways do.

Amtrak asserts that freight trains “interfere” with its passenger services. However, Amtrak often makes questionable route choices despite having legal priority over freight. Between Chicago and Los Angeles, the Desert Wind lost less money than the Southwest Chief. Despite this, Amtrak favored the Southwest Chief, which passed through more congressional districts. It discontinued the Desert Wind in 1997, leaving Las Vegas with no train service.

QotD: Corporate taxes

Filed under: Business, Economics, Government, Quotations — Tags: , — Nicholas @ 01:00

Many politicians, pundits and some economists would have us believe that corporations pay taxes, but do they? Economists distinguish between entities who ultimately bear the tax burden and those upon whom tax is initially levied. Just because a tax is levied on a corporation doesn’t mean that the corporation bears its burden. Faced with a tax, a corporation can shift the tax burden by raising its product prices, lowering dividends or laying off workers. The lesson here is that only people pay taxes, not legal fictions like corporations. Corporations are simply tax collectors for the government. Similarly, no one would fall for a politician telling a homeowner, “I’m not going to tax you; I’m going to tax your property”. I guarantee that it will be a person, not the property, writing out the check to the taxing authority. Again, only people pay taxes.

Walter E. Williams, “Economics Reality”, Townhall.com, 2020-02-04.

May 8, 2025

QotD: Trade empires

Filed under: Economics, History, Military, Quotations — Tags: , , , , — Nicholas @ 01:00

The final (and possibly ultimate) sort of empire is the Trade Empire. These develop more because exploring traders have a need for safe bases and secure lines of communication to make their trade work. Theoretically trade empires could be land based (and both the American West and the Chinese spread down the Silk Road argue the case that they started as trade security rather than conquest … no matter how they finished). But in reality the main cause of and reason for trade empires is the development of water transport. Specifically ocean transport.

So let us consider the motives of Empire in a few cases.

The Phoenicians had a magnificent trade empire, though with a few elements we find familiar from the more recent Viking version, or indeed the Venetian “Republic” — namely a bit of raiding, and quite a bit of slave trading. All three broadened into a bit of conquest — Carthage, Normandy and the sack of Constantinople in the 4th Crusade come to mind — but all those offshoots were by-products of the original cultures, and none of them became the norm for the ongoing home culture (each of which faded away as circumstances changed and they failed to adapt). So we could say that they were essentially trading empires.

Greece and Carthage and Rome were also trade empires, initially letting their security concerns drag them into a bit of conquest on the side. The difference in their cases was that the conquest element became dominant and completely changed the “homeland”. The city states of Greece becoming the world-conquering hordes of Alexander, and completely undermining the vibrant city state cultures that had proceeded them. The Phoenician trading city of Carthage becoming an expansionary conquest state that eventually pushed Rome too hard. And Rome’s overseas campaigns in Spain and North Africa completely undermining the independent farmer/citizen/soldier class of the Roman Republic, and replacing them with a system of professional troops whose loyalty could only be bought by ever increasing conquests by the emperors.

Naturally every expansion eventually reaches limits, and the concern reverts to trying to secure what you have, and hold the outsiders further away. Which is why, amusingly, people like the Romans and the Chinese came through their expansionary conquest phase, and then found themselves back in the position of having to protect the fringes through deals with tribes that can be traded with/employed by/or paid tribute. Cue Attila the Hun and his ilk.

So empires on the way down may also be considered trade and security empires I suppose, though many still had a conquest impulse (for fame or fortune or simply to pay the defenders off) built in, or tried to act as if they were still conquering hordes. Cue Constantinople and Belisarius.

In fact most empires will go through a variety of stages, though I think it fair to say that most empires have a core purpose and attitude, no matter how they tinker at the edges to deal with specific circumstances.

Nigel Davies, “Types of Empires: Security, Conquest, and Trade”, rethinking history, 2020-05-02.

May 5, 2025

Make America Austere Again?

Filed under: Economics, Government, Media, Politics, USA — Tags: , , , , — Nicholas @ 03:00

The first 100 days of the BOM haven’t been quite what anyone expected. Close allies and trading partners were shocked at the new administration’s devotion to 1920s tariff “diplomacy”, supporters were dismayed to not get lots and lots of perceived wrongdoers of the Biden administration getting perp-walked for the cameras, and ordinary Americans were presented with a much worse domestic economy than they were promised:

Trump wasn’t totally fixated on economic matters … he still found time in his busy schedule to troll Catholics on his Truth Social platform.

On Wednesday, in the prelude to a cabinet meeting, U.S. President Donald Trump made yet another remark to chill the blood for those concerned about his country. Trump’s cat-and-mouse game of arbitrary changes to American import tariffs is starting to raise concerns about prices and supply chains for consumer goods. The American economy has unexpectedly shrunk in the first 100 days of Trump 2.0, even though workers and businesses are scrambling to make purchases before the effects of Trump tariffs set in. The underlying state of the economy is probably worse than the short-term numbers.

Trump says this is all a matter of “get(ting) rid of the Biden ‘Overhang'”, i.e., it’s his immediate predecessor’s fault. And let’s face it: no other politician on Earth would say anything else 100 days into an executive term. If that was as far as Trump went, it wouldn’t be of unusual concern. What struck me was his separate remark implying that, yeah, tariffs might foul up supply chains a little in the transition to the glorious economy of the future, but haven’t we Americans had it too soft for too long?

“Maybe the children will have two dolls instead of 30 dolls,” the president mused. “So maybe the two dolls will cost a couple bucks more than they would normally.” The message, which brazenly puts the contentment of children front and centre, is one you can’t imagine any other American leader delivering so directly in peacetime: have you all considered being happy with less?

The answer one would expect the median American voter to give is “Hell no”. It’s crazy that I should have to write this, but consumer abundance is a defining feature of the United States! During the Cold War, American supermarkets were the unanswerable argument for economic freedom: you could summarize the United States pretty reasonably as “It’s the country that coined the word ‘super-market'”. In our hyper-interconnected social-media world, I see a dozen conversations a week in which some European boasts of affordable healthcare, walkable neighbourhoods and having July and August and half of September off work every year: the inevitable answer from Americans is “OK, but have you been inside a Buc-ee’s, Gustav?”

Of course, it’s been a very long time since media-decried austerity in government has actually meant any kind of actual reduction in outlay … it’s usually just a (very) slight decrease in the rate of increase rather than actual dollar-value reduction. But, as Chris Bray points out, this time for sure:

I was planning to spend $100 on groceries this morning, but then I decided to slash my grocery budget, so the amount I actually spent on groceries plummeted to just $99.97, plus a small eight dollar supplemental on previously deferred grocery needs, bringing the total to a shockingly parsimonious $107.97. These major cuts caused serious alarm in my household.

Donald Trump, Politico warns, is scorching the earth:

This is the common theme everywhere, as the administration offers the first not-very-detailed hints about its plans for FY ‘26 discretionary federal outlays. The Huffington Post concludes that Trump is pulling out the BUZZSAW:

The Federal News Network sums up the size of the hit, and compare the topline number to the language about scorched earth and buzzsaws:

    Overall, the administration is looking to increase national security spending next year by 13% and decrease non-defense discretionary spending by 7.6%, meaning the White House is asking for $1.7 trillion for the discretionary budget down from $1.83 trillion this year.

While the White House plans don’t get into the subject of total federal spending, focusing narrowly on discretionary spending, the implication is that federal spending overall will go from about $7 trillion to about … $7 trillion. But TBD.

You can read the entire White House proposal for discretionary funding here. Trump is proposing deep cuts in some federal departments and programs, but is also proposing to offset those cuts with sharp increases in military spending and “homeland security”, meaning border security and sending poor gentle immigrants to places where Chris Van Hollen will fly to stare into their beautiful eyes.

May 1, 2025

When “looming dystopia” is the preferable scenario

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , , — Nicholas @ 04:00

Elizabeth Nickson on just how badly the great and the powerful have managed to screw up so badly that instead of opening for Anthrax at the Hollywood Bowl, “Looming Dystopia” might actually be one of the better possible futures we face:

I asked Grok to show me Looming Dystopia opening for Anthrax. This is the “in Gothic style” version.

I am a person of faith, of Christ, not a very good one, but one who has been devoted for a long time. I’m not saying I didn’t spend twenty years in the great big glittering world, where I indulged every whim, lived among the powerful, beautiful, God- hostiles, adopted their habits of speech and dress, went to every small exquisite museum, the play of the moment, the art openings, the restaurants and parties, became a sophisticate able to live within that world as handmaiden or companion. I mean, for almost ten of those years, I had a husband who never, not once, came home without a present. But even that came of prayer, of a desire fulfilled a wish granted, of prayer, as in “You want this? Ok then, you will sicken, but here it is”.

That world – the enrichment of culture that came out of the 80’s and 90’s – determines today. That life is the model and goal for many and in fact, now the design, the plan laid out by those who plan the future of the world. Humans shunted deliberately into city life, then enhanced via surgery and chip. Indulgence, consumption, fighting for preference, ambition. Cultural creatives, unmarried, oddly-sexed, politically left would determine the future, their gifts the siren call of the arts, fashion, grand bohemia, Hollywood, eat, drink and travel merrily. The end goal of life: your individuality, your woundedness, your self care, the full expression of your specific gifts. If you are lucky you too can be Lady GaGa or BlackPink and have stadiums roar when you appear. Other humans? The state will take care of them, do not worry. Maybe they will die off. Like dinosaurs.

The central banks have gamed this going forward, making the insane assumption that this social movement was permanent. Did they depend on feminism and drugs to stop the next step, ie, young people leaving the city to build families? Even if they did, they thought they could stop it. Why? Because fascist greens like John Kerry, told them that rural regions must be left to “recover”.

Therefore they gutted the suburbs of financing, because “poor land use”, and “too much car required”, which is preposterous in the Americas with all this land. What else does a young family want but trees and parks, and lawns and a neighborhood of friends, not riven with whores, crackheads and murderous migrants?

The ‘08 crash was predicated on Thatcher’s fiscal success in selling people their council houses in the 80’s. Wonderful! thought Bill Clinton’s team, let’s lead marginal Americans into housing, and lo, we still haven’t paid the freight for that insane idea. I had a paralegal friend in Florida who was foreclosing on $500,000 loans to actual crackhead whores. Clinton’s people, lost in their greed and benevolence, forgot that the British council estate dweller was homogenous, placed, as in deep roots in the area, and stable. In the U.S and Canada, idiot banks lent to just about any joker who turned up with a plausible story. Then the speculators invaded, everyone cashed out merrily, then ka-boom. And pioneering walking away with $100 million from government “service” was Jimmy Johnson, Head of Fannie Mae.

I mean, it’s stupid. The western world’s current bankruptcy (and it’s severe) was caused by Central Bank clowns. Those ridiculous, repellent, hideously expensive COP #8,789 conferences had two outcomes: banks would be compelled to lend to green, require green, require climate mitigation, and jump through DEI, ESG hoops, and governments would chunk up green regs. And prosperity would bloom! Not only that, they surreptitiously, across the world, funded actual companies that poisoned the air, water and land. And when I say “they funded”, I mean the taxpayer did. A lot of our money went into insane outfits like this:

And just like Malcom Gladwell’s tipping point – it took ten years – boom, economic activity came to a screeching halt, except for the wreckage of green energy enterprises everywhere, government debt and re-financing. For instance, the Obama-created outfit, the Ivanpah Solar Power Facility, that consists of three solar concentrating thermal power plants in California burned through $1 billion before it collapsed in February. It is one of thousands across the west, all subsidized by the taxpayer. Unwittingly. The press is so embarrassed, they don’t report the trillions lost to green energy projects.

Again, the central bankers own this.

Central bankers have become a metastatic cancer on the economy. By definition, they are late adopters on the marketing curve. By the time they notice something and make their plans upon it, it’s over and something new is growing. Today, the mega-cities everywhere are emptying of everyone over 30 with an income, even or rather especially in China, where the young have just said … nope, a pox on your Commie plans. Chinese, European, British, American, everyone is trickling back to the towns of which their ancestral memories sing, where they can root, where they can live smaller, without environmental toxicity, the rank depravity of the super-culture, the ruinous stupidity of green. The great cities are now super-dangerous for women, and that is spreading as the autocrats in power force violent young men into towns. Last week a young woman in Vancouver fought off a migrant who tried to kill her three times in Stanley Park. My modest, Christian, pioneer family who built the early city along with their community of 10,000 and neglible government, made that park in the early 1900’s; my great grandmother was the first woman to ride a bike in bloomers through that park. It was so safe for 100 years you could let kids play in it after dark, calling them home with a whistle. It is one of the world’s great urban parks, more astonishing than Central Park. This is an outright tragedy. And it is unnoticed, unreported, except on TikTok.

The economics of migration

Filed under: Economics, Education, Europe, Government, Media, Politics — Tags: , , , , , — Nicholas @ 03:00

Lorenzo Warby wonders if an entire discipline can commit suicide:

Can an academic discipline seriously decline? Yes. Disciplines which were once mainstays of universities have either vanished or shrunk to pale shadows of their former selves.

What about a social science? One can envisage a social science disappearing. The most obvious way is it gets utterly discredited and replaced. A less obvious way is its institutional bases could disappear. A final way is its entire social basis disappears.

The West is currently marked by two entirely different discourses on migration that seem unable to interact. One is migration-as-economic-boon. This is the outlook of mainstream Economics. Migrants add to the economic activity of societies and potentially retard the effect of an ageing population by replacing absent local children with foreign migrants. This discourse invokes the authority of Economic Theory and its statistical methods.

This outlook typically treats criticism of migration as economically illiterate, socially retrograde, or morally bankrupt; or some combination of thereof. It is protected by the Self-Righteous, Knowing scoff which is such a feature of the modern professional-managerial class. They are the Masters of Knowledge, and of Moral Concern, who the plebs should defer to.

The other discourse talks in terms of social and democratic decay, increased crime, threats of violence, increased fiscal stress, even the possibility of civil war.

This is the world where, in Sweden — due to the stress on social and fiscal order from migration — it has become policy to pay migrants to go away. This is the world where highly intelligent and informed folk quietly discuss how the performance of economists on migration has been so catastrophically bad, it may bring down the entire discipline.

The adherents of the second, problems-with-migration, discourse are well aware of what mainstream Economics has to say on migration, and judge it to be obviously and demonstrably — even catastrophically — false. That it is much harder for migrants to contribute positively to a society than mainstream Economics admits, and this gets worse the higher the rate of migration. A recent Dutch study (Jan van de Beek, Joop Hartog, Gerrit Kreffer, Hans Roodenburg, The Long-Term Fiscal Impact of Immigrants in the Netherlands, Differentiated by Motive, Source Region and Generation, IZA DP No. 17569, December 2024. https://docs.iza.org/dp17569) found that:

    Only 20% of all immigrants [to the Netherlands] make a positive lifetime net contribution to the public budget. Groups with large contributions come from Scandinavia, the Anglo-Saxon world and a few other countries like France and Japan.

The adherents of the first discourse seem either utterly unaware of the second discourse, or protected from even considering it by the Self-Righteous Knowing scoff. Their mastery of Theory is such, they cannot possibly be so catastrophically wrong.

The notion that migration could break a society along its existing fracture lines to the point of civil war would absolutely be treated with the Self-Righteous Knowing scoff, despite there being — as is discussed below — at least three historical examples of precisely that happening.

April 30, 2025

Low-energy Europe

Filed under: Britain, Economics, Europe — Tags: , , , , , — Nicholas @ 03:00

Depending on who you read, it appears that the massive power outage in southwestern Europe nearly expanded across the continent, as Spain and Portugal went dark taking parts of other neighbouring countries’ networks down as well. James Price explains that this sort of thing is likely to be a recurring phenomenon as Europe leans ever more heavily on unreliable sources of electricity:

In his 2017 book The Strange Death of Europe, Douglas Murray accused Western European nations of Geschichtsmüde, being weary of history. President Trump might translate this by recycling a sobriquet he used against Jeb Bush — being low-energy.

This is now literally the case in both the United Kingdom and Germany, who have the most expensive energy costs in the developed world. The consequences have been catastrophic, in economic, political, environmental, and even geostrategic terms.

The true tragedy is that so much of the pain is self-inflicted, the result of bad, rushed policy designed to make people feel warm and fuzzy inside, rather than actually keeping people warm.

Net Zero

The commitment in Britain to “net zero emissions by 2050” was signed into law in the dying days of Theresa May’s premiership, as an attempt to give her a “legacy” after three painful years as Prime Minister. That legacy is likely to be lost, like the works of Ozymandias, as the world comes crashing back to economic reality.

The debate over the introduction of net zero was conducted during the Conservative Party’s leadership contest to succeed May, and therefore all attention was away from what would prove to be the most impactful economic decision of the year. The debate lasted all of 90 minutes.

The results have been completely devastating for Britain’s economy in all sorts of corrosive ways. For one, 169 years after Henry Bessemer worked out how to mass-produce steel in Sheffield, Yorkshire, Britain almost lost its ability to make the stuff here in Britain. Global factors like Chinese dumping play a part, but the extent of environmental regulation on British industry is making it impossible to sustain any kind of heavy industry. And now, British Steel has been nationalized once more, lumping the taxpayer with the losses and liabilities, but without doing anything to address the root causes.

But the government meddling does not stop there. In agriculture, a cruel, ideological attack on farmers (over whether farms can be charged inheritance tax) is going to spur more prime farmland to be turned into solar panel fields in a country where the sun often doesn’t shine.

There are now many statutory requirements to push environmental policies in all sorts of areas, to the complete detriment of other requirements, namely economic prosperity, that would otherwise be carefully balanced. So new homes in Britain have to have small windows, to increase insulation efficiency.

HS2, a much delayed and hideously over-budget high speed rail line between London and Birmingham, is building a one-kilometer-long tunnel to prevent bats being harmed by high-speed trains. The tunnel will cost over £100 million to build. Not only is there no evidence that the trains would interfere with bats, but there is also some evidence that the bat tunnel may actually be a bat-killing tunnel.

Hinkley Point C, the only nuclear power station being constructed at the moment in Britain, is having to construct a “fish disco” at huge costs to push fish away from being sucked into the cooling system.

This kind of environmental “everythingism” is not just holding back progress, not just costing huge amounts; it is corrosive of every attempt by people who just want to get on with building and growing — even “green” enterprises. Orsted, an offshore wind company, had to fill in forms five times longer than Tolstoy’s War and Peace, and had to wait nearly three years for a decision to build one farm.

And specifically about the Spanish situation that nearly triggered a Europe-wide blackout, from the social media network formerly known as Twitter:

SPAIN BLACKOUTS: AN ANONYMOUS EXPERT VIEW

From a deep groupchat, last night, translated from Spanish, written by an expert in transmission and distribution of power. Not my words.

“What has happened on April 28 has a well-located origin: the Aragón-Catalonia corridor, which is one of the most important electric highways in Spain. There is not only the electricity produced by our solar and wind farms in the northeast, but also the electricity that we import from France. This international interconnection, although weak (it can only contribute 3% of our demand, well below the minimum of 10% that marks the EU), in times of stress is essential to balance the network.

“At 12:32 p.m., in that Aragón-Catalonia corridor there was an electric [shake]. What exactly does “shake” mean? It means that suddenly and abnormally, the power that flowed through those lines began to vary violently, rising and falling in a very short time. Such abrupt variability can be due to three main causes:

“1. That a relay or transformer on that electric highway detects an abnormal flow of current or voltage (higher or lower than expected) and automatically disconnected to avoid burning or [being] destroyed. This is called that “opens” a relay or switch: it jumps and cuts the passage of electricity to protect itself.

“2. That the enormous concentration of renewable energy in that area (mainly solar and wind) has created an electrical resonance: electronic inverters, which synchronize current, can sometimes be amplified between them if a small voltage alteration (for example, due to clouds, strong wind or a slight failure) extends like an echo to all devices, causing widespread oscillations.

“3. That a wrong control order has been sent (by mistake or attack) from the SCADA systems, disconnecting or reducing the generation of multiple hit plants. There is no confirmation of this possibility yet, but it is being investigated.

“What is known is that as a consequence of that shake, the interconnection with France jumped: we were isolated just at the worst time, when the peninsula needed external support to stabilize.

“Without that French help, the frequency of the peninsular network (which should always be 50 Hz exact) began to drop quickly. The frequency is like the heartbeat of the network: if it falls too much, the systems understand that the patient (the network) is collapsing and automatically disconnected so as not to self-destruct. Thus, in just five seconds, the solar and wind farms were turned off — [they are] very sensitive to frequency variations — 15 GW of power was lost suddenly (60% of all the electricity generated at that time), and the network could not take it anymore: it collapsed completely, showing the Redeia Platform (REE) a “0 MW” nationwide. That does not mean that all the turbines were physically turned off, but there was no generator synchronized at the common frequency of 50 Hz. It was, for practical purposes, a country [turned] off.

“To [restart] a completely dead network, one essential thing is needed: plants that can start in black, that is, without receiving energy from anywhere else. Spain has identified five large hydroelectric jumps capable of doing this. However, and here is one of the great negligences that are coming to light, three of those five groups were stopped in scheduled maintenance, by business decision supervised by the administration. Only two were operational. That made the recovery much slower and weaker than it should be in a normal contingency plan.

“The result is that, after almost 10 hours, only 35% to 40% of the national supply has been recovered, and there are still large areas in the dark or under scheduled cuts.

“The situation reveals a very serious underlying problem:

“Spain is still an energy island: it only has 3% foreign exchange capacity compared to its total demand.”

Part 2:

“The network depends a lot on variable renewables, which are disconnected quickly in the face of any instability.

“The lack of physical inertia reserves (i.e. large rotating masses such as thermal power plants or classic hydraulics) prevents the disturbances from damping.

“And poor maintenance planning left without enough hydraulic muscle to respond to a crisis.

“The most likely causes, with current data, are:

“A combination of technical failure in protection or in synchronization, added to a serious lack of operational forecast and maintenance (probability ≈ 40%).

“The possibility of an intentional cyber-physical attack remains in analysis (≈ 25% estimated probability).

“Other factors such as human error, punctual atmospheric phenomenon or mixed causes complete the rest.

“In short: an initial shake at the most sensitive point of the Spanish network — the Aragón-Catalonia corridor, door to Europe — left the peninsula isolated and vulnerable. The network could not sustain its own demand because it did not have sufficient assistance, nor stable physical reserve, nor enough bootable plants in black. Three of five hydroelectric jumps were out of service when they were most needed.

“For this reason, Spain went out in five seconds, and that is why it still continues to light little by little, fragile, slow and exposed.”

April 29, 2025

The US Cancels Tariffs and Saves the World – W2W 025

Filed under: Economics, Europe, History, Japan, USA — Tags: , , , , , , — Nicholas @ 04:00

TimeGhost History
Published 28 Apr 2025

After seeing the devastating effects of the trade war that ravaged the global economy between the world wars, in 1948 the US is determined to usher in an age of free trade and global cooperation that will last until the spring of 2025.
(more…)

April 26, 2025

Lies, damned lies and government statistics

Filed under: Cancon, Economics, Food, Government, Media, Politics — Tags: , — Nicholas @ 03:00

Francisco at Small Dead Animals linked to this interesting examination of the difference between the official inflation rate and the actual inflation ordinary Canadians are coping with:

    Great news! We’ve brought inflation back under control and stuff is now only costing you 2.4 percent more than it did last year!

That’s more or less the message we’ve been hearing from governments over the past couple of years. And in fact, the official Statistics Canada consumer price index (CPI) numbers do show us that the “all-items” index in 2024 was only 2.4 percent higher than in 2023. Fantastic.

So why doesn’t it feel fantastic?

Well statistics are funny that way. When you’ve got lots of numbers, there are all kinds of ways to dress ‘em up before presenting them as an index (or chart). And there really is no one combination of adjustments and corrections that’s definitively “right”. So I’m sure Statistics Canada isn’t trying to misrepresent things.

But I’m also curious to test whether the CPI is truly representative of Canadians’ real financial experiences. My first attempt to create my own alternative “consumer price index”, involved Statistics Canada’s “Detailed household final consumption expenditure“. That table contains actual dollar figures for nation-wide spending on a wide range of consumer items. To represent the costs Canadian’s face when shopping for basics, I selected these nine categories:

  • Food and non-alcoholic beverages
  • Clothing and footwear
  • Housing, water, electricity, gas and other fuels
  • Major household appliances
  • Pharmaceutical products and other medical products (except cannabis)
  • Transport
  • Communications
  • University education
  • Property insurance

I then took the fourth quarter (Q4) numbers for each of those categories for all the years between 2013 and 2024 and divided them by the total population of the country for each year. That gave me an accurate picture of per capita spending on core cost-of-living items.

Overall, living and breathing through Q4 2013 would have cost the average Canadian $4,356.38 (or $17,425.52 for a full year). Spending for those same categories in Q4 2024, however, cost us $6,266.48 – a 43.85 percent increase.

By contrast, the official CPI over those years rose only 31.03 percent. That’s quite the difference. Here’s how the year-over-year changes in CPI inflation vs actual spending inflation compare:

As you can see, with the exception of 2020 (when COVID left us with nothing to buy), the official inflation number was consistently and significantly lower than actual spending. And, in the case of 2021, it was more than double.

Since 2013, the items with the largest price growth were university education (57.46 percent), major household appliances (52.67 percent), and housing, water, electricity, gas, and other fuels (50.79).

April 25, 2025

Is Anschluss Back on the Menu? – Rise of Hitler 15, March 1931

Filed under: Economics, France, Germany, History — Tags: , , , , , , — Nicholas @ 04:00

World War Two
Published 24 Apr 2025

March 1931 sees President Hindenburg unleash a controversial emergency decree, suspending key civil liberties to crush political violence in Germany. Meanwhile, Hitler promises legality but openly prepares the SA for the “Third Reich”, and the Nazi coalition in Thuringia collapses dramatically. Germany’s proposed customs union with Austria sparks international alarm — could this trigger another European conflict?
(more…)

Canada’s lost decade, 2015-2025

Filed under: Cancon, Economics, Government, Media, Politics — Tags: , , , — Nicholas @ 03:00

It’s quite remarkable how many economic charts show the US and Canadian economies tracking along similar paths up until “something” happened in 2015 that knocked the Canadian economy well below the US trend line. I wonder what happened in 2015 that could account for this quite visible change in fortune?

GDP growth in Canada fell off a cliff over the period from 2015 onwards. This kinda matters.

Throughout the 2025 campaign, the Conservatives have frequently referred to what they call the “Lost Liberal Decade”, a reference to the fact that Canada has lagged dramatically on virtually every available indicator since the Liberals first came to power in 2015.

In sum, the economy is worse, crime is worse, public services are worse, affordability is worse — and there’s a whole galaxy of niche indicators, such as firearms incidents, refugee backlogs, even life expectancy, that are worse than they’ve ever been.

Below, a quick guide to the fact that, whatever you think of the Liberals, the last decade has really not been great for Canada.

In the year the Liberals took office, 604 people were murdered across Canada. This was already a slight uptick from the year before, when murder rates hit a low not seen since the mid-1960s.

Just seven years later, in 2022, homicides would hit a high of 874. In raw numbers, that’s 270 more murdered Canadians.

But even when accounting for population growth, there are way more murders happening now than in 2015. The homicide rate in that year was 1.71 murders per 100,000 people. As of 2023, the most recent year for which Statistics Canada has released data, it was 1.94.

Put another way, if Canada had stuck to the homicide rates of 2015, we’d have had 94 fewer murders in 2023, 216 fewer murders in 2022, and about 150 fewer murders in 2021.

And it’s a similar story when it comes to virtually every other category of crime. Statistics Canada maintains a “crime severity index” that attempts to aggregate the raw amount of criminality each year in Canada. The index bottoms out just before the Liberals came to power in 2015, and has been on the upswing ever since.

Unfortunately, this is particularly true when it comes to violent crime. For one thing, the number of guns being turned on people each year in Canada has never been higher.

In 2015, for every 100,000 Canadians, there were 28.6 incidents of firearm-related violent crime. By 2022, the last full year for which data is available, this had surged to 36.7 incidents — nearly a 30-per-cent increase in just seven years.

The Correctional Service of Canada publishes annual statistics on incarceration rates, and a noticeable trend begins to emerge starting in 2015: The prison population begins to plummet.

April 24, 2025

Berlin Airlift: From Bombs to Candy – W2W 23 – 1948 Q3

Filed under: Britain, Economics, Germany, History, Russia, USA — Tags: , , , , , , , — Nicholas @ 04:00

TimeGhost History
Published 23 Apr 2025

In 1948, Stalin blockades West Berlin, isolating over two million people without food, fuel, or supplies. Refusing to surrender the city, Western powers launch the Berlin Airlift, history’s largest aerial supply mission, to deliver food, coal, and even candy. As tensions soar, planes defy Soviet threats around the clock — can the Allies really sustain a city from the sky?
(more…)

April 23, 2025

“Liberals have never met a crisis they didn’t think they could spend their way out of”

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 03:00

Jesse Kline refutes Mark Carney’s recent diss against libertarians:

The Liberal Boomer in his natural state (spotted on social media, 20 April, 2025).

“The capacity of the federal government to invest in the economy, to support businesses and individuals, will ensure that we bounce back strongly.”

That was Prime Minister Justin Trudeau announcing an $82-billion support package at the beginning of the COVID-19 pandemic, but it could just as easily have been Carney, who said over the weekend that, “In a crisis … government needs to step up.”

At a Saturday news conference, the Liberal leader unveiled his party’s election platform, which includes $130 billion in new spending over four years to fend off the threats posed by U.S. President Donald Trump.

“It’s said there are no atheists in foxholes, there should be no libertarians in a crisis,” Carney argued to justify the continued spending spree.

This offends me as both a libertarian and an atheist. In fact, Canada would be in much better shape today if there were a few libertarians in the room when the Liberals were dealing with the numerous emergencies they’ve faced over the past decade.

The problem with crises is that there’s no way to predict when the next one will hit. But a prudent government should expect the unexpected and leave some fiscal room in the budget to address unforeseen events, while working to fortify the economy during good times so it can withstand the bad. This is not what the Liberals have done.

They took a $1.9-billion surplus in the 2014-15 fiscal year and turned it into a $25-billion deficit in 2016-17.

[…]

And so, we got more Big Government programs that we could ill afford, while Trudeau turned away world leaders looking to Canada to help solve an energy crisis resulting from Russia’s invasion of Ukraine.

Now, as Carney prepares to launch another massive spending spree to deal with the effects of U.S. tariffs, he’s pledging hundreds of millions of dollars for unnecessary programs, including permanent funding for the Sexual and Reproductive Health Fund to make it easier to abort babies, and $400 million for IVF treatments to create new ones in a test tube.

Needless to say that if there were some libertarians around the cabinet table during the crises of the past 10 years, we likely wouldn’t be facing a major economic upheaval with a $40-billion budget deficit, which Carney wants to increase to $62 billion, and a national debt approaching $1.26 trillion.

Spending always appeals to the voters at election time, and the Liberals have been past masters of using that to get into power. But even though there may be a lot of ruin in a nation, even the biggest of nations eventually runs out of money. According to a report from Policy Horizons Canada, an in-house government think tank, we’re well on the way to reaching that ruin and nobody will like what that looks like:

The report warns that by 2040, housing affordability is essentially limited to the wealthy or those with family help; most new homeowners get help from family, some depend on intergenerational mortgages and have several generations of family living together, and others enter “alternative” household mortgages with friends, with a growing percentage of homeowners also owning rental properties.

“Inequality between those who rent and those who own has become a key driver of social, economic, and political conflict,” reads the report.

Moreover, the report highlights a growing dependence on intergenerational wealth, noting that by 2040, inheritance is widely seen as the only reliable path to prosperity. “Society increasingly resembles an aristocracy,” it states, as family background — particularly property ownership — becomes the defining factor in determining one’s opportunities.

Canadians in this future rarely mix with others of different socio-economic status, and there is a clear disconnect between the aspirations of the country’s youth and economic realities, which leaves most with limited expectations of success.

And finally, the rapid propagation of artificial intelligence has dramatically reshaped the labour market. By 2040, the rise of artificial intelligence will have significantly diminished the availability of jobs in creative and knowledge-based professions, once seen as stable paths to upward mobility.

[…]

As a result of the six factors, Canada’s economy could shrink or become less predictable, with the consumer economy shrinking in size, and a higher proportion of very wealthy, older people holding the capital capacity for investment in new businesses. Labour unions could also grow in power and size from a frustrated population. The mental health of Canadians could suffer from living cost challenges.

With these upward mobility issues, Canada may become a less attractive destination for immigrants, and there could be an exodus of young workers, which would exacerbate the issues with supporting the public and social services that support the country’s growing cohort of seniors. This could also result in a labour shortage in industries where artificial intelligence is most difficult.

Perhaps most dystopian is a partial reversion of Canadian society to a trade-and-barter and neo-hunter-gatherer society by 2040, in response to declining trust in formal systems and reduced access to traditional economic opportunities.

[…]

The report’s vision of a future Canada — where trust in institutions collapses, effort no longer yields reward, and people yearn for systemic change — carries echoes of that dangerous historical crossroads, where ideological extremes once flourished in the face of prolonged despair.

With all that said, how likely is this precarious scenario of Canadian society in just 15 years from 2025?

According to Policy Horizons Canada, its “research suggests that it is plausible and would create challenges across a range of policy areas.”

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