Quotulatiousness

November 1, 2024

“[H]er plan will mean the obliteration of your savings, the end of banks and even the destruction of ‘money as we know it'”

It’s astonishing how many highly placed bureaucrats, NGO functionaries, and the very, very wealthy are super gung-ho for reducing the rest of us to the status (and living conditions) of medieval serfs:

“German flag” by fdecomite is licensed under CC BY 2.0 .

This week, VW announced plans to cut tens of thousands of jobs and to close three factories. That is a very big deal, because they have never closed a single German factory before. I try to avoid economic topics, but this story is so much bigger than economics. As Daniel Gräber wrote in Cicero last month, “the VW crisis has become a symbol for the decline of our entire country“.

The Green leftoid establishment are eagerly blaming management for these failures, which is on the one hand not entirely wrong, but on the other hand not nearly an absolution. The German state of Lower Saxony holds a 20% stake in Volkswagen, and so they also manage the company. Recently, in a fit of virtue, they placed a Green politician – Julia Willie Hamburg – on its supervisory board. Hamburg does not even own a car and has used her position to argue that Volkswagen should regard itself not as an automobile manufacturer but as a “mobility services provider” and shift its focus away from “individual transport”.

The absurdly named Julia Willie Hamburg is merely symptomatic of a broader phenomenon. Germany has succumbed to political forces that have nothing but indifference and disdain for the industries that have made us prosperous. Our sitting Economics Minister, Robert Habeck, gave an interview to taz in 2011 in which he said that “fewer cars will not lead to less economic growth, but to new industries”, and attacked “the old growth theory, based on gross domestic product“. And behind Green politicians like Habeck are even more radical forces, like Ulrike Herrmann, the editor of taz, for many years a member of the Green Party and also an open advocate of wide-scale deindustrialisation. Because I am going to quote Herrmann saying some very crazy things, you need to know that she is in no way a fringe figure. She appears regularly on all the respectable evening talkshows and every politically informed person in the Federal Republic knows who she is.

Herrmann has outlined her political views in various books like The End of Capitalism: Why Growth and Climate Protection Are Not Compatible – and How We Will Live in the Future. From these monographs, we learn that Herrmann sees climatism as a means of imposing a centrally planned economy in which we will own nothing and be happy. Happily, Herrmann also talks a lot, and in her various speeches and interviews she states her vision for decarbonising Germany in very radical terms. I am grateful to this twitter user for highlighting typical remarks that Herrmann delivered in April of this year before a sympathetic audience of climate lunatics.

There, Herrmann elaborated on her vision for a future economy in which all major goods would have to be rationed:

    Talking about rationing: It’s clear that if we shrink economically, we won’t have to be as poor as the British were in 1939; rather, we’d have to be as rich as the West Germans were in 1978. That is a huge difference, because we can take advantage of all the growth of the post-war period and the entire economic miracle.

    The central elements of the economy would have to be rationed. First of all, living space, because cement emits endless amounts of CO2. Actually, new construction would have to be banned outright and living space rationed to 50 square metres per capita. That should actually be enough for everyone. Then meat would have to be rationed, because meat production emits enormous amounts of CO2. You don’t have to become a vegetarian, but you’ll have to eat a lot less meat.

    Then train travel has to be rationed. So this idea, which many people also have – “so okay then I don’t have a car but then I always travel on the Intercity Express trains” – that won’t work either, because of course air resistance increases with speed. Yes, it’s all totally insane. Trains won’t be allowed to travel faster than 100 kilometres per hour, but you can still travel around locally quite a lot. This is all in my book, okay? But I didn’t expand on it there because I didn’t want to scare all the readers.

At this point Herrmann begins to cackle manically, ecstatic at the thought that millions of Germans will be stuck riding rationed kilometres on slow local public transit.

October 31, 2024

Riley Donovan – “October 24th was a tragic day …”

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

Riley Donovan enumerates some of the most notable losers from the federal government’s belated realization that cutting immigration numbers was politically necessary:

A billboard in Toronto in 2019, showing Maxime Bernier and an official-looking PPC message. The PPC has been the only federal party against mass immigration from its founding.
Photo from The Province

October 24th was a tragic day for real estate developers, speculators, cheap labour employers, business lobbyists, slumlords, corrupt immigration consultants, and strip mall diploma mill operators. On that day, Prime Minister Justin Trudeau reluctantly caved to public opinion and announced that the Liberal government will slash permanent resident levels by 21%.

Less than one week before the October 24th announcement, an Abacus poll revealed that support for immigration restriction has reached 72% – a statistical supermajority. This includes a majority of all four major political parties and every age group. A month before the announcement, a Leger poll found that majorities of both white and non-white Canadians want lower immigration.

It is now impossible to find even one demographic subset of Canadians that registers majority support for high immigration – except perhaps if you exclusively surveyed CEOs, bank presidents, or woke university professors (politics makes for strange bedfellows).

There is no prominent, well-funded immigration restriction lobby in this country – in fact, there is a prominent, well-funded pro-immigration lobby. Columnists – with the exception of yours truly – almost never wrote the word “immigration” before the summer of 2023. The Canadian public was not goaded by public figures into opposing mass immigration by a margin of three to one; this trend was entirely grassroots.

The shift in public attitudes was the result of countless private conversations in which regular people shared worries about job lines full of international students that stretched around the block, Canadian youth outcompeted by foreign workers for positions at Tim Horton’s, seniors living in RVs because of sky-high rent, and hospitals overcrowded by an annual inflow of 1.3 million newcomers.

October 29, 2024

The slavery reparations grift – “it’s not possible for us to compensate a man for having made him better off”

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

The demands for reparations from Britain over the slave trade are not based on the actual history as much as emotion and selective blindness to the facts:

The Official Medallion of the British Anti-Slavery Society, by Josiah Wedgwood 1795.
British Abolition Movement via Wikimedia Commons.

No, no, stop squealing. Yes, slavery was appalling, vile, we’re all damn glad we don’t do it any more. But slave labour was not free.

We could — possibly should — look at the difference between that subsistence level that the slaves got and what free labour — not free as in at no cost, free as in free to choose — got at the same time. The answer being not much difference in fact. If we’re to believe Jason Hickel (which, of course, we shouldn’t) free labour in England got below subsistence incomes. To be Marxist, what was the expropriation from those slaves, from the value of their labour? And, well, not a hugely different amount from that of free labour at the time.

    While imperial Britain soared to sustainable economic development and global military superpower status, the enslaved and their descendants were left to this day with enduring pain, persistent poverty and systemic suffering.

This is, as the cool kids say, problematic. Beckles is from Barbados. So, let us use Barbados numbers. And compare them to Sierra Leone and Liberia. The places that slaves not transported across to their servitude were freed into.

So, Hils, Matey, what is this poverty and pain you’re condemned to?

An obvious point — it’s not possible for us to compensate a man for having made him better off.

But we need to go further too. Britain did not benefit from this labour anyway. We did not then have a state controlled economy, we do not now have a state controlled economy. Britain didn’t own the slaves so it’s not Britain that — even if you can prove that there should be reparations — which should pay for owning the slaves it didn’t.

This does then rather leave the reparations argument being that Barbados — or whoever — needs to go around suing, individually, the estates of those who owned slaves. Good luck with that one.

    The so-called Slavery Abolition Act, the most racist legislation ever passed in the British parliament,

Aha, have you ever in your puff seen such a perfect perisher of an argument? That abolition of slavery itself was the most racist legislation ever?

Aha, aha, aha. Becks must have practised that one in the mirror a lot for no audience would be able to hear that without screaming in laughter.

    compensation of £20m in cash paid as reparations to the enslavers. The enslaved were valued at £47m, and the remaining amount was paid off with labour in kind for four extra years of enslavement after they were freed. They received no compensation for the theft of their labour or the denial of their human identity.

A £20 million bribe and cheap at twice the price. For that’s what it was. A bribe. One we’re still paying off today — no, Osborne did not pay it off, he issued more gilts to pay off the old ones — and I’m wholly happy to be paying my mite of that amount. Absolute damn bargain, freeing 700k people from slavery for such a trivial sum. As to the slaves, well, they gained their freedom. Which is of value. Actually, that’s rather the point, freedom has value, no?

October 26, 2024

Our solar energy future – “In September alone, Germany paid 2.6 billion Euro to renewables producers for electricity that had a market value of a mere 145 million Euro”

Checking in with what’s been happening in Germany, eugyppius explains why solar power is far from the cost-free energy source that politicians and scam artists try to claim:

Photovoltaic panels on a roof, 28 April, 2015.
Photo by Antonio Chaves, via Wikimedia Commons.

Climatism in Germany is attended by all manner of naive ideas and bright pink fairytale slogans. Among the latter is a dubious proverb proclaiming that “The sun doesn’t send any bills” (in German: “Die Sonne schickt keine Rechnung“). Such proverbs always seem initially plausible (is there anything freer and more democratic than sunshine?) while proving to be basically the opposite of the truth. In fact, the energy transition has landed German taxpayers in the position of paying billions of Euros for the sun to shine. It is becoming an unmitigated disaster, and what is worse, the more we expand solar capacity, the more we will have to pay. For something that does not send any bills, sunshine has sure become very expensive here in the Federal Republic.

Welt calls it “the solar trap,” and it works like this: Our Renewable Energy Sources Act (EEG) pledges to pay renewables producers fixed tariffs for every kilowatt hour of electricity their installations feed into the grid. Whether you are an ordinary climate-conscious person with solar panels on your house or you run massive solar farms, the EEG entitles you to receive these fixed “feed-in tariffs” for a period of twenty years. The EEG also requires grid operators to accept your electricity regardless of demand and to sell it on the electricity exchange.

Now the sun, although it may not charge for its services, turns out to have this naughty habit of shining in many places all at once. When this happens, electricity supply often exceeds electricity demand and exchange prices fall. They can fall all the way to zero, or in extreme situations of excessive sunshine they can even go negative. Negative prices mean that you have to actually pay “buyers” to take the excess power off your hands. Whether the prices are merely very low, or zero, or negative, the German taxpayer has obligated himself, via the EEG, to pay these producers of unwanted if extremely green and climate-friendly electricity their fixed feed-in tariffs anyway. That is, we are on the hook for the difference between the actual exchange value of excess electricity and the feed-in tariffs promised to producers. In this way we have ended up literally paying for the sun to shine.

In September alone, Germany paid 2.6 billion Euro to renewables producers for electricity that had a market value of a mere 145 million Euro. Our sunny autumn is destroying our already-fragile government budget. Federal number-crunchers had originally allocated 10.6 billion Euros for feed-in tariffs in 2024, but already the government owes 15 billion and the year is not yet over. Scholz’s cabinet are thus trying to allocate an additional 8.8 billion Euro for the rest of the year. The parliament have yet to approve the additional funds, though, and also the damned sun will just not stop fucking shining, and so probably even this supplementary allocation won’t be enough. We’re bleeding money, all for a sun that doesn’t send any bills.

This problem will get worse before it gets better. The more solar panels we install, the greater oversupply we’ll face when the sun shines, and the larger the spread between the fixed feed-in tariffs and the actual market value of this green electricity. In 2024, as I said, the government projected that feed-in tariffs would cost 10.6 billion Euros, but they’ll probably end up costing 20 billion at least. Next year, the costs are projected to be even higher, and the year after that, they will be higher still. As Welt report, the German government plans to triple our solar capacity to 215 gigawatts over the next six years – “the equivalent of 215 nuclear power plants” every time the sun emerges from behind a blessed cloud.

The energy transitioners know they messed up. The new plan is to change the rules for solar subsidies. When prices go negative, larger producers won’t receive their fixed tariffs, and they’ll also have to sell their electricity themselves. In this way, they will become newly sensitive to market demand and stop overproducing electricity when nobody wants it. It is almost like creating a blind system totally oblivious to market incentives was a bad idea. Unfortunately, the new rules will apply only to new solar installations. The German government will still have to honour its insane agreement to pay the operators of older solar plants for years to come. We will light billions on fire for nothing.

October 13, 2024

Occupation of Germany, Plunder and Enslavement?

World War Two
Published 12 Oct 2024

The Allies’ occupation of Germany was marked by competing visions for its future, ranging from France’s focus on security to the Soviet push for reparations. This episode dives into the complex negotiations that determined Germany’s borders, industrial disarmament, and economic management, all of which would shape Europe’s post-war order and fuel the East-West divide.
(more…)

October 12, 2024

Canadians don’t hate their banks enough

Filed under: Business, Cancon, Economics, Government — Tags: , , , — Nicholas @ 04:00

In the latest SHuSH newsletter, Ken Whyte follows up on an earlier item thanks to the many Canadians who responded with their own tales of woe in their dealings with Canadian banks:

Since I mentioned a couple of weeks ago that we have published Andrew Spence’s Fleeced: Canadians Versus Their Banks, the latest edition of Sutherland Quarterly, I’ve been inundated with people’s horror stories of their dealings with Canada’s chartered banks. Jack David’s tale in the above interview is a classic of the genre.

In Fleeced, Andrew lays out in aggravating detail how Canadian banks, although chartered by the federal government to facilitate economic activity in the broader economy, do all they can to avoid lending to small and medium businesses, never mind that small and medium businesses employ two-thirds of our private-sector labour force and account for half of Canada’s gross domestic product.

By OECD standards, small businesses in Canada are starved of bank credit, and when they are able to secure a loan, they pay through the nose. The spread between interest rates on loans to small businesses and large businesses in Canada is a whopping 2.48 percent, compared to .42 percent in the US — more than five times higher.

Why? Because Canada’s banks are a tight little oligopoly, impervious to meaningful competition. Their cozy situation allows them to be exceedingly greedy. Their profits and returns to shareholders are wildly beyond those of banks in the US and UK (and, as Andrew demonstrates, their returns from their Canadian operations are far in excess of those from the US market, meaning they screw the home market hardest.)

Our banks never miss an opportunity to impose a new fee, or off-load risk. From their perspective, small business involves too much risk — some of them will inevitably fail. The banks prefer that publishers and dry-cleaners and restaurateurs either finance themselves by pledging their homes, or use their credit cards to cover fluctuations in cash flow or make investments that will help them hire, expand, and grow. And that’s what entrepreneurs do. According to a survey by the Canadian Federation of Independent Business, only one in five respondents accessed a bank loan or line of credit. Half of respondents financed themselves, tapped existing equity and personal lines of credit, and about 30 percent used their high-interest credit cards.

By severely rationing credit and making it exceedingly expensive, Canada’s banks siphon off an ungodly share of entrepreneurial profit to themselves while leaving the entrepreneur with all the risk. Their insistence on putting their own profits above service to the Canadian economy is one of the main reasons Canada has such a slow-growing, unproductive economy and a stagnant standard of living.

There is much else in this slim volume to make your blood boil: exorbitant fees on chequing and savings accounts; mutual fund expenses that torpedo investments; ridiculous mortgage restrictions, infuriating customer service …

Fleeced: Canadians Versus Their Banks is a stunning exposé of the inner workings of our six major banks — something only a reformed banker and financial services veteran such as Andrew could write. He also explodes the myth that a bloated, uncompetitive banking sector is the price we have to pay for stability in times of financial crisis.

We are in desperate need of banking reform in Canada. Read this book and you’ll be shouting at your member of Parliament for prompt action.

October 10, 2024

Trump’s tariff proposals will rival Smoot-Hawley for self-inflicted economic woes

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

J.D. Tuccille explains why Trump’s economic plans are very much a curate’s egg of good and bad ideas, but the proposed tariff plans would more than compensate for any good positive effects from the rest of his proposals:

Willis C. Hawley (left) and Reed Smoot in April 1929, shortly before the Smoot–Hawley Tariff Act passed the House of Representatives.
Library of Congress photo via Wikipedia Commons.

Former president and current Republican presidential candidate Donald Trump wants to extend the tax cuts passed when he was in the White House, which are due to expire next year. That would not just be welcomed by the many Americans who would benefit, it could boost economic activity. But there’s a big problem: The protectionist tariffs favored by Trump would undo the good done by his tax cuts, reducing rather than increasing prosperity.

Tariffs Not Seen Since the Great Depression

“Former President Donald Trump’s proposals to impose a universal tariff of 20 percent and an additional tariff on Chinese imports of at least 60 percent would spike the average tariff rate on all imports to highs not seen since the Great Depression,” warns Erica York of the Tax Foundation.

Trump has actually been a little vague on the size of his universal tariff, first floating it at 10 percent while allowing “it may be more than that”, and then upping the ante to 20 percent. Either way, it’s a cost that ends up being largely paid by Americans in terms of higher retail prices and more expensive imported parts and materials for domestic manufacturing.

The Trump administration’s 2018 “tariffs resulted in higher prices for a wide variety of goods that U.S. consumers and businesses purchase,” the Tax Foundation’s Alex Durante and Alex Muresianu concluded.

Even when tariffs don’t directly affect the cost of imported goods purchased by consumers, they still drive up the prices of many things made in the U.S. The Cato Institute’s Pierre Lemieux points out that “a tariff on an input (say, steel) is paid by the American importer who will typically pass it down the supply chain to his customers and eventually to the consumers of the final good (say, a car)”. Instead of boosting domestic production, that can do harm, instead.

“For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs,” Federal Reserve Board economists found when they researched the 2018 tariffs.

That’s not to say Trump is alone in his protectionism. Last month, Bob Davis noted for Foreign Policy that “the Biden administration is the first since at least President John F. Kennedy’s time to fail to negotiate a major free trade deal, instead embracing tariffs” while Trump pursued both tariffs and trade deals.

The Road to Serfdom by F.A. Hayek

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

David Warren recommends one of the first economics books I ever read and I fully concur with his appreciation of Friedrich Hayek’s most famous work:

For those who have an interest in politics, who also wish to have some knowledge of this subject, I can recommend a book published in 1944. It is by Friedrich Hayek, and is dedicated “To the socialists of all parties”. The title is, The Road to Serfdom.

It is extraordinarily well-written, for an academic whose native language wasn’t English, in less than two hundred exhilarating pages. The book predicts, correctly, that while they will lose the War, German ideological notions that began to prevail before the War in e.g. Germany, Russia, Italy, and throughout the West, would continue to do so, in Britain and America. They were plausible and were thought to have been proved in wartime. In the coming peacetime, all the intellectuals would be on board.

Yet they were wrong, and had always been wrong. The professor, Hayek, shows why neither a little nor a lot of socialism will ever work; why it invariably makes everyone poorer, except for an ideological elite; and why it traps whole societies in the condition of serfdom. Oddly enough, almost no one wants to be a serf, but some wish to have power over serfs. Hence the popularity of socialism among the power-hungry.

Too, ambiguous and poorly understood political terms fool people. (My father explained this as the Triple-B principle: “Bullshit Baffles Brains”.)

The idle reader should still be captivated by this book, which hasn’t dated, even slightly. Re-reading it, as I have been doing since high school, I find the arguments irresistible and compelling. Other members of the “Austrian School” out of which Hayek sprang (it was originally a Catholic movement, incidentally) are also informative, but none are so articulate.

The “Chicago School”, of Milton Friedman et alia, was the nearest American equivalent. But that was based on numbers, more than upon the ironical ideas, which old Austro-Hungaria had the leisure to mull.

October 9, 2024

Dangling the old “high speed rail between Toronto and Montreal” proposal again

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

In what seems like an annual ritual, the attractive-to-many (but economically non-viable) idea of putting in a high speed rail line between Toronto and Montreal is getting another airing:

The closest active model to the proposed VIA “High Frequency Rail” proposal is the Brightline service in Florida.
“BrightLine – The Return of FEC passenger service” by BBT609 is licensed under CC BY 2.0

In 2021, the Government of Canada confirmed its plans to significantly upgrade VIA Rail’s passenger rail service between the Windsor and Quebec City corridor into a high-frequency rail service.

As the name suggests, this new high-frequency rail service would offer significantly higher frequencies and reduce travel times on the route linking Toronto, Ottawa, and Montreal by 25 per cent.

With dedicated passenger rail tracks separate from freight operations, which greatly contribute to current service delays, this new train service would more consistently operate at increased speeds of up to 177 km/h to 200 km/h, and reliability would improve to an on-time performance by over 95 per cent.

This is quite true … the existing rail network between Toronto, Montreal and Ottawa was designed and built to carry freight traffic first and passengers only as a secondary goal — in many cases to attract government subsidies for the construction of the lines. Passenger services are, at best, marginally profitable but generally passenger service is a dead loss for the railways and only maintained thanks to ongoing government subsidies, grants, and tax breaks.

Freight trains — the profitable part of the railway network — have gotten longer and heavier over time as technology has improved (and train crews have gotten smaller, reducing labour costs) and the signal systems are optimized for freight traffic: long, slow-moving trains that take a lot of time and energy to speed up and slow down. Passenger trains travel faster (well, theoretically anyway) and make frequent stops to pick up and drop off passengers … signalling systems (which are critical to safe operations) need to be designed to optimize the usage pattern of the majority of the trains which in practice means freight with some modifications in high-population areas to accommodate passenger traffic.

This high-frequency rail service would use VIA Rail’s new and growing fleet of modern Siemens Venture trains operating on the Windsor-Quebec City corridor.

But as it turns out, the federal government is also contemplating a new service that is even better than high-frequency rail — the potential for a high-speed rail service, which would be the first of its kind in Canada.

Currently, the federal government is engaged in the Request For Proposal (RFP) process for the project. In July 2023, it shortlisted three private consortiums to participate in the RFP’s detailed bidding process, attracting international interest from major investors and some of the world’s largest passenger rail service operators.

This includes the consortium named Cadence, entailing CDPQ Infrastructure, AtkinsRealis (formerly known as SNC-Lavalin), Systra Canada, Keolis Canada, SNCF Voyageurs, and national flag carrier Air Canada.

The inclusion of Air Canada in the consortium is … interesting … as one of the goals of an actual high speed system would be to drain off a proportion of the short-haul passenger traffic that currently goes by air. A cynic might wonder if Air Canada’s interest in the project is to help or hinder.

According to a report in Toronto Star last week, each of the three consortiums was directed to create two detailed proposals, including one concept with trains that travel under 200 km/h and another concept with trains that travel faster than 200 km/h.

High-speed rail is generally defined as a train service that operates at speeds of at least 200 km/h.

It was further stated in the report that the new service could result in travel times of only three hours between Toronto and Montreal, as opposed to the current travel times of over five hours on existing VIA Rail services.

For further comparison, the travel time between Toronto and Montreal on flight services such as Air Canada is about 1.5 hours, which does not include the time spent at airports, while the driving time over this distance of over 1,000 km is about 5.5 hours — similar to VIA Rail’s existing services.

The potential holds for VIA Rail’s new service to operate at speeds over 200 km/h along select segments of the corridor.

The required costs to implement 200km/h speeds will be in eliminating as many grade crossings as possible and reconstructing some tight curves to allow the higher speed trains … and, as mentioned earlier, retrofitting the signal system for the faster passenger trains. Even those measures, which don’t really produce a true “high speed” system will be very expensive.

October 6, 2024

The rise of coal as a fuel in England

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

In the latest instalment of Age of Invention, Anton Howes considers the reasons for the rise of coal and refutes the frequently deployed “just so” story that it was driven by mass deforestation in England:

An image of coal pits in the Black Country from Griffiths’ Guide to the iron trade of Great Britain, 1873.
Image digitized by the Robarts Library of the University of Toronto via Wikimedia Commons.

It’s long bothered me as to why coal became so important in Britain. It had sat in the ground for millennia, often near the surface. Near Newcastle and Sunderland it was often even strewn out on the beaches.1 Yet coal had largely only been used for some very specific, small-scale uses. It was fired in layers with limestone to produce lime, largely used in mortar for stone and brick buildings. And it had long been popular among blacksmiths, heating iron or steel in a forge before shaping it into weapons or tools.2

Although a few places burned coal for heating homes, this was generally only done in places where the coal was an especially pure, hard, and rock-like anthracite, such as in southern Wales and in Lowlands Scotland. Anthracite coal could even be something of a luxury fuel. It was burned in the palaces of the Scottish kings.3 But otherwise, the sulphur in the more crumbly and more common coal, like that found near Newcastle, meant that the smoke reeked, reacting with the moisture of people’s eyes to form sulphurous acid, and so making them sting and burn. The very poorest of the poor might resort to it, but the smoke from sulphurous coal fires was heavy and lingering, its soot tarnishing clothes, furnishings, and even skin, whereas a wood fire could be lit in a central open hearth, its smoke simply rising through the rafters and finding its way out through the various crevices and openings of thatched and airy homes. Coal was generally the inferior fuel.

But despite this inferiority, over the course of the late sixteenth century much of the populated eastern coast of England, including the rapidly-expanding city of London, made the switch to burning the stinking, sulphurous, low-grade coal instead of wood.

By far the most common explanation you’ll hear for this dramatic shift, much of which took place over the course of just a few decades c.1570-1600, is that under the pressures of a growing population, with people requiring ever more fuel both for industry and to heat their homes, England saw dramatic deforestation. With firewood in ever shorter supply, its price rose so high as to make coal a more attractive alternative, which despite its problems was at least cheap. This deforestation story is trotted out constantly in books, on museum displays, in conversation, on social media, and often even by experts on coal and iron. I must see or hear it at least once a week, if not more. And there is a mountain of testimonies from contemporaries to back the story up. Again and again, people in the late sixteenth and the seventeenth centuries complained that the woods were disappearing, and that wood fuel prices were on the rise.

And yet the deforestation thesis simply does not work. In fact it makes no sense at all.

Not out of the Woods Yet

This should immediately be obvious from even just a purely theoretical perspective, because wood was almost never exploited for fuel as a one-off resource. It was not like coal or peat or oil, which once dug out of the ground and burned could only be replaced by finding more. It was not a matter of cutting swathes of forest down and burning every branch, stump and root, leaving the land barren and going off in search of more. Our sixteenth-century ancestors were not like Saruman, destroying Fangorn forest for fuel. Instead, acres of forest, and even just the shrubs and trees that made up the hedges separating fields, were carefully maintained to provide a steady yield. The roots of trees were left living and intact, with the wood extracted by cutting away the trunk at the stump, or even just the branches or twigs — a process known as coppicing, and for branches pollarding — so that new trunks or branches would be able to grow back. Although some trees might be left for longer to grow into longer and thicker wood fit for timber, the underwoods were more regularly cropped.4

Given forests were treated as a renewable resource, claiming that they were cut down to cause the price of firewood to rise is like claiming that if energy became more expensive today, then we’d use all the water behind a hydroelectric dam and then immediately fill in the reservoir with rubble. Or it’s like claiming that rising food prices would result in farmers harvesting a crop and then immediately concreting over their fields. What actually happens is the precise opposite: when the things people make become more valuable, they tend to expand production, not destroy it. High prices would have prompted the English to rely on forests more, not to cut them down.

When London’s medieval population peaked — first in the 1290s before a devastating famine, and again in the 1340s on the eve of the Black Death — prices of wood fuel began to rise out of all proportion to other goods. But London had plenty of nearby woodland — wood is extremely bulky compared to its value, so trees typically had to be grown as close as possible to the city, or else along the banks of the Thames running through it, or along the nearby coasts. With the rising price of fuel, however, the city did not even have to look much farther afield for its wood, and nearby coastal counties even continued to export firewood across the Channel to the Low Countries (present-day Belgium and the Netherlands) and to the northern coast of France.5 A few industries did try to shift to coal, with lime-makers and blacksmiths substituting it for wood more than before, and with brewers and dyers seemingly giving it a try. But the stinking smoke rapidly resulted in the brewers and dyers being banned from using it, and there was certainly no shift to coal being burnt in people’s homes.6


    1. Ruth Goodman, The Domestic Revolution (Michael O’Mara Books, 2020), p.91

    2. James A. Galloway, Derek Keene, and Margaret Murphy, “Fuelling the City: Production and Distribution of Firewood and Fuel in London’s Region, 1290-1400”, The Economic History Review 49, no. 3 (1996): pp.447–9

    3. J. U. Nef, The Rise of the British Coal Industry, Vol. 1 (London: George Routledge and Sons, 1932), p.107, pp.115-8

    4. Oliver Rackham, Ancient Woodland: Its History, Vegetation and Uses in England (Edward Arnold, 1980), pp.3-6 is the best and clearest summary I have seen.

    5. Galloway et al.

    6. John Hatcher, The History of the British Coal Industry: Volume 1: Before 1700: Towards the Age of Coal (Oxford University Press, 1993), p.25

October 5, 2024

David Friedman on falling birth rates

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

In the west, generally speaking, female employment and economic power has been rising and birth rates have been falling, except among religious minorities. David Friedman provides some explanations:

“Tetra Pak® – Housewife at the dairy counter in a Swedish shop” by Tetra Pak is licensed under CC BY-SA 2.0 .

One possible explanation is changes in norms and legal rules that make mate search more difficult. An example is a norm against dating fellow employees and a stronger norm against dating someone who has authority over you or you have some authority over.

For many people, their job is the only context in which they routinely interact with lots of other people, the best environment for mate search. The interaction often provides a way of evaluating someone for characteristics such as honesty and competence as well as compatibility, much harder to do in the context of dating, harder still in computer dating. It works better for people who not only are fellow employees but are actually working together, which often means one just above the other in the office hierarchy.

The same issue arises in the university context. Undergraduates are free to date each other — mate search is arguably one of the main functions of college. Junior faculty members, likely to be unmarried, are commonly not supposed to date students, even students not taking classes from them, certainly not students who are. I am not sure what current norms are for graduate student/undergraduate interaction, expect graduate student/faculty romance to be at least somewhat frowned upon, especially if the faculty member has some authority over the student which is likely if they are in the same field, the context in which they are most likely to get know each other.

Another cause for declining birth rates might be changing norms of courtship. I have not been part of that market for over forty years but I gather from what younger people say online that many men believe that making advances that do not turn out to be wanted is not only embarrassing but dangerous, that they risk being accused of harassment or some related offense. In the student context, many men believe that if a romantic partner changes her mind she can get him into a great deal of trouble by taking advantage of a college disciplinary process heavily biased against men. I do not know to what degree that belief is true but many men believe it is, which could be expected to discourage courtship.

Along related lines:

    Also, when I was working for a big time international consulting firm, they tried to come out with a formal rule that said that you were allowed to ask out a co-worker, but only one time. If they said no, you could never ask again. Apparently the Italians howled with laughter and insisted that if this rule was enforced in Italy, no one would ever have kids, as the typical Italian courtship approach involves like a dozen rejections before ultimately the woman finally gives in. (GoneAnon)

That cannot be the full explanation since Italian birth rates are down too. Since birth rates are down in all or almost all developed countries and many less developed ones, it is worth investigating how widespread the relevant norms are.

Housewife Becoming a Low Status Profession

For a very long time, the default system for producing and rearing children was a married couple, with the husband producing income and the wife in charge of running the household and rearing the children. Over recent decades, the woman’s role in that division of labor has become a low status activity, lower status than making a living in the marketplace, much lower than professional success.1 Being an unmarried adult woman used to be, in most contexts, low status, on the presumption that if she could have caught a man she would have. At present, in much of western society, that has reversed — being a married housewife is lower status than being an employed single woman.

    …arguments from the stay-at-home moms I know, who say people are constantly giving them grief about it, and who are often looking for some part-time make-work job they can take just so people will stop giving them grief about being a stay-at-home mother (Scott Alexander)

It is possible for a married woman to have both a job and children or for an unmarried woman to have children, but the former is more difficult than for a full time housewife, the latter much more difficult.


October 4, 2024

You know the jig is up for “renewables” when even Silicon Valley techbros turn against it

JoNova on the remarkably quick change of opinion among the big tech companies on the whole renewable energy question:

Google, Oracle, Microsoft were all raving fans of renewable energy, but all of them have given up trying to reach “net zero” with wind and solar power. In the rush to feed the baby AI gargoyle, instead of lining the streets with wind turbines and battery packs, they’re all suddenly buying, building and talking about nuclear power. For some reason, when running $100 billion dollar data centres, no one seems to want to use random electricity and turn them on and off when the wind stops. Probably because without electricity AI is a dumb rock.

In a sense, AI is a form of energy. The guy with the biggest gigawatts has a head start, and the guy with unreliable generators isn’t in the race.

It’s all turned on a dime. It was only in May that Microsoft was making the “biggest ever renewable energy agreement” in order to power AI and be carbon neutral. Ten minutes later and it’s resurrecting the old Three Mile Island nuclear plant. Lucky Americans don’t blow up their old power plants.

Oracle is building the world’s largest datacentre and wants to power it with three small modular reactors. Amazon Web Services has bought a data centre next to a nuclear plant, and is running job ads for a nuclear engineer. Recently, Alphabet CEO Sundar Pichai, spoke about small modular reactors. The chief of Open AI also happens to chair the boards of two nuclear start-ups.

October 2, 2024

Duelling reports on how Javier Milei’s Argentinian “shock therapy” is working

At Astral Codex Ten, Scott Alexander tries to find something approaching the truth between the pantingly enthusiastic libertarian reports and the angrily negative progressive reports:

How is Javier Milei, the new-ish libertarian president of Argentina doing?

According to right-wing sources, he’s doing amazing, inflation is vanquished, and Argentina is on the road to First World status.

According to left-wing sources, he’s devastating the country, inflation has ballooned, and Argentina is mired in unprecedented dire poverty.

I was confused enough to investigate further. Going through various topics in more depth:

1: Government Surplus

When Milei was elected, Argentina went from constant deficits to almost unprecedented government surplus, and has continued to run a surplus for the past six months.

This wasn’t fancy macroeconomic magic. Milei just cut government spending:

This source says he cut the size of government by about 30% overall. Unsurprisingly, this eliminated the Argentine deficit.

[…]

6: Overall

When Javier Milei took office, he promised to do shock therapy that would short-term plunge Argentina into a recession, but long-term end its economic woes.

He has fulfilled his campaign promise to plunge Argentina into a recession. Whether this will long-term end its economic woes remains to be seen.

I think he gets credit for some purely political victories (completing the budget cuts he said he would complete), for decreasing inflation, and for improving the housing market. But in the end, history will judge him for whether his shock therapy eventually bears fruit. I don’t think that judgment can be made yet, and I don’t see many economists eager to go out on a limb and say that there are strong signs that his particular brand of shock therapy will definitely work/fail.

There are disappointingly few Milei prediction markets, probably because it’s hard to operationalize “he makes the economy good”. This multi-pronged mega-market has few traders, and weakly predicts a mix of good and bad things, maybe leaning a little good. But here is a more specific one:

… which compared to Argentina’s historical GDP growth rate seems — no, sorry, Argentina’s historical GDP growth rate is too weird to draw any conclusions.

And maybe the most important test:

September 29, 2024

Fleeced: Canadians Versus Their Banks by Andrew Spence

Filed under: Books, Business, Cancon, Economics — Tags: , , , — Nicholas @ 05:00

In the latest SHuSH newsletter, Ken Whyte talks about one of Sutherland House’s most recent publications:

I could write about eight versions of this post based on the many revelations in Andrew Spence’s Fleeced: Canadians Versus Their Banks, the latest edition of Sutherland Quarterly, released this week. I’m going to run with the version most relevant to my fellow publishers and small business people in Canada.

Andrew lays out in aggravating detail how Canadian banks, although chartered by the federal government to facilitate economic activity in the broader economy, do all they can to avoid lending to small and medium businesses, never mind that small and medium businesses employ two-thirds of our private-sector labour force and account for half of Canada’s gross domestic product.

By OECD standards, small businesses in Canada are starved of bank credit, and when they are able to secure a loan, they pay through the nose. The spread between interest rates on loans to small businesses and large businesses in Canada is a whopping 2.48 percent, compared to .42 percent in the US—more than five times higher.

Why? Because Canada’s banks are a tight little oligopoly, impervious to meaningful competition. Their cozy situation allows them to be exceedingly greedy. Their profits and returns to shareholders are wildly beyond those of banks in the US and UK (and, as Andrew demonstrates, their returns from their Canadian operations are far in excess of those from the US market, meaning they screw the home market hardest.)

Our banks never miss an opportunity to impose a new fee, or off-load risk. From their perspective, small business involves too much risk — some of them will inevitably fail. The banks prefer that publishers and dry-cleaners and restaurateurs either finance themselves by pledging their homes, or use their credit cards to cover fluctuations in cash flow or make investments that will help them hire, expand, and grow. And that’s what entrepreneurs do. According to a survey by the Canadian Federation of Independent Business, only one in five respondents accessed a bank loan or line of credit. Half of respondents financed themselves, tapped existing equity and personal lines of credit, and about 30 percent used their high-interest credit cards.

(The banks, incidentally, claim they need to keep credit card rates around 20 percent because their clients are high credit risks when their own data shows the risk is minimal. They simply prefer to gouge customers. To a banker, forcing hundreds of thousands of small businesses to use their credit cards to finance their businesses rather than giving them proper small business loans at reasonable rates is great business.)

By severely rationing credit and making it exceedingly expensive, Canada’s banks siphon off an ungodly share of entrepreneurial profit to themselves while leaving the entrepreneur with all the risk. Their insistence on putting their own profits above service to the Canadian economy is one of the main reasons Canada has such a slow-growing, unproductive economy and a stagnant standard of living.

There is much else in this slim volume to make your blood boil: exorbitant fees on chequing and savings accounts; mutual fund expenses that torpedo investments; ridiculous mortgage restrictions, infuriating customer service …

The “Foundations” essay could apply equally to Canada’s doldrums as it does to Britain

Earlier this week, I linked to the “Foundations” essay by Ben Southwood, Samuel Hughes, and Sam Bowman and it struck me that so much of what they discuss about Britain’s stagnation applied at least as well to Canada. In the National Post, John Ivison concurs:

The “Foundations” essay pointed to moribund GDP per capita growth, among other data points, to make the argument that Britain is standing still economically. (Britain’s economy grew 0.7 per cent a year between 2002 and 2022, Canada’s increased 0.6 per cent a year in the same period, while U.S. output swelled 1.16 per cent a year.)

In relative terms, both countries are getting poorer: in 2002, Canada’s GDP per person was 81 per cent of the U.S.; in 2022, it was 72 per cent. The same figures for the U.K. against the U.S. are 78 per cent in 2002 and, 70 per cent in 2022.

The reason for Britain’s stagnation, the authors argue, is that it has effectively banned investment in transportation, energy and housing — “the foundations it needs to grow.”

Sound familiar?

“The most important economic fact about modern Britain is that it is difficult to build almost anything, anywhere. This prevents investment, increases energy costs and makes it harder for productive economic clusters to expand,” the authors write, saying the result is lower productivity, incomes and tax revenues.

They argued that Britain needs a program of reform with the scale and ambition of the liberalization of the 1980s that focused on cutting taxes, curbing union power and privatizing state-run industries.

“This time we must focus on making it easier to invest in homes, labs, railways, roads, bridges, interconnectors and nuclear reactors,” they write.

That’s a difficult proposition for politicians who are able to resist anything except the temptation to use resources for immediate electoral gratification, rather than investing for a time after they have left office.

Both Canada and Britain are laggards when it comes to investment in infrastructure. While China spent more than five per cent of its GDP on roads, bridges and other infrastructure in 2021, Canada invested just 0.5 per cent (down from 1.3 per cent in 2010) and the U.K. 0.9 per cent.

But the lack of dynamism is not simply political expediency. Rather, it is motivated by an indifference, even a hostility, toward building critical infrastructure.

The Foundations report noted that Britain has not built a reservoir for 30 years, yet faces chronic water shortages in the east of England. Its environmental agency has blocked new development on the basis that it could only be supplied with water by draining environmentally valuable chalk streams. The result is that England’s innovation hub, Cambridge, is barred from expanding, which threatens to strangle the country’s life-sciences industry.

Similar impulses are at work in Canada. Federal Environment Minister Steven Guilbeault said in February that Ottawa would stop investing in new road infrastructure — a position he later clarified to say meant the federal government would not fund large projects like a highway tunnel connecting Quebec City and Levis, Que.

That same sentiment is reflected in the federal Liberal government’s Impact Assessment Act, passed in 2019, which slowed the pace and increased the cost of major project approvals.

On the housing front, a generation of activists emerged who were intent on preventing urban sprawl yet were also opposed to building mid-rise buildings of the kind that eased housing pressures in continental Europe. Constraints on approval are a major contributor to the 3.5-million-unit housing gap because supply has not kept pace with demand.

The consequence of Canada’s regulatory sclerosis is what business veteran Paul Deegan and former clerk of the Privy Council Kevin Lynch in an FP Comment article earlier this year referred to as “an insidious stealth tax on Canadian jobs and growth“.

Taking each of the “foundations” in turn, the depth of the problem becomes clearer — but so do the solutions.

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