Quotulatiousness

July 19, 2024

Argentina’s decades-long struggle with inflation

Filed under: Americas, Economics, Politics — Tags: , , — Nicholas @ 04:00

At the Foundation for Economic Education, Marcos Falcone provides an update on President Javier Milei’s ongoing efforts to drag the Argentine economy back from hyperinflation:

As Javier Milei rose to power in December of last year, Argentina suffered from an annual inflation rate of over 211 percent, only behind Venezuela and Lebanon. Having risen consistently for over two decades, a combination of perpetually unbalanced budgets and investors’ distrust made money creation (and thus inflation) almost unavoidable.

In that context, Javier Milei’s first promise in his inaugural address was to avoid hyperinflation. In order to do that, his highest priority was to balance the budget so as to stop monetizing the deficit. And indeed, after just one month, the government announced in January that Argentina achieved its first financial surplus in 16 years. In successive months, the budget has been kept balanced.

Quick action seems to be causing quick effects. Indeed, inflation has plunged from 25 percent in December to an expected 4 percent in July. This is happening in a context of price readjustments, with prices like rent going down (after the government repealed rent control laws) and energy and transport prices going up (as the government is cutting subsidies). Even the IMF has admitted that inflation is falling faster than expected. In fact, inflation is coming down so fast that banks have started offering mortgages for the first time in seven years. This signals that the market expects inflation to stay down.

Milei told Argentines that the process of defeating inflation would hurt—and it has. The downside of the government’s economic plan is that the country has entered a recession which is likely to last until at least the end of the year. Amid some layoffs, the country’s industrial output is decreasing. The spending cuts that allowed the country to balance the budget have resulted in less income for provinces and specific groups like retirees.

The rise of the reactionaries – Gen X poised to pounce and seize

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

Andrew Potter tries to explain why Gen X are much more likely to support conservative policies than the groovy fossil Boomers and the painfully Socialized Millennials and GenZ’ers:

Generation X Word Cloud Concept collage background
Best Motivation Blog: What Generation Is X

As North American politics continues its rightward lurch, it is becoming increasingly commonplace to note the outsized role of Gen Xers in pushing this trend. In 2022, a Politico essay tried to explain “How Gen X became the Trumpiest generation“. That same year, an essay in Salon lamented how “of course Gen X was always going to sell out and vote Republican”. Writing in The Line last year, Rahim Mohamed wondered “how Generation MTV became Generation GOP?” These aren’t outliers – there is a whole sub genre of cultural commentary devoted to trying to explain just why Gen Xers are so right wing, compared to both their Boomer predecessors and the Millennials and Zs who followed.

This raises a couple of questions, the first of which is: is it even true? And if so, why?

On the facts of the matter, it appears that members of Generation X are, on the whole, more conservative than other generations, and this is especially true in the United States. For the past three or four years, polls have consistently shown that Gen Xers are more likely to see the country as going in the wrong direction, more likely to disapprove of Joe Biden, and more likely to support Donald Trump and vote Republican, than any other generational cohort. And while every generation tends to become more conservative as it ages, it is a tendency that accelerated under Gen X.

Pollsters have found similar support for these trends in Canada. An Abacus survey conducted last August found Gen Xers had the highest level of support for the Conservatives, with 41 per cent of those surveyed intending to vote CPC. And just this past June, the pollster Frank Graves released a series of charts tracking sentiment in Canada on a number of issues, including national attachment, social cohesion, and voter intention. He found significant intergenerational discord, with members of Gen X showing the highest level of support for smaller government, and Gen X males having the highest level of support for the CPC.

So why is this the case? How did the generation that fought (and won) the first culture war against conservatives, that launched the antiglobalization movement, that made heroes out of left wing icons like Kurt Cobain and Naomi Klein, become the most right wing cohort of all? Did we follow our Boomer parents’ hippies-to-yuppies trajectory in selling out? Or is there something else at work, beyond crass financial self-interest?

There’s probably at least something to be said for the “crass self-interest” angle. Despite the long-standing claim to being the first generation to do worse than their parents, the truth is, Gen X is raking it in. Starting right around the pandemic, Canadian Gen Xers quietly overtook Boomers as the generation with the highest average household net worth. It may also explain why alone amongst the generations, members of Gen X list “cost of living” as their most salient political issue, in contrast with both the older and younger cohorts who identify things like climate change, health care, and the environment as the most important issues facing Canada.

July 16, 2024

Real world economic experiment to test Card & Krueger’s minimum wage theory

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

Tim Worstall points out that the California state government is — intentionally or not — running an interesting economic validation of the Card & Krueger study in New Jersey that seemed to show raising minimum wages didn’t have a negative impact on overall employment:

“Fast food” by Daniel Barcelona is licensed under CC BY 3.0 .

For think back to that New Jersey minimum wage study, Card and Krueger. That showed that acshully, employment in fast food joints rose when the minimum wage went up. Now, I’ve been saying for a long time now that I think there’s a fallacy of composition there.

“Fast food” isn’t “fast food”. There are — at least — two sectors here. There’re those big national chains, lots of advertising, franchisees, MaccyD’s and the like. Then there’s a vast hinterland of Mom and Pop places. The financial structures are entirely different. The chains are capital intensive. I think I’ve seen that buns for burgers come in pre-cut. Salad definitely arrives in bags, already shredded. There’s no prep – not even prep areas in those kitchens. Mom and Pop run differently. One reason I know is because I’ve owned and run one. There’s an awful lot of labour that goes into turning blocks of stuff into those sandwiches. Stuff is sliced, diced, soups are cooked on site, from identifiable ingredients, bread is sliced and on and on.

No, this isn’t to try and riff off The Bear. But there is a difference in economic structure between those who are large corporates vending fast food and not-large corporates vending fast food.

And I think — think, me, I do — that the problem with the Card and Krueger study was that it didn’t account for this. A change in the general labour rate might push people to the capital intensive end of this market. Certainly could do, it would be possible to model it that way. Which means that using only the data from the fast food chains, as C&K did, would pick up only part, perhaps half, of the reaction. The Mom and Pops shed labour, the capital intensive chains modestly pick it up, the net effect is — well, the net effect could be anywhere actually.

Which is what makes this CA minimum wage change so interesting. Because the $20 an hour applies only to those working for the big national chains — or their franchisees.

Mom and Pop have to pay the normal CA minimum wage, not the $20. So, the labour intensive part of the overall system has just been handed a competitive advantage against the capital intensive end of it. We would expect, could possibly measure, that the overall employment outcome is positive.

No, really. I’d be willing to defend the idea that it could be, certainly. Note that “could”. So, we’ve two sectors, capital intensive, labour intensive. We’ve just said that the capital using guys now have to pay more — much more — for their labour than the labour intensive guys. The capital intensive guys can only respond by higher prices or worse service (ie, fewer labour hours). The labour intensive sector might end up picking up so much of the traffic that they expand employment — expand employment so much as to actually increase overall fast food sector employment. By shifting from the capital to the labour intensive sectors.

This should be studied, right? Now, my actual economic skills — rather than ruminations — are zero so it’s not going to be me checking this out. But I recommend it as something for someone looking for a PhD subject to think about. Possibly even someone more senior than that looking for a point upon which to make their bones.

Does a higher minimum wage that only — only — applies to the capital intensive portion of an economic sector like fast food actually increase employment? By shifting the sector over to the more labour intensive sector not subject to that higher minimum wage?

Logically, it could, significant empirical work would be necessary to show it though.

Britain’s Tories – “It is hard to think of any political Party that has so relentlessly thrown away its political mandate”

Lorenzo Warby considers a few of the early lessons that can be drawn from the British general election results:

I dislike the term “the deep state”. It mystifies what is much more straightforward, even bland: how metastasising bureaucracy is undermining the resilience of Western societies and their political systems.

The British Labour Party has won a massive Parliamentary majority in the House of Commons even though its total votes fell: from 10,269,051 in 2019 — 32.1% of total votes — to 9,704,655 in 2024 — 33.7% of total votes. Labour’s massive Parliamentary majority is not a product of enthusiasm for Labour, but the fracturing of the votes of its opponents.

The Scottish National Party (SNP) vote fell dramatically — from 1,242,380 votes in 2019 to 724,758 in 2024. This was largely a casualty of the SNP embracing the genderwoo of Transactivism. Outside some narrow urban enclaves, no one votes for “woke” but, given a genuine opportunity, folk will vote against it. As Scots have.

The Liberal Democrats did very well, as they have a regionally concentrated vote — which, this time, they targeted properly — and disgruntled (posh) Shire Tories will protest vote Lib-Dem. Clearly, lots did.

The Tories did so badly because their already low vote was further reduced by the Reform vote surge. The Reform vote represented voters punishing the Tories for their failure to do anything they had promised. As political scientist Matt Goodwin puts it:

    They failed to control our borders.

    They failed to lower legal immigration.

    They failed to cut taxes and the size of the state.

    They failed to take on woke, exposing our children to ideas with no basis in science.

    And they failed to level-up the left behind regions.

It is hard to think of any political Party that has so relentlessly thrown away its political mandate.

So, an angry, unhappy electorate (rightfully) punished two governing Parties (Tories and SNP) and has given Labour a massive majority, with little enthusiasm — almost two-thirds of voters voted for someone else — on a relatively low turnout.

There is, however, a deeper institutional issue underlying these results. Why are voters so disgruntled? Why did the Tories fail so spectacularly?

The answer to these questions is a mixture of how institutions have evolved, the development of media culture, the Anywhere-Somewhere divide and technocratic delusions.

Technocratic delusion

The technocratic delusion is multi-layered. It holds that governing is a managerial input-output problem, government bureaucracy simply implements policy, and that politics is not a motivation and coordination problem.

None of these presumptions are true, so technocratic politics fails. It does not connect to voters and does not understand, or grapple with, the actual institutional landscape.

The technocratic delusion is a way for clever people to be spectacularly clueless. Not the only such mechanism in the modern world.

July 13, 2024

QotD: The need for social status

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

Human beings become more preoccupied with social status once our physical needs are met. In fact, research reveals that sociometric status (respect and admiration from peers) is more important for well-being than socioeconomic status. Furthermore, studies have shown that negative social judgment is associated with a spike in cortisol (hormone linked to stress) that is three times higher than non-social stressful situations. We feel pressure to build and maintain social status, and fear losing it.

It seems reasonable to think that the downtrodden might be most interested in obtaining status and money. But this is not the case. Inhabitants of prestigious institutions are even more interested than others in prestige and wealth. For many of them, that drive is how they reached their lofty positions in the first place. Fueling this interest, they’re surrounded by people just like them — their peers and competitors are also intelligent status-seekers. They persistently look for new ways to move upward and avoid moving downward. The French sociologist Émile Durkheim understood this when he wrote, “The more one has, the more one wants, since satisfactions received only stimulate instead of filling needs.” And indeed, a recent piece of research supports this: it is the upper class who are the most preoccupied with gaining wealth and status. In their paper, the researchers conclude, “relative to lower-class individuals, upper-class individuals have a greater desire for wealth and status … it is those who have more to start with (i.e., upper-class individuals) who also strive to acquire more wealth and status”. Plainly, high-status people desire status more than anyone else.

Furthermore, other research has found that absolute income does not have much effect on general life satisfaction. An increase in relative income, on the other hand, has a positive effect. Put differently, making more money isn’t important. What’s important is making more than others.

Rob Henderson, “Thorstein Veblen’s Theory of the Leisure Class — A Status Update”, Quillette, 2019-11-16.

July 10, 2024

QotD: Persuasion

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

But I really do not expect people to agree with me. People haven’t agreed with me as a soft Marxist, as a social engineering transport economist, as a quantitative economic historian, as a Chicago School economist, as a neoinstitutionalist, as a libertarian, as a global monetarist, as a free market feminist. No wonder they don’t agree with me as a rhetorician of science.

Of course, like most people, I do assume that those people are wrong and I am right. (And in sober truth — can I confide in you as a friend? — I am right.)

Deirdre McCloskey, “The Rhetoric of Economics”, 1998.

Hat tip to Grant “I can take a hint” McCracken.

July 8, 2024

QotD: The Potlatch

John: Among the American Indians of the Pacific Northwest, there is a custom called “potlatch”. A potlatch is a feast commemorating a birth, a death, a wedding, or a communal ritual occasion. It has all the usual feast stuff — singing, dancing, drunken revelry, recitation of epic poems and renewal of ancient grudges — but there’s one additional feature to a potlatch that might be less familiar to our readers. As the party reaches its climax, the host of the potlatch reveals a collection of valuables: artisanal handicrafts, or precious items made from bone and ivory, culinary delicacies, alcohol, artworks, the rarer and more valuable the better. And then, all these treasures are heaped into a pile and burned in a giant bonfire.

The point, of course, is to show off how rich you are by showing off how much crystallized labor you are able to destroy. This pattern is not an uncommon one across human societies — a lot of human and animal sacrifice, while ostensibly religious in motivation, has this sort of showing off as an undertone. But what makes the potlatch especially interesting is its competitive nature. The Indians believe that as the goods are consumed by the blaze, every other wealthy man is “shamed” unless he comes back and burns objects of equal or greater value. It’s value destruction as a contest, like a dollar auction for status where the final price is set on fire rather than being paid to somebody, a negative-sum machine for destroying economic surplus.

Good thing our culture is way too civilized to do anything like that.

I don’t remember when it was that you told me I had to read this book about VIP “models and bottles” service at nightclubs, but I’m glad you did because it’s sort of like the Large Hadron Collider but for human social practices. By analyzing behavior under these extreme conditions, certain patterns that are normally obfuscated (often deliberately so) emerge with stark clarity. Much of your research focuses on “disreputable exchange” — the ways people buy and sell things while hiding the fact that they’re buying or selling something. Have you been able to get the NSF to pay for a night out in South Beach yet?

Gabriel: I should start off by disclosing that I’m friends with Ashley. However I don’t think that biases my opinion since the reason we are friends is that I admire her work.

Potlatch is one of the most interesting cultural practices in the world and the keystone upon which both economic anthropology and economic sociology are built. Indeed, you left out just how amazing it is in that not only did the native peoples of the Pacific Northwest destroy property in the form of salmon, blankets, and copper; but also wealth in the form of human beings, as they would use the occasion to both free and kill slaves. To us 21st century WEIRD Americans, murdering a slave and manumitting a slave seem like opposites, because manumission is humane and human sacrifice is brutal. But from the logic of status competition, they are alike in that both demonstrate that one is so wealthy that one can afford to give up the value of some of one’s slaves. Thus we see that not only the Tlingit but also the Romans would both murder and free slaves in funerary contexts.1 Patterson’s Slavery and Social Death has some very interesting material on this and is generally the greatest work of comparative scholarship on economic institutions since Max Weber — I hope to review it with you or Jane some day.

Now imagine it’s your job to describe one of the most interesting things to have ever happened, a ritual of passive-aggressively inviting rivals to parties that gavage your guests and culminate in wealth bonfires and human sacrifice, and the only thing you find worth emphasizing about it is how mean the Canadian government was to suppress the practice. This is how the Gene Autry Museum here in Los Angeles describes it, and you see similar emphasis at other museums that follow the curatorial heuristic of maximizing pious status redistribution and involvement of the descendants of the community being described, while avoiding at all costs anything that would serve as such a near occasion of awesome as to lead your internal monologue to roll tape for the Basil Poledouris score to Conan the Barbarian.

So now that we know what potlatch 1.0 is, why do I describe the models and bottles scene as a douchebag potlatch? There’s no human sacrifice, and the rivalry is a bit more friendly, but otherwise bottle service has a lot in common with a traditional potlatch. Most obviously, it is a ritual of competitive feasting where powerful men show off how much they can waste. The nightclubs are well aware of this and actively encourage “bottle wars”, where different tables compete to see how many bottles they can order. The service the club offers is not intoxication, but the spectacle of other clubgoers (and the home audience on Instagram) seeing how much the customer can spend. And so they don’t merely send a busboy or a waitress to quietly deliver the bottle, as would be the case at Applebee’s, but a bottle girl carrying bottles festooned in sparkler fireworks and, in one particularly decadent instance, the manager dressed as a gladiator and riding a chariot pulled by busboys. And once the bottles are drained, the bottles remain at the table. At a normal bar or restaurant, uncleared dishes would be a sign of lazy staff, but at a bottle service club the debris is an accumulating trophy that makes visible to all the consumer’s glorious expenditure.2

John Psmith and Gabriel Rossman, “GUEST JOINT REVIEW: Very Important People, by Ashley Mears”, Mr. and Mrs. Psmith’s Bookshelf, 2024-03-04.


    1. Gladatorial ludi were originally funerary in nature. And we know from the Lex Fufia Caninia that by 2 BC funerary manumission was considered to be in such an escalatory spiral that it would ruin estates absent sumptuary laws limiting the practice.

    2. Another example of garbage as testament to the host’s opulent generosity is the “unswept floor” mosaic motif common to many Hellenistic and Roman triclinia.

July 4, 2024

Argentina’s inflation rate

Filed under: Americas, Economics — Tags: , , , , — Nicholas @ 03:00

As you may have noticed, my interest in Argentinian affairs increased a lot with the election of Javier Milei as President. His first six months in office, while turbulent, do seem to have the economic indicators moving in the right direction for ordinary Argentines:

Argentina’s inflation rate has recently dropped to its lowest point since January 2022, registering a monthly increase of 4.2 percent in May according to the National Institute of Statistics and Census (INDEC). Although annual inflation has slowed for the first time since mid-2023, it still stands at 276.4 percent, one of the highest rates globally.

When Javier Milei assumed the presidency in December 2023, monthly inflation had skyrocketed to an unprecedented 25.5 percent. Within five months, Milei’s administration managed to reduce this figure by more than 20 percentage points. Despite the persistently high annual inflation rate, the trend indicates potential stabilization of the Argentine economy.

Javier Milei’s reforms have been described as aggressive. In his inaugural speech, he emphasized the need to clean up the economy before implementing his promises to dollarize and close the central bank.

To achieve a zero deficit, Milei enacted a 35 percent reduction in public spending. He achieved this by closing half of the ministries and secretariats, suspending public works for a year, reducing subsidies for energy and transportation, canceling government advertising, and maintaining the 2023 budget for 2024 despite an inflation rate of 300 percent. Essentially, the government drastically cut its expenditures.

These measures, although unpopular, yielded results. Milei’s government not only avoided a deficit, but achieved a surplus, and most importantly, inflation began to decline.

Following the inflation story in Argentina recently brought to mind Henry Hazlitt’s famous 1978 article “Inflation in One Page“. As the title suggests, Hazlitt summarizes the causes and remedies of inflation in a brief and simple explanation. He argued that inflation is a consequence of government monetary policies, specifically excessive money printing due to unbalanced budgets caused by extravagant government spending.

June 30, 2024

The medieval salt trade in the Baltic

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

In the long-awaited third part of his series on salt, Anton Howes discusses how the extremely low salt level of water in the Baltic Sea helped create a vast salt trade dominated by the merchant cities of the Hanseatic League:

The extent of the Hanseatic League in 1400.
Plate 28 of Professor G. Droysen’s Allgemeiner Historischer Handatlas, published by R. Andrée, 1886, via Wikimedia Commons.

It’s difficult to appreciate salt’s historical significance because it’s now so abundant. Societies used to worry about salt supplies — for preparing and preserving food — as a matter of basic survival. Now we use the vast majority of it for making chemicals or chucking on our roads to keep them from getting icy, while many salt-making plants don’t even operate at full capacity. Yet the story of how we came to achieve salt superabundance is a long and complicated one.

In Part I of this series we looked at salt as a kind of general-purpose technology for the improvement of food, as well as a major revenue-raiser for empires — especially when salt-producing coastal areas could dominate salt-less places inland. In Part II we then looked at a couple of places that were all the more interesting for being both coastal and remarkably salt-less: the coast of Bengal and the Baltic Sea. One was to be exploited by the English East India Company, which needlessly propped up a Bengalese salt industry at great human cost. The other, however, was to prove a more contested prize — and ultimately the place that catalysed the emergence of salt superabundance.

It’s worth a brief recap of where we left the Baltic. Whereas the ocean is on average 3.5% salt, along the Baltic coast it’s at just 0.3% or lower, which would require about twelve times as much time and fuel to produce a given quantity of salt. Although there are a few salt springs near the coast, they were nowhere near large enough to supply the whole region. So from the thirteenth century the Baltic’s salt largely came from the inland salt springs at Lüneburg, supplied via the cities of Lübeck and Hamburg downstream. These two cities had a common interest against the kingdom of Denmark, which controlled the straits between the North and Baltic seas, and created a coalition of trading cities that came to be known as the Hanseatic League. The League resoundingly defeated the Danes in the 1360s and 1430s so that their trade in salt — and the fish they preserved with it — could remain free.

But Lüneburg salt — and by extension the League itself — was soon to face competition.

Lüneburg could simply not keep up with the growth of Baltic demand, as the region’s population became larger and wealthier. And so more and more salt had to come from farther afield, from the Bay of Biscay off France’s western coast, as well as from Setúbal in Portugal and from southern Spain.1 This “bay salt” — originally referring to just the Bay of Bourgneuf, but then extended to the entire Bay of Biscay, and often to all Atlantic solar-evaporated salt — was made by the sun and the wind slowly evaporated the seawater from a series of shallow coastal pools, with the salt forming in coarse, large-grained pieces that were skimmed off the top. Bay salt, however, inevitably ended up mixed with some of the sand and dirt from the bottoms of the pools in which it was held, while the seawater was never filtered, meaning that the salt was often brown, green, grey or black depending on the skill of the person doing the skimming — only the most skilled could create a bay salt that was white. And it often still contained lots of other chemicals found in seawater, like magnesium chloride and sulphate, calcium carbonate and sulphate, potassium chloride and so on, known as bitterns.2

Bay or “black” salt, made with the heat of the sun, was thus of a lower quality than the white salt boiled and refined from inland salt springs or mined as rock. Its dirt discoloured and adulterated food. Its large grains meant it dissolved slowly and unevenly, slowing the rate at which it started to penetrate and preserve the meat and fish — an especially big problem in warmer climates where flesh spoiled quickly. And its bitterns gave it a bitter, gall taste, affecting the texture of the flesh too. Bay salt, thanks to the bitterns, would “draw forth oil and moisture, leading to dryness and hardness”, as well as consuming “the goodness or nutrimental part of the meat, as moisture, gravy, etc.”3 The resulting meat or fish was often left shrunken and tough, while bitterns also slowed the rate at which salt penetrated them too. Bay-salted meat or fish could often end up rotten inside.

But for all these downsides, bay salt required little labour and no fuel. Its main advantage was that it was extremely cheap — as little as half the price of white Lüneburg salt in the Baltic, despite having to be brought from so much farther away.4 Its taste and colour made it unsuitable for use in butter, cheese, or on the table, which was largely reserved for the more expensive white salts. But bay salt’s downsides in terms of preserving meat and fish could be partially offset by simply applying it in excessive quantities — every three barrels of herring, for example, required about a barrel of bay salt to be properly preserved.5

By 1400, Hanseatic merchants were importing bay salt to the Baltic in large and growing quantities, quickly outgrowing the traditional supplies. No other commodity was as necessary or popular: over 70% of the ships arriving to Reval (modern-day Tallinn in Estonia) in the late fifteenth century carried salt, most of it from France. But Hanseatic ships alone proved insufficient to meet the demand. The Danes, Swedes, and even the Hanseatic towns of the eastern Baltic, having so long been under the thumb of Lübeck’s monopoly over salt from Lüneburg, were increasingly happy to accept bay salt brought by ships from the Low Countries — modern-day Belgium and the Netherlands. Indeed, when these interloping Dutch ships were attacked by Lübeck in 1438, most of the rest of the Hanseatic League refused Lübeck’s call to arms. When even the Hanseatic-installed king of Denmark sided with the Dutch as well, Lübeck decided to back down and save face. The 1441 peace treaty allowed the Dutch into the Baltic on equal terms.6 Hanseatic hegemony in the Baltic was officially over.

The Dutch, by the 1440s, had thus gained a share of the carrying trade, exchanging Atlantic bay salt for the Baltic’s grain, timber, and various naval stores like hemp for rope and pitch for caulking. But this was just the beginning.


    1. Philippe Dollinger, The German Hansa, trans. D. S. Ault and S. H. Steinberg, The Emergence of International Business, 1200-1800 (Macmillan and Co Ltd, 1970), pp.219-220, 253-4.

    2. L. Gittins, “Salt, Salt Making, and the Rise of Cheshire”, Transactions of the Newcomen Society 75, no. 1 (January 2005), pp.139–59; L. G. M. Bass-Becking, “Historical Notes on Salt and Salt-Manufacture”, The Scientific Monthly 32, no. 5 (1931), pp.434–46; A. R. Bridbury, England and the Salt Trade in the Later Middle Ages (Clarendon Press, 1955), pp.46-52. Incidentally, some historians, like Jonathan I. Israel, Dutch Primacy in World Trade, 1585-1740 (Clarendon Press, 1989) p.223, note occasional reports of French bay salt having been worse than the Portuguese or Spanish due to its high magnesium content, “which imparted an unattractive, blackish colour”. This must be based on a misunderstanding, however, as the salts would have been identical other than in terms of the amount of dirt taken up with the salt from the pans. At certain points in the seventeenth century the French workers skimming the salt must simply have been relatively careless compared to those of Iberia.

    3. John Collins, Salt and fishery a discourse thereof (1682), pp.17, 54-5, 66-8.

    4. Bridbury, pp.94-7 for estimates.

    5. Karl-Gustaf Hildebrand, “Salt and Cloth in Swedish Economic History”, Scandinavian Economic History Review 2, no. 2 (1 July 1954), pp.81, 86, 91.

    6. For this section see: Dollinger, pp.194-5, 201, 236, 254, 300.

June 29, 2024

Oh no! The filthy proles are getting too many calories! Let’s re-impose rationing!

Tim Worstall suggests that the regular “viewing with alarm” thumbsuckers about purchased meals having “too many calories” are actually an indication of a strong desire by the great and the good to stick their regulatory noses into the lives of ordinary people:

“Indian take away in Farrer Park” by Kai Hendry is licensed under CC BY 2.0 .

This headline is, of course, wrong.

    Some takeaway meals contain more calories than daily limit, UK study finds

There is no daily limit. We do not have laws stating how much food we are allowed to eat. Of course, there are those who want there to be such laws but there aren’t, as yet. What there is is a series of recommendations about the limits we should impose upon ourselves:

    Some takeaway meals contain more calories in one sitting than someone is advised to consume in an entire day, a study of British eating habits has revealed.

That’s better.

    Cafes, fast-food outlets, restaurants, bakeries, pubs and supermarkets are fuelling the UK’s obesity crisis because so many meals they sell contain dangerously large numbers of calories, it found.

That’s not better. Because a plate of food containing a lot of calories is not a danger. Eating many of them might be but that the average household can get a gutbuster for some trivial portion of household earnings is a glory of modern civilisation, the very proof we require that we’re all as rich as Croesus.

And this is actually true too. That we are gloriously rich and it’s our food supply that proves this. As Brad Delong likes to point out back 200 years (yes, about right, 1820s is as it was really changing but 300 years would be better) it took a full day’s work to be able to gain 2,000 calories a day for a day labourer. There are 800 million out there still living at that standard of living. We can buy 2,000 calories — if we go boring stodge — for 30 minutes work now.

By history and by certain geographies we are foully rich these days. Which is the complaint of the wowsers of course. They’re a revival of the puritans and their sumptuary laws. How dare it be true that people fill their bellies with food they actually like?

    Six out of 10 takeaway meals contain more than the 600-calorie maximum that the government recommends people should stick to for lunch and dinner in order to not gain weight, according to the research, which was carried out by the social innovation agency Nesta.

    One in three contain at least 1,200 calories – double the recommended limit.

And? So, folk can buy lots of food for not much money. This is the very thing that makes having a civilisation possible — cheap food. My wife and I do indeed partake of an Indian occasionally — and find the takeout portions rather large. So, we have one amount for lunch or dinner and we’ve a refrigerator in which to keep the excess for a supper or snack another day. This is not beyond the wit of man to organise.

We don’t order in food very often, but when we do we usually manage to get both dinner on the night and lunch on the morrow from a typical order. If the nosey parkers have their way, they’d limit what we were allowed to buy — for our own good, of course — so we’d almost certainly still pay the same amount for less food. Such a deal!

June 25, 2024

In all places and at all times, the true minimum wage is zero

Filed under: Business, Economics, Food — Tags: , , , — Nicholas @ 03:00

Tim Worstall explains why fast food restaurants like McDonalds and Burger King are reported to be introducing new low-priced value meals to try and attract and keep more customers in the current economy:

“McDonald’s restaurant, Toledo OH, 1967” by DBduo Photography is licensed under CC BY-SA 2.0 .

It’s terribly unfashionable to say that minimum wage rises have any effects — other than that the minimum wage workers earn more, of course. It’s supposed to be one of those areas where only good things can come from poking a stick in the market. The justification is that the only jobs these folks can get are slinging fries (If that is the case then I’d probably start with education system reform so that grievance studies graduates are skilled enough to do something else but maybe that’s just me), therefore MaccyD’s and the like have a monopoly on employing them (a “monopsony”) and so omniscient and caring politicians and bureaucrats can correct this market error without there being any side effects.

Hmm. Seems unlikely but that is the story.

[…]

The standard economics of a minimum wage rise is — well, was before the progressive smokeblowing about monopsony — that the money’s got to come from somewhere. It could be that profits fall and therefore there’s less investment — even a move away from having invested in — that activity and so employment falls. Or, wages are higher for those fewer people employed and some lose their jobs — also known as rising productivity and also known as fewer jobs. Or, customers get to pay higher prices, fewer now buy the item and so employment falls as the sector shrinks.

Hmm, well, we can get all serious about monopsony but that one doesn’t work to my mind either as even if profits were excessive a fall in them will still lead to less investment in the sector and we’re back at option 1) above. But, many have convinced themselves.

But here we’ve got a general agreement that Americans are eating fast food less. They’re eating at home more. The only thing that’s changed in the varied cost structures is the price of fast food labour. Sorry, the only thing that’s changed in the *relative* cost structures is that labour as the minimum wage is pushed up. Whatever food inflation has been it’s been no better or worse for MaccyD’s than it has been in Albertsons or King Super. It’s also true that US real incomes have been rising so it’s not a general retreat on the part of consumers. The price of fast food relative to home prepared has risen, people are buying less fast food. The only cost pressure causing this is the pushing up of the minimum wage in recent years (for chains, in California, it’s now $20 an hour).

Myself I take that as being proof of the original and base minimum wage argument in standard economics. Trying to recoup that fall in sales is what is leading to these special offers — and don’t forget they’re special, not for all time and so should be considered advertising, not a long term change in price levels.

As a larger lesson I take it to mean that we should be very wary indeed of those claiming that there’s some special little economic trick that makes what they want to do anyway such a good idea. Why, yes, that does include any special little tricks I might want to claim. But many really did convince themselves that fast food wages were different, that pushing them up would have only good, not ill, effects.

Seems it ain’t so.

Over the weekend, there were a few stories about a small fancy coffee chain whose employees had successfully unionized to get better wages, only for the owners to shut down all three stores because even before the workers unionized, they were losing money on the business. Rather than the higher wages the employees were expecting (while keeping their unusually generous benefits for such entry-level jobs), all their jobs were lost and nobody won. Small businesses like restaurants operate on a far smaller profit margin than most people believe … according to Statistics Canada, the average restaurant of all types made a 4.3% profit in 2022.

June 21, 2024

“Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens”

Tim Worstall responds to a recent Medium essay by Julia Steinberger which illustrates that “neoliberal” has joined “fascist” as a generic term to indicate strong disapproval of a person, organization, or idea:

The idea that an adult woman can believe these things is just amazeballs. But here we are. A tweet from Julia Steinberger leads to her Medium essay about what’s wrong with the world.

An upheaval in 10 chapters:

    1. The cause. We know the climate crisis is brought to us by highly unequal and undemocratic economic systems.

Err, no? Emissions are emissions. 100 people emitting one tonne each is exactly the same as 1 person emitting 100 tonnes. Sure, it’s true that a more unequal society will have more people emitting those 100 tonne personal amounts. But a more equal society will have more people able to emit another 1 tonne each. For, more equality is by definition the movement of some of those assets of the richer to those poorer — the economic assets which either allow or do the emitting. Sure, Jim Ratcliffe’s £50,000 private jet flight emits more than my £100 Easyjet one. But if we take the £50k off Jim and give it to 500 folk like me then all 500 of us might spend the marginal income on an Easyjet flight each — which would be more emissions than Jim’s spending of the money.

It simply is not true that economic inequality is the heart, the core or the cause of climate change. It’s idiocy to think it is too.

Of course, we know what’s happening here. Climate Change is Bad, M’Kay? Which it is, obviously. Economic inequality is Bad, M’Kay? Well, there the evidence is a great deal more mixed but whatever. But in the minds of the stupid all bad things have the same cause. So, if inequality is bad, climate change is bad, then they must be the same thing because they’re Bad, M’Kay?

    2. The rise. The recent history of these economic systems, in the Americas and Eurasia, is dominated by the ascendance of neoliberal ideology.

Oh, that is good. Given that I am a neoliberal — a fully paid up one, Senior Fellow at the Adam Smith Institute and all — that’s very good. Given HS2, looming wealth taxation, the increased bite of idiot regulation and all that I can’t say that I see neoliberalism as winning right now but that might depend upon your starting point. If you’re a socialist — or an idiot but I repeat myself — you might well regard the plenitude of bananas in the supermarket as neoliberal. After all, that is something that socialism never did achieve.

    3. The threat. Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens.

And, well, you know, bollocks. The very beating heart of neoliberalism is that corporations need to be controlled and they’re best controlled by the citizens. In the form of free markets rather than voting on which bureaucrats get the gold plated pension, true. But neoliberals are between indifferent and actually against capitalist power. The whole nub of the idea is that markets do the job of controlling capitalists better than bureaucrats, politicians or, obviously, capitalists.

There’s not really any way for her thesis to survive after getting so much of the basics wrong, is there?

But just one more tidbit:

    Hayek and his neoliberal colleagues now needed another, antidemocratic way, to organise society. They didn’t want democracy, but they wanted some kind of self-maintaining organisation — by which they meant hierarchy. Organisation was supposed to be supplied by the market, and hierarchy by competition within markets. (It’s worth noting that neoliberals in the 1950s did not, although they should have, predict that unfettered markets lead to concentrations in monopolies or cartels. They would arguably disapprove of the vast corporations running our current economies, even though their market-above-democracy policies predictably brought them into being.)

Well, that wasn’t actually the last tidbit. But the idea that Friedman, Mises, Menger, Hayek and the rest didn’t worry about monopolies? Jesu C is really bouncin’ on that pogo stick right now. And then the idea that democracy will be better bulwark against monopolies than markets? Can you actually do backflips on a pogo stick?

June 18, 2024

“If you convince a group of Homo sapiens that that group over there are economic parasites … then you have primed them for mass murder”

Lorenzo Warby on the malign influence of Karl Marx:

Despite — in some ways because of — all his Theorising about “capitalism”, Marx made no serious attempt to understand the actual dynamics of commerce, creating a (false) theory of economic parasitism (“surplus value”) that — both predictably, and in practice — motivated mass murder. If you convince a group of Homo sapiens that that group over there are economic parasites — and you and your society is better off without them — then you have primed them for mass murder. Hence, Marx’s theory was used to justify actual Marxist mass-murders, starting with Lenin’s infamous hanging order.

Marx’s economistic systematising created a pretence of being social scientist — to himself and even more to Engels — that many people have maintained ever since. Hence a pre-Darwinian metaphysician is even now regularly treated as if he was a social scientist. This despite being wrong about more or less everything — class, commerce, surplus, immiseration, the state, patterns of history, commodification, division of labour, foraging societies …

As I have noted elsewhere:

    To have a state, farming niches have to be sustainable after taxes are extracted. That means resources are extracted before they turn into extra babies. This means that states create surplus (income above subsistence): indeed, they dominate the creation and extraction of surplus.

The perennial dominance of the state in extraction of surplus — and hence the creation of class structures — is nowhere more obvious than in Marxist states.

Philosopher Charles Taylor pointed out the tension between the claim to being science — and the causal determinism that goes with that — and the messianic vision that motivates Marx’s and Marxist activism. In any tension between the two, the latter wins because it is so powerfully motivating. This includes with Marx himself, which is why his “science” is so profoundly wrong in fact. It exists to justify the messianic vision.

No political (or religious) movement has killed and tyrannised more people than revolutionary Marxism. A Marxist is someone for whom no amount tyranny and mass murder will stop them worshipping the splendour in their head. This testifies to the power of the messianic vision.

Marx was the original launderer of ideas. Over decades of wrestling with the economics of Smith and Ricardo, he laundered — via economic reasoning — the metaphysical conclusions he reached in the 1840s to create a system that would “scientifically” generate and justify those conclusions. That those conclusions went mostly unpublished in his lifetime — with the most dramatic exception being The Communist Manifesto (1848) — does not belie this. Marx himself insisted on the centrality of this period of “self-clarification”.

Nothing he published later significantly contradicted those conclusions. Marx is the archetypal activist scholar, whose activism drives, and so degrades, his scholarship and analysis. He is the key formulator of the Dialectical Faith, that has generated various disastrous spin-offs, from his own economism to Lenin’s Jacobinising of Marxism to the Cultural Marxism of Lukacs and Gramsci, Critical Theory, and all forms of Critical Social Justice.

No form or derivative of the Dialectical Faith have ever generated a net positive contribution to human flourishing, or understanding, compared to available alternatives.

Ibn Khaldun was a far more acute analyst of the role of the state in the economy, and patterns within history, than Marx. Ibn Khaldun sought systematically to understand what he observed, participated in and read about. He was not laundering ideas, not justifying pre-set conclusions, nor judging evidence by his Theory.

Ibn Khaldun was a social scientist (arguably the first). Marx was not, he was pretending to be one (including to himself).

The Dialectical Faith holds that history is driven by dialectical process that transforms society from an oppressive past to a future liberated from constraints, if the oppressive elements of society are suppressed or abolished. As Marx tells us, our productive capacity will be so great, that we will so humanise the world, that division of labour will end for:

    In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.

Marx was not engaged in scientific enquiry but pseudo-scientific, or scientistic — the form of science without the substance — justification of already reached conclusions. He regularly judges and chooses evidence based on Theory, a pattern that has become endemic within all forms of Marxism and its spinoffs (such as Critical Theory). Marx exemplifies the activist principle that “what I can imagine — however self-contradictory — is so much better than what others have struggled to achieve”.

Marx’s picture of the evils of division of labour is metaphysical twaddle flatly contradicted by any serious study of the role of division of labour — and, for that matter, commodification — in production at scale. How can division of labour be such an alienating evil when it is built into sexual reproduction, into every eusocial species, even into the cells of every single complex organism?

The answer is via a ludicrous quasi-theological metaphysical inflation of human consciousness and creativity. Marx collectivises — through his notion of species-being — the Romantic notion of human fulfilment through self-expression.

June 16, 2024

“What the hell is going on in Canada?”

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

If you’re not Canadian or have any Canadian friends, you may not understand just how badly broken the country is — and the federal government is still desperately pretending that we’re all onboard with the Net Zero/Carbon Tax/”you’ll own nothing” bullshit and piling on the long-term debt:

One of Canada’s intelligence agencies, a couple of months ago, sent a memo to the Liberal federal government informing them that, in the near-future years to come, they are worried about revolutionary activity. I believe Canada is a good case study because it seems the country has been a sociological testing ground for the powers that be to see what happens. Canada is a surreal twilight zone where it feels like every psyop known to man is hurled its way. Canada unquestionably has the worst demographic and immigration issues, the worst housing issues, the worst social stability, and upwards mobility issues, all adjusted and proportional to its population and size, of course. For our purposes, I believe Canada serves as the worst-case scenario of how bad the dating market can be, and how bad it will continue to get.

Canada has some of the lowest upward social mobility among developed nations, especially for young people, particularly within the OECD and G8. This means that young people in Canada find it relatively difficult to move up the economic ladder compared to their parents.

In 2022, Canada’s population growth was significantly driven by immigration. According to Statistics Canada, approximately 95% of the population growth in that year was attributed to immigration. This includes both permanent and temporary residents, with a notable influx of international students, temporary workers, and permanent residents. Only a meagre 5% of Canada’s population growth, including recent immigrants, was from organic growth and childbirth. Below are the national origins of immigrants over the last twenty-four years. The combined total number of people entering Canada per year, including international students, temporary foreign workers, legal immigrants, and refugee claimants, is approximately 1,133,770 individuals officially. In reality, the government over the last four years has lost count.

As of April 2024, the average home price in Canada is approximately CAD $703,446. This is €477,121.93 and USD $511,466.93. Would you like to see what $703k CAD can get you in France? Hint: a lot more than in Canada.

This has been noticed so much by Canadians that it is now a meme, with Conservative Party and opposition leader Pierre Poilievre pointing it out in the House of Commons. You can compare the price of homes and the cost of living with Canadian wages. You can also compare how far those meagre wages would go in other first-world countries like France, Germany, or Sweden. The answer is much farther. Much, much farther. There is currently no hope, short of radical action by the government unheard of in Canadian history, for this situation to be rectified. The only other option is best left unsaid.

“Educated” Women Lead

In Canada, among ethnic Canadians, a significant portion of the female population is more educated and makes more money than Canadian men. Canadian men make, on average, CAD $48,500, while women make CAD $42,000. However, only 56% of men have post-secondary education, while 68% of women do. Men have completed higher levels of high school, and women have completed higher levels of college or university. This has led to a massive gap in socioeconomic status between men and women. It gets worse when you include non-ethnic Canadians. Completed levels of post-secondary education for men remain at 56%, while women’s rise to 73%.

We know that in our post-industrial world, resources translate to money. Money and completed levels of education translate to status. Women are 50% more likely to divorce men when they make more money. When women are already the initiators of divorce 70% of the time, it starts looking pretty ugly, fast.

June 13, 2024

Debunking the “miraculous” Marshall Plan

If you’ve read anything about the state of Europe in the aftermath of the Second World War, you’ll undoubtedly have heard of the way the Marshall Plan did wonders to get (western) Germany and the other battle-devastated nations back on their feet economically. At FEE, Christian Monson suggest that you’ve been provided with a very rosy scenario that doesn’t actually accord with the facts:

Konrad Adenauer in conversation with Ludwig Erhard.
KAS-ACDP/Peter Bouserath, CC-BY-SA 3.0 DE via Wikimedia Commons.

Unfortunately, the ubiquity of the myth that the Marshall Plan rebuilt Germany is proof that state-controlled education favors propaganda over economic literacy. Despite the fact that most modern historians don’t give the Marshall Plan much credit at all for rebuilding Germany and attribute to it less than 5 percent of Germany’s national income during its implementation, standard history textbooks still place it at the forefront of the discussion about post-war reconstruction.

Consider this section from McDougal Littell’s World History (p. 968), the textbook I was given in high school:

    This assistance program, called the Marshall Plan, would provide food, machinery, and other materials to rebuild Western Europe. As Congress debated the $12.5 billion program in 1948, the Communists seized power in Czechoslovakia. Congress immediately voted approval. The plan was a spectacular success.

Of course, the textbook makes no mention of the actual cause of the Wirtschaftwunder: sound economic policy. That’s because, for the state, the Marshall Plan makes great statist mythology.

Not only is it frequently brought up to justify the United States getting involved in foreign conflicts, but it simply gives support for central planning. Just look at the economic miracle the government was able to create with easy credit, they say.

And of course, admitting that the billions of dollars pumped into Germany after WWII accomplished next to nothing, especially when compared to something as simple as sound money, would be tantamount to admitting that the government spends most of its time making itself needed when it isn’t and thereby doing little besides getting in the way.

The Inconvenient Truth of Currency Reform

You are unlikely to find the real cause of the Wirtschaftwunder mentioned in any high school history textbook, but here is what it was. In 1948, the economist and future Chancellor of West Germany Ludwig Erhard was chosen by the occupational Bizonal Economic Council as their Director of Economics. He went on to liberalize the West German economy with a number of good policies, the most important being currency reform.

The currency in Germany immediately after WWII was still the Reichsmark, and both the Nazis and then the occupying Soviet authorities had increased the amount in circulation significantly. As a result, by 1948 the Reichsmark was so worthless that people had turned to using cigarettes and coffee as money.

To give people a true store of value so that they could calculate economic costs accurately, assess risk and invest in the future, Erhard created the Deutsche Mark, West Germany’s new currency. Like ripping off a bandaid, he decreased the money supply by 93 percent overnight.

It’s also worth noting that while Erhard, following his school of Ordoliberalism, did form a central bank, it was at least designed independent from the government and followed a hard-money policy (preserving a stable amount of money) through the length of the Wirtschaftswunder. In fact, the original Bank Deutsche Länder was rather limited in scope until it was reorganized as the considerably more centralized Bundesbank in 1957, incidentally when Germany’s economic miracle began to lose steam.

Other notable liberal policies instituted by Erhard included removing all price controls and lowering taxes from the Nazis’ absurd 85 percent to 18 percent. The American occupational authorities opposed these reforms, but Erhard went through with them anyway. This liberalization had an immediate effect. The black market disappeared almost overnight, and in one year, industrial output almost doubled.

Perhaps most poignantly, unemployment dropped from more than 10 percent to around 1 percent by the end of the 1950s. Normally the government tries to justify currency manipulation as a means to eliminate unemployment, but the Wirtschaftwunder is evidence that sound money does the job far better.

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