Quotulatiousness

April 20, 2020

The four distinct phases of the Great Depression in the United States

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

An older post from Lawrence W. Reed at the Foundation for Economic Education outlines the low points of the Great Depression and debunks a few widely held myths about that cataclysmic economic era:

Phase 1, the Federal Reserve and the end of the Roaring 20’s:

One of the most thorough and meticulously documented accounts of the Fed’s inflationary actions prior to 1929 is America’s Great Depression by the late Murray Rothbard. Using a broad measure that includes currency, demand and time deposits, and other ingredients, Rothbard estimated that the Federal Reserve expanded the money supply by more than 60 percent from mid-1921 to mid-1929. The flood of easy money drove interest rates down, pushed the stock market to dizzy heights, and gave birth to the “Roaring Twenties.”

By early 1929, the Federal Reserve was taking the punch away from the party. It choked off the money supply, raised interest rates, and for the next three years presided over a money supply that shrank by 30 percent. This deflation following the inflation wrenched the economy from tremendous boom to colossal bust.

The “smart” money — the Bernard Baruchs and the Joseph Kennedys who watched things like money supply — saw that the party was coming to an end before most other Americans did. Baruch actually began selling stocks and buying bonds and gold as early as 1928; Kennedy did likewise, commenting, “only a fool holds out for the top dollar.”

Phase 2, Hoover’s interventions and the disaster of Smoot-Hawley:

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 Wikimedia Commons.

Unemployment in 1930 averaged a mildly recessionary 8.9 percent, up from 3.2 percent in 1929. It shot up rapidly until peaking out at more than 25 percent in 1933. Until March 1933, these were the years of President Herbert Hoover — the man that anti-capitalists depict as a champion of noninterventionist, laissez-faire economics.

Did Hoover really subscribe to a “hands off the economy,” free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of presiding over “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, charged that Hoover was “leading the country down the path of socialism.” Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war. Professor Barry Poulson notes that not only were 887 tariffs sharply increased, but the act broadened the list of dutiable commodities to 3,218 items as well.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Phase 3, FDR and the New Deal:

Top left: The Tennessee Valley Authority, part of the New Deal, being signed into law in 1933.
Top right: FDR (President Franklin Delano Roosevelt) was responsible for the New Deal.
Bottom: A public mural from one of the artists employed by the New Deal’s WPA program.
Wikimedia Commons.

Franklin Delano Roosevelt won the 1932 presidential election in a landslide, collecting 472 electoral votes to just 59 for the incumbent Herbert Hoover. The platform of the Democratic Party whose ticket Roosevelt headed declared, “We believe that a party platform is a covenant with the people to be faithfully kept by the party entrusted with power.” It called for a 25 percent reduction in federal spending, a balanced federal budget, a sound gold currency “to be preserved at all hazards,” the removal of government from areas that belonged more appropriately to private enterprise, and an end to the “extravagance” of Hoover’s farm programs. This is what candidate Roosevelt promised, but it bears no resemblance to what President Roosevelt actually delivered.

In the first year of the New Deal, Roosevelt proposed spending $10 billion while revenues were only $3 billion. Between 1933 and 1936, government expenditures rose by more than 83 percent. Federal debt skyrocketed by 73 percent.

[…] in 1935 the Works Progress Administration came along. It is known today as the very government program that gave rise to the new term, “boondoggle,” because it “produced” a lot more than the 77,000 bridges and 116,000 buildings to which its advocates loved to point as evidence of its efficacy. The stupefying roster of wasteful spending generated by these jobs programs represented a diversion of valuable resources to politically motivated and economically counterproductive purposes.

The American economy was soon relieved of the burden of some of the New Deal’s excesses when the Supreme Court outlawed the NRA in 1935 and the AAA in 1936, earning Roosevelt’s eternal wrath and derision. Recognizing much of what Roosevelt did as unconstitutional, the “nine old men” of the Court also threw out other, more minor acts and programs which hindered recovery.

Phase 4, the Wagner Act:

The stage was set for the 1937–38 collapse with the passage of the National Labor Relations Act in 1935 — better known as the Wagner Act and organized labor’s “Magna Carta.” […] Armed with these sweeping new powers, labor unions went on a militant organizing frenzy. Threats, boycotts, strikes, seizures of plants, and widespread violence pushed productivity down sharply and unemployment up dramatically. Membership in the nation’s labor unions soared; by 1941 there were two and a half times as many Americans in unions as in 1935.

[…]

Higgs draws a close connection between the level of private investment and the course of the American economy in the 1930s. The relentless assaults of the Roosevelt administration — in both word and deed — against business, property, and free enterprise guaranteed that the capital needed to jumpstart the economy was either taxed away or forced into hiding. When Roosevelt took America to war in 1941, he eased up on his antibusiness agenda, but a great deal of the nation’s capital was diverted into the war effort instead of into plant expansion or consumer goods. Not until both Roosevelt and the war were gone did investors feel confident enough to “set in motion the postwar investment boom that powered the economy’s return to sustained prosperity.”

April 16, 2020

Canada’s temporary foreign workers

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

Chris Selley points out some of the weirdness of Canada’s claimed dependence on temporary foreign workers because “Canadians still need to eat.”:

Temporary foreign workers picking fruit in a Canadian orchard.
Image from http://www.yorkfeed.com/apple-picking-urgently-canada/

If all goes as it should at Canada’s airports, temporary foreign workers will be informed of their responsibilities. They should be made aware of their employers’ responsibilities as well. And there’s no particular epidemiological reason to worry about them more than anyone else landing on a Canadian runway from abroad — or domestically, for that matter. The vast majority of temporary foreign workers are from Mexico, Jamaica or Guatemala, which have reported 39, 25 and nine COVID-19 cases per million residents. Canada’s tally works out to 713 per million.

But the official advice to employers provides little comfort. It doesn’t prohibit putting people up in shared accommodations; it merely says residents must be able to keep two metres from each other at all times. We know the limitations of such measures from experience in seniors’ homes and homeless shelters. It’s not necessarily “the state’s duty” to quarantine arriving temporary foreign workers, as Bloc Québécois leader Yves-François Blanchet argued this week. But the state could certainly do far more than it is.

For one thing, the cities in which workers typically first arrive are much better suited to proper self-isolation — i.e., in a hotel or motel room — compared to the farm country they are eventually headed for. Sourcing 45,000 hotel rooms is a huge job even in cities — that’s roughly how many rooms there are in the entire Greater Toronto Area — but it will never be easier than right now. It would prevent any bad-actor employers from breaking the rules. It would be much more reassuring than a government cheque for what works out to less than $80 per worker per day of isolation.

The whole situation is completely bizarre, though — one of several longstanding, bizarre and sometimes embarrassing Canadian situations that COVID-19 has highlighted. Economically speaking, the idea of temporary foreign workers essentially amounts to cheating. It reaches peak absurdity when businesses like Tim Hortons outlets claim to need them — that is, when they’re being brought in to do work that Canadians are demonstrably willing to do. It’s just a skeevy way to artificially depress wages and the price of fast food. People seemed to sense that back in 2014, when the government tightened the rules.

In agriculture, however, the idea seems thoroughly entrenched. Perhaps it’s a case of out of sight, out of mind. But it’s the same absurdity: If you can identify a group of 45,000 people without whose labour we literally wouldn’t be able to feed ourselves — or so we are told — then on what possible grounds are we denying them a path to Canadian citizenship? In 2017, the Toronto Star profiled a 66-year-old Saint Lucian man who had busted his hump on Canadian farms for 37 years in a row, with his paycheques deducted for income tax, EI and CPP, but who had no claim to stay. The highly skilled and educated immigrants we compete to attract bring many important things to Canada’s table; they don’t bring anything more important than food. And food is something COVID-19 has very much taught us not to take for granted. Who would have thought supermarket checkout clerks would achieve hero status?

April 15, 2020

The Industrial Revolution and the Society for the Encouragement of Arts, Manufactures and Commerce

Filed under: Britain, Economics, History, Technology — Tags: , , , , , — Nicholas @ 05:00

In the latest from Anton Howes’ Age of Invention newsletter, we are introduced to the Society for the Encouragement of Arts, Manufactures and Commerce:

The London Sweep (from a Daguerreotype by BEARD).
Image from London labour and the London poor : a cyclopaedia of the condition and earnings of those that will work, those that cannot work, and those that will not work, 1851, via the Wellcome Collection.

When we think of the British Industrial Revolution, the image that springs to mind tends to be of soot-belching factories and foundries, of child labour and squalid cities. The inventors who spring to mind tend to be James Watt and his steam engines, or Richard Arkwright and his cotton-spinning machines. But what people tend to forget is that the Industrial Revolution was unleashed by a much broader tide of accelerating innovation — as I never tire of repeating, it touched everything from agriculture to watchmaking, and everything inbetween. Just as some inventors pioneered the use of factories, other inventors sought solutions to industrialisation’s social ills.

Last time, I mentioned the Society for the Encouragement of Arts, Manufactures and Commerce, set up in 1754 in a London coffee house (the Society of Arts for short). What’s so fascinating about the organisation — which still exists today, now called “Royal” — is that it was closely involved with many of the more socially-oriented innovations of the period. By this, I mean the kinds of inventions that were rarely immediately profitable, but which aimed to save lives, to alleviate suffering, or to remedy some other social ill. The Society advertised premiums — cash prizes or honorary medals — for solutions to the problems that its members identified. And it offered similar rewards, which they called bounties, for unsolicited inventions.

It awarded a bounty of fifty guineas and a gold medal to Henry Greathead, for example, one of the claimants for the invention of the lifeboat. It gave another fifty guineas to a sergeant of the Royal Artillery, John Bell, for a method of firing a rope and grapple by mortar from a ship to the shore, to save people on board from shipwreck during storms. (Some years later, it even gave a gold medal to another inventor for a device that did the opposite, firing from shore to ship.) The Society awarded a medal to a Sheffield schoolmaster, John Hessey Abraham, for a magnetic apparatus that would prevent metal dust getting into the eyes and lungs of workers employed in grinding the points of needles. And in 1767 it awarded a bounty to a clockmaker, Christopher Pinchbeck, for a safer crane — cranes at the time were like gigantic hamster wheels, but for humans. When lines snapped, the results could be fatal, so Pinchbeck added a pneumatic braking mechanism.

The list goes on — in all, over the course of about a century, the Society of Arts awarded over two thousand premiums and bounties for inventions. But there is one that really stands out: a premium for the invention of a mechanical means of cleaning chimneys. With such an invention, the Society hoped to abolish the employment of children, sometimes as young as 4, who were forced to climb up inside chimneys in order to clean them. These children were sometimes abducted by the master chimney sweeps, and frequently perished in horrific accidents or of soot-induced cancers. Strikingly, the use of climbing boys was thought to be unique to Britain — the “peculiar disgrace of England” as the campaigners put it (though I don’t think this was quite true). The Society’s idea was that if a technological replacement could be found, then the case for outright abolition could be made — they wanted to create a machine to take the children’s jobs.

The Society of Arts played its role with the offer of a premium, but it acted alongside another campaign run by a few of its members, who ran the snappily titled “Society for Superseding the Necessity of Climbing Boys, by Encouraging a New Method of Sweeping Chimnies, and for Improving the Condition of Children and Others Employed by Chimney Sweepers”, founded in 1803 at the London Coffee-House on Ludgate Hill. Let’s call it the SSNCB for short. There had been earlier campaigns to abolish the use of climbing boys, one of the most prominent being run by Jonas Hanway (a prominent philanthropist, also a member of the Society of Arts, whose various claims to fame include being the first man in London to sport an umbrella). But the 1803 campaign was to prove the most successful, drawing on wider political support. The SSNCB’s key members included William Wilberforce, who later became famous for his zeal in abolishing the slave trade.

“Experts” and their “models”

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

In the latest Libertarian Enterprise, after offering us his current favourite mixed drink recipe, L. Neil Smith gets around to discussing our modern dependence on “experts” wielding their intricate and convoluted computer models to guide our lives:

My preferred variant of Mott’s Clamato … I’ll have to try it with tequila as Neil suggests.

Start with a tall glass of Mott’s Clamato over ice. Many people can’t stand the idea of tomato juice enhanced with sweet clam juice (and some spices), and I won’t try to sell you on it, here. But if you relish it the way I do (I used to buy it by the gallon), then bon appetit! Throw in a healthy shot of tequila — mine is Cuervo Gold, but your mileage may vary. Add a fat slice of lime on the edge of the glass, a slice of lemon, and a slice of orange. The citrus really dresses it up. These are all ingredients I like very much, and together, they take the edge off a day I spent writing 1000 or 2000 words (my record so far is 3200) and let me relax.

At the end of that day, when my lovely and talented wife quits work and comes home — from the dining room, these days — we have a nice, comfortable cocktail hour (she drinks Cuba Libras) and watch Tucker Carlson. Ordinarily, three giant cans of the Budweiser concoction (which is also made with Clamato) will make me the tiniest bit silly. This drink, the Bloody Mermaid (ick) is surprisingly gentle and I have had two and a half so far without embarrassing myself. I love the taste of tequila neat (many don’t), and I would still be doing shooters, except that my loving bride of 36 years won’t let me eat that much salt.

Please enjoy this silly little drink if you can until we’re all free again.

Oh yeah — I couldn’t resist after all. There’s something I need to get off my chest. I’m sure you remember the way “experts” with computer models warned us all about Y2K, and the way it meant the end of Civilization-As-We-Knew-It. Then there was Global Warming — more experts, more computer models — there are still gullible morons out there who believe it’s not an obvious hoax. Now experts and their — increasingly failing — computer models are all telling us we are in the middle of the worst health crisis since the Black Death.

I happen to be, as you know, a lifelong libertarian and the most fervid advocate of the First Amendment that you will ever read. Therefore, I cannot endorse the suggestion I’ve heard that whenever an “expert” testifies about anything before any legislative body anywhere, and the words “computer model” come out of his mouth, the Sergeant-at-Arms should smash his face in, drag him out into the street, and shoot him him the back of the head. Perhaps millions of lives could be saved that way, but, as a lifelong libertarian and the most fervid advocate of the First Amendment you will ever read, I cannot endorse that position.

So drink up, my dear friends and readers and have the best time — under house arrest — that you possibly can!

When the Fed Does Too Much

Filed under: Economics, Government, History, USA — Tags: , , , , , — Nicholas @ 02:00

Marginal Revolution University
Published 22 Aug 2017

In the 2000s, the Fed kept interest rates low to stimulate aggregate demand. But the cheap credit also helped fuel the housing market bubbles. We’ll look at the case of the Great Recession as an example of where the Fed did too much in one area, and perhaps not enough in others.

QotD: The limited utility of the “left-right” scale in political debate

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

Categorizing a political position according to some simple left-right scale of values leaves something to be desired. Political views cover such a wide variety of issues that it is impossible to describe adequately any one person merely by identifying where he sits on a lone horizontal line.

Use of the single left-right scale makes impossible a satisfactory description of libertarian (and classical-liberal) attitudes toward government. Libertarians oppose not only government direction of economic affairs, but also government meddling in the personal lives of peaceful people. Does this opposition make libertarians “rightists” (because they promote free enterprise) or “leftists” (because they oppose government meddling in people’s private affairs)? As a communications tool, the left-right distinction suffers acute anemia.

Nevertheless, despite widespread dissatisfaction with the familiar left-right — “liberal-conservative” — lingo, such use continues. One reason for its durability is convenience. Never mind that all-important nuances are ignored when describing someone as being, say, “to the right of Richard Nixon” or “to the left of Lyndon Johnson”. The description takes only seconds and doesn’t tax the attention of nightly news audiences.

Don Boudreaux, “Coercivists and Voluntarists”, The Freeman, 1997-08-01.

April 14, 2020

QotD: The Edict of Diocletian, 301 AD

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

The most famous episode of price controls in Roman history was during the reign of Emperor Diocletian (A.D. 244-312). He assumed the throne in Rome in A.D. 284. Almost immediately, Diocletian began to undertake huge and financially expensive government spending projects.

There was a massive increase in the armed forces and military spending; a huge building project was started in the form of a planned new capital for the Roman Empire in Asia Minor (present-day Turkey) at the city of Nicomedia; he greatly expanded the Roman bureaucracy; and he instituted forced labor for completion of his public works projects.

[…]

Diocletian also instituted a tax-in-kind; that is, the Roman government would not accept its own worthless, debased money as payment for taxes owed. Since the Roman taxpayers had to meet their tax bills in actual goods, this immobilized the entire population. Many were now bound to the land or a given occupation, so as to assure that they had produced the products that the government demanded as due it at tax collection time. An increasingly rigid economic structure, therefore, was imposed on the whole Roman economy.

But the worst was still to come. In A.D. 301, the famous Edict of Diocletian was passed. The Emperor fixed the prices of grain, beef, eggs, clothing, and other articles sold on the market. He also fixed the wages of those employed in the production of these goods. The penalty imposed for violation of these price and wage controls, that is, for any one caught selling any of these goods at higher than prescribed prices and wages, was death.

Realizing that once these controls were announced, many farmers and manufacturers would lose all incentive to bring their commodities to market at prices set far below what the traders would consider fair market values, Diocletian also prescribed in the Edict that all those who were found to be “hoarding” goods off the market would be severely punished; their goods would be confiscated and they would be put to death.

In the Greek parts of the Roman Empire, archeologists have found the price tables listing the government-mandated prices. They list over 1,000 individual prices and wages set by the law and what the permitted price and wage was to be for each of the commodities, goods, and labor services.

A Roman of this period named Lactanius wrote during this time that Diocletian “… then set himself to regulate the prices of all vendible things. There was much blood shed upon very slight and trifling accounts; and the people brought no more provisions to market, since they could not get a reasonable price for them and this increased the dearth [the scarcity] so much, that at last after many had died by it, the law was set aside.”

Richard M. Ebeling, “How Roman Central Planners Destroyed Their Economy”, Foundation for Economic Education, 2016-10-05.

April 12, 2020

Minimum alcohol pricing – a policy so good you have to lie about it

Filed under: Britain, Economics, Government, Health, Wine — Tags: , , , , , — Nicholas @ 05:00

Scotland has had legal minimum prices for alcoholic beverages since mid-2018. If you read a random selection of mainstream media coverage, you’d know that it’s been a huge success, with vastly improved public health results at a price to consumers measured in mere pennies. As with all propaganda efforts, if you tell the lies often enough, people may believe you:

There has been all sorts of rubbish written about minimum pricing since it was introduced in Scotland in May 2018. Nicola Sturgeon has lied about in the Scottish Parliament. The BBC has gone to extraordinary lengths to spin the policy as a success. The public have been told that alcohol-related hospital admissions have gone down when they have gone up. We have seen the media fall for blatant cherry-picking. We have been told that rates of problem drinking have gone down when we don’t have any evidence either way.

One of the few solid facts — that there were more alcohol-related deaths recorded in Scotland in 2018 than in 2017 — has been sidelined. Instead, the media have focused on a disputed, and relatively small, decline in alcohol sales as if that were an end in itself. Any port in a storm (fortified wine sales have definitely benefited from minimum pricing).

Figures from the calendar year of 2018 are of limited use because minimum pricing didn’t begin until May 1st. Today, for the first time, I can reveal the monthly mortality figures for Scotland, England and Wales. They show that there was no difference between the change in annual death rates from alcohol-related causes, regardless of whether the country had minimum pricing in place. Both England/Wales and Scotland saw a decline between May and December of seven per cent (compared to the previous year).

This graph is published in a new briefing paper I have written for the IEA. It summarises all the evidence gathered to date on deaths, hospitalisations and sales, plus exclusive new data.

Importantly, it contains estimates of the costs to consumers. Among the more outlandish claims made by the Sheffield modellers was the idea that moderate and low income consumers would be barely affected by minimum pricing. They predicted that a low income moderate drinker would only pay an extra 4p a year! This was never realistic, not least because it was based on the minimum price being set at 45p and they defined a moderate drinker as someone consuming the equivalent of just two pints of lager a week, but it worked from a PR perspective because it quelled politicians’ fears about the policy being regressive.

Self-interest in the clothing of idealism

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

Last week, Esteban wrote at the Continental Telegraph:

Much has been made over the past year of the fact that young people in America approve of Socialism in rather large numbers, and quite a lot more than their elders. Some explain that this is because they are more idealistic than the older crowd, who have become corrupted and “sold out” now that they have a mortgage and expensive lifestyle. Others argue that this supposed idealism is actually naivete.

It seems fair to point out that if you are 24 with negative net worth, a modest paying job and no reasonable expectation on the horizon to make serious cash, it isn’t idealistic to support redistribution, it’s self-interest. And you don’t change this fact by saying “Well, if I made that much money, I’d be happy to pay a lot in taxes”. If you ever get to that point we’ll see, until then this statement doesn’t fly.

Likewise, if you’re 55 with a couple of million dollars in your 401(k), a big home and an income well into six figures your view may be biased against “sharing the wealth” based on your wallet, not principles.

QotD: The Gini coefficient

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

At least for now, most progressives acknowledge that markets and economic growth are necessary. But progressives in academia contend that growth has proved itself secondary to equality efforts — something to be exploited, rather than appreciated. Not just nationally, but worldwide, policymakers and the press regard the subordination of growth to equality to be a benign practice, as in the recent line in the Indian periodical Mint: a policy aimed at “reducing inequality need not hurt growth.”

The redistributionist impulse has brought to the fore metrics such as the Gini coefficient, named after the ur-redistributor, Corrado Gini, an Italian social scientist who developed an early statistical measure of income distribution a century ago. A society where a single plutocrat earns all the income ranks a pure “1” on the Gini scale; one in which all earnings are perfectly equally distributed, the old Scandinavian ideal, scores a “0” by the Gini test. The Gini Index has been renamed or updated numerous times, but the principle remains the same. Income distribution and redistribution seem so crucial to progressives that French economist Thomas Piketty built an international bestseller around it, the wildly lauded Capital.

Through Gini’s lens, we now rank past eras. Decades in which policy endeavored or managed to even out and equalize earnings — the 1930s under Franklin Roosevelt, the 1960s under Lyndon Johnson — score high. Decades where policymakers focused on growth before equality, such as the 1920s, fare poorly. Decades about which social-justice advocates aren’t sure what to say — the 1970s, say — simply drop from the discussion. In the same hierarchy, federal debt moves down as a concern because austerity to reduce debt could hinder redistribution. Lately, advocates of economically progressive history have made taking any position other than theirs a dangerous practice. Academic culture longs to topple the idols of markets, just as it longs to topple statutes of Robert E. Lee.

But progressives have their metrics wrong and their story backward. The geeky Gini metric fails to capture the American economic dynamic: in our country, innovative bursts lead to great wealth, which then moves to the rest of the population. Equality campaigns don’t lead automatically to prosperity; instead, prosperity leads to a higher standard of living and, eventually, in democracies, to greater equality. The late Simon Kuznets, who posited that societies that grow economically eventually become more equal, was right: growth cannot be assumed. Prioritizing equality over markets and growth hurts markets and growth and, most important, the low earners for whom social-justice advocates claim to fight. Government debt matters as well. Those who ring the equality theme so loudly deprive their own constituents, whose goals are usually much more concrete: educational opportunity, homes, better electronics, and, most of all, jobs. Translated into policy, the equality impulse takes our future hostage.

Amity Shlaes, “Growth, Not Equality”, City Journal, 2018-01-21.

April 6, 2020

The Precautionary Principle – “If it saves only one life…”

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

A guest post at Catallaxy Files on the madness of taking the Precautionary Principle as your guide:

Slide from a presentation by Patti Gettinger, 2011-07-11.
Original slideshow at https://fr.slideshare.net/regsgridlock/the-precautionary-principle-8656034

In the unprecedented trampling of rights characterised by the response to the global pandemic of COVID-19, the common justification is that it will save lives, as though no measure is too great to save even one life.

This has echoes of the Precautionary Principle, which has pushed aside ubiquitous risk management principles in such areas as climate change, invariably to justify unlimited spending which risk management principles would otherwise limit. In other words, it’s a principle which can be used to justify any measure. And here we are.

One fundamental difference between the competing principles is the concept of marginal benefit, which, simply put, is the point where the benefits of an action no longer outweighs the cost. Our new “rules” from the newly formed National Cabinet, of which no legal or constitutional standing exists, has far surpassed the point of marginal benefit.

A person fishing off the coast alone in a small boat is in breach of the rules, as is a person playing golf alone, or a person sunbathing on a rock in the outback, yet in none of these examples can any measurable likelihood of spreading it or catching the disease be identified. These situations would fail any risk management approach, but not the Precautionary principle. Any risk, that is, any potential risk that can not be confidently identified as absolute zero, is a risk not worth taking, but that is not how we live our lives, because we understand that everything involves risk. Driving a car, catching public transport, having a job, not having a job, leaving your house or indeed staying in it involves some level of risk.

Also central to risk management is the concept of mitigation; the potential actions that can reduce, transfer or eliminate identified risks. In the case of COVID-19, many mitigation measures have been identified, and implemented. Such mitigations implemented are travel bans (belatedly), banning large crowds (belatedly), temperature screenings, washing hands, social distancing, pandemic announcements (belatedly, again), face masks (very belatedly), and fit-for-purpose hospitals (you guessed it). All of these easily demonstrate a benefit greater than worst-case scenario costs, yet after being bystanders for weeks, leaders across the globe then overreacted far beyond the demonstrable benefits. At least benefits to us.

QotD: North American downtown “architecture”

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

Real brick-and-plaster substance is, perversely enough, often smooshed then overlain with a plastic parody of some “olde” style. We live today in urban environments which are comprehensively fake — a contributing factor to the fakeness in ourselves. The tactic of developers is to append “poetic” associations from a happier past, to their ghastly provisional installations. This odonymical abuse has been going on for some time: “mountain-view” where there is no mountain, “river-side” where there is no river, “park-dale” with neither park nor dale. “Old-world charm” that consists of ticky-tack boxes, with stacks of brutalist concrete poking through.

The “downtowns” of cities in the eastern half of this American continent were built before the automobile, with pedestrian compactness. So prosperous did we become, so quickly, and so extensive was the building towards the latter end of the nineteenth century, that plentiful evidence remains. The ground-cover is still mostly older buildings, paradoxically thanks to rocketing property values: new buildings must accommodate phenomenal densities, upon tiny footprints. But ten-thousands of apparently “old houses” remain, going on and off market at a million apiece. The principles of money-management have “evolved” over the years, and the idea of “home” as a fungible investment has been universalized. All one needs to acquire one is a small saving and a large credit line. Then one is cut in for all subsequent rounds of poker.

You move in and “re-decorate,” less from personal taste than in anticipation of re-sale. After this process has been repeated a few times, nothing remains of the older building except its “historical” façade, itself somewhat tarted. Travelling about by foot and trolley, I have watched a likely majority of the city’s more attractive “landmark” buildings reduced to fronts only. These are propped by girders, while entirely new (and disproportionately larger) new constructions are bunged in behind.

Thus, nothing remains that is “authentic.” All continuities are destroyed, beyond this tip of the hat — the aesthetic equivalent of that homage which vice pays to virtue.

David Warren, “The scandal of interiors”, Essays in Idleness, 2018-01-25.

April 5, 2020

China’s geostrategic box

Filed under: China, Economics, Military, Pacific, USA — Tags: , , , , , , , — Nicholas @ 05:00

ESR looks at the concerns that China may be considering starting a war with the United States in the wake of the Wuhan Coronavirus:

To understand how limited the PRC’s war options are, we can start with a grasp on how difficult and unsatisfying any war of conquest would be due to the geographic box China is in. The obstacles around it are formidable.

To the south, the Himalayan massif makes all of South Asia other than a narrow coastal plain on the Southeast Asian peninsula inaccessible to serious troop movements. There are no roads or rail links. The last time the Chinese tried pushing in that direction, in 1979, they were unable to sustain an offensive at any distance from their railheads and withdrew after less than a month. Their war aim – forcing the North Vietnamese to withdraw its troops from Cambodia – failed.

To the west, the vastness and comparatively undeveloped state of China’s western hinterland is a serious logistical problem before one even gets to the border. At the borders, the Tien Shan and Pamir ranges present a barrier almost as formidable as the Himalayas. External road and rail links are poor and would be easily interdicted.

To the north, movement would be easier. It might be just within logistical possibility for the PLA to march into Siberia. The problem with this idea is that once you’ve conquered Siberia, what you have is … Siberia. Most of it, except for a small area in the south coastal region of Primorsky Kraye, is so cold that cities aren’t viable without food imports from outside the region. Set this against the risks of invading a nuclear-armed Russia and you don’t have a winning proposition.

To the east is the South China Sea. The brute fact constraining the PRC’s ambitions in that direction is that mass movement of troops by sea is risky and difficult. I recently did the math on Chinese sealift craft and despite an expensive buildup since the 1980s they don’t have the capacity to move even a single division-sized formation over ocean. Ain’t nobody going to take Taiwan with one division, they’ve has too much time to prepare and fortify over the last 60 years.

The PRC leadership is evil and ruthless, but it’s also cautious and historically literate and can read maps. Accordingly, the People’s Liberation Army is designed not to take territory but to hold the territory the PRC already has. Its mission is not conquest but the suppression of regional warlordism inside China itself. The capability for the PLA to wage serious expeditionary warfare doesn’t exist, and can’t be built in the near-term future.

It’s often said that the danger of aggressive war by China is a function of the huge excess of young men produced by covert sexual selection and the one-child policy. But to expend those young men usefully you need to get them to where they can fight and are motivated by some prospect of seizing the wives unavailable for them at home. The PRC can’t do that.

The military threat from China is, therefore, a function of what it can do with its navy, its airpower, and its missiles. And what it can do with those against the U.S. is upper-bounded by the fact that the U.S. has nuclear weapons and would be certain to respond to a PRC nuclear or EMP attack on the U.S. mainland by smashing Chinese cities into radioactive rubble.

Within the constraints of conventional warfare waged by navy and air force it is difficult to imagine an achievable set of PRC war aims that gains more than it costs.

It’s possible — even likely — that the Chinese military has something like the oft-rumoured “ship-killer missiles” that might be able to cripple or sink an American carrier … if it was in range. That makes the South China Sea, the East China Sea, and the west coast of Japan a possible no-go area for US Navy carrier strike groups. A good defensive weapon system to have on hand in case relations with the outside world go “hot”, but not a strategic game-changer. Nobody would be likely to consider anything as dangerous as a seaborne invasion of mainland China, even without the threat of wonder weapons like the ship-killer. And good defensive weapons won’t secure the trade routes that China depends on outside coastal waters.

In a lot of ways your strategic situation is like a scaled-up version of Japan’s in 1941 – you could seize the initiative with a Pearl-Harbor-like initial shock, but you can’t wage a long war because without sealane control you’ll run out of key feedstocks and even food rather rapidly. And unlike the Japanese in 1941, you don’t have the kind of serious blue-water navy that you’d need for sealane control outside the First Island Chain – not with just two carriers you don’t.

There is one way an aggressive naval war could work out in your favor anyway. You can count on the U.S.’s media establishment to be pulling for the U.S. to lose any war it’s in, especially against a Communist or Socialist country. If your war goals are limited to ending U.S. naval power projection in the Western Pacific, playing for a rapid morale collapse orchestrated by agents of influence in the U.S. is not completely unrealistic.

It’s playing with fire, though. One problem is that before you launch your attack you don’t know that your sucker punch will actually work. Another is that, as the Japanese found out after Pearl Harbor, the American public may react to tragic losses with Jacksonian fury. If that happens, you’re seriously screwed. The war will end with your unconditional surrender, and not sooner.

Update: Bone-headed typo in the headline fixed. It’s funny how you can’t see ’em until just after you click the Save button…

April 4, 2020

The media’s grasp of modern logistics

Filed under: Business, Economics, Government, Media — Tags: , , , , , , — Nicholas @ 05:00

Kurt Schlicter — who, spoiler, isn’t a fan of our news media in general — on the demands by newsbeings for the impossible to be done immediately:

We Americans are truly blessed by having a mainstream media full of brilliant renaissance men, women, and gender non-specific entities who are masters of so many varied and intermittently useful skills and who are eager to share their knowledge with us benighted souls. The pandemic has revealed that every urban Twitter blue check scribbler, MSNBCNN panelist, NYT/WaPo doofus, and barely legal “senior editor” of a website you never heard of, is a Nobel Prize-winning epidemiologist, a master logistician, and a diversity consultant to boot.

[…]

Another hitherto unknown skill that the media believes it possesses is logistics. “Why hasn’t Trump commanded a million ventilators to appear?!” the reporters demand. It’s pretty easy to see where they might have gotten the idea that the moment one articulates a desire to possess something that it magically appears. Capitalism has pretty much made that a reality. If you want something, you can go to a store and get it 24/7, or you can go on Amazon and it’ll be at your Manhattan apartment in 48 hours. Since they have never built anything or transported anything or distributed anything, only benefited from the labor of the unhip people who do those things, it’s only natural that the delayed adolescents who make up our media class imagine that material goods can be simply wished into being. After all, for all practical purposes during normal times, because of the efforts of Americans they look down upon, material goods pretty much can be simply wished into being. But prosperity takes work, not that the media would know.

[…]

Apparently, the media class thinks there are giant warehouses with an endless supply of goods just sitting there, somewhere, waiting. They have no idea about how logistics work, how goods flow quickly from producer to market and how expected resupply levels need a few days to adjust from a 10 percent daily turnover to a 30 percent daily turnover. They have zero appreciation for inventory management because no one they know does unglamorous stuff like that.

It’s all much easier in a socialist command economy. You get nothing and like it. Or don’t like it. Whatever. Here’s your weekly bean allowance. Workers of the world unite. You have nothing to lose but access to toothpaste and toilet paper.

The best part is when the media – the same media that was collectively soiling its Dockers because that mean old Trump was barring direct flights from China because of racism and stuff – demands to know why, back in December, Trump was not commanding a zillion Wuhan Flu tests, a zillion masks, and a zillion ventilators be created, while locking down all of America. Leaving aside the whole lack of an enumerated power to do that thing, in what world would have Trump have convinced anyone – least of all the media that was slobbering over his bogus impeachment at the time – that some bat soup-derived pathogen in BumFoo, China, was going to black swan all over America’s economy? The lack of seriousness by the people who presume to be reporting the news to us is more breathtaking than the damn ChiCom grippe.

Monetary Policy: The Negative Real Shock Dilemma

Filed under: Economics, Government — Tags: , , , , — Nicholas @ 02:00

Marginal Revolution University
Published 15 Aug 2017

Imagine a negative real shock, like an oil crisis, just hit the economy. How should the Fed respond?

Decreasing the money supply will help with inflation, but make growth worse. Increasing the money supply will improve growth, but inflation will climb higher. What’s the Fed to do?!

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