Quotulatiousness

December 3, 2019

“Useful idiots” during the Cold War

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

Robert Reilly reviews Judgement in Moscow: Soviet Crimes and Western Complicity by Vladimir Bukovsky, which has recently been republished in English:

Krushchev, Brezhnev and other Soviet leaders review the Revolution parade in Red Square, 1962.
LIFE magazine photo by Stan Wayman.

Judgment In Moscow contains autobiographical elements but is principally concerned with providing and analyzing documentary evidence for what should have been the USSR equivalent of what the Nuremberg Trials had been for Nazi Germany. In 1991, Bukovsky returned to the Soviet Union to take part in the “trial of the communist party” that was held in 1992. In an audacious move the Communist Party had sued then-President Boris Yeltsin to get its property back. To prepare a defense, Yeltsin ordered that the secret Central Committee archives be opened to Bukovsky. The order was obeyed, but only partially and for a short time. The trial fizzled, but Bukovsky, with the aid of a hand-held scanner, was able to gather many thousands of pages of top-secret Central Committee and Politburo documents and get them out of Russia. Some of these key documents are what we have in this priceless book. They are eye-opening.

During the Cold War, we had to speculate as to why, for instance, the Soviet Union invaded Afghanistan and how the decision was made. Now we know for certain. Bukovsky provides the minutes of the Politburo meetings in which the invasion was decided. The Reagan administration was highly skeptical of détente and was therefore criticized for war-mongering. The skepticism was well-placed because, as the documents reveal, détente was simply a façade for advancing Soviet power and manipulating Western publics and governments against the Reagan plan to place Pershing IIs and cruise missiles in Europe to defend it against burgeoning Soviet power, including the SS-20s.

The revelations of the extent to which the Soviet Union manipulated the “peace” movement in the West should be an embarrassment to its participants, who may have been too naïve at the time to know how they were being used. Others, of course, acceded to being used, or even cravenly sought to be used. The names of some of these useful idiots are in the documents.

Another thing these documents disclose, much to the embarrassment of many American Sovietologists, is that there were no “hawks” and “doves” in the Kremlin — a premise on which they had banked their academic careers. The unanimity of the Politburo decisions reveals that the senior Soviet leaders were all of one stripe. It was to their advantage to create the impression that there were hawks and doves so that they could game the policies of Western governments and the opinions of its publics. For instance, providing Western credits to the USSR — it was thought by many so-called Russian experts in the West — would strengthen the doves in the Kremlin, whereas denying credits would empower the hawks. By buying this line of thought, the West was induced to keep the Soviet Union on life-support for more than a decade past what would have been its earlier collapse, according to Bukovsky.

No one was a greater master of this deception than Mikael Gorbachev. The minutes from many Politburo meetings chaired by Gorbachev show that glasnost and perestroika were façades constructed to ensure the continued existence of the Soviet Union through even more Western subsidies. And it worked to the extent that credits and subsidies ballooned under the Western illusion that Gorbachev had to be supported to ensure his success — ignorant of the fact that Gorbachev conceived of success in ways inimical to Western freedom.

H/T to Blazing Cat Fur for the link.

December 2, 2019

QotD: Evidence of markets in classical civilizations

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

If someone were to claim that market behaviour was peripheral to life in eighteenth century England, it would be easy to laugh at him. This is not to say the claim has not been or will not be made. But if it were made, it could be refuted with a mass of government and private statistics, of newspaper reports and law reports, of high literature, of sermons, speeches and letters, of descriptive and analytical surveys, of biographies and novels, and of physical remains. Ludicrous claims can always be based on selective and misread evidence. In this case, the weight of the evidence must be decisive.

If we turn, however, to the ancient world, the evidence must almost always be indecisive. Very few ancient writings have survived. Obviously, two thousand years are a long time; and ancient civilisation did collapse. Add to this that far fewer documents relating to economic matters were produced or could be preserved than has been the case with us. There was no printing: everything had to be copied by hand. The best writing material was papyrus, which was both expensive and fragile. The normal writing materials for accounts and administrative documents were waxed tablets, which were scraped and reused, and thin wooden sheets, which were thrown away once they had served their purpose.

The literary remains of Greece and Rome which have come down to us through generations of copying and recopying are the products of a rather snobbish culture, and contain little direct information about economic behaviour. The great writers, as Finley observes, do seem to have lacked the conceptual framework for intelligent discussion of finance and commerce. Even otherwise, these were matters they regarded as beneath the notice of history. Thucydides, for example, gives full discussion to the political causes of the Peloponnesian War, but says nothing of what we know from the archaeological evidence was the complete Athenian displacement of Corinth in the pottery markets of the Western Mediterranean world.

During the past century or so, the rubbish dumps of Egypt have revealed a mass of the everyday documentation we have for no other area of the ancient world. There are tax records, and commercial correspondence, and administrative commands, among much else. The problem here is that Egypt was always an exception. From its earliest history, its geography opened it to capture and exploitation by rent-seeking élites. The Pharaohs were worshipped as gods and given whatever they demanded. The Ptolemies organised the country into one gigantic state enterprise and used the proceeds for making a big noise in the Hellenistic world. The Roman Emperors kept up the monopolies and requisitions, treating Egypt as their personal property, and so far as possible isolating it from the rest of the Empire. The documentary evidence, therefore, we have from Egypt may not be representative of the ancient world as a whole.

But this, plus the material archaeology, is all we have. And if we want to know anything for economic motivations and behaviour, we must press the evidence we have as hard as we can. The history of the ancient world is, in many important respects like a mosaic that has been broken up with many of its tiles thrown away. The whole must be reconstructed from the parts remaining. It is a difficult enterprise, but it can be attempted.

If there is little direct, there is much indirect evidence. This is scattered through the surviving body of ancient literature. It consists of casual remarks, illustrations to arguments, even comments that are in themselves foolish. It is a question of looking for this evidence, and of knowing how to use it.

An interesting example of how evidence can be extracted and used comes not from our own ancient world, but from pre-Columbian South America. Deirdre McCloskey has looked at the geographical distribution of Mayan obsidian tools. She notes that, the farther from the sources of their obsidian, the smaller was the ratio of blade weight to cutting length. She comments:

    By taking more care with more costly obsidian the blade makers were earning better profits; as they did by taking less care with less costly obsidian.

What we have here, then, is evidence that illiterate, stone age toolmakers were at least as conscious of opportunity cost as any Victorian mill owner, and rather more so than the average socialist planner of the next century. So long, of course, as this is evidence — this is, so long as the tools are distributed as claimed — we have empirical reason for doubting the Polanyi claim that,

    previously to our time no economy has ever existed that, even in principle, was controlled by markets…. Gain and profit made on exchange never [before the nineteenth century] played an important part in human economy.

Sean Gabb, “Market Behaviour in the Ancient World: An Overview of the Debate”, 2008-05.

November 30, 2019

QotD: Comparative advantage

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

Business schools, which focus naturally on the fortunes of the individual firm, teach that “competitiveness” is all. They believe it follows that government, not price signals from the world economy, should choose winners. The economists in the business schools have had hard time persuading their colleagues that the pattern of trade and specialization is determined, on the contrary, by “comparative advantage,” which has nothing to do with absolute advantage, and which professors of management and of history regularly mistake it for. Pakistan exports clothing to the United States, the economists preach (without much effect on editorial boards and politicians), not because it is better per hour at making socks and sweaters but because it is comparatively better at them than at making jet airplanes and farm tractors.

Deirdre McCloskey, Bourgeois Equality, 2016.

November 27, 2019

The “Gentrification” debate

Filed under: Economics, Politics, USA — Tags: , , , — Nicholas @ 05:00

In Quillette, Coleman Hughes explains the furor over gentrification in many big American cities:

The word “gentrification” was coined in 1964 to describe the influx of wealthy newcomers into low-income inner-city neighborhoods, resulting in rising property values, changes in neighborhood culture, and displacement of original residents. Though gentrification predates the modern era, it has only become the target of criticism in recent decades, as cities like Washington, D.C., Atlanta, and Boston have witnessed rapid transformations. Opponents of gentrification have ranged from residents directly affected by it to wealthy college students directly responsible for it, as well as prominent Democrats such as Bernie Sanders, Cory Booker, and Alexandria Ocasio-Cortez.

Critics of gentrification give two main reasons for their opposition: (1) wealthy newcomers drive up monthly rents, thereby displacing original residents; and (2) rapid change to neighborhood culture represents an injustice to original residents. Both critiques are magnified by the presumed skin color of the gentrifiers and the gentrified, who tend to be white and black or Hispanic, respectively.

Though such critiques may seem reasonable at first glance, neither of them survive scrutiny. Not only is gentrification harmless, it’s actually beneficial. Indeed, for reasons I will lay out, it’s exactly the kind of thing that progressives should support.

Let’s begin with the charge that gentrification displaces original residents. Two economists used data from the 2000 U.S. Census and the 2010-2014 American Community Survey to track individual outcomes for all residents of “gentrifiable” — or low-income inner-city — neighborhoods in America’s one hundred largest metropolitan areas. The largest study of its kind, it divided residents of gentrifiable neighborhoods into two categories based on educational attainment. Their findings refute the displacement narrative conclusively.

[…]

On the whole, progressives ought to love gentrification. It makes black inner-city homeowners wealthier. Among less-educated homeowners — who are majority non-white and comprise over a quarter of the total population in gentrifiable neighborhoods — those who remained in gentrified neighborhoods saw a $15,000 increase in the value of their homes due to gentrification. Among more-educated homeowners — who are also majority non-white — those who remained saw a $20,000 increase in property value.

What’s more, gentrification breaks up concentrated poverty and reduces residential segregation. Progressives have frequently observed that poor blacks are more likely to live in concentrated poverty than poor whites. As a result, they lose out on the advantages that come with living in a mixed-income neighborhood. Gentrification helps solve this problem. Moreover, progressives often observe that residential segregation remains pervasive half a century after the 1968 Fair Housing Act. Gentrification helps solve that problem too.

QotD: The evolution of markets

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

It is a settled assumption among most libertarians, classical liberals and English-speaking conservatives that market behaviour is part of human nature. Whether or not we care to make a point of it, we stand with John Locke and, through him, with the men of the Middle Ages and with the Greeks and Romans, in trying to derive what is right from what is natural.

We believe that there is a natural inclination to promote our own welfare and that of our loved ones. We further believe that, given reasonable security of life and property, this inclination will lead to the emergence of a system of voluntary exchange. That is, we will seek to trade the things we have or can create for other things that we regard as of greater value to ourselves.

In doing so, ratios of exchange that we call prices will be revealed. These prices, in turn, will provide general information about what should be produced, in what ways and in what quantities. Furthermore, changes in price will provide information about changes in preferences or in abilities to produce. Custom will set aside one or more goods to serve as money. Institutions will emerge that channel savings into productive investment, that spread risk, and that moderate expected fluctuations in price. Laws will develop to police the transfer of property and performance of contracts.

We believe that market economies emerge spontaneously and are self-regulating and self-sustaining. This is not to say that all market societies will be the same. Their exact shape will depend on the intellectual and moral qualities of the individuals who comprise them. They will reflect pre-existing patterns of trust and honesty and the general cultural and religious values of a people. They will also be more or less distorted by government intervention. But we do say that market behaviour is natural — that, in the absence of extreme government coercion, or extreme disorder, buying and selling to increase our own welfare is what we naturally do.

Sean Gabb, “Market Behaviour in the Ancient World: An Overview of the Debate”, 2008-05.

November 23, 2019

Sir Charles Trevelyan, head of the Irish relief efforts during the potato famine, and creator of the modern civil service

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

By happenstance, after posting the OSP video on the history of Ireland, a post at Samizdata covered one of the questions I had from OSP’s summary, specifically that the famine was worsened by British “laissez-faire mercantilism”. Mercantilism is rather different from any kind of laissez-faire system, so it was puzzling to hear Blue link them together as though they were the same thing. Of course, I live in a province currently governed by the Progressive Conservative party, so it’s not like I’m unable to process oxymorons as they go by…

Anyway, this post by Paul Marks looks at the man in charge of the relief efforts:

Part of the story of Sir Charles Trevelyan is fairly well known and accurately told. Charles Trevelyan was head of the relief efforts in Ireland under Russell’s government in the late 1840s – on his watch about a million Irish people died and millions more fled the country. But rather than being punished, or even dismissed in disgrace, Trevelyan was granted honours, made a Knight Commander of the Order of the Bath (KCB) and later made a Baronet, not bad for the son of the Cornishman clergyman. He went on to the create the modern British Civil Service – which dominates modern life in in the United Kingdom.

Charles Edward Trevelyan (contemporary lithograph). This appeared in one of the volumes of “The drawing-room portrait gallery of eminent personages principally from photographs by Mayall, many in Her Majesty’s private collection, and from the studios of the most celebrated photographers in the Kingdom / engraved on steel, under the direction of D.J. Pound; with memoirs by the most able authors”. Many libraries own copies.
Public domain, via Wikimedia.

With Sir Edwin Chadwick (the early 19th century follower of Jeremy Bentham who wrote many reports on local and national problems in Britain – with the recommended solution always being more local or central government officials, spending and regulations), Sir Charles Trevelyan could well be described as one of the key creators of modern government. If, for example, one wonders why General Douglas Haig was not dismissed in disgrace after July 1st 1916, the first day of the Battle of the Somme when twenty thousand British soldiers were killed and thirty thousand wounded for no real gain (the only officers being sent home in disgrace being those officers who had saved some of them men by ordering them stop attacking – against the orders of General Haig), then the case of Sir Charles Trevelyan is key – the results of his decisions were awful, but his paperwork was always perfect (as was the paperwork of Haig and his staff). The United Kingdom had ceased to be a society that always judged someone on their success or failure in their task – it had become, at least partly, a bureaucratic society where people were judged on their words and their paperwork. A General, in order to be great, did not need to win battles or capture important cities – what they needed to do was write official reports in the correct administrative manner, and a famine relief administrator did not have to actually save the population he was in charge of saving – what he had to do was follow (and, in the case of Sir Charles, actually invent) the correct administrative procedures.

But here is where the story gets strange – every source I have ever seen in my life, has described Sir Charles Trevelyan as a supporter of “Laissez Faire” (French for, basically, “leave alone”) “non-interventionist” “minimal government” and his policies are described in like manner. […]

Which probably explains why Blue used the term in the previous video. Then these “laissez-faire” policies are summarized, which leads to this:

None of the above is anything to do with “laissez faire” it is, basically, the opposite. Reality is being inverted by the claim that a laissez faire policy was followed in Ireland. A possible counter argument to all this would go as follows – “Sir Charles Trevelyan was a supporter of laissez faire – he did not follow laissez faire in the case of Ireland, but because he was so famous for rolling back the state elsewhere (whilst spawning the modern Civil Service) – it was assumed that he must have done so in the case of Ireland“, but does even that argument stand up? I do not believe it does. Certainly Sir Charles Trevelyan could talk in a pro free market way (just as General Haig could talk about military tactics – and sound every inch the “educated soldier”), but what did he actually do when he was NOT in Ireland?

I cannot think of any aspect of government in the bigger island of the then UK (Britain) that Sir Charles Trevelyan rolled back. And in India (no surprise – the man was part of “the Raj”) he is most associated with government road building (although at least the roads went to actual places in India – they were not “from nowhere to nowhere”) and other government “infrastructure”, and also with the spread of government schools in India. Trevelyan was passionately devoted to the spread of government schools in India – this may be a noble aim, but it is not exactly a roll-back-the-state aim. Still less a “radical”, “fanatical” devotion to “laissez faire“.

What? No minister for socks? How will Justin decide what to wear?

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

Chris Selley on the quirky decision to appoint a “Minister of Middle Class Prosperity” to Justin Trudeau’s new cabinet:

Typical image search results for “Justin Trudeau socks”

Wednesday’s Cabinet shuffle featured the usual head-scratching reorganization of portfolios and outright invention of others, “bigger” being for some reason a stated goal. Joyce Murray, for example, becomes Minister of Digital Government. It has a very pre-Y2K ring to it, but then again the government in question accepts payment for access-to-information requests by cheque, and sometimes fulfills them (if at all) via CD-ROM, and it can’t manage a simple payroll system. So maybe it’s not such a bad thing to have someone on that job specifically.

Then there’s Ottawa-Vanier MP Mona Fortier’s new job. I literally assumed people were joking about the Liberals’ obsessive branding, but it’s true: No word of a lie, she is an Associate Minister of Finance and, specifically, the Minister of Middle Class Prosperity.

Should a government need a minister whose job is to ensure Canadians are prospering? One might reasonably hope that’s the goal of pretty much any minister when she rolls out of bed in the morning. But they sure don’t always act that way, so maybe a Minister for Making People Richer isn’t such a bad thing.

But the “middle class” flourish is so ridiculously on-brand that it turns the very idea into a joke. Recalling Trudeau’s 2015 catchphrase, many wags asked: “Shouldn’t it be the Minister of the Middle Class and Those Working Hard to Join It?” And they have a point. After four years in government, the Liberals have a good story to tell on social mobility: Poverty rates are at an all-time low. And yet they remain officially obsessed with a middle class that was never as imperilled as they claimed.

November 18, 2019

The Opium War – Lost in Compensation l HISTORY OF CHINA

Filed under: Britain, China, Economics, History, Military — Tags: , , , , — Nicholas @ 06:00

IT’S HISTORY
Published 22 Aug 2015

The Opium War started as a dispute over trading rights between China and Great Britain. Regular trade between Europe and the Chinese had been ongoing for centuries. But China’s trading restrictions frustrated the British who were eager to supply the Chinese people with the increasingly popular narcotic opium. Circumventing the government’s attempts to ban opium trade by smuggling and bribery, China declared the death sentence on Opium smuggling and refused to compensate British tradesmen for any losses. Furiously, the Brits sent out a fleet to demand compensation and end the Cohong trading monopoly. Fierce battles and attacks on the Chinese coast were followed. Find out all about the First Opium War from Indy in our new episode of Battlefields!

» SOURCES
Videos: British Pathé (https://www.youtube.com/user/britishp…)
Pictures: mainly Picture Alliance
Content:
Lovell, Julia: The Opium War: Drugs, Dreams and the Making of China
Wei, Yuan: Chinese Account of the Opium War
McPherson, Duncan: The First Opium War – The Chinese Expedition 1840-1842
Merwin, Samuel: Drugging a Nation – The Story of China and the Opium Curse
Bernard, William Dallas; Hall, Sir William Hutcheon: Narrative of the Voyages and Services of the Nemesis, from 1840 to 1843.
Isabel Hilton (The Guardian): “The Opium War by Julia Lovell – review”
Perdue, Peter C. (MIT): The First Opium War http://ocw.mit.edu/ans7870/21f/21f.02…

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Contains material licensed from British Pathé
All rights reserved – © Mediakraft Networks GmbH, 2015

November 17, 2019

QotD: Socialist beliefs about “capitalism”

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

The poor understanding of economic and political institution that Marx did so much to promote remains widespread today. “Progressive” and hard-left opponents of markets hold mistaken – or, at the very least, questionable – presumptions about reality, which include:

  • Wealth is either fixed in amount, or, while it might be destroyed or diminished by certain human activities (such as war), if wealth grows this growth occurs largely independently of human ideas, choices, actions, and institutions;
  • trade and commerce, therefore, are largely zero-sum – that is, each exchange situation pits a party who will win against one who will lose;
  • trade and commerce, in turn, involve activities are thus, at best, suspect; trade and commerce too often reward greediness and duplicity while penalizing generosity and honesty;
  • the “distribution” of wealth – whether conceived as financial flows or assets, or as access to real goods and services – is determined largely by power;
  • prices set on markets are largely arbitrary; prices seldom play any role beyond determining how much one party “wins” from trade and how much the other party “loses.”
  • each of a handful of large groups of people, mostly as conceptualized by intellectuals with no understanding of economics, has its own “interests” – interests that are shared by all members of the group and that are at odds with the interests of other groups; for example, “labor” has interests that are are shared by all workers and that are at odds with the interests of “employers”;
  • while the state can be captured by ill-intentioned people, the state – especially under unlimited majoritarian rule – is also the only possible savior of the powerless against the predations and frauds of the powerful;
  • absent vigorous state intervention, ordinary people – people whose main asset is the value of their own labor – lack both the power to get their fair share of society’s wealth and the intelligence or self-discipline to use wisely whatever share of wealth they do manage to secure;
  • social progress is achieved by the powerless grabbing power under the leadership of men and women of singular vision, intelligence, and courage; “the People” will be led to the Promised Land – can be led to the Promised Land – only if they faithfully follow their caring messiahs;
  • those who argue in favor of free markets are either soulless mercenary cronies for the powerful propertied class or they are ideologically blinded dupes for this class; no intelligent and decent person could possibly deny the enormous benefits available to “the People” when the state is empowered to work on their behalf against the propertied few.

Don Boudreaux, “Some Links”, Café Hayek, 2017-10-08.

November 15, 2019

QotD: Understanding trade policy

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

You live on a block on Elm St. which has two other households: the Joneses and the Jacksons. Suppose your neighbor Jones puts a knife to your throat and threatens to kill you unless you either buy your tomatoes from him or, if you insist on buying tomatoes from a grower across town, pay him a fine for each across-town tomato that you buy. You immediately understand that Jones is violating your rights; you immediately understand that Jones is a thug, pure and simple. No amount of philosophy, economics, political science, or theology will change your assessment.

Now let Jones secure Jackson’s approval for his actions. Jackson expresses his approval not only of Jones obstructing your freedom to buy across-town tomatoes, Jackson also approves of Jones taking some of your money directly to help Jones pay for the employment, arming, and dressing up in fancy costumes of a street gang who will do the actual dirty work of caging or killing you if you refuse to abide by the tomato-buying terms that Jones imposes on you.

When you object to the injustice of Jones’s actions, he reminds you that you had a vote in this matter. But being outvoted 2 to 1, this majority outcome, by some mystical process, transforms Jones’s pure and simple thuggery into perfectly acceptable – even noble – “trade policy” the violation of which would make you the anti-social criminal.

Further, Jones, to his delight, discovers that Jackson has been hard at work on a treatise that details the many dangers of allowing you to buy your tomatoes without obstruction from across town. Jackson’s treatise even has empirical data on the number of tomatoes and labor hours that would no longer be grown and and worked on your Elm St. block if you are left free to buy your tomatoes unobstructed. Combined with criticisms of “simple-minded” defenses of free trade and with explanations that tomatoes grown across town are sold at unfairly low prices, Jackson’s treatise rids Jones of the few qualms that Jones’s threats of violence against you caused him to suffer from time to time

Thus is “trade policy.”

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2017-10-23.

November 8, 2019

QotD: Exports are costs; imports are benefits

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

You write that “exports are at least as much a benefit to us as our imports are.”

With respect, you’re mistaken. To see why, look at the matter at the level of your household. What you export from your household is your labor; what you import are the goods and services that you purchase with your income. Suppose that you were given the option of continuing to do one or the other of these activities but not both. That is suppose that you could either (a) continue to export (that is, continue to work) but no longer import (that is, no longer bring into your household any goods and services) or (b) continue to import into your household goods and services for your consumption but no longer work. Which option – (a) or (b) – would you choose?

You would clearly choose option (b).* The reason is that you supply the fruits of your labor to others in order to increase your ability to consume. What you export from your household is a cost that you willingly incur in order to be able to import into your household the goods and services that you and your family consume. What is true at the level of the household is here true at the level of the national economy: the goods and services that Americans export to foreigners are the costs that we willingly incur in order to be able to import into our country the goods and services that we receive from foreigners in exchange. Exports are the means; imports are the end.

* If I’m mistaken and you’d choose option (a), please call me as I have several household repairs to be done and I’d be delighted to have you do the repairs for me for free.

Don Boudreaux, “Exports are Costs; Imports are Benefits”, Café Hayek, 2017-10-17.

November 4, 2019

QotD: Ludwig von Mises explains the fall of the western Roman empire

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

Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.

[…]

The Roman Empire in the second century, the age of the Antonines, the “good” emperors, had reached a high stage of the social division of labour and of interregional commerce. Several metropolitan centres, a considerable number of middle-sized towns, and many small towns were the seats of a refined civilisation […]. There was an extensive trade between the various regions of the vast empire. Not only in the processing industries, but also in agriculture there was a tendency toward further specialization. The various parts of the empire were no longer economically self-sufficient. They were interdependent.

What brought about the decline of the empire and the decay of its civilization was the disintegration of this economic interconnectedness, not the barbarian invasions. The alien aggressors merely took advantage of an opportunity which the internal weakness of the empire offered to them. From a military point of view the tribes which invaded the empire in the fourth and fifth centuries were not more formidable than the armies which the legions had easily defeated in earlier times. But the empire had changed. Its economic and social structure was already medieval […]

[I]n the political troubles of the third and fourth centuries the emperors resorted to currency debasement. With the system of maximum prices the practice of debasement completely paralysed both the production and the marketing of the vital foodstuffs and disintegrated society’s economic organisation. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food. Commerce in grain and other necessities vanished altogether. To avoid starving, people deserted the cities, settled on the countryside, and tried to grow grain, oil, wine, and other necessities for themselves.

Ludwig von Mises, Human Action, 1949.

November 3, 2019

Colby Cosh on the origins of carbon taxes

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

In response to a column by Andrew Coyne in the National Post, Colby Cosh outlines the intellectual origins of carbon pricing:

As Andrew knows, the intellectual origins of carbon pricing are purely classical-liberal. Maybe you have to belong to our club to spot that he has carefully not called it an invention of the “left.” When I was an undergraduate, it was the unfashionable libertarian and Hayekian zanies, not the despondent post-Cold-War Marxists, who were preaching what would become mainstream environmental economics. The left has been slow rather than fast to accept the idea of putting a mere price on what they regard as an inherent evil.

British economist Arthur C. Pigou (1877-1959).
Photo via Wikimedia Commons.

All of the foundations of carbon pricing were developed by economists that the left, in all varieties, now regards as cartoonish modern-day demonoids. The gentle Arthur Pigou, who developed the concept of economic externalities and the idea of taxing them, might still pass muster. But Pigou’s reformer-reviser Ronald Coase is deeply suspect, having pioneered an amoral analysis of externalities that tackles social-cost problems like environmental pollution without assigning blame to, or even necessarily acting against, the polluters.

In his paragraph Andrew almost explicitly outlines the theory of the “double dividend” from replacing bad, economically distorting taxes (like the one we impose on incomes) with taxes laid directly on externalities like carbon. The double dividend is pure Gordon Tullock, who is now a hate figure on the left for his role in creating public choice economics.

You can see that this analysis gets pretty complicated in a hurry. The idea of carbon taxation isn’t really of the right or the left. The best term for it might be “neoliberal,” although some people think there is no useful place for that word. To the degree that the left has accepted carbon pricing, they have done so as a (perhaps mostly unwitting) compromise with otherwise abominable thinkers like Coase and Tullock. Total state command-and-control of the economy isn’t an option in today’s Western world, and since there’s a neo-Malthusian crisis in the atmosphere around us, we had better try to solve it without having to execute a global socialist revolution first.

But if instinctive suspicion of the state is a feature of the conservative mind, carbon pricing doesn’t solve the problem completely. Canadian carbon tax designs have been given redistributive features, which makes them more acceptable politically to people who aren’t instinctive or innate conservatives, but creates confusion and distaste for those who are. And to the degree conservatives are inclined to doubt that the state will cut other taxes to make carbon prices revenue-neutral, they have been partly justified, so far, by the history of Alberta and B.C. The “double dividend” is a good idea: can governments be trusted to actually let us collect it?

In a nutshell, that lack of trust is why I’m generally opposed to the federal carbon tax system, even though the idea of carbon taxes (when properly implemented) are far less distorting to the economy than the hodge-podge of taxes and regulations we have now.

Alberta and the Liberals

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

Andrew Coyne summarizes the deep-seated anger in Alberta toward the federal Liberals … and the rest of Canada:

The point sometimes arrives in politics when a complex of different issues coalesce into one; when people stop listening to the arguments in favour of or against each, and instead allow their emotions to dictate a single response to the lot. We are at such a point in Alberta.

Pipelines, carbon taxes, equalization, the Canada Pension Plan — to which familiar litany we can now add the departure of Encana’s headquarters from Calgary — have become, not so much issues in themselves, but arguments in another, grander meta-controversy. All of the questions raised by each (is there a problem? if so, how is it to be solved? who pays? etc) have been pureed into a single narrative: of a Liberal government that is at best indifferent and at worst hostile to Alberta, whose re-election confirms the rest of Canada is as well.

There is, it should be said, some truth in this. Whether the Liberals have failed to win more than a handful of seats in Alberta in over a half a century because of their historic disdain for the province, or whether the causation runs the other way, the chicken is as malignant as the egg. There’s no doubt some people in some parts of the country would cheerfully shut down the oilsands tomorrow, nor is it impossible to detect a strain of anti-Albertanism in some of the rhetoric on the subject.

Albertans, for their part, are not just in a fight to defend their major industry today, but have been for decades. It is inconceivable, to take the most obvious example, that the National Energy Program, that vast attempt to expropriate Alberta’s oil wealth for the benefit of central-Canadian oil consumers, would have been visited upon either Ontario or Quebec, were the situations reversed.

October 30, 2019

Defending the work of Dr. Beeching

Filed under: Britain, Economics, Government, Railways — Tags: , , , , — Nicholas @ 09:20

Ever the contrarian, Tim Worstall responds to an article calling for the “Beeching Axe” cuts to the British passenger railway network in the 1960s to be reversed:

The British Railways Board’s publication The Reshaping of British Railways, Part 1: Report, Beeching’s first report, which famously recommended the closure of many uneconomic British railway lines. Many of the closures were implemented. This copy is displayed at the National Railway Museum in York beside a copy of the National Union of Railwaymen’s published response, The Mis-shaping of British Railways, Part 1: Retort.
Photo by RobertG via Wikimedia Commons.

For background, as the “Beeching Axe” is far less well-known today than it used to be, here’s Wikipedia’s introduction:

The Beeching cuts (also Beeching Axe) were a reduction of route network and restructuring of the railways in Great Britain, according to a plan outlined in two reports, The Reshaping of British Railways (1963) and The Development of the Major Railway Trunk Routes (1965), written by Dr Richard Beeching and published by the British Railways Board.

The first report identified 2,363 stations and 5,000 miles (8,000 km) of railway line for closure, 55% of stations and 30% of route miles, with an objective of stemming the large losses being incurred during a period of increasing competition from road transport and reducing the rail subsidies necessary to keep the network running; the second identified a small number of major routes for significant investment. The 1963 report also recommended some less well-publicised changes, including a switch to containerisation for rail freight.

Protests resulted in the saving of some stations and lines, but the majority were closed as planned, and Beeching’s name remains associated with the mass closure of railways and the loss of many local services in the period that followed. A few of these routes have since reopened; some short sections have been preserved as heritage railways, while others have been incorporated into the National Cycle Network or used for road schemes; others now are lost to construction, have reverted to farmland, or remain derelict.

Worstall says:

[Dr. Richard] Beeching is one of the most universally hated figures in British politics, yet I have no doubt that he was that rare creature, someone working for the state who actually got things about right.

What Dr Richard Beeching mostly did was a cold, analytical report into the railways and recommended cutting large chunks of it that no-one was using. This was done because the railways were losing a fortune every year. And he mostly got it right. He assumed that we would replace trains with buses, which isn’t a bad idea at all. […]

One of the reasons I think Beeching ended up more right than he thought was the arrival of the car. Yes, cars can be environmentally damaging, cause deaths and so forth. Personally, I lean towards the bus or train as a preference. But you can’t ignore the upsides of cars.

The biggest problems with trains are connection time, flexibility and that there’s no market in there. Rail is quite poor at doing their one job: getting a train from A to B. You’d think after 150 years, they’d have it going pretty good, but crew not turning up, signal failures, electrical failures, doors not closing properly. industrial action are not that rare. The problems are certainly more common than if you drive a Toyota Corolla on the motorway to work. Your driver will turn up (because it’s you), the doors will close, the car will run pretty much perfectly. You also have no connection time in that Corolla. You turn off one road straight onto another. You can also go when you please. Middle of the night, middle of the day.

Maps originally from Losing Track by Kerry Hamilton and Stephen Potter (1985), by way of Is Your Journey Really Necessary?, 2012-12-31.
https://isyourjourneyreallynecessary.wordpress.com/2012/12/31/nice-work-if-you-can-get-there/
Click map to enlarge.

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