Quotulatiousness

July 16, 2019

Totalitarian Temptations in Free Societies by Ryszard Legutko

Filed under: Books, Economics, Government, History, Politics — Tags: , , , , — Nicholas @ 05:00

Daniel Pipes reviews a recent translation (from Polish) by Teresa Adelson:

Legutko does not claim liberalism resembles communism in its monstrosity, much less that the two ideologies are identical; he fully acknowledges that the first is democratic and the second brutally tyrannical. After recognizing this contrast, however, he gets down to the more pungent topic of what the two have in common.

He first perceived those commonalities in the 1970s when visiting the West, where he saw how its liberals preferred communists to anti-communists; later, with the overthrow of the Soviet Bloc, he watched liberals warmly welcome communists, but not their anti-communist opponents. Why so?

Because, he argues, liberalism shares with communism a powerful faith in rational minds finding solutions which translates into a drive to improve the citizen, modernize him, and mold him into a superior being. Accordingly, both ideologies politicize, and thereby debase, every aspect of life, including sexuality, the family, religion, sports, entertainment, and the arts. (Here’s a mischievous but deadly serious question: which is the more awful art, the communist or the liberal, Stalin’s or the Venice Biennale’s?) [see below]

Both engage in social engineering to create a society whose members are “indistinguishable, in words, thoughts, and deeds ” from one another, aiming for a largely interchangeable population with no dissidents making trouble. Each sublimely assumes its specific vision constitutes the greatest hope for mankind and represents the end of history, the final stage of mankind’s evolution.

Trouble is, such grand schemes for improving mankind inevitably lead to severe disappointment; human beings, it turns out, are far more stubborn and less malleable then dreamers would like. When things go badly (say, food production for communists, unfettered immigration for liberals), two nasty consequences follow.

Bitcoin mining’s massive carbon buttprint

Filed under: China, Economics, Environment, Technology — Tags: , , , — Nicholas @ 03:00

Lincoln Swann explains why Bitcoin has become a huge environmental liability as its per-unit cost-to-mine has risen:

Bitcoin is more than a rather volatile imitation currency, it is also a huge energy monster.

The digital “mining” to create more Bitcoins and the recording of transactions uses up vast, crazy, amounts of electricity – something like 70TWh a year. That is about the same as Austria, say 20% of UK power consumption. As an added horror much if it is done in China where most of the power is coal generated.

All that adds up to a CO2 output from Bitcoin stuff of about 35mt a year. Planet friendly it definitely aint.

July 10, 2019

QotD: Price controls

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

Price controls – both price ceilings and price floors – reduce the quantities of price-controlled goods and services that consumers actually get. Forcing the money price of a good or service down with a government-imposed price ceiling reduces the amount of this good or service that consumers actually get by reducing the quantity supplied (from what that quantity would be were the money price not forced downward). Forcing the money price of a good or service up with a government-imposed price floor reduces the amount of this good or service that consumers actually get by reducing the quantity demanded (from what that quantity would be were the money price not forced upward). In both cases, the government intervention reduces economic output.

Minimum wages, statutory prohibitions on so-called “price gouging,” and other price controls reflect irrational mysticism. These controls are all premised on the notion that by forcibly changing the nominal reported value of a good or service – that is, by forcibly changing the name of the value – the real value of the good or service will change to correspond to the dictated name. It’s a notion no less batty than is the belief, say, that the New York Times can actually change the number of people killed in a terrorist attack by changing the name of the number. Yet who believes that if, say, 18 people are killed in a terrorist attack that the number of dead people will miraculously be reduced by three if the New York Times reports that “15 people were killed in a terrorist attack”? The answer, of course, is no one. Indeed, anyone who would suppose that reality is changed simply when newspaper reports of it are changed is recognized as being too far detached from reality to take seriously.

Those who support price controls are just as detached from reality. The market-determined price of a good or service is as accurate a report as is possible of the value of each unit of a good or service. This value will not move up or down simply if the government orders it to move up or down.

[…]

None of this matters to proponents of price controls. Such proponents are satisfied with the fact that the names of the values of good or services are changed in ways that please the eye and ear of the economically illiterate. If it is now possible to say that the highest name of the value of a gallon of gasoline is $1.00, then these proponents are content to believe that the real value is indeed $1.00. If it is now possible to say that the lowest name of the value of an hour of low-skilled labor is $7.25, then these proponents are content to believe that the real value is indeed $7.25.

It’s a foolish superstition. It is, however, a superstition that is very widespread, especially among those who today fancy themselves to be immune to superstitions.

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2017-06-19.

July 9, 2019

“Why can’t America have great trains?”

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

At the very end of his recent book Romance of the Rails, Randal O’Toole regretfully (he really, genuinely is a train fan) answers the question three ways … none of which bolster the hopes that the United States will go back to great passenger railway service:

First, when we had great trains, they were used mainly by the elite, and that remains true of great trains in other countries today. Before 1910, it is likely that a majority of Americans had never traveled more than 50 miles from home, and most had never been on a train, while many others had taken only one or two train trips in their life. As James Hill observed, “the so-called ‘travelling public’ forms in reality but a small, and the more fortunate class of the community.” If he was prejudiced against passenger trains, as some claim, it may have been for altruistic reasons, as the people who relied on freight trains “direct and indirect, include all. Hence justice requires that railway systems … should be cautious not to favor passenger traffic at the necessary expense of freight payers.” It is neither sensible nor fair fo the government to subsidize transportation catering mainly to the wealthy.

Second, new transportation technologies have replaced trains and streetcars. Planes are faster and less expensive for long distances; cars and buses are more convenient and less expensive for short distances; and there is no midrange distance at which passenger rail has an advantage over both cars and planes.

Third, and just as important, other new technologies, including the moving assembly line, telecommunications and the electrical grid, have reshaped our cities so the urban patterns that once made rail convenient to large numbers (though never a majority) of people have been replaced by patterns in which rail makes no sense for passenger travel.

Although we might want great trains in our fantasy of what the world should be like, the reality is we don’t need trains. Most Americans don’t ride the trains we have, nor would they ride them even if they met some arbitrary devinition of “great.” We love passenger trains, and we will remember them in museums and tourist lines. But if the government stays involved in transportation at all, it should be to prepare for the next revolution in transportation, not to try to reverse the previous one.

The main economic damage of Brexit is the extended period of uncertainty

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

At the Continental Telegraph, Tim Worstall interprets a recent Bank of England recommendation to really mean “do Brexit” and “get it over with”:

To pull that out of the jargon, when every bugger’s running around screaming because they don’t know what’s going to happen then things are dark for the long term future of the economy. Just because the screaming and the running around means no bugger is doing anything else.

And here’s the thing – that lookin’ dark bit gets worse the longer the uncertainty lasts. To the point that the effect just of the not knowing becomes greater than the possible effect of any particular event in that universe of possibilities. It really is true that continuing to delay Brexit will, at some point, become worse than any particular Brexit outcome.

Thus get on with it, get it done. And given that we’ll get something of a bloody revolution if the Remainers win – we Brits being really quite keen on this democracy idea, we get to choose not they – then the getting on with it will have to be to leave. Yesterday would have been good, tomorrow if that’s not possible.

QotD: Tariffs

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

The entire aim of having trade is so that we can go buy those lovely things made by foreigners. We only export so as to be able to swap something for those foreign made goods. Thus tariffs are a bad idea to begin with — why should we tax ourselves for gaining access to the very point of our having trade in the first place? Sadly all too many don’t grasp this point. Too many of them being in the current Trump Administration.

Over and above the general point that we don’t want to limit trade nor imports there’s another worry with tariffs and trade wars. Which is what the International Monetary Fund is complaining about. The imposition of more tariffs is a disruption to that global economy. One that is going to reduce growth, the very thing we all desire.

Tim Worstall, “IMF Says The U.S. And China Trade Tariffs Are A Major Risk To World Growth”, Seeking Alpha, 2019-06-07.

July 8, 2019

Bitcoin and its successors lack one thing that Libra has

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

Andrew Coyne on cryptocurrencies:

Sign of the times: the convenience store in my block of mid-town Toronto has installed, in addition to the usual fare of milk, cigarettes and magazines, an ATM dispensing bitcoins. Customers insert their debit cards and buy bitcoin, which they can then use to … to …

To do what, exactly, that they could not do with regular money? Bitcoin, the original cryptocurrency — there are now dozens of competitors — has always struck me as a solution in search of a problem. Its chief selling point, the anonymity made possible by its system of ultra-encrypted peer-to-peer transactions, unmediated by the banking system and beyond reach of the regulators, would seem of most appeal to two groups: crooks and cranks.

Oh, and a third: speculators. The price of cryptocurrencies has tended to fluctuate wildly — having fallen to a third of its peak against the U.S. dollar last year, Bitcoin has tripled in value so far in 2019. Cryptocurrencies are unlikely to achieve widespread use as mediums of exchange so long as they fail to fulfil one of money’s other primary functions, as stores of value.

The Wild West reputation the privately issued currencies have acquired — one of the most popular, Dogecoin, was invented by a 26-year-old Australian in 2013 as a joke — will be one of the early hurdles confronting Facebook’s recent entry into the field. The company hopes its 2.4 billion users will soon be buying goods and services from each other with Libra, as the proposed digital currency is called, wherever on earth either party may happen to be.

And yet Libra differs from Bitcoin and its ilk in several important ways. One, while it makes use of the same blockchain encryption technology as Bitcoin to ensure the security of payments, it is not based on the same anarchic premise.

In contrast to Bitcoin’s unsupervised, massively distributed, “permissionless” network, Libra will operate, at least initially, via Facebook’s Messenger and WhatsApp platforms, which are very much subject to its control. The company, and the others it has recruited as partners — names like Visa, Mastercard, and PayPal — are likewise highly visible targets of regulatory oversight, and indeed have signalled they intend to work with national banking regulators.

July 7, 2019

Cancelling student loans would be a really, really bad economic move

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

Art Carden explains why cancelling outstanding student loan debt — despite its huge popularity on the campaign trail — would be a very bad idea:

University College, University of Toronto, 31 July, 2008.
Photo by “SurlyDuff” via Wikimedia Commons.

It’s one of the rules of electoral success: advocate policies that concentrate the benefits on an easy-to-identify interest group (preferably one that is sympathetic in the public eye) and disperse the costs onto the entire electorate. It’s how we get Coke sweetened with corn syrup rather than actual sugar. It’s also how we get proposals to cancel student loans. As my AIER colleague Will Luther points out, the fact that two of the Democratic frontrunners have made debt cancellation such an important part of their campaigns suggests that the issue is going to be with us for a while.

But would it be a good idea to cancel student debt? And importantly, how does even the prospect of canceled student debt affect people’s incentives?

Regressive Tax

First, let’s consider the quality of the policy. A lot of commentators are pointing out that it’s fundamentally regressive, meaning that we’re basically taxing the poor to pay the rich. As economist Alexander William Salter puts it in the Dallas Morning News, it’s

    a transfer of wealth to those with relatively high levels of expected lifetime income, at the expense of those with relatively lower levels of expected lifetime income.

The idea might have some merit, but it will make wealth and income inequality worse rather than better.

Even saying that the idea might have some merit is perhaps too charitable. In 2011, economist Justin Wolfers called it the “Worst. Idea. Ever.” in a Freakonomics post. Why? First, there’s the distributional effect. If we’re going to have policies that transfer wealth from one group to another, it doesn’t make much sense to transfer wealth from taxpayers generally to high-income college graduates. As Will Luther and so many others have pointed out, a college degree brings spectacular financial returns. As a group, college graduates aren’t “needy” by any reasonable definition.

July 6, 2019

Putting global worker pay into perspective

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

Tim Worstall explains why the headline-friendly numbers in a recent ILO report are nothing to be surprised at:

“Nearly half of all global pay is scooped up by only 10% of workers, according to the International Labour Organization, while the lowest-paid 50% receive only 6.4%.

“The lowest-paid 20% – about 650 million workers – get less than 1% of total pay, a figure that has barely moved in 13 years, ILO analysis found. It used labour income figures from 189 countries between 2004 and 2017, the latest available data.

“A worker in the top 10% receives $7,445 a month (£5,866), while a worker in the bottom 10% gets only $22. The average pay of the bottom half of the world’s workers is $198 a month.”

[…]

The explanation? To be in the top 10% of the global pay distribution you need to be making around and about minimum wage in one of the rich countries. Via another calculation route, perhaps median income in those rich countries. No, that £5,800 is the average of all the top 10%.

Note that this is in USD. About £2,000 a month puts you in the second decile, that’s about UK median income of 24,000 a year.

And as it happens about 20% of the people around the world are in one of the already rich countries. So, above median in a rich country and we’re there. Our definition of rich here not quite extending as far as all of the OECD countries even. Western Europe – plus offshoots like Oz and NZ, North America, Japan, S. Korea and, well, there’s not much else. Sure, it’s not exactly 10% of the people there but it’s not hugely off either.

So, what is it that these places have in common? They’ve been largely free market, largely capitalist, economies for more than a few decades. The most recent arrival, S. Korea, only just managing that few decades. It is also true that nowhere that hasn’t been such is in that listing. It’s even true that nowhere that is such hasn’t made it – not that we’d go to the wall for that last insistence although it’s difficult to think of places that breach that condition.

QotD: How to learn

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

I can imagine an economics professor reading through The Literary Book of Economics in search of things he can use in his teaching. But I find it hard to imagine anyone else doing so on his own initiative, merely because he enjoyed reading it. There is a reason why a book is the length it is; a novel is not, with rare exceptions, a series of short stories. I conclude that most of the people reading [Michael] Watts’ book, most of the people it was written for, will be students reading it because their professor told them to. And, judging by my experience of students over the years, many of the students told to read it won’t.

That fits the pattern of most modern schooling at all levels. Someone else decides what you should learn, tells you what you must do to learn it, and makes some attempt to make sure you follow his instructions. It is not a model I think highly of. A much superior model in my view, if you can pull it off, is to get someone to learn something primarily because he finds it interesting. The best way of doing that is to provide students with things to read that are worth reading on their own, not things they read only because they are ordered to. Not even things they read only because they think the labor of reading them will pay off in future benefit.

That view of education is why both children of my present marriage were unschooled. It is also why all of my nonfiction books, with the partial exception of Price Theory, were targeted at the proverbial intelligent layman. They can be, and sometimes are, used as textbooks, but they were written with the assumption that if the reader did not find a chapter worth finishing he was likely not to finish it.

David Friedman, “Thoughts on Literature, Economics and Education”, Ideas, 2017-05-01.

June 28, 2019

The “V-word” in political discussions

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

Kristian Niemietz explains why “Venezuela” isn’t a sensible or satisfactory answer to claims in favour of socialism:

Shaded relief map of Venezuela, 1993 (via Wikimedia)

The main point to note is that Venezuela is an actual country, not a shorthand for “everything I don’t like about the Left”. It is a country that is in trouble for specific, identifiable reasons, not for being, somehow, generically, “too left-wing”. This sounds obvious when you put it like that, but deviations from this point are the main cause of V-word inflation.

So when somebody on the Left proposes to, for example, raise income tax, wealth taxes, or corporation tax, people on the pro-market side should not respond by shouting “Venezuela!”. Because that’s not what happened in Venezuela. Venezuela is not a high-tax economy, or at least, their tax burden is not what ruined them.

In the same way, if somebody on the Left proposes to hike the minimum wage, to abolish university tuition fees, or to ban zero-hour contracts, shouting “Venezuela!” is not the answer either. Those are bad ideas, sure. But those are not the ideas that destroyed Venezuela.

In short, we shouldn’t bring up Venezuela in a discussion of run-of-the-mill left-wing policies, which bear little relationship to anything that Chávez and/or Maduro did.

Furthermore, when somebody points out a genuine social problem in Britain, “Yeah but Venezuela!” is not much of a reply. Socialists are sometimes good at identifying problems, even if they are terrible at developing solutions. It is true that we have some of the highest housing costs in the world. It is true that our productivity performance, and as a result, wage growth, are poor, and have been poor for far too long. It is true that our welfare system is riddled with flaws, and often fails to support people who have fallen on hard times.

“It’s much worse in Venezuela, which is the system you lot want!” is not good enough. “It’s much better in capitalist countries X and Y – which is the system we should learn from” is more like it. So in such cases, it’s best to leave Venezuela out of it. Let “Venezuela” be a country, not a rhetorical all-purpose put-down.

That said – don’t declare that moratorium just yet. When prominent British socialists call for mass nationalisations, when they call for price controls and capital controls, when they deride the rule of law as a mere “bourgeois” construct that only serves “the elites” – then yes, it is absolutely fair to point out that this is exactly what happened in Venezuela. Here, we’re not talking about some allegorical “Venezuela”, but about the actual country, and about specific things that happened there. These are the very policies, and this is the very mindset, which turned what was once South America’s richest country into a basket case. This argument may not “resonate with people” – but it’s true.

Further to that: when socialists claim that “their” version of socialism will be completely different from any of its previous incarnations, that it will be genuinely democratic, empowering, grassroots-based and non-hierarchical – then it is fair to point that this is exactly what the Chavistas also used to say.

Some Western socialists are currently trying to convince themselves that Chávez and Maduro just never really aspired to a different kind of socialism, that authoritarian populism is all they ever wanted. This is fundamentally untrue, and Western socialists used to know this very well. The project of Venezuelan socialism started with the aspiration that this time would be different, that this time, “socialism” would not mean an all-powerful state controlling everything. It started with the aspiration that there could be completely different forms of collective ownership, which had nothing to do with the top-down nationalised industries of the past.

The appeal of Millennial Socialism rests on the delusion that the democratic, bottom-up socialism Millennial Socialists aspire to is a fundamentally novel aspiration, and that nobody in history has ever tried to build anything like this before.

But it is not a new aspiration. This was precisely what Chávez’s and Maduro’s “21st Century Socialism” was also about, which is why it used to be so popular in the West. A moratorium on the V-word would just play into the hands of those who now want to pretend that none of this ever happened, and that “Millennial Socialism” is novel, untried and untested.

June 27, 2019

“Raise our taxes!” cried the hypocritical virtue signallers

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

We’ve been over this ground before. Some very rich people are getting fawning media coverage for their “selfless”, “virtuous” demand that the government raise their taxes. Except they’re far from selfless: they’re demanding that other people be forced to pay more tax, but they’re very much not putting their own money where their bleating mouths are. Most governments are happy to accept more money from you than your formal tax liabilities:

… are all very eager to accept your contributions. But most people don’t take advantage of this mechanism, especially the ones garnering headlines for their “altruism”. Because they’re virtue signalling, and almost certainly don’t actually want to be taxed more. Don’t believe what people merely say they want, watch what they actually do (economists call this “revealed preference“). Hypocrites, the lot of them.

June 26, 2019

What is the problem that a wealth tax is designed to solve?

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

Andrew Coyne asks the obvious question about the sudden keen interest in imposing wealth taxes:

It is noteworthy how the debate on inequality has shifted in recent years: from the problem of poverty, whose evils are obvious, to the “problem” of great wealth; from the gap between the poor and the rest of us, to the gap between the rest of us and the rich, or indeed between the rich and the very rich.

But it is not obvious why it is wrong, in itself, that a small number of people should get stinking rich. It is clearly objectionable if they did so by illicit or unethical means — but then it is the means itself, not the wealth, to which we object. And it would be in poor taste, at the least, if they spent it all on themselves. But that is not how the great fortunes are typically disposed of — it’s physically impossible to spend more than a small fraction of it.

Perhaps the argument is less that the rich are too rich than it is that the government is too poor. You can make a case that government should spend more on certain things, especially in America. It doesn’t follow that you need to raise taxes to do so. A lot of good new spending could be funded by cutting bad old spending.

Suppose there were a case for raising taxes. Are wealth taxes the way to go? Wealth is, after all, merely the accumulation of past income — and we already tax income. If rich people are exploiting loopholes to avoid paying tax on their incomes, by all means close the loopholes. But the case for taxing income twice seems obscure.

Yes, we already have a kind of wealth tax, in the form of municipal property taxes — and they’re a notorious mess. They conform to none of the usual principles of good taxation, being neither simple, nor efficient, nor fair.

Why unfair? The bedrock criteria of tax fairness is supposed to be ability to pay. That’s only uncertainly related to wealth. Suppose the value of your house shoots up. Congrats: suddenly you’re wealthy. But your income is unchanged. And it’s income you need, or more accurately cash, to pay your taxes. It’s not clear why you should pay more in tax than someone with the same income, but a cheaper house.

QotD: “Right-wing central planning is as foolish as left-wing central planning”

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

It is the old familiar dream of the central planner, an orrery economic universe in which things move in predictable and comprehensible patterns. That model of the economy has no relationship to reality. A million different things might become of any given laid-off steelworker; predicting what would happen to an entire industry’s work force (or even a small portion of it) in the absence of a certain protectionist policy is not economics — it is speculative fiction. For the most part, we do not have a very good record for predicting the effects of policies; trying to build a set of policies on an intellectual framework consisting of imagined counterfactuals will fail for the same reason that wage and price controls fail, agricultural-market management fails, and those highly targeted “investments” every president proposes in every State of the Union address fail: Human civilization is not an ant farm that can be viewed in cross-section and comprehended in total.

The real world is populated by politicians and lobbyists rather than philosopher-kings, but a government of philosopher-kings that tried to micromanage the economy in the way Beattie suggests would fail, just as all similar attempts at putting the economy under political discipline have failed. Right-wing central planning is as foolish as left-wing central planning.

Kevin D. Williamson, “Right-wing central planning is as foolish as left-wing central planning”, National Review, 2017-06-12.

June 23, 2019

The state of play in the Strait of Hormuz

Filed under: China, Economics, Middle East, Military, USA — Tags: , , — Nicholas @ 03:00

Arthur Chrenkoff wonders what would happen if Iran gave a war, but nobody came:

A satellite view of the Strait of Hormuz, 30 December 2001.
Jacques Descloitres, MODIS Land Rapid Response Team, NASA/GSFC via Wikimedia Commons.

Nearly twenty per cent of world crude oil shipments (from the Arab Gulf producers) go out to the rest of the world through the Strait of Hormuz, which Iran is threatening to close (hence its recent attacks on oil tankers).

However, through a combination of fracking, increased mainline well production and greater efficiencies, the United States is now finally energy self-sufficient. For all that America cares, Iran could cut off all the traffic through the Strait and it would have a minimal impact on the domestic economy, some minor logistical adjustments aside.

Nearly two thirds of the oil that travels through the Strait ships to Asia instead, and specifically to China, India, Japan and Korea, which are significantly more dependent on that oil to power their energy-hungry, export-oriented economies than other regions of the world.

China, notably, has been Iran’s tacit international ally. If Iran wants to interfere with the free navigation in its backyard and in so doing antagonise one of its few remaining backers, it should be left alone to do so.

These circumstances – the US doesn’t need the Gulf oil, China does – should convince the United States to stand back and not involve itself yet another time as the world sheriff to enforce the rules of international law and maintain the open international trading system. The rest of the world all too often free-rides on America’s good graces (not to mention its blood and treasure), while at the same time reserving the right to castigate the superpower for its interventionism. Why not let the world experience what it’s like without having the US solve all their problems (while getting all their blame)? Maybe the European Union or the United Nations can do something [canned laughter]. Or maybe the most affected Asian nations can try to solve their own oil supply problems. Good luck, lads.

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