Those who cannot remember the past are doomed to repeat it, as George Santayana once said. Slightly before him, Karl Marx claimed that history repeats itself, the first time as a tragedy, the second time as a farce. Both of these Dead White Males are arguably right, if only the latter still continues to inspire people, though not with this particular quote.
Throughout the developed world – with the notable exception of Poland – Gen Ys or the Millennials veer strongly to the left. Young people have always done so, but the current crop would make even their proud Baby Boomer grandparents blush in their enthusiasm for collectivism. It’s not just that in countries like the United States or Australia two thirds of them vote for the parties of the left – after all, the left can be a broad church, from Tony Blair to Jeremy Corbyn – but they positively heart socialism: 63 per cent of Australian university graduates and over the half of the American cohort. Those who literally cannot remember the past are very keen to repeat it – let’s hope that this time only as a farce.
The Millennials can’t remember very much – and they don’t learn very much either. It’s easy being hot for socialism or communism when you actually have a very little idea of what it is and what it did throughout the 20th century. And the Ys have that ignorance in spades; one third of them think that George W Bush killed more people than Stalin and 42 per cent have never heard of Mao – but over 70 per cent agree with Bernie Sanders. Some research suggests that only 15 per cent actually have a correct understanding of socialism. It’s not just politics; the Millennials are the most woefully undereducated and miseducated generation in a very long time. To be fair, that’s not strictly their fault; that attaches itself again to their Boomer grandparents who have been in charge of our failing education systems during this time. Combine the modern indoctrination-cum-dumbification taking place in schools and universities with the attention span-killing impact of information technology and social media, and you have a barely literate cohort, which is simply not equipped with the necessary mental tools to learn about the real world even if they wanted to.
Any surprises that socialism is now nearly synonymous with Gen Y?
Arthur Chrenkoff, “Socialism as a Millennial religion”, The Daily Chrenk, 2019-02-19.
March 22, 2019
March 21, 2019
Remy: “Affluenflammation”
ReasonTV
Published on 20 Mar 2019When quality of life improved, doctors discover a new affliction.
Reason is the planet’s leading source of news, politics, and culture from a libertarian perspective. Go to reason.com for a point of view you won’t get from legacy media and old left-right opinion magazines.
A parody of the Red Hot Chili Peppers’ “Californication” written by Remy.
Music tracks, mastering, and background vocals by Ben Karlstrom
Video produced by Austin Bragg.LYRICS
There’s a non-foregone phenomenon in any prosperous nation
When primal fears all disappear the brain then gets a sensation
The medical name we gave this pain is affluenflammationOl’ Bill Tub is chugging a jug of cold bovine lactation
When his eyes then realize that carton side’s got information
And since his life contains no strife it’s affluenflammationFor the better part of history diseases all were raging
Measles, mumps up on your junk like they were Kevin Spacey
Then came Jonas Salk
Makes you wonder what all for…Cuz we’ve got affluenflammation
We’ve got affluenflammationOl’ Chip Black is cracking the back of twelve live-steamed crustaceans
For the perks and glee of living free he starts to lose appreciation
And if you probe his frontal lobe — yep — affluenflammationThrough the course of human history each day we faced starvation
Rats and pox and chamber pots, streets filled with defecation
Free markets changed the norm
Makes you wonder what all for…Cuz we’ve got affluenflammation
We’ve got affluenflammation
We’ve got affluenflammation
We’ve got affluenflammation
“It’s back to normal, basically. The emperor is naked. Votes are for sale. Caveat emptor“
Chris Selley somehow seems, I dunno, a bit … cynical about Prime Minister Trudeau and Finance Minister Morneau’s 2019 federal (election) budget:
Ahoy there, relatively young and middle-class Canadian! Did you vote Liberal in 2015? And are you, shall we say, somewhat less enthused about that prospect four years later, for various reasons we needn’t go into here?
Now, what if Justin Trudeau were to offer you a down payment on a shiny new condominium?
Well, that’s just the kind of guy he is. Starting this year, so long as your household income is below $120,000, the Canada Mortgage and Housing Corporation will pitch in 5 per cent of the price of your first home — 10 per cent if it’s a new home, the construction of which the government hopes to incentivize.
That’s Item One in the 460-page federal budget tabled Tuesday in Ottawa.
On a new $400,000 condo, you could put down your own $20,000; CMHC would chip in another $40,000; and your monthly mortgage payment, on a 25-year term at 3.25 per cent, would drop by a not inconsiderable 12 per cent. You would reimburse CMHC, interest-free, if and when you sell. Cost to the taxpayer: $121 million over six years.
If you’re worried giving home-seekers free money might just push the price of a $400,000 condominium nearer to $440,000, Finance Minister Bill Morneau would first of all like you to stop. (“You’re wrong,” he admonished a reporter who dared suggest it during a press conference in the budget lockup Tuesday.) But if all else fails and you’re forced to rent, the feds also found $10 billion extra over nine years to throw at the Rental Construction Financing Initiative, a CMHC program that offers low-interest loans to qualified builders. The goal is 42,500 new rental units in a decade.
Can’t even think of home ownership until you pay off your student loans? Again, the government is here to help: From now on you’ll pay the Bank of Canada’s prime interest rate, instead of prime plus 2.5 points. And for the first six months after you graduate, you’ll pay nothing. The budget document introduces us to Angela, a recent psychology grad carrying $13,500 in student debt who landed a job at “a medium-sized consumer goods company.” (It doesn’t matter where she works. The writers just wanted to add some colour.) Angela will save something like $2,000 in interest over 10 years.
There’s also the new Canada Training Benefit, which the government intends to help Canadians with “the evolving nature of work.” (Maybe your parents were right, Angela. Maybe that psych degree wasn’t the best idea, Angela.) Starting in 2020, the feds will chip in $250 a year, and you can use the accumulated credit to pay up to half the cost of courses or training. And you can draw on up to four weeks of EI to complete it.
March 16, 2019
MMT – Magic Money Theory
Antony Davies and James R. Harrigan explain just why so many progressives are so excited about MMT:
Modern Monetary Theory, or MMT, is all the rage in the halls of Congress lately.
To hear the Progressive left tell it, MMT is not unlike a goose that keeps laying golden eggs. All we have to do is pick up all the free money. This is music to politicians’ ears, but Fed Chairman Jerome Powell is singing a decidedly different tune. Said Powell recently on MMT, “The idea that deficits don’t matter for countries that can borrow in their own currency … is just wrong.”
MMT advocates see this as outdated thinking. We can, they claim, spend as much as we want on whatever we want, unencumbered by trivialities like how much we have. But MMT is a bait-and-switch wrapped in a sleight-of-hand. It focuses on debt and dollars rather than resources and products. Debt and dollars are merely tools we use to transfer ownership of resources and products. It’s the resources and products that matter. Shuffling debt and dollars merely changes the ownership of resources and products. It doesn’t create more.
[…]
So here’s the sleight of hand. MMT advocates say that we won’t experience inflation because the U.S. dollar is a reserve currency — foreigners hold lots of U.S. dollars. First, increasing the money supply, other things constant, does create inflation. But when a reserve currency inflates, the pain gets spread around the world instead of being concentrated within one country. In short, MMT advocates believe our government should print money and let foreigners bear some of the inflation pain. Second, there’s no law that says that the U.S. dollar must be a reserve currency. The British Pound was one, but as its value declined, foreigners stopped holding it. Foreigners will stop holding U.S. dollars too as their value declines.
And here’s the bait-and-switch. MMTers say that if inflation does become a problem, the government can simply raise tax rates to soak up excess dollars. In short, the government would print money with one hand, buying whatever it wants and causing inflation. It would then tax with the other, thereby removing dollars from the economy and counteracting the inflation. In the end, all that’s happened is that the government has replaced goods and services that people want with goods and services politicians want.
After a bout of MMT, we might have the same GDP and zero inflation, but what constitutes that GDP would have changed dramatically. Instead of having more cars and houses, we might have more tanks and border walls.
March 12, 2019
A choice between a (small) UBI and not taxing the poor at all
Tim Worstall responds to an article advocating abolishing Britain’s tax-free personal allowance and replacing it with a form of universal basic income (UBI):
Sure, we need to have government, even if not quite as much as we do have. Thus we need tax revenues to pay for it. But that tax should be, where it is derived from income, paid by the better off among us. As Adam Smith pointed out, people should be paying more than in proportion to their income. I would actually argue that income tax should only kick in at median income but agree that would require a smaller state than we’ve got now. Actually, that’s why I would propose it.
Still, that does mean that this suggestion fails at that first hurdle:
The tax-free personal allowance, which rises to £12,500 in April, should be scrapped and replaced with a flat payment of £48 a week for every adult, according to radical proposals welcomed by shadow chancellor John McDonnell. The proposal, from the New Economics Foundation thinktank, is for a £48.08 “weekly national allowance,” amounting to £2,500.16 a year from the state, paid to every adult over the age of 18 earning less than £125,000 a year. The cash would not replace benefits and would not depend on employment.
It’s a universal basic income. Excellent stuff therefore. But the error is to think that this should replace that personal allowance. Assume that they’re including NI in that no allowance thing – if they’re doing it for income tax then they probably will for NI. What that means is that anyone earning more than £50 a week is facing a 40% marginal tax rate (yes, 40%, employers’ NI is incident upon the workers’ wages).
Do we think that’s a just way to pay for diversity advisers? That someone on £50 a week gives up 40% of any income over that? No, we don’t, we think that’s an entirely unjust taxation system. Actually, it’s a really stercore* taxation system.
* Someone’s been at his Latin texts again … I had to look this word up myself. It’s the ablative singular form of stercus, which means “manure, dung; to sully, soil, decay”, according to Wiktionary.
March 9, 2019
Old posts (from the old blog) about Chinese official economic statistics
This post at Continental Telegraph a few days back reminded me I wanted to get around to gathering some of my older posts about the reasons to take the official GDP numbers from the Chinese government with more than just a pinch of salt. Here’s my very first rant on the topic from 10 August, 2004 (original expired URL – http://bolditalic.com/quotulatiousness_archive/000323.html):
On my way in to work this morning, I heard a stock advisor doing his best to make reasonable assumptions about what the average listener needed to know about the economy. This guy has been pretty level-headed in the past, but this morning’s talk just got my head ready to explode.
The topic of discussion was the Chinese economy and how the Chinese central bank was having to take greater efforts to rein in economic expansion. He talked about how many different sectors of the North American economy were, to greater or lesser degree, depending more and more on Chinese growth to increase their own investments and output. The idea that the Chinese economy was "overheating" was bandied about. He closed by indicating that a slight drop in the official growth rate from 9.8% to 9.6% showed that the Chinese central bank was seeing some results from their intervention in the economy.
There are so many things wrong here that I’m almost at a loss where to start. While there is no doubt that China is a fast-growing economy, the most common mistake among both investors and pundits is to assume that China is really just like South Carolina or Ireland … a formerly depressed area now achieving good results from modernization. The problem is that China is not just the next Atlanta or Slovenia. China is still, more or less, a command economy with a capitalist face. One of the biggest players in the Chinese economy is the army, and not just in the sense of being a big purchaser of capital goods (like the United States Army, for example).
The Chinese army owns or controls huge sectors of the economy, and runs them in the same way it would run a division or an army corps. The very term "command economy" would seem to have been minted to describe this situation. The numbers reported by these "companies" bear about the same resemblance to reality as those posted by Enron or Worldcom. With so much of their economy not subject to profit and loss, every figure from China must be viewed as nothing more than a guess (at best) or active disinformation.
Probably the only figures that can be depended upon for any remote accuracy would be the imports from other countries — as reported by the exporting firms, not by their importing counterparts — and the exports to other countries. All internal numbers are political, not economic. When a factory manager can be fired, he has his own financial future at stake. When he can be sentenced to 20 years of internal exile, he has his life at stake. There are few rewards for honesty in that sort of environment: and many inducements to go along with what you are told to do.
Under those circumstances, any growth figures are going to be aggregated from all sectors, most of which are under strong pressure to report the right numbers, not necessarily corresponding with any real measurement of economic activity. So, if the economic office wants to see a drop in the economy, that’s what they’ll get.
Basing your own personal financial plans on numbers like this would quickly have you living in a cardboard box under a highway overpass. Companies in the soi-disant free world have shareholders or owners to answer to. Companies in China exist in a totally different environment.
I returned to the same topic on October 25, 2004, triggered by yet another talking head on the radio under the heading “More Economic Voodoo — or is that Feng Shui?” (original URL – http://www.bolditalic.com/quotulatiousness_archive/000580.html):
Again this morning, I was listening to my local jazz radio station on the way in to work. As usual, they had a broker from CIBC Wood Gundy giving portfolio advice at about 9:20 a.m. Today’s talk was about investing in China, and how the markets have been reacting to the recent small drop in the official GDP growth figures released by the Chinese central bank.
This time, the emphasis was on the idea that in spite of the breathtaking growth figures, Chinese firms still are not particularly profitable and that therefore there are better ways of investing your money to benefit from all that growth. Unlike the last time I addressed this issue, this time I thought that the advisor was actually making pretty good sense. The incredible transformation of China from a pure command-driven economy to a mixed economy will certainly provide lots of opportunities for people to get rich; it will also provide even more opportunities to lose big money.
Much of the problem is that even now, the Chinese economy is not particularly free: the official and unofficial controls on the economy provide far too many opportunities for rent-seeking officialdom to play favourites and cripple antagonists (and for once, "cripple" is not just a bit of hyperbole). Any numbers provided by the Chinese authorities cannot be depended upon, and should probably only be viewed as an indication of what the Chinese government wants the outside world to believe.
Even in a relatively free economy like Canada, the underground economy can be huge, with plenty of economic activity happening out of reach of the taxman. In China, where everybody was raised in an environment where providing the "wrong" answer to your leader could get you imprisoned (or executed) as an economic criminal, the numbers upon which the bankers and financial officials depend can only be described as extremely unreliable.
Update 26 October: The Last Amazon asks a highly pertinent and pointed question:
In the past week, the Globe and Mail has been featuring the economic engine that China has become. Its economy is thriving so much so that Chinese government owned companies like China Minmetals Corp (which had revenues in 2003 of USD$11.7 billion) is currently negotiating to buy outright 100% of the stock of the Canadian mining corporation, Noranda Inc. The total stock is estimated at approximately CDN$6.7 billion.
If the Chinese government can afford to buy Noranda Inc. why hasn’t anyone asked when China will reimburse the overburdened Canadian taxpayers of this fair land for the Cdn$65.4 million that has been given to China as foreign aid?
I managed to stay away from the topic until April 13, 2007, when I posted “The Chinese Economy”, which largely quoted from my first two posts (old URL – http://bolditalic.netfirms.com/quotulatiousness_archive/003649.html):
Everyone must have heard many different variations on how incredible the Chinese economy is: spectacular growth, innovations galore, etc., etc. And there’s much truth to it — China has been industrializing at a mind-croggling pace. At least, the visual evidence says so. The economic data coming out of China is, to be kind, not as dependable as similar data from most other countries. […]
Three years on, I must retract a tiny bit there … Enron’s and Worldcom’s figures, while deliberately misleading, were refutable (and the culprits taken to court). […]
Samizdata links to a brief Tyler Cowen post which includes this quote:
…of the 3,220 Chinese citizens with a personal wealth of 100 million yuan ($13 million) or more, 2,932 are children of high-level cadres. Of the key positions in the five industrial sectors – finance, foreign trade, land development, large-scale engineering and securities – 85% to 90% are held by children of high-level cadres.
That’s even higher than I expected. But it’s an excellent example of what I originally wrote about back in 2004: the economy isn’t free, and the beneficiaries are disproportionally those who are politically well-connected. Caveat investor.
And that was when I discovered that my “full” backup of files from the old site is actually missing nearly a year of posts from May 2008 to May 2009 (when I moved to the current site). I vaguely recall that Jon (my former virtual landlord) was having problems with limited storage on that site — I was just a freeloading guest — so perhaps one of the things we lost was the auto-archiving after we reached a certain capacity.
Thanks to the Wayback Machine, I found a couple of other entries but they were often just rehashes of the first two posts interspersed with quotations from articles I felt were being too Pollyanna-ish about the Chinese economic numbers, like this one from May 2, 2008:
Those untrustworthy Chinese economic numbers
Regular readers will know that I’ve been a long-term skeptic about the economic figures reported by the Chinese government (for example, here and here back in 2004). As a result, this post at the Economist is not very surprising:
As China’s importance in the global economy increases, investors are paying more attention to its economic numbers. Yet the country’s official statistics are notoriously ropy. Some commentators accuse China’s government of overstating GDP growth for political reasons, others complain that the official inflation rate is fraudulently low. So which data can you trust?
One reason to be suspicious of GDP figures is that China is always one of the first countries to report them, usually only two weeks after the end of each quarter. Most developed economies take between four and six weeks to produce them.
However, The Economist still feels that the Chinese economy is larger than reported. My sense of distrust in the figures argues for it being neither as big nor as robust as the reported figures indicate. They’re professional economic reporters … I’m a guy typing a blog entry. I wonder what the long-term odds are for either of us to be closer to the truth?
It’s tough to disagree with this, though:
The prize for the dodgiest figures goes to the labour market. The quarterly urban unemployment rate is meaningless because it excludes workers laid off by state-owned firms as well as large numbers of migrant workers, who normally live in urban areas but are not registered. Wage figures are also lousy. There has recently been much concern about the faster pace of increase in average urban earnings. But this series does not cover private firms, which are where most jobs have been created in recent years.
Now that China is such an engine of global growth, it urgently needs to improve its economic data. Only a madman would drive a juggernaut at full speed with a faulty speedometer, a cracked rear-view mirror and a misty windscreen.
By this point, Jon was referring to my obsession with bogus Chinese economic statistics as my “hobby horse” … yet it wasn’t unknown for him to send me links to articles on that very topic. Here’s another post, courtesy of the Wayback Machine, from January 23, 2009:
China’s economic situation
There’s an article at The Economist today that shows a touching belief in the magic of the Chinese economy. The reported Gross Domestic Product has fallen to “only” 5.8%. The Economist‘s writer spends much of the article worrying about this gloomy report:
New figures show that China’s GDP growth fell to 6.8% in the year to the fourth quarter, down from 9% in the third quarter and half its 13% pace in 2007. Growth of 6.8% may still sound pretty robust, but it implies that growth was virtually zero on a seasonally adjusted basis in the fourth quarter.
Industrial production has slowed even more sharply, growing by only 5.7% in the 12 months to December, compared with an 18% pace in late 2007. Thousands of factories have closed and millions of migrant workers have already lost their jobs. But there could be worse to come. Chinese exports are likely to drop further in coming months as world demand shrinks. Qu Hongbin, an economist at HSBC, forecasts that exports in the first quarter could be 19% lower than a year ago. 2009 may well see the first full-year decline in exports in more than a quarter of a century.
Economists have become gloomier about China’s prospects, with many now predicting GDP growth of only 5-6% in 2009, the lowest for almost two decades.
I’ve blogged about the Chinese economy on a few occasions (most recently here), generally with the same concern: that the numbers reported cannot be relied upon. The same is true here. Interestingly, the Economist article I linked to back in May makes this point quite well, yet today’s article appears to treat the Chinese government’s numbers as solid.
China has changed substantially from twenty years ago, and in many ways for the better. Most ordinary Chinese today are more free — economically anyway — than they were a generation ago, and there is a lot more opportunity for individuals to set up businesses and to succeed without needing Party connections. All this is indisputable … yet vast swathes of the Chinese economy are a legacy of the worst command-and-control period. It’s not an exaggeration to say that we can expect to discover the “official numbers” have absolutely no relationship to reality, because the numbers are compiled from various sources including both free-r quasi-capitalist companies and tottering government-owned (and often People’s Liberation Army-owned) conglomerates which cannot be depended upon to report anything accurately.
An example from this article: “a fall in electricity output of 6% in the year to the fourth quarter, down from average annual growth of 15% over the previous five years.” That’s not just a reduction in the rate of growth, that’s a reported drop in output of 6%. Imagine what the state of a European or Japanese/Korean economy running at only 94% of electricity … it’d be something you’d only see at times of severe economic contraction, not as a sign of a slow-down in growth.
Finally, on May 22, 2009, a final post on the topic at the old blog:
Official Chinese statistics
If you’ve read the blog for a while, you’ll know that I’m pretty skeptical about how believable the official statistics coming from the Chinese government may be. The Economist is somewhat undecided on the matter … sometimes publishing articles that treat the official numbers as legitimate and other times, showing more doubt:
Part of the recent optimism in world markets rests on the belief that China’s fiscal-stimulus package is boosting its economy and that GDP growth could come close to the government’s target of 8% this year. Some economists, however, suspect that the figures overstate the economy’s true growth rate and that Beijing would report 8% regardless of the truth. Is China cheating?
Economists have long doubted the credibility of Chinese data and it is widely accepted that GDP growth was overstated during the previous two downturns. In 1998-99, during the Asian financial crisis, China’s GDP grew by an average of 7.7%, according to official figures. However, using alternative measures of activity, such as energy production, air travel and imports, Thomas Rawski of the University of Pittsburgh calculated that the growth rate was at best 2%. Other economists reckon that Mr Rawski was too pessimistic. Arthur Kroeber of Dragonomics, a research firm in Beijing, estimates GDP growth was around 5% in 1998-99, for example. The top chart, plotting the official growth rate against estimates by Dragonomics, clearly suggests that some massaging of the government statistics may have gone on. The biggest adjustment seems to have been made in 1989, the year of political protests in Tiananmen Square. Officially, GDP grew by over 4%; Dragonomics reckons it actually declined by 1.5%.
Of course, The Economist doesn’t want to lose sales in China, so the last paragraph of the article blithely re-assures readers that things are improving and that the official numbers are much harder to fudge now than they used to be. That may well be true (I rather hope it is), but in the same way that you can get much more impressive growth from a very small base, you can become much more honest with your numbers when you’re starting from pure fiction.
[…] Let’s just say that I’m still unconvinced.
After that, my hobby-horse rides can be found by searching for “china economy” (or just click this link) on the current blog, or you can just peruse the China category.
March 5, 2019
Changes in Velocity
Marginal Revolution University
Published on 16 May 2017What happens when aggregate demand shifts because of a change in the velocity of money? You’ll recall from earlier videos that an increase or decrease in velocity means that money is changing hands at a faster or slower rate.
Changes in velocity are temporary, but they can still cause business fluctuations. For instance, say that consumption growth slows as consumers become pessimistic about the economy.
In fact, we saw this play out in 2008, when workers and consumers became afraid that they might lose their jobs during the Great Recession. This fear drove them to cut back on their spending in the short run. But, since changes in velocity are temporary, this fear receded as time passed and the economy began to recover.
Dive into this video to learn more about what causes shifts in the aggregate demand curve.
February 28, 2019
The federal Liberals did get one important thing right … no, not marijuana legalization
Justin Trudeau’s Liberals haven’t had a lot of successes in their term in office, but there is one achievement they can legitimately take some credit for:
Pssst. Can I let you in on a little secret? Keep it under your hat, but — the poverty rate has fallen again. In fact, it’s at a new all-time low. Statistics Canada reports that the percentage of Canadians falling below the official poverty line in 2017 fell to 9.5 per cent, down from 15.6 per cent in 2006. That still leaves much room for improvement. But this is remarkable progress.
Of course, the official measure of poverty, known as the Market Basket Measure, has only been around for a few years. But an earlier, unofficial measure, known as the Low Income Cut Off, goes back much further. It, too, is at an all-time low, after a steady, two decades-long decline. Indeed, at 7.8 per cent, it’s barely half what it was in 1996.
Andrew Coyne continues:
The sources of this amazing success story are not hard to find — and no, it is not quite as simple a matter as replacing the Conservatives with the Liberals. The trendlines on both low and median incomes, I repeat, go back to the mid-1990s: when the economy, after the long recession, began to grow again.
It turns out — who knew — that poverty tends to fall, and incomes to rise, in periods of economic growth, such as we have enjoyed, almost without interruption, since then. Even the 2009 recession, a relatively mild one in Canada, barely made a dent in either trend.
Still, the Liberals deserve some credit for the continuing decline in poverty since they were elected. If the overall rate has dropped appreciably, it has fallen even more among children — especially welcome, given the lasting effects poverty can have on life chances. At nine per cent, it is down a third from just two years ago.
That’s almost certainly due, at least in part, to the Liberals’ first and most significant policy reform: the rationalization of several existing child benefits and credits into a single income-tested Canada Child Benefit, with increased amounts going to low-income families. It turns out — who knew — that if you give people more money, they are less likely to be in poverty.
February 26, 2019
Laissez-faire versus “Fairtrade”
In the Guardian, a sad tale of the fading bright hopes of the (relatively small number of) affluent westerners who passionately supported the “Fairtrade” movement:
When, in 2017, Sainsbury’s announced that it was planning to develop its own “fairly traded” mark, more than 100,000 people signed a petition condemning the move. Today, on the eve of Fairtrade Fortnight, the fact that most supermarkets have moved away from the standards developed by the Fairtrade Foundation is worrying.
While some grocery chains have sought the foundation’s stamp of approval, many have gone their own way. This means most consumers have little sense of which organisation is doing what to protect the wages and rights of developing world workers. Over the next two weeks, the foundation plans to focus its publicity efforts on cocoa farmers in west Africa and the way the Fairtrade mark can improve their lives.[…]
That is a sad situation. After the great financial crash of 2008, a commodity boom that lasted from 2013 to 2017 turned into a slump that has robbed farmers and developing world governments of vital cash. Just as they were managing to stabilise their finances and set aside money to invest, the world price tumbled and wiped out their profit. Fairtrade practices protect farmers from this sort of setback and allow them to plan for the future.
Of course they have their critics. These are most mostly from the US – people who favour unfettered markets and seek to undermine the Fairtrade ideal, saying it is a form of protectionism that dampens innovation and ultimately ruins farms.
Theirs is an almost religious adherence to the free market that discounts the gains in stability and security that Fairtrade provides, and the scope of the community premium to promote universal education and the rights of women.
But without large employers making strides to adopt the standardised and transparent Fairtrade practices put forward by the foundation, it will be left to consumers to drive the project forward.
At the Continental Telegraph, Tim Worstall responds:
The Guardian tells us that the Great White Hope of global trade, Fairtrade, isn’t in fact working. On the basis that no one seems to be doing very much of it. To which the answer is great – for the only fair trade is laissez faire.
This does not mean that Fairtrade should not have been tried – to insist upon that would be to breach our basic insistence upon the value of peeps just getting on with doing what they want, laissez faire itself. But the very value of that last is that we go try things out, see whether they work and if they don’t we stop doing them. If they do then great, we do more of them.
[…]
So, trying out Fairtrade, why not? Let’s go see how many other people feel the same way? In exactly the same way we find out whether people like Pet Rocks, skunk or Simon Cowell. Product gets put on the market we see whether it adds to human welfare or not. If people value it – and revealed preferences please, by actually buying it – at more than the use of those scarce resources in other uses then that’s adding to human welfare and long may it thrive. If it doesn’t, if it’s subtracting value from the human experience, then we’ll stop doing it as those trying go bust.
This is not an aberration of the system it is the system and it’s why laissez faire works. Peeps get to do whatever and we keep doing more of what works, less of what doesn’t.
Fairtrade? No, I never thought it was going to work as anything other than virtue signalling for Tarquin and Jocasta but that’s fine. Why shouldn’t Tarquin and Jocasta gain their jollies by virtue signalling? As it turns out, now that we’ve tried it, no one else gives a faeces*. So, we can stop. Except, obviously enough, for those specialist outlets like the Co Op where the odd can still gain their jollies. It being that very mark of a laissez faire, liberal, society that the jollies of the odd are still catered to in due proportion to the desire for them.
*From Gibbon, all the fun stuff’s in Latin.
February 25, 2019
“Alexandria Ocasio-Cortez [is] doing for America what Jeremy Corbyn has done for Britain”
Alex Noble sings the praises of Alexandria Ocasio-Cortez as she does the heavy lifting to bring awareness of socialism to the American people:
Alexandria Ocasio-Cortez speaking at the Reardon Convention Center in Kansas City, on 20 July 2018.
Photo by Mark Dillman via Wikimedia Commons.
Good old Alexandria Ocasio-Cortez – she’s doing for America what Jeremy Corbyn has done for Britain. Much to the dismay of the secret socialists now entrenched in the Democrat Party, she is stripping away the protective layer of bullshit that socialism normally has to rely upon to keep people from understanding its inherent failings, and is thus laying it bare before the world.
Because she is too ignorant to understand them – she actually believes in socialism, and thinks that if only it is adequately explained to the rest of us, we will love it as she does.
She doesn’t know enough history to know that everyone over the age of forty has seen socialism tried a dozen times in their lifetimes. Her sales pitch is wasted on us – we’ve seen the results before.
So when she told Amazon that their particular brand of crony capitalism was not welcome in New York, she genuinely thought people would admire her.
Instead, even the crony capitalists on the Democrat side of the aisle (i.e those who understand how the game is really played) are very upset with her – she has driven away 25,000 jobs and all the
voteseconomic benefits that would have flowed from them.All because she thinks Amazon should pay more corporation tax.
QotD: Defining mineral reserves
The European chemists organisation – EuChemS – has just added to the torrent of environmental drivel with their new periodic table. They’re trying to tell us which elements are going to run out when and thus tell us all that we’ve got to recycle. The entire process is bunkum because they’ve not understood the first thing about the supply of minerals. They simply do not know the meaning of mineral reserve that is.
Just for the edification of anyone who does drool when contemplating their own nasal effluvia – you know, a member of Greenpeace, that sort of person – a mineral reserve is something we’ve proven, yes proven, that we can extract from using today’s technology, at today’s prices, and make a profit. It costs a lot of money to prove these facts. Thus we only prove for what we’re likely to use in the next few decades. Mineral reserves are, to a reasonable level of accuracy, just the working stock of current mines.
There is no relationship, no relationship at all, between our mineral reserves and how much of that element or mineral is available to us to use. Really do grasp this point. It’s not that the amount is larger. It’s not that the multiple is high. It’s that there is no relationship at all. There are, for example, absolutely no mineral reserves of hafnium anywhere on the planet. Nothing, absolutely nada. At current rates of usage we might run out some few billion years after the Sun goes Red Giant. The European Chemical Society tries to tell us that there’s a serious risk of running short of Hafnium in the next 100 years. This is so gibberingly stupid that it would get a laugh from German geologists – I know because I told some this once and they giggled. Seriously, German – German – geologists, giggling.
Tim Worstall, “More Environmental Drivel With New Periodic Table – We’re Going To Run Out Of Helium”, Continental Telegraph, 2019-01-23.
February 23, 2019
How a statistical error became the key argument in the “everyone must turn vegan” movement
At The Conversation, Frank M. Mitloehner explains how a flawed statistic — comparing numbers derived from non-parallel bases — evolved into one of the most widely quoted arguments for governments forcing people to give up meat in their diet:
As the scale and impacts of climate change become increasingly alarming, meat is a popular target for action. Advocates urge the public to eat less meat to save the environment. Some activists have called for taxing meat to reduce consumption of it.
A key claim underlying these arguments holds that globally, meat production generates more greenhouse gases than the entire transportation sector. However, this claim is demonstrably wrong, as I will show. And its persistence has led to false assumptions about the linkage between meat and climate change.
[…]
Global livestock production by region (milk and eggs expressed in protein terms).
Source: United Nations Food and Agriculture Organization.Setting the record straight on meat and greenhouse gases
A healthy portion of meat’s bad rap centers on the assertion that livestock is the largest source of greenhouse gases worldwide. For example, a 2009 analysis published by the Washington, D.C.-based Worldwatch Institute asserted that 51 percent of global GHG emissions come from rearing and processing livestock.According to the U.S. Environmental Protection Agency, the largest sources of U.S. GHG emissions in 2016 were electricity production (28 percent of total emissions), transportation (28 percent) and industry (22 percent). All of agriculture accounted for a total of 9 percent. All of animal agriculture contributes less than half of this amount, representing 3.9 percent of total U.S. greenhouse gas emissions. That’s very different from claiming livestock represents as much or more than transportation.
Why the misconception? In 2006 the United Nations Food and Agriculture Organization published a study titled “Livestock’s Long Shadow,” which received widespread international attention. It stated that livestock produced a staggering 18 percent of the world’s greenhouse gas emissions. The agency drew a startling conclusion: Livestock was doing more to harm the climate than all modes of transportation combined.
This latter claim was wrong, and has since been corrected by Henning Steinfeld, the report’s senior author. The problem was that FAO analysts used a comprehensive life-cycle assessment to study the climate impact of livestock, but a different method when they analyzed transportation.
For livestock, they considered every factor associated with producing meat. This included emissions from fertilizer production, converting land from forests to pastures, growing feed, and direct emissions from animals (belching and manure) from birth to death.
However, when they looked at transportation’s carbon footprint, they ignored impacts on the climate from manufacturing vehicle materials and parts, assembling vehicles and maintaining roads, bridges and airports. Instead, they only considered the exhaust emitted by finished cars, trucks, trains and planes. As a result, the FAO’s comparison of greenhouse gas emissions from livestock to those from transportation was greatly distorted.
February 18, 2019
Mis-measuring inequality
Tim Worstall explains why any protest in a western country about “inequality” is probably bogus from the get-go:
Their opening line, their justification:
We live in an age of astonishing inequality.
No, we don’t. We live in an age of astonishing and increasing equality. Thus any set of policies, any series of analysis, that flows from this misunderstanding of reality is going to be wrong.
And that’s all we really need to know about it all.
The problem is that their measurements – the ones they’re paying attention to – of inequality just aren’t the useful ones, the ones we’re interested in. They’re usually pre-tax, pre-benefits. They’re always pre-government supplied services. And they never, ever, look at the thing we’re actually interested in, inequality of living standards.
To give an example, the Trades Union Congress did a calculation a few years back looking at top 10% households in the UK and bottom 10%. They took the average of each decile – so, the average of the top 10% households, the average of the bottom. Then they looked at the ratio between them.
The top 10% gain some 12 times the market income of the bottom 10%. Now take account of taxes and benefits. Then add in the effects of the NHS, free education for all children and so on. Government services. We end up with a ratio of 4 to 1. Life as it’s actually lived gives the top 10% four times the final income – income being defined by consumption of course – of the bottom 10%.
That’s not a high level of inequality.
February 16, 2019
Indian government considers hiking the national minimum wage
Tim Worstall explains why this is a bad idea that won’t do much — if anything — to improve the lot of workers already earning the current minimum wage, and might well make things worse:
It’s not surprising that this is happening, India mooting a rise in the national minimum wage. There is, after all, an election in the offing. Just when we would expect crowd pleasing but bad ideas to surface. The problem here is that the Indian minimum wage is already too high. Increasing something that’s too high is not sensible policy. […]
Sure, we can declare a floor price and that will be valid wherever the government’s writ runs. Which, in the Indian economy, isn’t all that far.
The national minimum wage could be set at Rs 9,750 per month, almost double the current level, along with an additional Rs 55 per day of average HRA for urban workers, an expert committee has submitted. The January report, which went public for suggestions on Thursday, has also suggested an alternate plan, with a range of Rs 8,892-11,622 per month of national minimum wage for five different regions as they have diverse socio-economic and labour market situations, The Indian Express reported.
The specific details don’t matter all that much because the Indian government isn’t that powerful in economic matters.
The point being that any formal minimum wage will only apply to people in the formal economy. Depending upon who you want to believe between 80 and 90% of the Indian economy is over in the informal sector. That’s the part of the economy that doesn’t have health and safety standards, proper contracts and minimum wages. And our proof that the current minimum wage is too high is exactly that, that most of the economy isn’t in the formal sector where it applies.
In one manner raising that Indian minimum wage is an irrelevance because it affects so few people. In another it’s actively bad, as it makes it more expensive to join that formal economy, thus making it less likely. Thus it’s a bad idea either way. But you know, elections, politics.
February 15, 2019
European-style passenger railways don’t scale to North American distances
At PJ Media, Charlie Martin does a good job of showing why the fast, efficient passenger railways of Europe are not replicated in the US and Canada:
… the usual story is something like “the United States should have a world-class passenger train system, with high-speed rail like the French and Japanese have.” @AOC’s official-no-fake-no-just-a-draft-Republican-conspiracy-theory-why-are-you-all-being-mean? Green New Deal FAQ wanted one so good that air travel would become “unnecessary.”
Sounds great, and I love the covert “MAGA” aspect of the pitch, but it has one great big, pretty much insurmountable problem: America.
Not the country, the geography. People living on the coasts just don’t realize how big this country is. I was discussing it on Twitter with a Swiss who lives in Zürich who was telling me how great the Europeans trains are — and they really are comfortable, pretty fast, have great scenery to look at — but, well, let’s compare Colorado and Switzerland. Similar climate, mountains, pretty scenery, cranky natives who are suspicious of newcomers. But let’s go to the maps:
Colorado is 6.5 times as big, has 60 percent of the population — and, it happens, about two-thirds of the gross “national” product per capita.
Compare the lower 48 states with all of Western Europe:
The truth is, we’re in flyover country out here. The coastal clerisy don’t realize that on their five-hour flight from LAX to LGA they’re traveling 2,500 miles. Now, back in the days of the Super Chief and the 20th Century Limited, you could make that trip by train in only 76 hours, not counting changing trains in Chicago. (It takes longer on Amtrak.)
So, let’s say we could get high-speed trains for the whole trip that averaged 200 miles per hour, and could travel as the crow flies: that’s 12.5 hours.
Except of course you couldn’t because the crow is flying over some of the highest mountains in the country. You’re going to need rights of way, and you can’t use the rights of way that exist because they’re not suited for that kind of speed and they’re pretty full anyway. Also, it wouldn’t do to interrupt the existing freight lines, which actually are about as good as anywhere in the world.
