Quotulatiousness

August 9, 2021

The modern-day threat of being made an “unperson” is real and very dangerous

Sean Gabb explains why even libertarians need to consider the non-state power in the hands of corporations that can — and does — force people out of their jobs, their homes, and even deprive them of the ability to communicate or to access financial services merely for expressing unpopular opinions. As I said in a different venue, it’s a short step from “no fly lists” to “no eat lists”, especially when the enforcing entity is a nominally private organization:

John Stuart Mill (1806-1873)

The old pressures to conform were wrong. So are the new. And they are wrong simply because they are pressures to conform. I find myself at last appreciating a part of Mill’s essay On Liberty for which I never used to have much time. Until recently, I would insist that the only real oppression was by the State: all else was the working of private choice. If the authorities fined a man £5 for having sex with another man, that was outrageous tyranny. If his tastes became public knowledge, and he was unable to find work, that was merely unfortunate. This is, I still believe, essentially true. Indeed, I could argue that, without a State having centralised and corporatised powers of discrimination that ought to be widely distributed, there would be no problem — or there would be a problem that was bearable. But these powers were centralised and corporatised a long time ago. They are now being used to achieve a uniformity of opinion outside the home in which the formal organs of compulsion have no obvious part. This is not the “tyranny of the majority” that worried Mill. I find it inconceivable that anything close to a majority could believe the insane drivel pouring from the regime media. Neither, though, is it the kind of oppression against which liberal bills of rights have traditionally been written. Because of this —

    when society is itself the tyrant …, its means of tyrannising are not restricted to the acts which it may do by the hands of its political functionaries. Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough: there needs protection also against the tyranny of the prevailing opinion and feeling; against the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them …

    (J.S. Mill On Liberty, 1859, “Introductory“)

We need protection indeed. But the protection we need is not yet another law telling the police to leave dissidents alone. We already have a stack of these, and they are protections against a threat that largely does not exist. The answer, I suggest, is an amendment to the anti-discrimination laws to outlaw discrimination on the grounds of what may be loosely called political opinion.

I say hardly anyone read my original essay. Sadly, most of those who did read it stand in the more wooden reaches of the libertarian movement, and these set up a cry that I had become a Communist. I was suggesting that private organisations should be coerced in their choices of whom and whom not to employ, and even in their choices of customer and supplier. I had abandoned the non-aggression principle. Here, briefly expressed, is my answer to these claims.

I run the Centre for Ancient Studies. This provides a range of tuition services in Greek and Latin. It is a sole tradership. As such, I reserve the unconditional right to decide what services I offer and to whom. If I dislike the colour of your face, or the status of your foreskin, or your tastes in love, or anything else that I may think relevant, it should be my right not to do business with you. It may be that only a fool turns away customers with money to spend, and I am not that sort of a fool. Even so, I do claim at least the theoretical right, and I ground it on my right to do as I please with my own. But I claim these rights as a human individual. A limited company is not a human individual. Whatever entrepreneurship may exist in them, these companies are artificial persons and creatures of the State. Their owners have the privilege of limited liability. That is, they have the right, in the event of insolvency, not to pay the debts of a company if these are greater than the assets of the company. If this were not a valuable right, there would not be so many limited companies. There are almost no large companies, and none lasting more than a single generation, that do not have limited liability.

This being so, limited companies benefit from a grant of privilege from the State, and are legitimate subjects of regulation by the State for as long as they are receipt of this privilege. No doubt, some forms of state regulation are bad in their objects, or bad as regards the means to their objects. But regulation is not in itself an aggression by the State. It follows that, whether or not we can get it, libertarians should not feel barred from demanding laws to prevent limited companies from discriminating against their employees on the grounds of political opinion, and to require them to do business with customers and suppliers regardless of political opinion.

I appreciate that I am asking for more than the regulation of limited companies. The anti-discrimination laws we have make no distinction between incorporated and unincorporated associations. Even so, the extension of these laws to cover political opinion would mainly affect only the larger limited companies. At the same time, there is an obvious and overriding public interest in the protection of political opinion. People are now scared to speak their minds. Whether intended or just revealed, this is part of the strategy. The reason why the collapse of both freedom and tradition is gathering pace is because no one dares stand up and protest. In the absence of protest, everything will carry on as it is. Given a restored right of protest, there is a chance of stopping the collapse. The only way to lift the blanket of fear that now lies over all but approved opinion is somehow or other to get a law making it clear that no one who speaks his mind can be loaded with shadow punishments.

“Somehow or other!” In a sense, I am making a fool of myself. I am asking the politicians to make a law against what they themselves may not be doing, but that has no effect on their main reason for being in politics, which is to fill their pockets. I am asking them to take on the entire mass of the non-elected Establishment. I am asking a lot of these people. On the other hand, the politicians still need to be elected, and that was the weak point in the Establishment’s plan to stay in the European Union. We had to spend four years voting and revoting, but we did eventually get what we wanted. It is conceivable that, if enough of us call loudly enough for protection, some kind of protection will be granted.

Short of that, we are lost.

May 7, 2021

Scott Alexander reviews David Harvey’s A Brief History Of Neoliberalism

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

[Update: In the comments, “gunker” explains that this is another of Scott’s reader-contributed book reviews, not one of his own work. My apologies for the mistake.] After a quick rundown of the conventional explanation for the decline and fall of the comfortable post-WW2 US economy in the 1970s, Scott gives an overall appreciation of Harvey’s arguments:

… This treatment is almost the opposite of the way ABHoN describes events. Telling the story this way makes me feel like Jacques Derrida deconstructing some text to undermine the author and prove that they were arguing against themselves all along.

Harvey is an extreme conflict theorist. The story he wants to tell is the story of bad people destroying the paradise of embedded liberalism in order to line their own pockets and crush their opponents. At his best, he treats this as a thesis to be defended: embedded liberalism switched to neoliberalism not primarily because of sound economic policy, but because rich people forced the switch to “reassert class power”. At his worst, he forgets to argue the point, feeling it so deeply in his bones that it’s hard for him to believe anyone could really disagree. When he’s like this, he doesn’t analyze any of the economics too deeply; sure, rich people said something something economics, to justify their plot to immiserate the working classes, but we don’t believe them and we’re under no obligation to tease apart exactly what economic stuff they were talking about.

In these parts, ABHoN‘s modus operandi is to give a vague summary of what happened, then overload it with emotional language. Nobody in ABHoN ever cuts a budget, they savagely slash the budget, or cruelly decimate the budget, or otherwise [dramatic adverb] [dramatic verb] it. Nobody is ever against neoliberal reform — they bravely stand up to neoliberal reform, or valiantly resist neoliberal reform, or whatever. Nobody ever “makes” money, they “extract” it. So you read a superficial narrative of some historical event, with all the adverbs changed to more dramatic adverbs, and then a not-very-convincing discussion of why this was all about re-establishing plutocratic power at the end of it. This is basically an entire literary genre by now, and ABHoN fits squarely within it.

Harvey’s theses, framed uncharitably, are:

1. Embedded liberalism was great and completely sustainable. The global economic system collapsing in 1971 was probably just coincidence or something, and has no relevance to any debate about the relative merit of different economic paradigms.

2. Sure, some people say that the endless recession/stagflation/unemployment/bankruptcy/strikes of the 1970s were bad, but those people are would-be plutocrats trying to seize power and destroy the working class.

3. When cities, countries, etc, ran huge deficits and then couldn’t pay any of the money back, sometimes the banks that loaned them that money were against this. Sometimes they even asked those places to stop running huge deficits as a precondition for getting bailed out. This proves that bankers were plotting against the public and trying to form a dystopian plutocracy.

4. Since we have proven that neoliberalism is a sham with no advantages, we should switch back to embedded liberalism.

Let’s go through these one by one and see whether I’m being unfair.

November 25, 2020

Switzerland: Neutral or Nazi Ally? – WW2 Special

Filed under: Europe, Germany, History, Military, WW2 — Tags: , , , , — Nicholas @ 04:00

World War Two
Published 24 Nov 2020

After the fall of France in June 1940, neutral Switzerland found itself surrounded on all sides by a hostile expansionist power. The small nation would have been a valuable possession but the jaws of the Reich hesitated to swallow it. How did Switzerland manage to exit the conflict intact and largely unscathed?

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Cassowary Colorizations

Sources:
– Pictures of Swiss Army by Strübin Theodor courtesy of Archäologie und Museum Baselland Lizenzbedingungen
– Bundesarchiv
– Imperial War Museums: HU56131
– ETH-Bibliothek Zürich: 03258, LBS MH05-02-04, M01-0756-0001
– Fortepan:3889, 92301
– National Archives
– Staatsarchiv Bern – P362
– Plan of the defence lines of the National Redoubt courtesy of Auge=mit from Wikimedia Commons
– Picture of Swiss Soldiers with anti-aircraft gun courtesy of Paebi from Wikimedia Commons
– Picture of Swiss aircraft in 1943 from theM.Pilloud – Archive familiale
– United States Holocaust Memorial Museum

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– “Other Sides of Glory” – Fabien Tell
– “Moving to Disturbia” – Experia
– “Remembrance” – Fabien Tell

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A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

World War Two
1 hour ago
As we draw close to the end of 1941, it becomes clear that neutrality is not a guarantee of safety. Its utility as a diplomatic strategy has been discarded and is non-existent.

A total of 12 sovereign and neutral nations have been invaded by Allied or Axis powers since the beginning of the war — Denmark and Norway on 9 April 1940; Belgium, the Netherlands, Iceland and Luxembourg on 10 May 1940; Lithuania on 15 June 1940 and Latvia and Estonia on 17 June; Greece on 28 October 1940 and Yugoslavia in April 1941; Iran in August 1941. Even those that are spared are compelled to assist either the Allies or the Axis or both in financial and economic terms, such as Switzerland and Sweden. Others offer voluntary military assistance such as Portugal and Spain.

July 23, 2020

QotD: Herbert Hoover in Australia and China

Filed under: Australia, Business, China, History, Quotations, USA — Tags: , , , , , — Nicholas @ 01:00

Hoover graduates Stanford in 1895 with a Geology degree. He plans to work for the US Geological Survey, but the Panic of 1895 devastates government finances and his job is cancelled. Hoover hikes up and down the Sierra Nevadas looking for work as a mining engineer. When none materializes, he takes a job an ordinary miner, hoping to work his way up from the bottom […]

After a few months, he finds a position as a clerk at a top Bay Area mining firm. One year later, he is a senior mining engineer. He is moving up rapidly – but not rapidly enough for his purposes. An opportunity arises: London company Berwick Moreing is looking for someone to supervise their mines in the Australian Outback. Their only requirement is that he be at least 35 years old, experienced, and an engineer. Hoover (22 years old, <1 year experience, geology degree only) travels to Britain, strides into their office, and declares himself their man. The executives “professed astonishment at Americans’ ability to maintain their youthful appearance” (Hoover had told them he was 36), but hire him and send him on an ocean liner to Australia.

[…]

After a year, Hoover is the most hated person in Australia, and also doing amazing. His mines are producing more ore than ever before, at phenomenally low prices. He scouts out a run-down out-of-the-way gold mine, realized its potential before anyone else, bought it for a song, and raked in cash when it ended up the richest mine in Australia. He received promotion after promotion.

Success goes to his head and makes him paranoid. He starts plotting against his immediate boss, Berwick Moreing’s Australia chief Ernest Williams. Though Williams didn’t originally bear him any ill will, all the plotting eventually gets to him, and he arranges for Hoover to be transferred to China. Hoover is on board with this, since China is a lucrative market and the transfer feels like a promotion. He travels first back to Stanford – where he marries his college sweetheart Lou Henry – and then the two of them head to China.

China is Australia 2.0. Hoover hates everyone in the country and they hate him back […] The same conflicts are playing itself out on the world stage, as Chinese resentment at their would-be-colonizers boils over into the Boxer Rebellion. A cult with a great name – “Society Of Righteous And Harmonious Fists” – takes over the government and encourages angry mobs to go around killing Westerners. Thousands of Europeans, including Herbert and Lou, barricade themselves in the partly-Europeanized city of Tientsin to make a final last stand.

In between dodging artillery shells, Hoover furiously negotiates property deals with his fellow besiegees. He argues that if any of them survive, it will probably because Western powers invade China to save them. That means they will soon be operating under Western law, and people who had already sold their mines to Western companies would be ahead of the game and avoid involuntary confiscation. Somehow, everything comes up exactly how Hoover predicts. US Marines arrived in Tientsin to liberate the city (Hoover marches with them as their local guide) and he is ready to collect his winnings.

Problem: it turns out that “Whatever, sure, you can have my gold mine, we’re all going to die anyway” is not legally ironclad. Hoover, enraged as he watches apparently done deals slip through his fingers, reaches new levels of moral turpitude. He offers the Chinese great verbal deals, then gives them contracts with terrible deals, saying that this is some kind of quaint foreign custom and if they just sign the contract then the verbal deal will be the legally binding one (this is totally false). At one point, he literally holds up a property office with a gun to get the deed to a mine he wants. Somehow, after consecutively scamming half the population of China, he ends up with the rights to millions of dollars worth of mines. Berwick Moreing congratulates him and promotes him to managing director. He and Lou sail for London to live the lives of British corporate bigshots.

As you might also predict, Hoover manages to offend everyone in Britain. Soon he is signing off on a “mutually agreeable”, “amicable” dismissal from Berwick Moreing. They agree to let him go on the condition that he does not compete with them – a promise he breaks basically instantly. He goes into banking, and his “bank” funds mining operations in a way indistinguishable from being a mining conglomerate. Eventually he abandons even this fig leaf, and just does the mining directly.

In other ways, his tens of millions of dollars are mellowing him out. Over his years in London, he develops hobbies besides making money and crushing people. He starts a family; he and Lou have two sons, Herbert Jr and Allen. He even hosts dinner parties, very gradually working on the skill of getting through an entire meal without mortally offending any guest…

Scott Alexander, “Book Review: Hoover”, Slate Star Codex, 2020-03-17.

April 27, 2020

The Economy of Ancient Rome

Filed under: Economics, Europe, History — Tags: , , , , , — Nicholas @ 04:00

Economics Explained
Published 26 Apr 2020

Ancient Rome was perhaps the most significant ancient civilisation to have existed throughout history, the empire lived for over 1000 years and in that time, it gave us the foundations for our modern society. Democracy, a court based legal system, Latin languages and alphabet, three course meals, and perhaps it was one of the first modern economies to move beyond a simple agrarian empire and develop things like modern banking, lending, taxation and yes even financial crisis as we know them today.

In the same way that scholars study a dead language like Latin to discerned the foundation of meaning in our modern dialects economists can study the histories of ancient civilisations like Rome to determine basic economic functions in a time before modern financial systems could skew results and Rome was perhaps the most developed case study we could look at.

#rome #economics #recession

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Enquiries – loungejita@gmail.com

References –

Morley, N., 2002. Metropolis and hinterland: the city of Rome and the Italian economy, 200 BC-AD 200. Cambridge University Press.

Temin, P., 2006. “The economy of the early Roman Empire”. Journal of Economic Perspectives

Temin, P., 2017. The Roman market economy. Princeton University Press.

Garnsey, P., Hopkins, K. and Whittaker, C.R. eds., 1983. Trade in the ancient economy

Brown, P., 2012. Through the Eye of a Needle: Wealth, the Fall of Rome, and the Making of Christianity in the West, 350-550 AD. Princeton University Press.

Braund, D.C., 1983. Gabinius, Caesar, and the publicani of Judaea. Klio

Articles

http://penelope.uchicago.edu/Thayer/E…

https://www.rug.nl/ggdc/historicaldev…

https://www.pwc.com.au/publications/a…

March 12, 2020

QotD: Cryptocurrency versus cash in a modern economy

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

The new TV series Ozark has the best explanation of this I’ve seen in popular culture. To paraphrase: Say you have $1 million in cash. What can you actually do with it?

If you try to deposit it in the bank, they will file a report, and you will shortly be explaining to the government where that money came from. Unless you have a good explanation, you will then be desperately trying to hire a lawyer in order to avoid a trip to the pokey.

Nor can you simply buy a house or a car with that cash, which will raise many, many eyebrows at the bank, and then at the government that bank reports to. You basically can’t make any large purchase in cash without raising a lot of questions. This is why drug dealers spend so much effort figuring out how to launder their ill-gotten gains. Unless you can find some way to put the money in a bank without the government getting suspicious, then all you have, in the words of Jason Bateman’s character, is (approximately) “groceries and gas for the rest of your life.”

And that’s dollars, which are indisputably legal tender. Your cryptocurrency will be even harder to spend. Who wants to trade you legal cash for scrip that’s only good for buying on the black market? How do you find that person? What discount will they demand for giving up their cash?

Bitcoin is currently good for transferring money out of failing states like Venezuela, because in those places, the local currency is so worthless that you’re better off trading it for bitcoin, or for that matter, cans of mackerel. But that presumes there are countries elsewhere with stable governments and strong economies where bitcoins can be turned into real goods. If bitcoins become a good way to evade those governments, those governments will ban them, and desperate people will go back to smuggling diamonds and dollars.

Megan McArdle, “Bitcoin Is an Implausible Currency”, Bloomberg View, 2017-12-27.

January 18, 2020

Economic interventions during the Roman republic and empire

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

Even during the republican period, state intervention in the economy — usually to “fix” another problem already caused or exacerbated by previous interventions — often made the situation worse. Fortunately there’s a lot of ruin in a nation, but over a long enough run, you do reach the economic end-game:

“The Course of Empire – The Consummation of Empire” by Thomas Cole, one of a series of five paintings created between 1833 and 1836.
Wikimedia Commons.

Debt forgiveness in ancient Rome was a contentious issue that was enacted multiple times. One of the earliest Roman populist reformers, the tribune Licinius Stolo, passed a bill that was essentially a moratorium on debt around 367 BC, a time of economic uncertainty. The legislation enabled debtors to subtract the interest paid from the principal owed if the remainder was paid off within a three-year window. By 352 BC, the financial situation in Rome was still bleak, and the state treasury paid many defaulted private debts owed to the unfortunate lenders. It was assumed that the debtors would eventually repay the state, but if you think they did, then you probably think Greece is a good credit risk today.

In 357 BC, the maximum permissible interest rate on loans was roughly 8 percent. Ten years later, this was considered insufficient, so Roman administrators lowered the cap to 4 percent. By 342, the successive reductions apparently failed to mollify the debtors or satisfactorily ease economic tensions, so interest on loans was abolished altogether. To no one’s surprise, creditors began to refuse to loan money. The law banning interest became completely ignored in time.

The original “dole” was implemented as part of the reforms of the Gracchi brothers, and quickly became a major part of government spending:

Gaius, incidentally, also passed Rome’s first subsidized food program, which provided discounted grain to many citizens. Initially, Romans dedicated to the ideal of self-reliance were shocked at the concept of mandated welfare, but before long, tens of thousands were receiving subsidized food, and not just the needy. Any Roman citizen who stood in the grain lines was entitled to assistance. One rich consul named Piso, who opposed the grain dole, was spotted waiting for the discounted food. He stated that if his wealth was going to be redistributed, then he intended on getting his share of grain.

By the third century AD, the food program had been amended multiple times. Discounted grain was replaced with entirely free grain, and at its peak, a third of Rome took advantage of the program. It became a hereditary privilege, passed down from parent to child. Other foodstuffs, including olive oil, pork, and salt, were regularly incorporated into the dole. The program ballooned until it was the second-largest expenditure in the imperial budget, behind the military. It failed to serve as a temporary safety net; like many government programs, it became perpetual assistance for a permanent constituency who felt entitled to its benefits.

In the imperial government, economic interventions were part and parcel of the role of the emperor:

In 33 AD, half a century after the collapse of the republic, Emperor Tiberius faced a panic in the banking industry. He responded by providing a massive bailout of interest-free loans to bankers in an attempt to stabilize the market. Over 80 years later, Emperor Hadrian unilaterally forgave 225 million denarii in back taxes for many Romans, fostering resentment among others who had painstakingly paid their tax burdens in full.

Emperor Trajan conquered Dacia (modern Romania) early in the second century AD, flooding state coffers with booty. With this treasure trove, he funded a social program, the alimenta, which competed with private banking institutions by providing low-interest loans to landowners while the interest benefited underprivileged children. Trajan’s successors continued this program until the devaluation of the denarius, the Roman currency, rendered the alimenta defunct.

By 301 AD, while Emperor Diocletian was restructuring the government, the military, and the economy, he issued the famous Edict of Maximum Prices. Rome had become a totalitarian state that blamed many of its economic woes on supposed greedy profiteers. The edict defined the maximum prices and wages for goods and services. Failure to obey was punishable by death. Again, to no one’s surprise, many vendors refused to sell their goods at the set prices, and within a few years, Romans were ignoring the edict.

Actually that last sentence rather understates the situation. The Wikipedia entry describes the outcome of the Edict:

The Edict was counterproductive and deepened the existing crisis, jeopardizing the Roman economy even further. Diocletian’s mass minting of coins of low metallic value continued to increase inflation, and the maximum prices in the Edict were apparently too low.

Merchants either stopped producing goods, sold their goods illegally, or used barter. The Edict tended to disrupt trade and commerce, especially among merchants. It is safe to assume that a black market economy evolved out of the edict at least between merchants.

Sometimes entire towns could no longer afford to produce trade goods. Because the Edict also set limits on wages, those who had fixed salaries (especially soldiers) found that their money was increasingly worthless as the artificial prices did not reflect actual costs.

January 11, 2020

The bubbly 1720s

Filed under: Americas, Britain, Business, Economics, France, Government, History — Tags: , , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes looks at Britain’s volatile financial scene in the 1720s:

William Hogarth – The South Sea Scheme, 1721. In the bottom left corner are Protestant, Catholic, and Jewish figures gambling, while in the middle there is a huge machine, like a merry-go-round, which people are boarding. At the top is a goat, written below which is “Who’l Ride”. The people are scattered around the picture with a sense of disorder, while the progress of the well-dressed people towards the ride in the middle represents the foolishness of the crowd in buying stock in the South Sea Company, which spent more time issuing stock than anything else.
Scanned from The genius of William Hogarth or Hogarth’s Graphical Works via Wikimedia Commons.

Over in France, a Scottish banker named John Law had in the late 1710s overseen an ambitious scheme to reorganise the government’s finances. He ran the Mississippi Company, one of the many companies with monopolies on France’s international trade. His scheme was for the company to acquire all of the other similar monopolies, so that it could have a monopoly on all of the country’s intercontinental trade routes. By 1719, the Mississippi Company had swelled into a Company of the Indies, which in turn had purchased the right to collect French taxes, from which it took took its own cut. In exchange for acquiring these monopolies, Law’s new super-monopoly would buy up the French government’s accumulated war debts, allowing repayment on more generous terms. By allowing the state to borrow more cheaply, the scheme was to be a key plank in improving French military might.

Meanwhile, in Britain, a very similar project was afoot. Following the War of the Spanish Succession, one of the things Britain won from France was the asiento – the monopoly on supplying African slaves to Spain’s colonies in America. The asiento was given to the South Sea Company, which had the monopoly on British trade with South America, and which in 1720 began to follow a scheme similar to Law’s. Given developments in France, it would not do for the British state to be left behind in terms of its capacity to take on more debt for war. Thus, with political support, the South Sea Company began to buy up the government’s debt, persuading its creditors to exchange that debt for increasingly valuable company shares.

In 1720, both schemes came crashing down. In the case of Law’s scheme, he had printed paper currency with which people could buy his company’s shares, but in 1720 discovered he had printed too much. When he prudently tried to devalue the company’s shares to match the quantity of paper notes, the devaluation spun out of control. In the case of the South Sea Company, the causes of the crash were a little more mysterious, perhaps even verging on the mundane. One explanation is that too many wealthy investors simply tried to sell their shares so that they would have ready cash to spend on holidaying in Europe, precipitating a minor fall in the share price which then led to a more widespread panic. Regardless, it did not end well. The company itself continued for many years thereafter — it even got involved with whaling off the coast of Greenland — but the collapse of its share price ended its chance to restructure the government’s debts.

October 29, 2019

QotD: The financial crisis of 33AD

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

Let us next take a brief but important notice in Tacitus, for the year 33 AD:

    Meanwhile a powerful host of accusers fell with sudden fury on the class which systematically increased its wealth by usury in defiance of a law passed by Caesar the Dictator defining the terms of lending money and of holding estates in Italy, a law long obsolete because the public good is sacrificed to private interest. The curse of usury was indeed of old standing in Rome and a most frequent cause of sedition and discord, and it was therefore repressed even in the early days of a less corrupt morality. First, the Twelve Tables prohibited any one from exacting more than 10 per cent., when, previously, the rate had depended on the caprice of the wealthy. Subsequently, by a bill brought in by the tribunes, interest was reduced to half that amount, and finally compound interest was wholly forbidden. A check too was put by several enactments of the people on evasions which, though continually put down, still, through strange artifices, reappeared. On this occasion, however, Gracchus, the praetor, to whose jurisdiction the inquiry had fallen, felt himself compelled by the number of persons endangered to refer the matter to the Senate. In their dismay the senators, not one of whom was free from similar guilt, threw themselves on the emperor’s indulgence. He yielded, and a year and six months were granted, within which every one was to settle his private accounts conformably to the requirements of the law.

    Hence followed a scarcity of money, a great shock being given to all credit, the current coin too, in consequence of the conviction of so many persons and the sale of their property, being locked up in the imperial treasury or the public exchequer. To meet this, the Senate had directed that every creditor should have two-thirds of his capital secured on estates in Italy. Creditors however were suing for payment in full, and it was not respectable for persons when sued to break faith. So, at first, there were clamorous meetings and importunate entreaties; then noisy applications to the praetor’s court. And the very device intended as a remedy, the sale and purchase of estates, proved the contrary, as the usurers had hoarded up all their money for buying land. The facilities for selling were followed by a fall of prices, and the deeper a man was in debt, the more reluctantly did he part with his property, and many were utterly ruined. The destruction of private wealth precipitated the fall of rank and reputation, till at last the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount. Credit was thus restored, and gradually private lenders were found. The purchase too of estates was not carried out according to the letter of the Senate’s decree, rigour at the outset, as usual with such matters, becoming negligence in the end.

So far as we can understand what was happening, the passage largely explains itself. An old law restricting the rate of interest is suddenly revived. This invalidates a large class of loans above the official rate made on short term but renewable contracts. An indulgence is given of eighteen months, during which the now illegal loans are systematically called in. The result is a liquidity crisis in which land prices collapse. The crisis is dealt with by emergency lending by the Emperor.

There is nothing unusual about this sort of crisis. We are passing through something similar at the moment. What Tacitus is showing is a developed economy with much integration of capital and land markets. We can see how easily land can be sold, and how responsive prices are to the forces of demand and supply. Again, special pleading can be brought to bear on the story to try and minimise the extent of market behaviour. But, so far as this crisis can be analysed in terms of standard economic theory, the simplest explanation is to conclude that the economy of the early Roman Empire was, in its essentials, like that of the modern world.

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

October 18, 2019

The State of the US is Depressing | BETWEEN 2 WARS I 1933 Part 2 of 3

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

TimeGhost History
Published 17 Oct 2019

The American economy is in a state of despair. Mass unemployment and poverty sweep the lands. In 1933, a new President is elected, promising to change things for the better. His name is Franklin D. Roosevelt.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Subscribe to our World War Two series: https://www.youtube.com/c/worldwartwo…

Hosted by: Indy Neidell
Written by: Francis van Berkel and Spartacus Olsson
Directed by: Spartacus Olsson and Astrid Deinhard
Executive Producers: Bodo Rittenauer, Astrid Deinhard, Indy Neidell, Spartacus Olsson
Creative Producer: Joram Appel
Post-Production Director: Wieke Kapteijns
Research by: Francis van Berkel
Edited by: Wieke Kapteijns
Sound design: Marek Kaminski

Colorized pictures by Norman Steward, Daniel Weiss and Joram Appel.

Sources:

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

TimeGhost History
12 minutes ago (edited)
If you’re new here, you might not be familiar with Indy Neidell and his other work. Not only are we doing “Between Two Wars”, on the events and years leading up to World War Two (of which this video is a part), also we’re covering World War Two in realtime week-by-week, exactly 79 years after it all happened. We have now entered the second year of the war. If you haven’t already, check out the World War Two Channel for what maybe one day will become the most complete account of The Second World War: https://www.youtube.com/c/worldwartwo

Cheers,
Joram

October 15, 2019

The Fed as Lender of Last Resort

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

Marginal Revolution University
Published on 1 Aug 2017

If you heard a rumor that your bank was insolvent (in other words, it had more liabilities than assets), what would you do?

A typical reaction is to panic. What if you can’t get your money out? Your next step would likely be to try and get all of your cash in hand.

The rumor could even be false, but if enough people responded as if it were true, it would still spell trouble. Even solvent banks can have illiquid assets. If the bank can’t pay out to its depositors, the panic can spread.

This is where the Federal Reserve System comes into play. The Federal Deposit Insurance Corporation (FDIC) insures deposit accounts. And, if the insurance isn’t enough or the financial institution isn’t covered, the Fed can act as the “lender of last resort” – it can loan enough money to a bank to cover customers who want their cash.

Why does this happen? Well, panics can be a threat to the entire banking system. If one financial institution falls, even if it is insolvent, it can have a domino effect.

If you think through very recent U.S. history, you’ll quickly come up with some examples of the Fed intervening. During the 2008 financial crisis, the Fed, along with U.S. Treasury and FDIC, stepped in to “bail out” insolvent U.S. financial institutions to minimize systemic risk.

But what happens when you know that the government will clean up the mess if you make risky investments? This is certainly a big problem facing the Fed. We’ll discuss the consequences in detail in this video.

September 28, 2019

How the Federal Reserve Works: After the Great Recession

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

Marginal Revolution University
Published on 3 Apr 2018

In response to the Great Recession, the Federal Reserve has implemented some new instruments and policies – including quantitative easing, paying interest on reserves, and conducting repurchase (and reverse repurchase) agreements. In this video we cover how these tools work, and why they matter.

September 27, 2019

How the Federal Reserve Worked: Before the Great Recession

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

Marginal Revolution University
Published on 13 Mar 2018

The Federal Reserve has massive influence over the United States and global economy. But how the Fed uses its tools to stimulate or shrink aggregate demand has changed since the Great Recession. We’ll start by covering how it was done prior to 2008.

September 25, 2019

The Money Multiplier

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

Marginal Revolution University
Published on 25 Jul 2017

When you deposit money into a bank, do you know what happens to it? It doesn’t simply sit there. Banks are actually allowed to loan out up to 90% of their deposits. For every $10 that you deposit, only $1 is required to stay put.

This practice is known as fractional reserve banking. Now, it’s fairly rare for a bank to only have 10% in reserves, and the number fluctuates. Since checkable deposits are part of the U.S. money supplies, fractional reserve banking, as you might have guessed, can have a big impact on these supplies.

This is where the money multiplier comes into play. The money multiplier itself is straightforward: it equals 1 divided by the reserve ratio. If reserves are at 10%, the minimum amount required by the Fed, then the money multiplier is 10. So if a bank has $1 million in checkable deposits, it has $10 million to work with for stuff like loans and reserves.

Now, typically, the money multiplier is more like 3, because banks can always hold more in reserves than the minimum 10%. When the money multiplier is higher, like during a boom, this gives the Fed more leverage to move M1 and M2 with a small change in reserves. But when the multiplier is lower, such as during a recession, the Fed has less leverage and must push harder to wield its indirect influence over M1 and M2.

Next up, we’ll take a closer look at how the Fed controls the money supply and how that has changed since the Great Recession.

September 6, 2019

Germany Commits Suicide by Cancelling War Reparations | BETWEEN 2 WARS I 1931 Part 3 of 3

TimeGhost History
Published on 5 Sep 2019

Contrary to popular belief it is not so much reparations themselves that puts the first stepping stone in place for the Nazi to rise to power. Instead it is the cancellation of war reparations, or more correctly put; the measures that “The Hunger Chancellor” Heinrich Brüning implements to get reparations cancelled that pushes Germany over the financial brink and into the hands of Hitler and Goebbels.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Subscribe to our World War Two series: https://www.youtube.com/c/worldwartwo…

Hosted by: Indy Neidell
Written by: Spartacus Olsson and Francis van Berkel
Directed by: Spartacus Olsson and Astrid Deinhard
Executive Producers: Bodo Rittenauer, Astrid Deinhard, Indy Neidell, Spartacus Olsson
Creative Producer: Joram Appel
Post-Production Director: Wieke Kapteijns
Research by: Francis van Berkel and Spartacus Olsson
Edited by: Wieke Kapteijns and Daniel Weiss
Sound design: Iryna Dulka
Colorization by Daniel Weiss

Thumbnail: Goebbels colorized bu Olga Shirnina, aka Klimbim

Archive by Reuters/Screenocean http://www.screenocean.com

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

Sources:
Ruth Henig, The Weimar Republic 1919-1933
Theo Balderston, Economics and Politics in the Weimar Republic
Kolbe, The Weimar Republic
Harold James, The Causes of the German Banking Crisis of 1931
Feuchtwanger, From Weimar to Hitler

Sources images: Bundesarchiv

From the comments:

TimeGhost History
49 minutes ago (edited)

OK, so this video is about Naziism to some degree, it’s also a serious look at how Germany started transitioning into Naziism – this is not speculation, it’s not even very controversial, it just happens to not fit with many popular superficial misconceptions. Now, we love it when you guys debate under our videos, even when it’s in disagreement with something we or somebody else said, but before you do so please save us some time and read our rules and consider if your post is against our rules. If you think it might be, consider editing or just not posting it — otherwise you’re just wasting our time and your own — because no matter what, we will moderate this.

If your going to post that the Versailles Treaty was to blame you might want to read this instead: https://community.timeghost.tv/t/why-the-treaty-of-versailles-didnt-cause-naziism-answering-a-guy-on-youtube/1858 — that’s Indy’s extensive answer to that claim.

If you’re going to claim “Naziism was Left Wing” well you can do that, we don’t suppress opinions, not even silly ones, but we suggest that you read this instead: https://timeghost.tv/national-socialism-an-extreme-left-wing-ideology/ that’s Spartacus’s explanation why it is not considered so by historians (and why it’s not really that important).

If you’re going to praise Naziism or celebrate Communism, or propose that any other form of lethal extremism is a great idea — just don’t, we do remove any promotion for lethal anti-democratic ideologies, and will probably revoke your positing privileges.

If you’re going to start peddling conspiracy theories about Jews controlling [insert your crazy idea here] or “it was the Jews” — definitely don’t do that or it will be last thing you post here.

If you’re going to say that stopping German Communism is what caused Naziism — well you can do that … it’s pretty much wrong or at least a gross misrepresentation, and you’ll look like an idiot to anyone who knows their factual German history, but you can do that if publicly proclaiming ignorance is your thing — we would however suggest waiting for our next video on Germany’s elections in 1932 for a more correct take on that instead.

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