. . . the plundering, the lack of invention, the barbarians and above all Diocletian’s red tape did for Rome in the end. As the empire disintegrated under this bureaucratic burden, at least in the west, money lending at interest stopped and coins ceased to circulate so freely. In the Dark Ages that followed, because free trade became impossible, cities shrank, markets atrophied, merchants disappeared, literacy declined and — crudely speaking — once Goth, Hun and Vandal plundering had run its course, everybody had to go back to being self-sufficient again. Europe de-urbanised. Even Rome and Constantinople fell to a fraction of their former populations. Trade with Egypt and India largely dried up, especially once the Arabs took control of Alexandria, so that not only did oriental imports such as papyrus, spices and silk cease to appear, but those export-oriented plantations in Campania became the plots of subsistence farmers instead. In that sense, the decline of the Roman Empire turned consumer traders back into subsistence peasants. The Dark Ages were a massive experiment in the back-to-the-land hippy lifestyle (without the trust fund): you ground your own corn, sheared your own sheep, cured your own leather and cut your own wood. Any pathetic surplus you generated was confiscated to support a monk, or maybe you could occasionally sell something to buy a metal tool off a part-time blacksmith. Otherwise, subsistence replaced specialization.
Matt Ridley, The Rational Optimist: How Prosperity Evolves, p. 175
May 30, 2010
QotD: The first great back-to-the-land experiment
April 6, 2010
Recommended to your attention
A link from the latest Reason Online mailing led to this article, which is quite worth reading, if only for the pro-Canadian/anti-Soviet-Canuckistan comments:
The Hate-America-First outfit Heritage Foundation says the U.S. of A. may be a tad freer when it comes to economics than trans-fat-free Denmark, land of free speech for Islamo-dumbkopfs, but is less free than Canada, a country whose greatest export remains a former pitchman for Molson Export and one of
both ofthe stars of the original Star Trek series
And some of the amusing comments:
¢: I’ll assume they say Canada’s freer because it’s much, much whiter. White supremacists always rank Hong Kong at the top of things.
Ken Shultz: I don’t have the stats handy, but I think the notion of Canada being remarkably “white” is a bit of a misconception . . . especially if by “white” you mean some sort of uniform ethnicity.
From aboriginals and metis to the francophones in Quebec, and from the ethnic Chinese in Vancouver to the “Newfies”, I think Canada’s a lot more diverse than most Americans give them credit for.
It’s almost an American conceit, I guess, that when we look at the rest of the world, we don’t think it’s diverse unless more than 10% of the population is of African ancestry? [. . .]
dr duncan druhl: If you lived near Francophones, Francophiles, or just the French in general, trust me, you’d buy that they are a very distinct group. The ones in Canada are strange because they can’t stand the French because the France-French look down their nose at them for their strange dialect, which is probably as close to common street French from the 16th and 17th century as we’ll likely find anywhere.
creech: Canadians are too modest to start bragging about this. Canadian tax rates are such that the boss is starting to jigger intercompany pricing to move profit from the U.S. to Canada. Used to be the other way around.
Force shits upon Reason’s back: Canadians are too modest
Have you ever met a Canadian? They have many fine traits; modesty is not among them.
February 3, 2010
Canada’s economy judged (marginally) more free than the US
H/T to Power Line blog for the image.
December 16, 2009
QotD: The importance of markets
America debated three strategies during the Cold War. The Right wanted “roll back” — dreams of Patton driving his tank into Red Square. The Left wanted détente — which is French for “surrender.” The country loosely followed containment, a program outlined by George Kennan in 1946, which argued that the political contradictions of the Soviet state would eventually cause its own demise. America had but to be patient.
Kennan may have been the first to realize that a society based on Communism would not survive politically, but it was Ludwig von Mises, in his 1922 work Socialism, who demonstrated that any such society could not survive economically.
When a collection of free individuals — the market — is willing to pay a price for a product that creates “excess” profits, it signals producers to provide more of that product. If the market does not support a given price, producers are forced to redeploy their assets for more pressing social needs. Similarly, if a factor of production, such as labor or capital, changes in price, producers instantly react, sending signals — through the prices of intermediate goods — down to the consumer. Prices effortlessly allocate society’s assets to reflect consumer preference and adjust to accommodate the ever-changing availability of scarce resources.
Mises argued that governmental interference in prices, through taxation, subsidies, and regulation, complicates this process — affecting not only the consumption of final goods, but also the economic calculations that are necessary to provide intermediate goods and services. Higher-order division of labor fails. Poverty results. For example, while Chinese and Russian central planners were busy setting quotas for steel mills, there was no method for consumers to signal that they preferred food — and millions starved to death.
Dan Oliver Jr., “Socialism in Stages: Even soft, incremental expansions of government produce poverty”, National Review, 2009-12-15
November 5, 2009
Background on those “Cellared in Canada” wines
In his November Frugal Oenophile newsletter, Richard Best looks at the evolution of that blight on the Ontario wine industry, the “Cellared in Canada” designation:
For some time (since 1973 in fact), Ontario wineries have been allowed to import juice or wine from other countries and then bottle it as their own. Bottles containing mostly foreign wine were originally labeled Product of Canada. Then in 1993 Product of Canada was replaced by Cellared in Canada (CIC). So, what you’ve been reading and hearing about lately is that people don’t get it, and that in an effort to support the local wine industry, they’ve been buying CIC wines and unknowingly underwriting wine factories in California, Chile and elsewhere.
Why Did This Come About
In the beginning, Niagara had thousands of hectares of north American Labrusca grapes the likes of Concord and Niagara and even one called President (“President Champagne” anyone?) When better grapes came along, the Ontario government encouraged growers to grub up their Labrusca vines and replant with French-American hybrids, mostly Vidal, Seyval Blanc, Marechal Foch, and Baco Noir. Then in 1989 the government launched another grubbing up program when some die-hard wineries started planting European Vinifera grapes: Chardonnay, the Cabernets, and especially Riesling. (It’s interesting to note that government experts insisted for decades that Vinifera vines could never succeed in Ontario.)
So, what do you do when you’ve ripped out your vineyard and now must wait 3-5 years to harvest grapes? The simplest solution is to allow wineries to import even more wine with which to “extend” their remaining harvest. Now, the original plan was to phase out the imported wine, with a “sunset” in the year 2000. But by then a few large wineries had shifted their business plan from Canadian fine wine to cheap and cheerful jug wines (but without the jug, at least). It’s pretty hard to change a law that has allowed a few companies to grow rich and dominate the market, so the plan was carved in stone . . . soapstone, as it turns out.
In 1993, when Canada signed the Free Trade Agreement, Ontario put a cap on the entire wine business. Only wineries establish before NAFTA would be allowed to import wine for blending. Moreover, only these wineries could own multiple site licenses. So we now have a two-tiered system: wineries that can do pretty much what they want, and those that can do little more than pay the bills.
It’s hard to pretend that it’s a level playing field for the domestic wine producers when there clearly are two distinct classes enshrined in law.
To subscribe to Richard’s newsletter, send him an email at frugalwine@sympatico.ca with the word SUBSCRIBE in the subject line.
October 5, 2009
Publius reviews Fearful Symmetry by Brian Lee Crowley
I tend to avoid reading right-wing rants about Canada, having had a surfeit of them in my youth. Publius makes a case for Fearful Symmetry being, perhaps, an exception to my general rule:
Crowley, a founder and long-time head of the Atlantic Institute for Market Studies, has spent decades preaching the free market gospel in some of the most inhospitable climes in North America for such a message. The theme of the book is tradition, Canadian tradition. A mental framework that dominated the first century of Canada’s existence as a federal state. Thrift, family, economic individualism and small and limited governments were the hallmarks of Canada then. A confluence of two powerful forces, the first the entrance of the baby boomers into the workforce, and second the emergence of Quebec nationalism in the wake of the Quiet Revolution, provoked a dramatic – and detrimental change in public policy and cultural attitudes. Crowley does not dismiss the importance of ideas in the shift to bigger and more intrusive government. He notes that Canada’s volte face from its traditional approach was more dramatic than other nations with a similar history, notably the United States and Australia. Broad intellectual trends set the stage, but it was specific Canadian factors that gave us our current Canadian sized government.
Crowley begins with demography; the baby boom. A jump in the birth rate in the fifteen or so years after the end of the Second World War. This major blip in the demographic charts was more intense in Canada than elsewhere in the developed world.
[. . .]
Economists have blamed this liberalization for Canada’s higher structural unemployment over the last forty years. UI, over time, also acquired regional variations, being especially generous to underdeveloped parts of Canada. In tandem with liberalized UI, straight welfare was also expanded. Combined they produced a gigantic welfare trap. The end result can be seen in Margaret Wente’s notorious, though accurate, description of Newfoundland as “the most vast and scenic welfare ghetto in the world.” To finance this generosity the federal government expanded equalization, the transfer of wealth between the richer and poorer regions of Canada. Until the mid-1970s there were only two “have” provinces, Ontario and British Columbia. The main weight of equalization, however, fell upon the Dominion’s largest, richest and most industrialized province, Ontario. When the province’s premier in the 1960s, the charismatic John P Robarts, was questioned about the burdens of equalization, he justified it thusly: Ontario was in effect exporting purchasing power to the other regions of Canada.
August 17, 2009
I hope he’s right
Publius has some interesting insights into the evolution of the Canadian economy from highly dependent on regional conditions (that is, largely tied to US markets) to a more independent one:
What the FTA and NAFTA did was to help fundamentally restructure the Canadian economy over the last two decades. While economic nationalists warned of increased dependency on the American juggernaut, the exact opposite has happened. NAFTA in particular allowed Canada to follow the laws of comparative advantage, shifting our economy away from manufacturing toward services. Nations have historically traded with countries nearest to them due to obvious transaction costs. When the wealth of nations is increasingly intellectual (which includes figuring out how to extract natural resources), those transactional costs become nearly irrelevant. A service economy is one less dependent on trading with nearby partners, instead it can reach out to the world. Buoyed by Canada’s traditional strength in natural resources — fur, fish, timber, wheat and now oil — we have become to a surprising extent decoupled from the American economy. Even in bulk products like oil and minerals, our clients are increasingly global. There is a massive glut of cheap shipping — refer to the Baltic Dry Index — to take our natural bounty where ever customers beckon.
We weathered the 2001 American recession easily, and we are weathering this one rather well. Harper knows this. He knows Barack Obama is shackling and regulating the American economy into near term stagnation. In the past this would have proven disastrous for Canada, today it will be an advantage. For decades Britain and the City of London have proven a relative free market haven to international businesses seeking to invest in Europe. There is no reason Canada cannot, and will not, play that same role in North America. In a year or so Canada may very well be leading other OECD countries in economic growth, all while the American giant is stuck in a slow motion recovery. The Prime Minister’s moderately statist approach will seem to many voters as a work of pragmatic genius. Not too much intervention, not too little. Just right. Harper the Helmsman. More image than reality. Such is the game of politics.
