"National governments don’t actually oppose Labour policies… They just want to manage them"

"It simply isn’t good enough to paint a red Government blue, and then pretend it’s all fixed by endlessly promising to just ‘get things done’....
    "Every time I hear Chris Luxon say that the Labour ‘doesn’t get things done’, it terrifies me… Could he seriously want them to do more? ... We don’t need a Government that gets things done, we need a Government that does a lot less so that you can get things done....
    "The truth is, Labour won’t dump their own policy agenda.... A more likely scenario is that another Prime Minister Chris gets the chance to dump Labour’s destructive policies, in just 249 days’ time.
    "But even then, let’s be absolutely clear: A reversal is not guaranteed. If you doubt that, let history be your guide.
    "Five times National has vigorously opposed Labour’s policies from opposition and five times it has come to office and bedded them in.
    "That’s part of the reason we’re in this mess - National governments don’t actually oppose Labour policies… They just want to manage them..."

~ David Seymour from his speech 'The Road to Real Change'

"Competition Is the Antidote to Big Tech's Bad Behaviour, Not Politicians"

"Big Tech is a hot button issue, and prohibiting access is a big deal. But these companies have the right to do so ...
    "As long as a company isn’t physically or forcefully harming another individual or their property, the ability to intervene is limited until new legislation is enacted, and we should be wary of calling for further government interference and be mindful that new laws can backfire....
    “The best regulator of technology… is simply more technology. And despite fears that ... gatekeepers have closed networks that the next generation of entrepreneurs need to reach their audience, somehow they do it anyway — often embarrassingly fast, whether the presumed tyrant being deposed is a long-time incumbent or last year’s startup darling.”
    "[L]ike any vice that is in our life, individuals need to take on some personal accountability for what has transpired in the online and trading realms.
    "The power players didn’t achieve their status by force, and most allowed us access to their services for free (whether for tweeting our thoughts or jumping on a bandwagon for buying stock). It is the producers and users (composed of individuals) who have furthered such ventures....
    "If given a chance, the market will eventually provide solutions to many of the grievances stemming from Big Tech's clumsy efforts to control user content. Creative destruction will bring better processes. And Henry Hazlitt’s succinct words of wisdom are important to remember in situations such as this—'The 'private sector' of the economy is, in fact, the voluntary sector; and the 'public sector' is, in fact, the coercive sector.'
    "Solutions will arise as long as regulatory bodies are kept at bay and rational ethical entrepreneurs and innovators are left unbridled. What is needed now is true economic freedom (removing the incentive of cronyism and political policing) and the welcoming of enterprising individuals."

~ Kimberlee Josephson, from her article 'Why Competition Is the Antidote to Big Tech's Bad Behaviour, Not Politicians'

 

"Tribalism Divides Us — Only Individualism Can Unite Us"

"There is no surer way to infect mankind with hatred — brute, blind, virulent hatred—than by splitting it into ethnic groups or tribes. If a man believes that his own character is determined at birth in some unknown, ineffable way, and that the characters of all strangers are determined in the same way — then no communication, no understanding, no persuasion is possible among them, only mutual fear, suspicion, and hatred. Tribal or ethnic rule has existed, at some time, in every part of the world, and, in some country, in every period of mankind’s history. The record of hatred [and its result] is always the same."

~ Ayn Rand, from her 1977 lecture 'Global Balkanisation,' examining the meaning of “ethnicity” and the consequences of “modern tribalism” in politics -- quoted in Tom Bowden's post 'Tribalism Divides Us — Only Individualism Can Unite Us'

"Reason Is Infinitely More Important Than Race"

"A commonality of skin colour and associated facial features is as nothing compared to the fact that human beings of all races share the faculty of reason. 

    "The former may allow for an interesting group photo once in a while. The latter is what underlies the accumulation and application of knowledge and gives to the members of all races the ability to produce the goods and services that the members of all races need and desire.
    "Every day the members of all races benefit from the work of the members of all other races in that greatest phenomenon of voluntary social cooperation, the division of labour and capitalism."

~ George Reisman, from his post 'Reason Is Infinitely More Important Than Race'

It's still the "chieftainship" that is the problem

 

THE NEW PRIME MINISTER heads up to Waitangi this week with all his hangers-on expecting, I daresay, to see his brief honeymoon period challenged by tribalists still aiming to be bridesmaids in some kind of ongoing "co-governance" nuptials between Crown and tribal "leaders." Whatever that much-battered word might mean.

Ever wondered why, in a world that's said to be about individuals and individual achievement, we still seem to have government support of a tribal system? Any challenge to which, even in the name of simple individualism, is branded "racist."

What happened? How come these putative leaders see no future for their own various hangers on except through government handouts? What happened to genuine independence?

THOUSANDS OF YEARS AGO, while European sailors were timidly tipping about the shores of the Mediterranean, terrified to leave sight of land for fear of who-knows-what beyond the horizon, intrepid Polynesian voyagers set out across the vast blue Pacific Ocean, half a hemisphere wide, to explore and occupy its many uncharted islands. Centuries later, as the world warmed, several of the most intrepid eventually discovered and settled in New Zealand. And then for just over five-hundred years, isolated from the rest of the world, they developed their own culture. They became Māori.

So in that great migration "out of Africa," these islands down here were the world's last great land-mass to be settled by human beings. And then, after half-a-century of autarchic ingenuity, they were almost the last to be brought back into the worldwide division-of-labour.

This sort of conquest and survival should be something to celebrate, no? The tale once proudly told of the Vikings of the Sunrise. Yet if the headlines are to be believed, the descendants of these former adventurers, the so-called tribal "leaders" of the day, see their own great conquest as creeping tribal capture of the government chequebook.

What a bunch of schmucks.

Tribal life

THESE SOUTH PACIFIC 'VIKINGS,' who were these islands' first settlers, were welcomed into the worldwide division-of-labour 250 years ago by explorers, whalers, sealers, timber-traders, and assorted beachcombers, wanderers and adventurers, who offered Māori things for their labour they'd never seen before. And in return for tools, technology and new foods they offered and sold them, Māori in return sold them trees and flax and kumara, and crewed ships, built houses and travelled the world.

But life down here was still mostly tribal -- serfs, and sometimes slaves, overseen by an aristocratic caste of mostly hereditary bossyboots.

However: The treaty signed at Waitangi by tribal chiefs and a recently-arrived Royal Naval captain promised all these New Zealanders their own Emancipation Proclamation, and held out hope of liberating tribal serfs from tribalism. Instead, 180 years later, we are barrelling down a path back to tribalism. Something Elizabeth Rata has called "neo-tribalism": the intentional production of a neo-tribal elite who are busily "marching through the institutions," in which they play "a decisive and self-interested role in controlling shifts in the interpretation of the treaty of Waitangi." [1]

The result: the empowerment of a neo-tribal elite, in which tribal leaders have the upper hand again. And instead of the hope and optimism of those early adventurers, the predominant emotions now are shame and guilt -- shame as a necessary precursor to this tribal shakedown.

Something clearly went wrong.

One reason is the way that treaty was written: hastily. It was written in just a few days by folk wholly unqualified to write a thing that some erroneously call the country's "founding document." It's not that, and never has been. And nor does it contain enough to merit that description.

But what it does have is the material which the neotribalists have been able to exploit. One of which is the problem of 'chieftainship.'

The problem of chieftainship

THE PROBLEM IS THIS: that instead of the treaty being written to protect individual Māori, it promised instead to placate tribal chiefs. It's right there in the wording and in all the arguments today about rangatiratanga. It's understandable. After all, it was their signatures the British Colonial Office was after before allowing colonisation here to receive their imprimatur. "Alive to the record of native extinction that had come with settlement in Tasmania and the Caribbean, and was threatened in Australia," the treaty's aim was to "recognise the rights of the Māori as subject in the agreement, with rights and interests to protect." [2] But in placating those chiefs of the 1840s, instead of promoting individualism and recognising real individual rights, the document has helped promote the neotribalism of today.

It's been argued -- and I've been one of those doing the arguing -- that the Treaty of Waitangi liberates individual Māori. It should have done -- it surely should have treated all Māori as individuals instead of as members of a tribe. But it really does nothing of the sort except by implication.

Instead, as written, it cemented in and buttressed the tribal leadership and communal structures that already existed here -- encouraging the survival of this wreck of a system until morphing, as it has done today, into this mongrelised sub-group of pseudo-aristocracy: of Neotribal Cronyism.

The problem was there from the start. One of the trade goods most sought after in these years of first contact was the musket. And Māori were devastated by the "musket wars" so eagerly embarked up on by every tribe -- eagerly, that is, until the corpses piling up became too much even their hardy stomachs. At which stage most simply hoped for some kind of peace.

But it wasn't individual Māori who had been trading for those muskets, it was the tribal leaders; and it was their own slaves and tribal "serfs" they put to work to cut and process the flax that bought the muskets (one ton of flax was said to buy one musket). And it was their own slaves they sometimes tattooed to "process" the slave into a shrunken head or mokomokai that could also be traded for muskets. (One mokomokai/one musket was said to be the going rate.) This first contact, and the Musket Wars that followed, only served to reinforce rather than diminish the tribal control -- and when a Treaty with Queen Victoria was offered, one primary motivation of trial chiefs to sign was to have the post-war peace enforced by these pakeha outsiders. Another was to preserve their own power, their rangatiratanga as tribal leaders.

Once they recognised what was on offer, the single sheet of parchment written up by William Hobson, James Freeman, James Busby, and Henry and Edward Williams, came as a boon to most of them.

The Offer

MĀORI IN 1840 GENERALLY paid more attention to oral discussion than to written documents, and there's enough evidence to suggest those wily old chiefs knew precisely what they were being offered at Waitangi: the protection of their own power.

As I'll explain here, in three short clauses and a preamble, what they discussed and what was read to them in 1840 was this [3]:

PREAMBLE

The treaty's preamble states the "concern to protect the chiefs and the subtribes of New Zealand" and the "desire to preserve their chieftainship." Nothing in that to promote or protect individualism. Everything to preserve "chieftainship" and to protect the chiefs in their rule.

CLAUSE 1

In Clause 1 the chiefs grant the Queen governorship -- kawanatanga -- over these islands. Non-chiefs, i.e., individual Māori, are neither asked about this nor recognised. Because they are not part of this agreement. 

CLAUSE 2

In Clause 2 the same theme is there again: ignoring the rights of individual Māori and protecting the chiefs in their land, forests and fisheries. Specifically, protecting "the chiefs, the subtribes and all the people of New Zealand in the unqualified exercise of their chieftainship [their tino rangatiratanga]" over all their various treasures -- while prohibiting their sale to anyone but the government. 

Yes, there's a mention there of "all the people of New Zealand" (tangata katoa o Nu Tirani). But unless you're a rangatira yourself, your own personal rangatiratanga was pretty close to zero. You didn't have any. 

So the effect of this clause (unless you're a rangatira yourself) is neither protection nor recognition of full ownership nor real property rights, except perhaps by implication. After all, Māori of 1840 had no such concept of rights, except perhaps for small personal possessions; and no words for "owner," so difficult for a translator to find one. Yes, they could express ownership for these small things at least -- the preposition na for example (or sometimes no), meaning 'belonging to.' [4] But the Williamses did not use these words. Instead, their agreement promised to protect only the unqualified exercise of chieftainship -- something not available to "all the people of New Zealand," even if they do get a mention, but only to those of that status. Only chiefs. 

So this promise of "rangatiratanga" undercuts everything else, as the chiefs themselves understood.

CLAUSE 3

Clause 3, however, appears to have something for everyone. Here we read the promise to "protect all the ordinary people of New Zealand," and to "give them" the "same rights and duties of citizenship as the people of England." (Ka tiakina e te Kuini o Ingarani nga tangata maori katoa o Nu Tirani ka tukua ki a ratou nga tikanga katoa rite tahi ki ana mea ki nga tangata o Ingarani.) Not to recognise rights, which is how it should have been written, but to give them, which makes them a political gift -- the gift of those who do exercise sovereignty by this treaty: the governor and the chiefs. 

And the translation (rendered above) is even worse. Lacking a word for "rights" -- the concept itself being only two centuries old, by then, and poorly understood even by those writing up these words -- the offer essentially reads as being to "protect all the natives of New Zealand" and to "grant them all the same conditions as she has for the people of England."

This is thin gruel indeed. 

And as any student of law or the history of feudalism or the welfare state might tell you, it's a very different thing for a government to promise to protect rights, than it is to promise to protect people. The former leads to a robust individualism; the latter to a wet mollycoddling paternalism.

And by then, with only one page of parchment, any hope of  an individualist interpretation of this Treaty is gone -- and those with "a decisive and self-interested role in controlling shifts in the interpretation of the Treaty of Waitangi" are now able to interpret this not as a promise of individual rights (since earlier clauses and the preamble take precedence), but instead as the chiefs essentially holding the rights of their people in trust, with the governor "being or becoming a 'father' for the Māori people." 

No surprise then that "this attitude has been held towards the person of the Crown down to the present day, shaping (according to the self-interested neotribalists who now interpret these things) "the continued expectations and commitments entailed in the Treaty." [2] 

It's evident from documents of the time that the Colonial Office in London had not intended to lock Māori up into that pre-existing tribal structure. Their intention was, as that last clause almost says, to recognise the same rights in every Māori as were enjoyed by all British citizens. 

But the treaty's wording and practice has essentially limited those rights while elevating chiefly status. It's the chieftainship, stupid. In other words: the problem is failing to properly recognise and to protect individual rights -- and instead to protect and nurture the status of those tribal leaders.

Is it any wonder today's tribal leaders favour the perpetuation of the tribal structure? Any surprise that the feudal structure continues? Or that today's neotribalists wish to continue benefiting from their feudal privileges of the past? With the government as "father" and taxpayer as today's serf ...

Poor drafting, poor treatment

WITHOUT A DOUBT, GOVERNMENT and the mostly-British settlers often treated Māori poorly in those early days. But the biggest structural harm was the failure to properly recognise them as individuals instead of as part of a tribe. By treating all Māori as part of a collective, there were few chances offered to change this trajectory -- and when they were tried, they were poorly done. The poor draftsmanship of this treaty is reflected in the poor treatment of Māori in those early days.

As a rights-respecting commentator says of the treatment of native Americans in the United States of America, "it could have been done in a more rational way, a much more rights-respecting way, and in a way that would have led to a lot less violence at the end of the day." (Later quotes are from this same source.) It could have been done here in a way that recognised Māori as individuals, with individual lives, rights and choices. But for the most part, it didn't.

Yes, colonisation here was far less violent here than in Australia, or in the Americas. And thank goodness for that. It was still not entirely peaceful here, but in the Americas and Australia it was savage -- particularly if you think of how the British treated the Aboriginals in Tasmania, or the Spaniards treated the natives of South America. And in the case of the US of A itself, "the American government made treaties with the Indians and then reneged on them whenever it was convenient to do so." [5]

Not so much here, at least. The treaty signed here was offered with the best of intentions, but the poorest of drafting. It barely lived up to the intention, and the neotribalists now exploit the drafting.

Individuals possess rights (not collectives)

But the biggest mistake, and the biggest ongoing tragedy -- there, as here -- is that the respective governments did not treat either Indians or Māori as individuals possessing rights. They treated them instead just as members of a tribe. Of a collective. Not as individuals with their own individual rights demanding recognition and protection, but as members of a tribe whose chief no longer held the power of life and death, but still held the power of property, and of making choices for them all.

And therefore [in the United States] all the deals, all the negotiations, were between the U.S. Government and a tribe -- a tribe who was fundamentally a collectivistic unit that was oppressing its individual members. And what the American government in my view should have done was in a sense annex the Indians into America, recognised their innate individual rights (the fact that every Indian like every human being on the planet has individual rights), protected those individual rights under the law, divvied up the property of the tribe among individuals (let American Indians own their own land, not just give it and have the tribes own reservations; the whole idea of reservations was a horrific idea).  They should have basically integrated Indians into American society: by treating them as individuals, by endorsing individualism among the Indians. And then, if the Indians then wanted to get together and live in a commune, then so be it.  But the American government's position should have been: "We are dealing with you as individuals. Here is your land; here is John Smith's land; here is somebody else's land... If you want to now unite those lands and do some collective-type stuff then that's your problem. But here's the benchmark: 'We're a country of individuals. That's the principle'."  And instead, they didn't do that. There was a lot of racism and there was a lot of just treating them as a collective and, as a consequence, slaughtering whole villages and so on.  Now, that is not to say that there weren't a lot of American Indians (and a lot of indigenous people around the Americas) who were very violent and needed to be dealt with violently. I'm not criticising violence when it was motivated by self-defence.      I am however criticising violence when it was not necessary for the defence of the European immigrants or settlers, and there was basically an attempt just to annihilate certain indigenous peoples.  And again that happened more in Latin America than it did in the United States of America. But it happened [in the US] as well. So, you know, it's a tragic part of history and to some extent inevitable because it seems to happen whenever a kind of a civilisation encounters barbaric tribes, barbaric peoples, that inevitably lands up in a physical violent struggle.      I think that particularly in the United States of America it could have been done in a more rational way, a much more rights-respecting way, and in a way that would have led to a lot less violence at the end of the day. [5]

Could it have been different here? Less violent? More rational? More rights-respecting? Yes. Yes, of course it could. But reinforcing tribalism today will not fix a single historic tragedy. And in any case, the guilt-ridden politics of today -- shaming today's New Zealanders by the actions of people in the past -- is not primarily about history anyway. 

The shaming of New Zealanders today is intended simply to precede and encourage their ongoing shakedown tomorrow. That's the effect of today's neotribalism: to put taxpayers on the hook for the perpetuation of this chiefly privilege.

Because, you see, in this new postmodern neo-tribal age of identity politics and cancel culture, history doesn't so much provide lessons from the past as an arsenal full of ideological weapons. The neotribalists, and their enablers, are happy to pick them up and use them. You should be ready to counter them.

* * * * * 

NOTES: 
1. Elizabeth Rata, '‘Marching through the Institutions’: The Neotribal Elite and the Treaty of Waitangi,' Sites (December 2005)
2. James Heartfield, The Aborigines' Protection Society: Humanitarian Imperialism in Australia, New Zealand, Fiji, Canada, South Africa, and the Congo, 1836-1909 (London, 2011) p. 126
3. Te Tiriti: Translation of the te reo Māori text by Hugh Kawharu
4. Raymond Firth, Economics of the New Zealand Maori (Wellington 1972), pp. 338-366 passim
5. Yaron Brook, 'Q: To what extent was the European treatment of the indigenous peoples of America immoral?' www. Peikoff.Com (3 August 2015)

NOTE:
Peter Winsley, for one has a different view, arguing that "Article Two transfers Magna Carta and English common law property rights to Māori. "

These tino rangitaranga rights over land and other properties (taonga) were given explicitly to individuals and whanau as well as chiefs and tribes...
Treaty of Waitangi settlements have so far focused on iwi or hapu on the assumption that these collectives will act for all their members. What is lost sight of is that individuals are specifically mentioned in Treaty Article Two, yet Treaty settlements have not been made to 
individuals. In a future post, this issue will be discussed...

By contrast, Ned Fletcher's recent book, The English Text of the Treaty of Waitangi, argues along similar line to those I've argued above (but, of course, in infinitely more detail -- his book is a fine piece of work). The difference between us, apart from his elevated scholarly stature, is that he evaluates the tribalism as positive and the promises made to reinforce tribalism by treaty to be good ones. I don't.

"Psychologically, [the goal] is the erosion of ambition."

 

"Politically, the goal of today's dominant trend is statism. Philosophically, the goal is the obliteration of reason; psychologically, it is the erosion of ambition.
    "The political goal presupposes the two others."

~ Ayn Rand, from her essay 'Tax Credits for Education,' included in the collection The Voice of Reason: Essays in Objectivist Thought  [hat tip Society for Reason]

 

Eco-Anxiety: "The kids are not alright"

[Pic from Zion Lights]

"The kids are not alright.
    "I know how they feel. I was anxious about the state of the planet from a young age and did everything I could to make a difference. I know many people think of activists as attention-seekers, and certainly, some of them have problems with inflated egos, but I was never driven by narcissism. I was driven by fear.
    "Anxiety, a feeling of helplessness, and fear.
    "Now that fear is widespread....
    "Out of desperation and fear, eco-anxious individuals are joining mainstream climate activist groups. I understand why: I’ve been there, done that, bought the rhetoric. But after two decades of taking action, it’s become clear that some groups are doing more harm than good....
    "The idea of being on a special mission to save humanity is one of the things that makes it so difficult to leave. We have a cause to win, only it isn’t winnable in any real sense, which means we are also trapped....
    "The late statistician Hans Rosling liked to point out that most people around the world incorrectly believe that the world is getting worse, when the contrary is true in many respects. In reality, data shows that extreme poverty is on the decline, access to education is on the rise, and global child mortality is on the decline.
    "This is crucial information for the young people who will inherit the world’s problems. How can we address important issues if we don’t understand what they are? And how can we reach out to people who have already succumbed to doomerism?
    "It is difficult, but not impossible....
    "As a mother of two young daughters, I do not wish to see my children, or their friends, experience eco-anxiety because they have been convinced that they don’t have a future....
    "The most powerful preventative method is to tell children positive stories about how much humankind has already achieved. This may not come naturally to you, but if you’re not doing it, you’re only a few steps away from doomerist territory yourself.
    "For many years I was surrounded by people who believe that humankind is a virus on the planet and that people deserve to be eradicated. This dark ideology is more common than you think, and it is easily reinforced by relentless bad news in the media. We must learn to tell better stories about humanity. Celebrate humankind and all of our achievements, and share this with your children. Because the truth is that the humans are alright."

~ Zion Lights, from her post 'In an era of eco-anxiety, how do we protect young people from the lure of doomerism?'

Is there a difference between a "market society" and a capitalist one? What exactly makes the difference that makes that difference, and on which side of that divide does, and will, China sit? Author of the book 'Is Capitalism Sustainable' Michael Munger answers in this guest post ...

China: A House Divided

BY MICHAEL MUNGER

THERE HAVE BEEN CLAIMS that China’s enormous economic growth and widely shared prosperity are the result of turning to capitalism. I think this is not true; China is not capitalist.

Of course, that depends on having a definition of capitalism that is clear, and that does not simply apply to all nations. It also requires a definition that is not so naively aspirational that no nation could satisfy the conditions to qualify as truly capitalist, because of the tendency toward cronyism in democracies.

I have come to think of it in terms of concentric circles, each smaller than, and fully contained in, the larger category. For me, the categories are exchange relations, market societies, and capitalism. All capitalist countries are market societies, and use exchange relations. But many market societies are not capitalist.

Exchange relations

EXCHANGE IS A MEANS of improving the welfare of both (all) parties to an exchange, if the exchange is voluntary. I have written a number of papers (this, and this) on the nature of “truly voluntary,” or euvoluntary, exchanges. Exchange that is not voluntary, but coerced by human agency, is theft. Such exchanges can look voluntary, if routinized over time, as in the case of Mancur Olson’s “stationary bandit.”

Voluntary exchange must leave the exchangers better off, because they are not obliged to exchange and yet choose to do so. The bases of voluntary exchange are three:

1. Different preferences, same endowments
2. Different endowments, same preferences
3. Division of labour, with specialisation that creates what looks like different endowments, on steroids

More simply, if I like bananas and you like oranges, and we both have bananas and oranges, then I’ll give up some of my oranges in exchange for your bananas, and we are both better off, even with the same total amount of stuff. If I have many bananas, and you have many oranges, and we both like fruit salad, again we exchange and we are both better off.

The really interesting example is the one that Adam Smith and David Ricardo described, resulting from division of labour and comparative advantage. If we were all clones, but specialised, we would soon have more stuff than if each of us supplied all of our own individual needs. And if that specialisation were further guided by differences in endowments, climate, natural resources, and local skills, the increase in the total amount of products available is redoubled and redoubled again.

Exchange is likely to have been common in the earliest days of human clans and tribes of hunter-gatherers. Groups of 150 roaming the terrain could likely find most of what they needed. But some people learned how to make clothing, and others learned how to make spear points and attach those sharpened stones to sticks to make spears. Division of labour, even at this level, rewarded tribes that fostered internal specialisation, so that the group could increase its total output.

But, as Adam Smith noted, division of labour is limited by the extent of the market. So the pressure to extend exchange beyond internal specialisation in a tribe created rewards to figuring out how to multiply transactions over greater distances and larger numbers of people who can specialise.

Market relations

EXCHANGE, IN THE SENSE of barter, is cumbersome, and transaction costs can hinder all but the simplest exchanges. Barter requires a “double coincidence of wants,” where I want what you have but we can only exchange if I happen to have something that you want in exchange, and we can find each other.

Markets are a subset of exchange relations where institutions have emerged, or perhaps been created, to reduce the transaction costs of impersonal and geographically extensive exchange. Some widely accepted currency, an accounting system, a shared system of weights and measures, and a system for adjudicating disputes over contract breaches using rules that are consistent and predictable, all transform simple exchange into something else entirely. Markets enable the degree of division of labour to reach much greater elaboration, and create much faster growth in the wealth of market participants. Adam Smith’s observation that division of labour is limited by the extent of the market is a recognition that increasing returns are not only the source of wealth, but a requirement that commercial society evolves institutions to handle the increased volume of trade, and the commodification of many aspects of human activity.

Capitalism

THE CONSTRAINT ON THE expansion of markets is partly the difficulty of extending shared commercial norms over physical and cultural distances. But markets and their consequent division of labour can also be held back by a lack of liquid capital. Physical capital is the buildings, machines, tools, and technology that increase the productivity of labor and foster the creation of products and services. Liquid capital is the product of saving, or foregone consumption, that allows entrepreneurs to use abstract value in the form of money to give physical form to their conceptions of production. The genius of capitalism in the US can be seen in Silicon Valley or Wall Street, where “venture capitalists” accept shares of ownership in a potential venture after they provide the liquidity that the entrepreneurial founders need to give their ideas physical shape and structure. This conversion of the capital structure from liquid form, which could be invested anywhere, into physical form, which is now at risk because it cannot be easily turned back into cash, is both the source of profit and the source of risk in a capitalist system.

Capitalism, however, also creates concentrations of economic power because of the ability of successful investors and entrepreneurs to gather large amounts of wealth. Ownership in a capitalist system is both the mechanism for raising liquid capital—by selling shares that are claims against the value of future profits—and a means of controlling substantial resources independent from state direction and control. The private ownership of tools and materials that characterise a market system are on a much smaller scale than the ownership of land and a controlling interest in the shares of joint stock corporations. Nations that do not have the corporate form of private ownership are likely to run up against capital constraints, as it is difficult to generate liquidity on a scale, and in a time frame, that allows the successful exploitation of profit opportunities.

So, is China Capitalist?

WHICH BRINGS ME BACK to the question posed at the outset: Is China capitalist? The answer is NO; China is a commercial market system, [what Ludwig Von Mises called a "hampered market"] but it is not capitalist. China’s great increase in total wealth, and the widely distributed nature of that increase in prosperity resulting in an unprecedented decline in poverty, were the product of the adoption of market reforms starting in 1978. There were some early hopes that China might continue to evolve in the direction of capitalism, but the government has (correctly) seen that actual capitalism would create what are, in effect, countervailing centers of power in great concentrations of wealth in the hands of owners of corporations.

Markets are systems that produce wealth and sharply reduce poverty. Capitalism is a system for raising liquid capital and creating countervailing power centers that constrain totalitarian aspirations of government. As long as the Chinese state is primarily centralized and authoritarian, capitalism will be blocked. But that means that Chinese economic growth will be strangled, as capital becomes more and more constrained.

To paraphrase Abraham Lincoln, the Chinese commercial state cannot stand divided against itself. China will not cease to exist, but it will cease to be divided. It will become all authoritarian, or it will become capitalist.

MICHAEL MUNGER is a Professor of Political Science, Economics, and Public Policy at Duke University and Senior Fellow of the American Institute for Economic Research.
His degrees are from Davidson College, Washingon University in St. Louis, and Washington University, and his books include the best-selling Is Capitalism Sustainable?.
Munger’s research interests include regulation, political institutions, and political economy.

This post first appeared at the AIER blog.

"The Phillips Curve model is wrong because Keynesians get causality reversed."

"In fact, the Keynesian Phillips curve model is simply wrong. It’s not wrong because there is no relationship between inflation and unemployment. A sharp fall in both wage and price inflation tends to be associated with a temporary rise in unemployment. Rather the Phillips Curve model is wrong because Keynesians get causality reversed. They assume that causation goes from economic overheating to wage and price inflation, whereas the opposite is more nearly true. To be precise, it is unexpected increases in nominal growth in spending that cause both rising inflation and falling unemployment."

~ Scott Sumner, from his post 'Fortunately, this isn't the Volcker disinflation'

"Tariffs are love."

"Inflation is high and the government says we’re in a cost-of-living crisis, with groceries and building materials front and centre. But those Korean companies’ roofing steel, along with galvanised wire from Malaysia and China, are hit with anti-dumping duties [by the NZ Government]. So you’re protected from affordable building products. Doesn’t it warm your heart? Tariffs are love."

~ Eric Crampton, from his post 'Cost of living absurdities'

"And all that extra aerosol matters, of course, because aerosols seed clouds, which change the weather."

"The science is settled, except we only just realised that the benzene and toluene gas over the vast Southern Ocean were not man-made pollutants after all, but were made by industrious phytoplankton. For the first time someone went and measured the benzene and toluene in the water and discovered that, instead of being a sink for human pollutants in the air above, the ocean was the source.
    "This matters because these two gases increased the amount of organic aerosols by, wait for it, between 8% and up to 80%, in bursts. And all that extra aerosol matters, of course, because aerosols seed clouds, which change the weather.
    "And the expert climate models, upon which a $1.5 Trillion dollar industry depends on for its very existence, did not know this. If hypothetically there has been less phytoplankton in the worlds oceans in the last few decades, there may also have been less cloud cover, and thus more warming. But who knows?
    "The modellers are always saying climate change can’t be natural because they can’t think of anything else that could have could have caused the warming, then people keep finding another factor they forgot to put in the models…"

~ Jo Nova, from her post 'Ocean life is seeding the clouds above it, and the modellers didn’t know'

Did someone say "Willy Jackson"?

"Benefits earmarked for a particular group are especially helpful for that group’s political leadership, even if these benefits are less valuable than alternative benefits the group might have obtained by alternative policies benefiting the society as a whole. Moreover, the attempt to obtain earmarked benefits may arouse far more opposition from other groups, therefore reducing the likelihood or the magnitude of such benefits, but they are still in the interest of the group’s political leaders. If the group benefits as members of the larger society, that is no feather in the cap of racial or ethnic leaders.....
    "In short, political 'solutions' tend to misconceive the basic issues. However, these misconceptions may serve the political leadership well, even if they are counterproductive for the racial or ethnic group in whose name they speak."

~ Thomas Sowell, from his book The Economics and Politics of Race: An International Perspective [hat tip Cafe Hayek]

 

"My conclusion isn’t just that ChatGPT is another con game—it’s the biggest one of them all."

"ChatGPT, the AI bot, [is] the hottest thing in tech right now.
    "Judging by my Twitter feed, ChatGPT is hotter than Wordle and Taylor Swift combined.
    "It’s even hotter than its predecessor Sam Bankman-Fried, who was doing something similar 12 months ago. ChatGPT is just better than SamFTX in every way. It can’t even be extradited—because it’s just a bot.
    "People love it. People have confidence in it.
    "They want to use it for everything—legal work, medical advice, term papers, or even writing Substack columns [like mine] ....
    "Instead of offering up my opinions on this, I’ll just share some tweets from knowledgeable observers who are starting to suspect the con.
    "I’ll let you decide for yourself whether this measures up to a confidence game....
    "My conclusion isn’t just that ChatGPT is another con game—it’s the biggest one of them all. Microsoft even wants to hand over its entire search engine to this AI bot. Premium subscriptions are already available.
    "Some of you will tell me that I’m making a hasty judgment. ChatGPT will get better, they say. It will get smarter.
    "That’s exactly what I’m afraid of. The ethics code should have been inserted at the ground level—but it wasn’t. At this point, incremental improvements only make it better at its confidence game.
    "But in one way, it’s all so fitting. The con artist always gives people exactly what they want. And in a post-truth society, nobody does this better than AI. So I predict great things for ChatGPT—at least in economic terms. It will certainly live up to Sneaky Pete’s standards:
    "'I give people confidence. They give me money.'"

~ Ted Gioia, from his post 'Introducing the Slickest Con Artist of All Time: Or ten tweets about ChatGPT'

"So what’s changed? The words have."

"Labour has a new leader which has given the country a new Prime Minister.
    "There’s also a new deputy and today we’ve got some new ministers.
    "But it’s not a new government.
    "Most of the new cabinet have been part of the team that’s been governing since 2017, and the rest of them are now into their third year in the current government.
    "So what’s changed?
    "The words have."

~ Eli Ludemann, from her post 'What’s changed?'

 

A philosopher's political spectrum...

 

Credit for the rankings goes to the freedom-loving philosopher Stephen Hicks, who shows some of his working here.

Some gratitude amidst the flooding

 

[Pic source Classic Kiwi]

Anger is said to be the second stage of grieving. The first stage however is denial.

It's natural, when disasters happen, to find someone to blame. To vent your anger. When a natural disaster happens, however, that's pretty pointless. It looks like anger redirected. Like trying to deny the reality of the disaster that's just happened.

I think we've seen a lot of that these lasts few days, which is certainly understandable. There have been many moments of humour in the sudden change in the city's landscape (kids and dogs playing in the floodwater*; people paragliding on the new Lake Domain; ) and at least one blessing (I for one can only celebrate the cancellation of the appalling Elton John) but for many it's been an unrelieved bloody disaster. Who wouldn't want to grieve, and to vent. To be angry at the folk you think caused it!

Sure, there is plenty of bureaucratic bungling in evidence around Auckland since last Friday -- much of it arguably because of Rodney Hide's super-sized bloody council (a predictable man-made disaster about whose formation I'm still angry). And much of it, too, because too many have come to expect far too much from government appointees and electees, as if the power of government somehow makes them all super-human and immune to common bloody sense (well, that last but at least is true). 

But what caused the disaster is not those non-entities, you know; it's all that bloody rain!

So the anger against Mayor Wayne Brown for saying this or not saying that -- or for not saying it early enough, or often enough -- looks to me more like anger redirected from the heavens, where the blame really lies for sending down rain in such 1-in-500 year buckets -- and against which there's really no point in ranting. That would literally be old men (and women) yelling at clouds.

We've had (and are still having, it seems) a disaster here in Auckland. A natural disaster. And it seems to me that instead of angry ranting about who said what to whom, and how, it may now be time to begin counting some blessings.

Reality has thrown at us Aucklanders rainfall of a magnitude that just isn't designed for. Engineer's design flood-resistant infrastructure for a 1-in-100 year event. Those buckets of rain represent something like a 1-in-500 year event. Rainfall of a magnitude that no stormwater or infrastructure engineer would have expected, or could realistically design for. Monsoon-level rain that's caused at least four deaths. And yet for all the many slips and outages, and the tragedy of those lives lost and the many homes, families and businesses disrupted, we've come through it a whole lot better than you might have expected.

With exceptions so notable as to be newsworthy, the vast majority of us are still supplied with water and power and refrigeration, and are as warm and dry as we want to be -- and able to offer help to those who aren't.

That it isn't a whole lot worse than it is is almost entirely due to the volunteers and emergency services who have responded to the disaster (who generally do get the praise they deserve at such times), and to the skill of our engineers in designing and building the infrastructure and flood measures that have coped with something well beyond their design load (who however are generally unsung).

The Auckland Domain's new lake, holding water (as designed)
to minimise the water's impact downhill otherwise [pic by Paul. D.]

Things like the culverts they've designed which are taking away the masses water; the nib walls, flood walls, stop banks and bunds that have kept water away from where it shouldn't be; the de-watering pipes in soft ground; the rain  gardens and water diversion devices, which help to slow down the damaging speed at which the water rushes past we fragile humans; there permeable paving that allows water to flow into the ground instead of in damaging sheets across it, and these down overloaded pipes; the work done over many years in identifying and re-engineering all these ways potentially the most dangerous places...

It's not straightforward. Many of the places most effected today were once swamps only a century-or-so ago, or are on soft land that's spent centuries frittering away, and nature is now doing its level best to return those places to their natural state. Yet despite the unprecedented scale of nature's efforts, well beyond what was designed for -- and with the effect of all that rainfall magnified by all the hard urban surfaces built across the city over the last century -- with some well-reported exceptions those places have all held.

[Pic source: Auckland Art Gallery – Toi o Tāmaki. Caption source: Te Ara]

We may not have, nor can afford, world-leading infrastructure. But despite this, that we aren't seeing huge casualty figures and an extremity of damage is something to applaud; applause directed especially to all those unsung engineers who so rarely receive any credit for anything -- and to the folk who created sufficient capital to put their ingenious design-work in place.

So as the city begins to endure the predicted second round of what reality can throw at us, I'm thinking that instead of anger at the grey ones for being as inept as always, we might instead direct more gratitude at those folk who deserve it.

It's time for us all to pause for a moment, and thank an engineer.

We may doubt the just proportion of good to ill.
There is much in nature against us. But we forget;
Take nature altogether since time began,
Including human nature, in peace and war,
And it must be a little more in favour of man,
Say a fraction of one percent at the very least,
Or our number living wouldn’t be steadily more,
Our hold on the planet wouldn’t have so increased.

~ Robert Frost

* * * *

* Kids, don't try this at home without washing your hands afterwards.

Trust the government, they said

"How much confidence should the public have in authorities managing natural disasters? Not much, judging by the farcical way in which the civil defence emergence in Auckland has played out.
    "The way authorities dealt with Auckland’s extreme weather on Friday illustrated how hit-and-miss our civil defence emergency system is. In particular, the communications failures made the crisis much worse than it needed to be.... All central and government agencies did a very bad job of communicating with Aucklanders on Friday evening.
    "Auckland’s Emergency Management proved particularly unhelpful to the public during the chaos of Friday.... As for New Zealand’s civil defence mobile phone message warning system, this failed to kick in. It only issued warnings to Aucklanders’ phones on Sunday night – over 48 hours too late.
    "Increasingly, the bureaucracy is being blamed for the poor management of Auckland’s weather disaster.... [T]oo often the system can become bureaupathic, with rules and procedures becoming more important than producing the right outcomes. Officials themselves can become more driven by self-interest than by serving the public interest....
    "We saw on Friday night that one of the worst examples of this was when Waka Kotahi – the government agency tasked with roads – logged off early in the disaster, tweeting that they were finishing for the night about 7:30pm, and leaving road users to their own devices.
    "Of course, the blame can’t be all shifted to the bureaucracy – the Mayor himself has proven to be the worst communicator of all.... Today’s 'Herald' editorial points out that Brown will be remembered for his 'tone-deaf' defence on Friday night that 'my role isn’t to rush out with buckets.'
    "Although the mayor [and] emergency systems and authorities obviously didn’t create the disaster, they had a responsibility to mitigate its worse effects, which they did not do...."

~ Bryce Edwards, from his post 'How authorities failed Aucklanders in an emergency'

"Finally, Jacinda herself said the abuse and threats had no effect on her retirement decision, and I believe her."

"Finally, Jacinda herself said the abuse and threats had no effect on her retirement decision, and I believe her. I do so as I’d picked her retirement on the date she announced it, on this site, back in 2021. Her behaviour last year bore that prediction out with seemingly non-stop indulgent last hurrah joy-riding international travelling with teams of colleagues at our expense.
    "Jacinda had been an MP for eleven years without making a mark then a series of improbable events flushed her from obscurity into the PM’s office and subsequently the international lime-light, all beginning with Winston’s shock enthroning her, motivated by revenge against the Nats.
    "Jacinda is a level-headed individual. She knew the adulation was ridiculous and said so to the 'Guardian' two years back, saying she lay awake at night suffering from imposter syndrome, once the absurd Joan of Arc Jacindamania rubbish began."

~ Bob Jones, from his post 'Anonymous Threats'

On peer-reviewed science: "The results are in. It failed."

"[T]he hypothesis seemed so obviously true: science will be better off if we have someone check every paper and reject the ones that don’t pass muster. They called it 'peer review.'
    "This was a massive change. From antiquity to modernity, scientists wrote letters and circulated monographs, and the main barriers stopping them from communicating their findings were the cost of paper, postage, or a printing press, or on rare occasions, the cost of a visit from the Catholic Church. Scientific journals appeared in the 1600s, but they operated more like magazines or newsletters, and their processes of picking articles ranged from 'we print whatever we get' to 'the editor asks his friend what he thinks' to 'the whole society votes.' Sometimes journals couldn’t get enough papers to publish, so editors had to go around begging their friends to submit manuscripts, or fill the space themselves. Scientific publishing remained a hodgepodge for centuries.
    "(Only one of Einstein’s papers was ever peer-reviewed, by the way, and he was so surprised and upset that he published his paper in a different journal instead.)
    "That all changed after World War II. Governments poured funding into research, and they convened 'peer reviewers' to ensure they weren’t wasting their money on foolish proposals. That funding turned into a deluge of papers, and journals that previously struggled to fill their pages now struggled to pick which articles to print. Reviewing papers before publication, which was 'quite rare' until the 1960s, became much more common. Then it became universal.
    "Now pretty much every journal uses outside experts to vet papers, and papers that don’t please reviewers get rejected. You can still write to your friends about your findings, but hiring committees and grant agencies act as if the only science that exists is the stuff published in peer-reviewed journals. This is the grand experiment we’ve been running for six decades.
    "The results are in. It failed....
    "[I]f peer review improved science, that should be pretty obvious, and we should be pretty upset and embarrassed if it didn’t.
    "It didn’t. In all sorts of different fields, research productivity has been flat or declining for decades, and peer review doesn’t seem to have changed that trend. New ideas are failing to displace older ones. Many peer-reviewed findings don’t replicate, and most of them may be straight-up false. When you ask scientists to rate 20th century discoveries in physics, medicine, and chemistry that won Nobel Prizes, they say the ones that came out before peer review are just as good or even better than the ones that came out afterward. In fact, you can’t even ask them to rate the Nobel Prize-winning discoveries from the 1990s and 2000s because there aren’t enough of them.
    "Of course, a lot of other stuff has changed since World War II. We did a terrible job running this experiment, so it’s all confounded. All we can say from these big trends is that we have no idea whether peer review helped; it might have hurt, it cost a ton, and the current state of the scientific literature is pretty abysmal. In this biz, we call this a total flop."

~ "postdoctoral research scholar" Adam Mastroianni on 'The Rise and Fall of Peer Review' (his follow-up post is here) [Hat tip Econ Log]

 

“Unlike government, a corporation has no legal authority to force anyone to do anything. Bottom line: If you don’t like a corporation, you can avoid it. You do not have this choice with government."

“Unlike government, a corporation has no legal authority to force anyone to do anything. It can’t tax you, arrest you, or conscript you. It can’t force you to work for it. It can’t force you to invest in it. It can’t force you to buy its products. [Anti-business author Joe] Bakan, however, says corporations 'determine what we eat, what we watch, what we wear, where we work, and what we do.' No, they don’t. They make us offers, which we can accept or refuse. But those offers give us countless options to improve our lives—options we wouldn’t have otherwise. Far from a threat, the earned economic power of corporations brings us great benefits.
    "People interact with corporations voluntarily. If a corporation sells a shoddy product, people can refrain from buying it. If it sets prices they regard as too high, they can negotiate or look for a better deal. If it pays low wages or lays off employees, they can work elsewhere or start their own business. If people think Google and Facebook collect too much personal data while failing to properly safeguard it, they can use other platforms or services. Bottom line: If you don’t like a corporation, you can avoid it. You do not have this choice with government, though. Ignore the IRS, and fines, penalties, or prison await you. You can opt out of Google and Facebook, but you can’t opt out of the surveillance dragnet of the [surveillance state].”

~ Michael Dahlen, from his article 'The Assault on Corporations'

"Society is nothing but the combination of individuals for cooperative effort." Meaning, we generally gain from the existence of others

“In the state of isolation, our wants exceed our productive capacities. By virtue of exchange, our productive capacities come to exceed our immediate wants. Implicit in exchange is division of labour...”

~ Frederic Bastiat, from his Economic Harmonies

“The individual lives and acts within society. But society is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individual men.”

~ Ludwig Von Mises, from, his book Human Action

“When you live in a rational society, where men are free to trade, you receive an incalculable bonus: the material value of your work is determined not only by your effort, but by the effort of the best productive minds who exist in the world around you. When you work in a modern factory, you are paid, not only for your labour, but for all the productive genius which has made that factory possible...”

~ Ayn Rand from her essay 'What is Capitalism?'

“Economic competition is not a process by which the success of the biologically fit brings about the extermination of the biologically weak. On the contrary, it is a process by which the success of better products and more efficient methods of production promotes the survival and well-being of all. It is a process in which the success of the more able raises the productivity and improves the standard of living of the less able....

    "So far from being the law of the jungle, the freedom of economic competition emerges as the true principle of the universal brotherhood of man.”

~ George Reisman, from his book Capitalism

"Economic competition is one of the unfortunate accidents of terminology; what it means is simply the freedom of individuals to cooperate through exchange with the others who offer (or accept) the best terms."

~ Frank Knight, from his 1944 lecture “The Planful Act: The Possibilities and Limitations of Collective Rationality,” as reprinted in Knight’s 1947 collection, Freedom and Reform [hat tip Cafe Hayek]

“The very fact that an exchange takes place is proof that there must necessarily be profit in it for both the contracting parties; otherwise it would not be made. Hence, every exchange represents two gains for humanity.”

- Etienne Bonnot de Condillac, from his Le commerce et le gouvernement considérés relativement l'un à l'autre