Tuesday, 1 April 2008
1. To the obvious frustration of many readers, one of those courses is George Reisman's self-study programme in economics, based on his book Capitalism: A Treatise in Economics -- which according to Nobel Laureate James Buchanan, deserves to take its place alongside that of Adam Smith's.
A crucial achievement of Reisman's -- one that puts him almost completely at odds with the 'thinkers' behind much of today's more mainstream neo-Keynesian economics -- is that his course (and his book) places the producer at the heart of the economic process.
This focus on production instead of consumption really does begin at the first page, right there in his definition of economics -- he defines economics as the science that studies the production of wealth under a system of division of labour. (You can compare his definition to some other commonly used definitions here, and reflect yourself on the implications of those differences.)
One major implication of this focus is his concern with just what exactly is required for the production of wealth under a system of division of labour to flourish. Rather than simply observing that producers produce and taking it for granted that they will continue no matter what is inflicted upon them -- which is the case with so many economists, who are only too happy to dream up and propose ever more imaginary restrictions -- Reisman instead is intensely concerned with the material, cultural and philosophical requirements of production.
Perhaps the most obvious requirement is that production itself be held as a value -- which means, he argues in our most recent lecture, that the requirements of human life be held as objectively valuable. (The end of economic activity therefore should be understand not in consumption as such, but more fundamentally as the furthering of human life and human values.) There are conditions under which the production of wealth under a system of division of labour is unable to flourish -- and here the student is invited to reflect on those parts of the contemporary world in which the the production of any kind of wealth is unable to flourish; these are without exeption those parts of the world in which the values of western civilisation (in brief: respect for logic, reason and individual rights) are spurned.
As he argued in our last lecture, the use of logic and reason and a respect for indidual rights crucially underpins the production of wealth, and are themselves objectively valuable. If the requirements of human life are recognised as being objectively valuable, then the value of western civilisation and the values that underpin it must itself be so recognised.
Consider the almost complete ignorance of those concepts in those parts of the world in which wealth is conspicuously absent, and the outright racist agenda of multiculturalism -- which blithely proclaims all cultures as equal, no matter how destructive to the human lives within them -- all but silences our ability to point this out. Reisman points out that to define 'culture' as being equivalent to race is to ignore the crucial truth that the life-saving values of western culture are open to anybody of any race who wishes to embrace them.
Fortunately, for readers unwilling to embrace this idea themselves, they can read the argument online in George Reisman's superb pamphlet 'Education and the Racist Road to Barbarism.'
I commend it to your attention.
2. The other course that I'm enjoying immensely is historian Scott Powell's 'entire history of the world course' (official title A First History for Adults) of which I'm presently just biting off a small morsel: his ten lectures on 'The Islamist Entanglement,' delivered by tele-conference. These are not just enjoyable, but as I go through the course I realise how necessary a thorough understanding of the history of the Middle East is to understanding its present state, and its possible futures.
The chief reason it's so enjoyable is not just Scott's abundant enthusiam, but his ability to explain history with both the detailed point-of-view necessary to seeing precisely who did what to whom and why, but also from the 'mountain-top' perspective necessary to integrate all the details, and draw all the wider implications therefrom.
The most recent lecture on Turkey's history will give you an example. As Scott titles his summary, 'Turkey Shows the Middle East’s Potential–and it Doesn’t Look Good.' A lesser historian would find it near impossible to describe and integrate the multitude of apparent contradictions about the most westernised, most advanced and most successful of all the Middle East's Islamic countries -- the benevolent dictator who secularised the country; the military dictatorships who frequently rescue Turkey from 'demise by democracy'; how Turkey's entry to the European Union could potentially destroy it ...
Scott's history-by-essentials offers the opportunity to see Turkey's future as the microsm of the Middle East's. It's a disquieting outlook.
But it's still not too late to sign up for either this ten-lecture course, or the whole First History for Adults. I can thoroughly recommend it.
I've taken some time away to rethink things, and I have to say upon close reflection that all my opponents are correct. About everything. I recant completely of all my former heresies, and hereby embrace all the contradictions of my former opponents. This I now believe:
- We are all our brother's keepers -- we must be forced to keep our brothers. Any other notion is immoral, not to say evil.
- It's sexist to say "brothers." It's judgemental to say "evil"!
- It's not my fault -- I was made that way. It's not bad behaviour, it's bad luck. No one is responsible for bad behaviour: We have no free will; society is to blame.
- We can't ever know anything about the past, we know nothing for certain about the present, but we can accurately project the future to three decimal places.
- There's no problems in Mathematics being silent to causality; reality itself is silent as to causality.
- Wot's reality?
- If it's in the models, then it must be right.
- If the UN says it, then it must be right.
- If it's in Wikipedia, then it has to be right (especially if the subject is controversial).
- If George Bush says it, then it has to be wrong (especially if the subject is controversial).
- Global warming is man-made. We did it. We did it here, we did it on Mars and Venus, we did it in the Medieval period, we did it in the early twentieth century. We are all to blame.
- Al Gore is always right. I love Saint Al, and look forward to helping him save the planet.
- The Greens are always right. I love Jeanette, and look forward to helping her clear her gorse.
- We have plenty of power, and no need to worry. All forms of alternative energy are absolutely reliable, but nuclear energy is not.
- But we are running out of resources, and the price system is incapable of letting us know in time. We are a virus on the planet and should be wiped out. (After you, please. I do believe in courtesy.)
- We have plenty of wealth in New Zealand, and no need to catch up with the rest of the developed world. In fact, no need even to be in the developed world. Industry is so last century.
- Islamist violence will go away if we just ignore it. Can't we just all get along?
- Crime will go away if we just ignore it. Can't we just stop being judgemental (see above under 'Society is to blame anyway.')
- Tax is good, and more tax is better. Except on Tuesdays.
- You didn't earn your money anyway - society let you have it. Be grateful.
- You can't run your own life; you need politicians and planners to run it for you. Be grateful.
- Minimum wage laws raise wages for everybody. We should raise minimum wages to twenty, thirty, forty dollars an hour -- and force all employers to hire extra staff. Be grateful we let you have staff ... or a business.
- The way to lower housing costs is to force house-builders to build low-cost houses. Building inspectors always know what they're doing.
- The way to lower the cost of land is to restrict its supply. Planners always know what they're doing.
- The way to lower the cost of money is to nationalise it. Central bankers always know what they're doing.
- The way to promote business activity is to increase compliance costs.
- The way to protect individual rights is for the government to redefine them.
- The way to protect individual responsibilities is for the government to assume them.
- Businessmen are all thieves. Thank goodness for bureaucrats.
- Politicians are all honest. Thank goodness journalists don't bother them with hard questions.
- Anonymous commenters are absolutely justified in insulting people who aren't themselves anonymous -- and absolutely correct to complain when other bloggers use obvious pseudonyms to protect themselves. Thank goodness we have unrueful people unwilling to put their name to their comments to keep the rest of us honest.
- Thank goodness too that we have sub-standard bloggers who, while unwilling to put their names to their own posts, are nonetheless willing to insist that political advertisers put their names and addresses on their ads.
- People are right to feel aggrieved when speakers at large functions don't personally stroke them. Thank goodness for sleazy con-men who do.
- Voters are right to feel aggrieved when politicians offer real choices. Thank goodness for sleazy con-men who don't.
- It's sexist to say "con-men."
- It's racist to say "one law for all." It's not racist however to say that one race should have special courts, special legal privileges, and special voting rights.
=> This I believe, on this date of April 1st, in the year of our Lord 2008 ... at least until midday anyway.UPDATE: The Museum of Hoaxes has history's all-time Top 100 April Fools Day hoaxes. My favourite was NPR Radio's 1992 announcement that, in a surprise move, Richard Nixon, was running for President again under the campaign slogan, "I didn't do anything wrong, and I won't do it again."
If it's wrong for Robert Mugabe to give stolen tractors and stolen farms to his supporters to buy their votes, why isn't it wrong for Helen Clark to give stolen money to her's to buy their's?
When will Winston give taxpayers back the $158,000 he stole from them last election to buy the baubles of office?
Why is it wrong for Frank Bainimarama to crack down on criticism of the government by censoring newspapers, but not wrong for Labour and the Greens to crack down on criticism of the government by introducing the Electoral Finance Act?
Will the new 15% R&D deduction introduced today cost more for businesses and the IRD to administer than it will save?
Will National's proposed new $50 'Victims of Crime Levy' cost more to collect then it will earn?
Who will the levies go to when people are arrested for victimless crimes?
Why do we have laws against victimless crimes?
When will the Warriors admit they've got no idea what they're doing?
When will John Key?
Answers on a postcard please.
Monday, 31 March 2008
Here's a letter to the head of the World Wildlife Fund that explains the precise nature of WWF's Earth Hour:
Dear Mr. Roberts:
You and members of your organization worry that industrialization and economic growth are harming the earth's environment. I worry that the intensifying hysteria about the state of the environment - and that the resulting hostility to economic growth - might harm humankind's prospects for comfortable, healthy, enjoyable, and long lives.
So I commend you on your "Earth Hour" effort. Persuading people across the globe to turn off lights for one hour supplies the perfect symbol for modern environmentalism: a collective effort to return humankind to the dark ages.
Donald J. Boudreaux
[Hat tip Anti Dismal]
Have you ever considered that all the arguments for the three percentage point cut in the company tax rate that's happening on Tuesday also exist for a three percentage point cut in every tax, thereafter -- and in fact for every further three percentage point cut after this one.
To be more precise, if one tranche of tax cuts of three percentage points is good, then successive tranches of three-percentage-point tax cuts is even better. If a tax cut on Tuesday is good, then another tax cut every day thereafter must surely be balm for the bottom line.
If a tax cut of three percentage points in the company tax rate is "good for investment," then so too is every further three percentage point cut in tax rates.
If a tax credit for research and development is "good for investment in research and development," then so too is every further tax credit for research and development.
If a tax cut of any size is good for low-wage earners to help them deal with cost and living increases, then so too is another cut in tax rates of the same size.
If the tax cuts that take effect on Tuesday "help provide a buffer against the expected economic slowdown," then how much better buffer would be provided by another tranche of tax cuts on Wednesday.
You see, all the arguments for this small cut in taxes that comes into force on Tuesday will exist the day after -- in other words, if tax cuts on Tuesday are good, then further tax cuts on Wednesday ... and Thursday ... and Friday ... are even better. Far from leaving opposition political parties 'no room to move' by introducing tax cuts in election year, Michael Cullen has offered any political party of principle the opportunity to go on, two, three or four steps even better -- if any such party existed.
What's wrong for example with successive three percentage point tax cuts sufficient to strangle government spending almost completely, and provide the spur to prosperity we so desperately need.
And no fear either with the sophism that "tax cuts cause inflation." That's nonsense. Tax cuts don't put extra cash in the economy the way the Reserve Bank or The Fed does when it prints money -- the money in your pocket from a tax cut is real money, your money, not the Reserve Bank's counterfeit capital -- what they do is change the entity that's spending your money. Instead of the government choosing where to put it, you do.
It's no more inflationary for you to spend your own money than it is for government to be spending it -- in fact, everything would suggest it's less inflationary for you to keep your money than for government to take it and spend it on inflating the bureaucracy: Individuals are more likely to save some of their money when more of it is left in their pocket, whereas governments are always better at spending binges; and companies allowed to keep more of their money are likely to plough it into reinvesting in their own prosperity -- and any extra spending is going to be on producer goods, not on the consumer goods on which the Reserve Bank bases its inflation figures.
Saturday, 29 March 2008
The latest copy of the sharpest, funniest, most daring, most honest, clearest thinking libertarian/Objectivist magazine around is quite literally hot off the press, and subscribers should be receiving their copies in the post from today -- and should hit these shops from Monday, if not before.
And if you just can't wait, you can (any minute now) download a digital copy from the Free Radical store, and a FREE A3 poster of that cover. Send one to your favourite political party leader. :-)
EDITOR, THE FREE RADICAL
Politics, Economics & Life as if Freedom Mattered
Friday, 28 March 2008
On our regular Friday avo Beer O'Clock posts, Neil from Real Beer brings you another beer reminiscence...
Today we dip back into the orange folder of beer reviews clearly marked “reviews to write up” although the ink is beginning to fade with age. Sorting through the papers, it is amazing how many of the beers we reviewed have subsequently disappeared – Katipo in Wellington and Pilot Bay in Auckland have shut their doors to name just two. It is also clear when one of the review panel had returned from overseas with a satchel of exotic lager because there is sudden rush of very rare beers from France or Australia.
We start off cheap and cheerful with Stag Lager (4%). If you pay more than a dollar a can for this stuff someone saw you coming. It is a plain, easy drinking lager. There may be a hint of malt sweetness and the suggestion of hops but nothing genuinely flavourful to slow you down. Perhaps the fact it was reviewed over fish and chips while watching the Hurricanes win may have influenced the results but this was better than expected. The average mark was 4 out of 10.
Next up is an “ale which looks like a stout” – the very dark Harrington’s Big John Special Reserve (6.5%). It throws a delightful burnt toffee nose. The beer has a depth of well rounded sweet flavours before moving onto a light hop finish. A lot happens in a mouthful. Flash notes that he would not want to overdo this beer but a couple would be good. It certainly warms you up after a cold day’s cricket on Wellington’s windswept sports facilities. It averaged out at 6 out 10.
Perhaps unfairly, the last beer is Westmalle Tripel (9.5%). Traditionally served in the most beautiful beer glasses in the world, this straw coloured Trappist ale is a genuine world classic. Lurking under a pillowed head of foam is, in Flash’s words, a beer to be appreciated slowly. This complex beer has notes of honey, toffee, apples, hops and yeast. It is very full in the mouth though not overwhelming alcoholic. Shong says this beer reminds him for some reason of lunches at Leuven which don’t seem to end until it is dark. It scores an average of 8.5.
The biofuels boondoggle is gaining increasing attention, both here and overseas, and not before time. Bread riots in the Twenty-First century? That's something only governments and subsidy-seeking 'businessmen' could achieve. Unconcerned that laws requiring so called 'sustainable' fuels will result in exorbitant fuel price rises of "just" fifteen percent or more? That's something you'd think only a Green politician could be doing -- but no, they're all doing it -- all of them suggesting against the evidence that talking about alternative fuels and including the magic word "sustainability" in the biofuels bill will somehow, like magic, make everything alright.
The boondoggle is getting attention, but its dangerous momentum seems almost inexorable. Once again, the lesson of the law of unintended consequences will be demonstrated by the spectacle of politicians once again making the world worse, and voters blithely voting for more of the same.
There is one thing about which one can say that John McCain is principled. "His politics," says the New York Times, "are best understood as a decade-long attack on the individual." It's telling that this is recognised even in the pages of the New York Times -- no slouch when it comes to attacks on individualism. Says Matt Welch, writing in the Times,
Mr. McCain’s stump speeches, as well as his five books, are chockablock with calls to elevate national greatness, collective duty and Washington rejuvenation over whatever individual roads we might be pursuing. In “Worth the Fighting For,” he wrote that “our greatness depends upon our patriotism, and our patriotism is hardly encouraged when we cannot take pride in the highest public institutions.” These institutions, Mr. McCain wrote, should “fortify the public’s allegiance to the national community.”
Like many country-first, party-second military officers who began second careers in Washington, Mr. McCain is often mischaracterized as a politician without any identifiable ideology. But all of his actions can be seen as an attempt to use the federal government to restore your faith in ... the federal government. Once we all put our shoulder on the same wheel, there’s nothing this country can’t do.
It can be a bracing approach when his issues line up with yours — I, for one, would welcome President McCain’s unilateral wars on pork-barrel spending and waterboarding — but it’s treacherous territory for those of us who consider “the pursuit of happiness” as something best defined by individuals, not crusading presidents-to-be.
I don't know about you, but the more I see and hear of the future President McCain (left), the more I think of Roman Emperor Marcus Aurelius (right) and his paeans to "a government of service and duty." Former German chancelllor Helmut Schmidt was once asked to name his favourite philosopher. "Marcus Aurelius," he shot back. "He taught that we must do our duty above all!" I fear that same deaf and blind heel-clicking tone will soon be occupying the White House.
One fears that Robert Bidinotto might be right; that "regardless of the election outcome, I can't see how the 2008 election will have anything but the most dire repercussions for [America's] future. With McCain, Hillary, and Obama in the race, all we need is one more horseman and we've got the Apocalypse."
When searching for guidance on making footnotes using the 'Harvard Referencing' system (yes, footnotes, one of the delights of students and magazine editors), I was somewhat humbled to find one of my own more than humble posts used as an example for students wanting to reference a blog post in their doctoral thesis.
How 'bout that.
Californian columnist for 'The Free Radical' Michael Vardoulis sent me a reflection from afar on why Maori activists need to learn about independence and self-reliance from the likes of the late-career Malcolm X (right) ...
Yes, Maori individuals have a lot fewer historical claim to bitterness than Afro Americans, or especially Native Americans and Hawaiians! Whatever their legitimate complaints, at least New Zealanders never suffered the stain of slavery while proclaiming the protection of individuals' rights. These are individuals whose ancestors were never enslaved -- not at least in New Zealand after the British arrived.
Maori individuals need to shake off the great state fixation too many seem obsessed with. There is a kind of philosophical 'judo' that Malcolm X represents, insofar as the pride of self-reliance he talked about is essential to survival as an individual, and it would apply to Maori as well. His message of "why look to your former 'masters' and the government which supported them, for anything? The only thing a (insert arbitrary racial identity here) individual should seek from the government which supported their former master is to be left the hell alone!"
The lesson that needs to be tattooed on the soul was expressed perfectly by Isabel Paterson: "A government big enough to give you everything you want is big enough to take everything you've got" -- including, if you let them, your pride in your self-reliance. Self-reliance does not come from sucking nanny's tit, or from the marshmallow embrace of collectivism -- it comes from standing on one's own feet and beginning to take responsibility for one's own future as an individual.
And then we have the conclusions one can draw universally on the issue of 'race' from what Rand wrote so perfectly: the only genuine solution to racism is a color-blind government supporting the same rights for all individuals as individuals; anything *other* than that merely perpetuates the evil of racism, and (not incidentally) the careers of political figures who benefit from the perpetuation of the problem rather than achieving solutions.
Liberty HAS been stolen from many different arbitrary groups (though compared to what others have suffered over history, including many Europeans it's much harder to find in the case of post-1840 Maori) and in any case it's ultimately irrelevant to the much more important issue of regaining that liberty, which can only be achieved in a society where only the rights of the individual are upheld regardless of any arbitrary 'group' status either placed upon them or with which they choose to identify.Hell, the Brits stomped all over my mother's ancestors in Ireland, and the Turks all over my father's ancestors in Greece. I don't go looking for handouts from Downing Street or Istanbul! I just pursue a society in which the individual is protected from being interfered with, knowing as a result that no arbitrary group can be singled out either for persecution, or for restitution. The people who stomped all over my ancestors are long dead and buried -- those alive now bear no guilt for what their great-great-great grandparents did to mine.
But, I fear I preach to the choir. It's individuals of Maori, Afro-American or Native American backgrounds which need to 'get it'... as my mentor Richard Boddie (right), a former student of Malcolm X, is fond of saying, "People are deluded en masse and enlightened one at a time."
The lesson of Malcolm's own growth and change over his life helps to show that lesson is true -- and dangerous to those who would hope the lesson is never learned.
The interested reader might appreciate PC's review of Spike Lee's film 'Malcolm X' that appeared in The Free Radical at the time of the film's release. [NB: Some light editing of Michael's post has been done for sense and context.]
'South Park' School counselor Mr Mackie at left, Finance Minister Michael Cullen at right. We think perhaps they are related? [Thanks RG for the pic.]
UPDATE: When a picture is worth a thousand words; how politicians view their employers:
Rembrandt's Storm on the Sea of Galilee (1633) is a genuine masterpiece, and a thrilling use of light and shade and the drama of the storm. This is, or should be, the sort of standard against which tremendous art is judged. It's interesting to compare it to Delacroix's painting of the same subject some 220 years later, and to speculate on the reasons for the differences.
Interesting too to see at least one New York art dealer who knows the difference between art like this and the con-art of the likes of Warhol and Koons. “Our society now values a Warhol for three times as much money as a great Rembrandt,” thunders self-made art dealer Larry Salander [hat tip Stephen Hicks], referring to the latest auction reports. “That tells me that we’re f***ed... That’s the difference between the Warhol and the Rembrandt,” Salander continues. “Being with Rembrandt is like making love. And being with Warhol is like f***ing.”
Read all of Salander's contemplation on how he planned to "rescue the art world from bad taste, and how it ultimately destroyed him" -- and on which art is good for the soul, and which is good just for investment.
Thursday, 27 March 2008
Austrian economists have known for a long time that people don't act the way mainstream economists say they do. But mainstream economists and the New York Times are only just finding it out themselves [hat tip Brain Stab].
"Anomalies" is what one Nobel prize winner called behavioural departures from the rationalistic idea that people act as mainstream economists say they should, ie., with both 'perfect' knowledge and 'perfect' self-interest. This wouldn't be important to the rest of us, except that when these 'anomalies' occur in ways that attract the attention of the business pages the more state-worshipping economists start to yell about "market failure" -- whining in other other words that people don't fit their "models," and calling for government agency to make them fit, ie., to"fix" a problem that doesn't actually exist.
But the way people behave is only anomalous to people who think other people should behave the way their equations say they should. The fact is that economics is not a science of human choice, as mainstream economists insist it is; it is instead a science that studies the result of human action, however mistaken the graduates of business schools might think those actions to be.
Rather than devising and formulating abstract, arbitrary models predicting the choices people make, and then throwing up the hands in horror when people over-eat, over-spend and generally act in ways other than those predicted, Austrian economists base their system of thought on one very simple principle: Man acts. Specifically, he acts in ways he think will move him from a less satisfactory to a more satisfactory state of affairs, whatever the hell that might actually be. He might be wrong in the way he acts to achieve his goals, and he might even be mistaken in the goals or choices themselves (and people might even act in ways they explicitly disown) but they act nonetheless, say Austrians, and in their actions they seek to further their own ends (whatever these might be) -- it is with this 'action axiom,' says economist Ludwig von Mises, that the science of economics begins.
A shame that mainstream economists and the New York Times's writers haven't read more Mises or observed more human activity before they burst into print calling what we do every day "anomalous."
UPDATE 1: New Zealand's funniest bloke, John Clarke, has the testimony of an unusually truthful "economics expert" appearing before a Royal Commission on What the Hell's Happening to the Australian Economy. The relevance to this post can be seen almost from the first exchange. Here's a small sample:
BARRISTER: Mr Trouser, you've told us over a 3 month period you collect information and analyse it for trends... So what's going to happen Mr Trouser? In the next few months? What's a likely next development in the economy.
TROUSER: I've no idea. I don't have the current information.
BARRISTER: I thought this [holds up telephone book sized sheaf] was the current information.
TROUSER: They are the current figures, but they're not based on the current information.
BARRISTER: The current figures are not based on current information?
TROUSER: No. The current information is coming in now.
BARRISTER: So what are the current figures based on?
TROUSER: They're based on the information available at the time the current figures were being prepared.
BARRISTER: Which was when?
TROUSER: 3 months ago. The figures take 3 months to assemble.
BARRISTER: Is it possible for you to tell what's happening now?
TROUSER: Yes, of course it is.
BARRISTER: When could you do that?
TROUSER: In 3 months.
Read it all. It's hilarious. And then send the link to your nearest economist.
UPDATE 2: Clifford Thies draws parallels between the predictions of mathematical economics, and the equations and prediction of pro-warmist super computers.
The emerging discipline of climatology is an interesting one. It has no laboratory. Instead, various measurements are put into computer models to see the extent to which they are consistent with the hypothesis that human activity has contributed to the trend of global warming. Unable to conduct experiments, all climatologists can do is examine statistical correlations.
In my field of economics, we have generally dismissed inferences based on mere correlations. Such things as interest rates, inflation, the unemployment rate, and real GDP growth are highly trended. Almost necessarily, they are highly correlated over discrete periods of time. This correlation doesn't prove anything regarding cause and effect, and the still short history of econometrics is littered with theories such as the Phillips Curve that once enjoyed a consensus among economists, that are now understood to be little more than statistical illusions.
Today, the econometric standard for testing theories involves determining if changes in one variable tend to be followed by changes in another variable. Thus, the sequence of fluctuations in variables is seen as a key to discerning cause and effect. This new standard has been humbling in revealing just how complex are macroeconomic phenomena.
Commenters on this thread are recommended to read and digest.
Interesting. A survey of 9000 New Zealanders has found that widows and widowers are happier than married people of either gender.
Since numbers themselves are silent as to causality, I'll allow you to make your own speculations as to the lessons to be drawn from the result.
Wednesday, 26 March 2008
While every political party in parliament keeps reciting the mantra "state ownership good, private ownership bad" as if it were the key to nirvana -- every one of them refusing even to countenance the idea that the 'commanding heights' of the economy might be safer sold to private owners ASAP -- while they strut and posture the state's power generators have been busy generating too little power and hiking their prices for that power far too high, all the while pouring the 'dividends' from squeezing every power consumer in the country dry straight into the government's coffers. As Bernard Hickey says on analysing this rort, "These higher power charges, higher profits and higher dividends have simply become another tax on every household." A highly inflationary tax, as it happens.
If ever the statement were true that corporates rip off their customers, then it is true when the corporates are both phony and state-owned.
Explain to me again why state ownership of either these de facto monopolies or any other is such a good idea? Remove their coercive monopolies and privatise them forthwith -- it's the only way to make the power consumer king, instead of the state's serf.
I've just been reading a magnificent speech on the nature and motivation of capitalism's enemies, delivered by Larry Sechrest at the recent Mises Institute conference. He began by delivering this tribute to one of my heroes, one of capitalism's great defenders, Ludwig von Mises, given in the words of another of capitalism's great heroes:
Ayn Rand once made an observation that I think is germane to Mises... She exhorted her readers to "observe also the intensity, the austere, the unsmiling seriousness with which an infant watches the world around him. (If you ever find, in an adult, that degree of seriousness about reality, you will have found a great man)." In the course of his pursuit of truth, this great man unfailingly exhibited what I like to think of as a "dignified ruthlessness." To comprehend complex phenomena was what was important. To grasp reality was the objective that fueled Mises's life, not popularity, not winning debates, not currying political approval. Moreover, this quest was to be undertaken within an interpersonal context of civility and even elegance.
All that is so alien to our present world...
And sometimes even, I confess, to this blog! But this reminder and Sechrest's tribute is not even the main part of why his speech is so magnificent. Why it is essential reading is its masterly summary of the anti-capitalist mentality:
... how can anyone find capitalism objectionable at all once one recognizes that it has — even in its attenuated form — increased the standard of living so dramatically that an average person now daily enjoys "luxuries" which hereditary monarchs could not boast of a mere 200 years ago? Mises offers two basic answers to that question: envy and ignorance.
These are not mere words. Sechrest analyses and dissects the two attributes of the anti-capitalist mentality, and adds another: malice. "Consider what follows if one couples the repugnant urge toward envy with a broad misperception of reality." The result can be seen in comments around the blogosphere, and in headlines and press releases in your daily news.
You need to read his words, or see or listen to his speech to fully appreciate the analysis, and the importance of understanding is immense. The stakes in the battle against the envious, the malicious and the ignorant are high, he says - as high as civilization itself.
To his everlasting credit, Mises fully comprehended what some free-market advocates still have not: namely, that the debate over capitalism is not merely about which socioeconomic system will more efficiently produce goods and services, nor about which will accord more closely with consumers' individual preferences. He understood that the debate involved that and much more besides. He understood that to attack capitalism was to attack civilization itself, to attack the role of reason in man's life — and thus to undermine the value of life itself. As he put it with characteristic candor, present day collectivists "advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor and in a return to barbarism" ...
Where, then, do we stand? As we know, socialism is calculational chaos. Rational appraisement and allocation are eternally elusive. It is a gigantic negative-sum game in which each player quickly grabs a piece of the pie, and all the while the pie shrinks before the players' eyes. The welfare/warfare state, the interventionist state, is no improvement. Each intervention begets yet another. Bureaucracy is the only "industry" guaranteed to experience growth. Each new regulation taxes the private sector, relentlessly shifting resources out of the hands of the productive, and into the hands of the unproductive. Capitalism is the only positive-sum game in town.
In short, the case against capitalism is indefensible. It is smoke and mirrors. It is rooted in envy and malice. It is fueled by a stunning ignorance of sound economics, which is part and parcel of a broader rejection of reason itself. These anti-capitalists, these New Barbarians will — if they get their way — finally destroy not only capitalism, but also education, science, technology, literature, art, individual rights, prosperity, in fact, civilization itself...
The barbarians are at the gates, says Sechrest, and have been there now a'knocking for years. If you're a defender of civilization, then you must set aside time to read and consider his speech to understand the nature of your enemy, and how once fully understood, the enemy is ripe for destruction.
Yes, that's the cover of the latest Free Radical, which will be going out to shops and subscribers from the end of this week. Subscribe now to make sure your letterbox is included in the first mailout, and you get the earliest possible briefing on the issues that matter:
- What happened to One Law for All? Why is John Boy cravenly brown-nosing a man who wanted to assassinate him? What does that say about him? And what do a dead Italian Communist and a live Mexican gunman have to do with it all? LINDSAY PERIGO, TREVOR LOUDON, PETER CRESSWELL, PHIL HOWISON & TIM WIKIRIWHI between them examine Waitangi collectivism, the objective threat and ideological links of Te Qaeda, and why this matters to you. DON'T MISS OUT! You'll be keeping this issue as a reference for a long time to come.
- And who wrote the strategy for the left's long march through the culture? LINDSAY PERIGO has the answer, and a solution.
- How do you keep yourself afloat in the world's most recent financial crisis? The simple answer is understanding. Recent articles in The Free Radical have warned about the economic downturn, explained how the counterfeit capital of the world's central banks are culpable, and pointed to real solutions. In this issue we have all the literature that's fit to read to understand the mess, and keep yourself afloat.
- And what about those dark greens, and their claims that the environment is endangered - that we're "running out of resources"? "Rubbish," say our writers. It's not climate that's endangered, says Czech president VACLAV KLAUS, it's freedom! Progress is good, not destructive, says GEORGE REISMAN -- economic freedom is the solution, not the problem, he proves. Reisman utterly demolishes environmentalists' claims that we're running out of resources and shows that as long as we pursue wealth we never will, and OWEN McSHANE & VINCENT GRAY dissect the background of those who insist we must. The historical links will surprise you, and the weight of argument will floor you!
All this and much, much more, including the Belgian who gave fuel to the Nanny State, the Canadian who became a hero of free speech, the architect who combines art and business, the educationalists who have a lot to say sorry for, and the American who's been proclaimed as a hero of conservatism and who is shown to be anything but -- all this plus film reviews, book reviews and all our usual and controversial columnists.
The world is in a mess, the long march through the culture by anti-reason, anti-life state worshippers is the root cause – and like every ‘Free Radical’ since issue number one, this one has the solution: in a nutshell, it’s reason and the freedom to use it.
DON"T MISS OUT! Subscribe now to get your copy in your mailbox ... and give the gift of Free Radicals to a friend or three who need the rocket-fuelled intellectual ammunition within.
A multi-storey atrium model from the 1936 film 'Things to Come' -- an atrium prefigured by the likes of Frank Loyd Wright's Larkin Building and Rogers Lacy Hotel project, and brought to reality again four decades after Korda in the multi-storey atria of John Portman.
Tuesday, 25 March 2008
News of a climatic, not to say a climactic, tipping point is reported by the newspaper The Australian:
CATASTROPHIC predictions of global warming usually conjure with the notion of a tipping point, a point of no return.
Last Monday - on ABC Radio National, of all places - there was a tipping point of a different kind in the debate on climate change. It was a remarkable interview involving the co-host of Counterpoint, Michael Duffy and Jennifer Marohasy, a biologist and senior fellow of Melbourne-based think tank the Institute of Public Affairs. Anyone in public life who takes a position on the greenhouse gas hypothesis will ignore it at their peril.
Duffy asked Marohasy: "Is the Earth still warming?"
She replied: "No, actually, there has been cooling, if you take 1998 as your point of reference. If you take 2002 as your point of reference, then temperatures have plateaued. This is certainly not what you'd expect if carbon dioxide is driving temperature because carbon dioxide levels have been increasing but temperatures have actually been coming down over the last 10 years."
Duffy: "Is this a matter of any controversy?"
Marohasy: "Actually, no..."
Read on here for the details, and the implications. Politicians, town planners and other catastrophists might care to pay particular attention.
Discussion of Shane Jones's proposed amendment to the Building Act to remove some hurdles for producers of sub-standard boxes [story here; video here] seems to have omitted more than a couple of important points.
The first thing to note is that it's only a pimple on the bottom of a very expensive problem: one created almost wholly by over-regulation.
The second is the issue of councils, and the power they have over designers and would-be home-builders. Now for various reasons, councils themselves are up in arms at Jones's proposal, but it has to be asked why councils should be involved at all in the job of inspecting and approving new houses? Why should they? Why on earth should productive people have to go cap in hand to the unproductive in order to seek permission to produce?
It's not only dead wrong, but there's no incentive under any building legislation either mooted or extant for councils to deal with the consent process in a timely manner (and they mostly don't) or with the inspection process in a rational manner (and it generally isn't); under the present legislation councils are keeping builder's and home-owners waiting often for months while they determine whether or not permission will be granted to go ahead, and when or if permission is granted, and building finally commences, the irrationality of much of what builders face from the inspections imposed on them would try the patience of Job.
The level of frustration most people feel on the productive side of building -- that is, those who build houses -- might be measured by the number of people on the other side of the fence -- that is, those whose only job is to get in their way. At present there seems almost more people on the dark side getting in the way than there are actually building houses. As can be seen from a perusal of the 'situations vacant' sections of most trade journals, the only thing keeping the number on the dark side down is the paucity of applicants to fill all the positions created by a nannying bureaucracy and by too overbearing building legislation.
If councils could increase the numbers on the dark side, they would. But it needs to be asked again, why are councils involved at all?
There's no particular expertise that councils' harbour that can't be found elsewhere, and no reason at all that the market for houses be treated in any way that's substantially different to the market for anything else. You don't ask council inspectors to examine your car or your boat before you buy it; there's no more reason to ask them to look under your bonnet before you buy than to look under your house while you build.
There's no reason that the insurance market can't do the job that's essentially being asked of councils, one that insurers have demonstrated beyond any doubt they're capable of, while all this time councils have demonstrated just the opposite. Insurers can look after housing in a similar way to how insurance operates with cars: If we choose to build the housing equivalent of a Toyota Corolla, then premiums would be low and inspections straightforward -- inspections based on a previously agreed standard laid down by the insurer, and carried out in the timely fashion we've come to expect when we ding our cars. If we want to build something a bit different, then both the standard used and the premium levied would be different, just as it would be if we chose to build a hot rod. All good common sense.
And if we want to build the housing equivalent of a Trabant, which is what Shane Jones seems to think we should all do, then we might expect to be discouraged by our insurer rather than encouraged.
The motivation to deal with an insurer is the same as it is when we insure our cars -- to protect our investment -- and also, in the case of houses, to ensure that future buyers are comfortable with the standard of our house. (They might, for example, be looking for the seal of their favourite insurer before being comfortable enough to buy, and if we want to make a sale, we're obliged to meet the buyers standard or else watch them go elsewhere.)
The difference to how things are presently done should be obvious, and the motivations to improve standards and reward innovation clear enough. Under an insurance-based system, both builders and insurers would be keen to protect their standards and to lower their premiums -- and they'd both be highly motivated to see the speed of processing and construction improve, and to reduce their costs by continual and ongoing innovation.
This is not what happens now.
It's usually maintained that government needs to maintain building controls and local governments inspect local buildings in order to maintain standards. The proposal to build Trabants as the only way to get anything out of the present system should demonstrate fairly well that we're at the dead end of a dead system. If this is 'innovation,' then who needs it?
What sort of 'standard' is being laid down by removing the hurdles from building cheap prefabricated boxes, but retaining them (or even having them increase) for any house of any greater quality that tries to get a flower instead of a weed out of the system? By insisting on building weeds we're doing what architect Claude Megson called "building the slums of tomorrow" -- we're ensuring that the overall standard of the country's housing stock is rapidly and progressively diminished, and innovation progressively and permanently discouraged.
And not just discouraged, but effectively prohibited. As Frank Lloyd Wright pointed out,
The building codes of the democracies embody, of course, only what the previous generation knew or thought about building...
That's true. There are two main legislative burdens imposed on every home-builder, designer and would-be home-owner: the Resource Management Act imposes the nostrum of "sustainability," insisting that "future generations" somehow be taken care of, while the Building Act with all its myriad controls insists that the remedies and methods of previous generations be rigidly adhered to.
Either way, the present generation gets it in the wallet.
Both impositions are insane -- the former tying us to a generation that never arrives, and the latter to a generation whose innovations we are not allowed to supersede -- and between them they ensure that the prosperity and wellbeing of this generation of potential home-owners is sacrificed to those of every other, which means in essence to the whims and machinations of housing ministers and housing inspectors.
It's time they were all cut off at the knees.
For years, you see, economists had been trying to solve what they called 'the problem of value,' or by some 'the water-diamond paradox.' Why, they wondered, was water so much more valuable to human life, but it is diamonds that are worth much more in money terms? (These are the sort of questions that still keep economists awake at night.) This was said by many economists to create an "irreconcilable contradiction" between use value and exchange value.
The problem wasn't left unreconciled for long, however. The idea of 'marginal value' was hit upon simultaneously by three different chaps, and in a flash it explained the conundrum. Put simply (well, as simply as an economist can) it states:
The ... importance or personal value that an individual attaches to a unit of any good diminishes as the quantity of the good in his possession increases.Put even more simply, however valuable something might be to our survival, then the more we have of it the value we place on each successive unit diminishes with each unit. Simple, yet profound. Since we generally have loads of glasses of water and very few diamonds to lay with -- however it might have been at Dorothy Parker's, that at least is the state of play around our house -- we find that your relatively rare professionally-cut precious stone is worth much more than our glass of water, even though it's the water and not the diamonds that it necessary to sustain life.
If we've just come out of the desert after losing our way, then our first glass of water will be worth our life itself -- and we'd be willing to pay whatever diamonds we've got to buy it. But by the time we're sipping our second or third glass we're starting to look around and wonder if we've paid too much, and by the third or fourth glass we're starting to wonder what we're going to tell the wife about where her diamonds went.
Here's another example. If we're stuck in a bush cabin with just five sacks of grain to last until the next harvest, then the most important sack is the one we've labelled "grain for survival," while the least important is the one further down the line that we've labelled "grain to feed the parrot." While grain itself is crucial for survival, you see, the value we place on our grain is contextual: the value is that of 'the last unit,' which in this case is equivalent to the value we place on feeding the parrot who keeps us entertained, rather than the value we place on eating to keep ourselves alive. (George Reisman draws more insights from this example here.)
All value comes from the margins, you see, with value diminishing with each successive unit. While this is a rule widely accepted by every school of economics since at least the fall of the Berlin Wall, Dorothy Parker's martinis pose a challenge to this. The value of martinis, she insists, increases with each subsequent unit. Here's her mantra:
I like a martiniSee, martinis actually get better with each drink! If our first martini is labelled "the martini I like" and the second "the martini I really like," then by the third we're up to "the martini that really likes me," and then -- depending on the value we put on our host -- by the last we might attach the label "a night of unrelieved pleasure." Let's just hope we can remember it afterwards, and to whom we need to send the diamonds to keep them quiet.
Two at the most, after three
I'm under the table, after four
I'm under the host.
Economists are recommended to undertake the necessary empirical research forthwith to explain this particular paradox.
Tomorrow, the martini diet ...
Some food for thought here for fans of communist dictators -- and for opponents and supporters of free trade:
In 1958, Cuba was almost as rich as Japan, one and half times as wealthy as Singapore, richer than Hong Kong, and three times as prosperous as South Korea.
Fifty years later, Cuba is one of the poorest countries in Latin America.
Meanwhile, jurisdictions such as Hong Kong, Singapore, South Korea and Taiwan (the latter two also had dictators and problems similar to Cuba in the 1950s) have long eclipsed Cuba. They've done so not only in per capita wealth, but in measurements Castro's defenders point to when they assert the Marxist revolution "worked," such as in health care and education...
As Paul Walker comments, "GDP per person isn't a perfect measure of well being, but it is a rough guide to average living standards. And by that standard Castro has much to answer for."
Yes, he does. But here's something else to think about, too: given all we know about the liberating effects of free trade (see even the nominally communist Vietnam, for instance) -- and as we consider the merits of free trade with China -- and I invite readers to speculate on the state of Cuba and Castro and the country's communism today if the US had gone for free trade instead of blockade. How liberating would fifty decades of free trade with Cuba have been, and what would have happened to Busy Whiskers and his communism if such a policy had been applied by the US?
Friday, 21 March 2008
Your Beer O'Clock post this week comes from Stu at SOBA.It’s good to drink good beer on Good Friday. It’s just a shame we can’t buy it.
Orval is one such good beer. In fact it is very, very good. So good, to my personal palate, that it’s my ‘desert island beer’ – the one beer, amongst the thousand-odd I’ve tasted, that’d I’d pick to drink for the rest of my life if such a terrible decision was forced upon me by some kind of non-benevolent supreme being (or just bad luck).
Orval pours hazy rose gold with a large, lacy white foam. It has a champagne-like spritzy look and feel, with a nose that is lightly bready, with hints of boiled-sweets, a unique woody spice and a little dried citrus zest. In the mouth it is dry and effervescent, slightly leathery, pithy, and with a bitterness reminiscent of old style oranges. There’s a little cinnamon and anise in there too. Its subtle touches linger on the palate for a lot longer than the average beer. Orval is a very special beer but, like almost every good beer, is relatively affordable and can be enjoyed on any occasion.
Part of the unique character of Orval is the brettanomyces yeast (commonly called ‘brett’), which adds some of the aromatic spice and really dries out any residue sweetness in the beer. This yeast continues to work in the bottle and, while changing the characteristics of the beer over time, can add an extra percent or two to the labelled alcohol level. Beware.
The monks behind Orval also produce a Port-du-Salut style cheese. You can take this combination as an explicit beer and cheese-matching tip (contrary to the opinion of Kerry Tyack, beer and cheese really is a match made in heaven). The dry bitterness of the beer contrasts with the creamy sweetness of the cheese, while the subtle fruit characteristics of each complement each other.
A brilliant beer inside a beautiful bottle, fit for a gorgeous glass. What’s more, it is available all-year ‘round at bottle stores, supermarkets and good beer bars all over the country (except, of course, Good Friday). I’ll drink it nine times out of ten whenever I’m at any of the Belgian-themed bars littered throughout our main cities.
If God-fearing monks produce the beer, then surely God must want us to drink it. And if this beer is the word of God... Amen!
Next time, back on the beer style theme, we’ll look at why 'Amber and Dark Lagers Ain't Ales.'
Slainte mhath, Stu
A friend has uploaded for me the four-handed religion debate this morning from Lindsay Perigo's show on Radio Live this morning, which I'm told was brilliant radio. I have to take his word for that at this stage since I was sleeping at the time, but you can click here to hear the debate in its full MP3 brilliance.
On the side of there being angels is Brother Richard Dunleavy and the Reverend Richard Randerson. Arguing against are Perigo and, from the Rationalists Association, Mr Bill Cooke.
It kicks off with Perigo announcing that God is a psychopath...
Highly amusing to read Jim Banderton's apoplectic response to ACT on Campus's Auckland Uni branch selling party pills to encourage students to sign up. My own reaction when I heard the plan was just the opposite -- I was pissed off that Libz on Campus hadn't thought of it first. Damn!
Perhaps there's hope for young ACToids after all, just as long as they don't go as soft as their seniors. As Duncan says over at Kiwiblog, "Maybe ACT does have a chance, if only they’d roll Hide & Douglas in favour of some young blood with balls."
I was amused too to see this exchange in the comments at Kiwiblog:
IT'S EASTER, GOOD FRIDAY, a day when government flunkies fan out around the country to sacrifice shop-owners, and the Christians who insist on their sacrifice to the gods of bureaucracy celebrate the sacrifice of their own ideal two-thousand years ago.
Every religion has its own myths that go to the very heart of their beliefs. The Easter Myth is central to Christianity, and all too revealing of the ethic at Christianity's heart. Bach's St Mathew Passion' musically and beautifully dramatises the Myth, and is all too revealing of the nature of it.
Just think, Christians revere Christ as their ideal, and Bach has his chorus praise him, worship him, and eulogise Him -- this after all was their hero, the man they believe their god sent to earth as an example of the highest possible on this earth -- and then they and that same god went and had him killed.
That's the story. This, says Bach, is what Christians revere: The murder of their ideal.
In Pagan times, Easter was the time in the Northern calendar when the coming of spring was celebrated -- the celebration of new life, of coming fecundity. Indeed, the very word "Easter" comes from Eos, the Greek goddess of the dawn, and means, symbolically, the festival celebrating the rebirth of light after the darkness of winter. But with the coming of Christianity, the celebration has been hijacked to be a veneration of sacrifice.
Such is the nature of the Easter Myth, and of the ethic at the very heart of Christianity. Not peace, not love and understanding, but sacrifice -- the murder and torture of tall poppies -- the sacrifice of the Christian's highest possible for the sake of the meanest most rotten 'sinner,' whose redemption Christ's murder was supposed to buy.
To put it bluntly, the Easter myth that Bach dramatises so well is one of suffering and sacrifice and murder, and the collusion of a supposedly omnipotent and omniscient god in the murder of his own son -- and if you subscribe to the whole sick fantasy that's what you have to believe; in the name of religion he shows us that the good (by Christian standards) must be sacrificed to the rotten; the constant to the inconstant; the talented and inspirational to the lumpen dross -- the ideal to the worthless.
For Christians, then, Easter is a time to revere that sacrifice and to remind themselves (and us) of the centrality of sacrifice to their fantasy. Oh yes, there's a 'rebirth' of sorts, but not one in this earthly realm, and not before a celebration of intense pain and suffering that supposedly bought redemption and virtue for those who possessed neither. As Robert Tracinski says so bluntly, "Easter's Mixture of the Benevolent and the Horrific Reveals Religion's Antagonism to Human Life."
THERE IS ANOTHER STORY that stands in complete contrast to this one, that is in all senses its polar opposite. Unlike the heroes of Bach's Passion, the heroes of Ayn Rand's novel The Fountainhead shun sacrifice. The ethic of The Fountainhead, one for which each of the leading characters fights in their own way, is one in which genius has the right to live for its own sake. The contrast with the demand of Christianity that The Good inheres in the act of suffering and dying for the expiation of others could not be stronger, or the question more important! Rather than demanding and worshipping the sacrifice of the highest to the lowest -- or as Nietzsche did, retaining the ethic but reversing the beneficiary of the sacrifice by demanding the sacrifice of the lowest to the highest -- the ethic of The Fountainhead insists that The Good is not to suffer and to die, but to enjoy yourself and live -- without any sacrifice at all.
In my book, that really is an ethic worthy of reverence.
NOW, I'M ALL TOO aware that if you believe the Easter Myth, then anything I say here is going to pass right by you. So if you do insist on venerating sacrifice this weekend, and especially if you're intending a bit of crucifixion yourself, or even just a bit of mildly flogging or self-torture, then here are a few simple Easter Safety Tips for you from the Church, which are not unfortunately intended as satire.
And now here's a Nick Kim cartoon from The Free Radical for all the bureaucrats who are working today ...
Thursday, 20 March 2008
Now here's an economist doing what economists do best: economist Paul Walker, who posts at the Anti-Dismal blog (as in, anti "the dismal science"), summarises a post by economist Frederic Sautet at the Austrian Economists blog looking at productivity growth in New Zealand.
Sautet has looked at New Zealand's productivity growth over the last decade for labour, materials and capital (so called multifactor productivity), and for labour alone, and what he's discovered is that ... growth in both crucial yardsticks is going backwards.
Like all decent economists, he seeks a reason for this shameful outcome of a decade of Hard Labour government and has little trouble finding it and pointing it out -- it's government failure, he says:
The current Labour-led government has criticized the "failed policies of the past" (i.e. the reform period and the deregulation of the 1980s and 1990s) for not delivering enough. Instead of continuing to improve the institutional context for socially-beneficial entrepreneurship, Prime Minister Helen Clark decided, among other things, to increase government spending (and the number of government bureaucrats), re-regulate the labor market, increase taxes (i.e. distort the tax structure, thereby rejuvenating the tax planning industry), intervene in utilities markets, provide more welfare, reintroduce corporate welfare, and renationalize businesses. All this is surely reflected in the weak growth in multifactor productivity...
Wednesday, 19 March 2008
These are the people, it should be remembered, who told the government they'd be in deficit when they're not (oops); who said for years that government surpluses would be small (when they turned out to be huge); that Kyoto would be a net benefit to New Zealand taxpayers (it's going to cost us billions) ... we're heading for recession, says Cullen, we're not, says Clark; we are says the BNZ, we're not says BERL ... let's face it, none of them really has the first clue what's going on.
And that's just the gee-whiz crystal-ball gazers who do the sums for government! Then there's the ones who pull down the really big salaries, the chaps who are all over the TV and radio making predictions -- which mostly consist in agreeing with what every other pundit is saying -- but it turns out with these types that they've got no more idea about what's going on than your taxi driver does, as a new study fresh from the printer makes clear. What you see in the graph below is a chart of NZ's Trade Weighted Index for the last fourteen years -- a crucial figure on which billions of dollars are spent -- measured against the predictions of all those big-name chaps with a calculator, a big salary, and not a clue what's going on. Take a look:
You'll be wondering what those little fan-shaped things are that seem to bear no relation to the actual TWI? Those suckers are the range of predictions made by most of the big names you hear cluttering up your airwaves with their soothsaying (the red line is the median forecast, the grey line is the range of their predictions, the solid black line baring little to no relation to either of these is what actually happened). Just to stress this point again: none of these turkeys is able to predict the future any more than you could by throwing a dart at the wall. Or to put it another way, when you hear these mathematical economists making predictions about the future, don't believe a word of it. You might just as well read your tea leaves.
Here's the real lesson: Economics doesn't give you a crystal ball allowing you to make quantitative predictions about the future. It doesn't give anyone that kind of crystal ball -- and anyone who says it does is either lying to you, or to themselves. As Ludwig von Mises pointed out fifty years ago, economics is not a science capable of quantitative predictions:
People by and large know today that a boom brought forth by a policy of credit expansion and "easy money" cannot last forever and must sooner or later lead to a slump. They do not want to be taken by surprise and ruined... As they believe that economics is the art of predicting tomorrow's business conditions, they consult the economists.But we've already seen that the country's highest-earning economists have no idea, do they.
"How will business be in the coming months?" asks the newspaperman when interviewing the economist. No convention of businessmen is held without the solicited presence of a professor of economics, or the head of a bank's research department, who in guarded language produces a cautiously qualified prediction about the nation's, or the world's business. Whenever and wherever a businessman catches sight of an economist, he tries to sound him out about the future state of the market.
Economics can only tell us that a boom engendered by credit expansion will not last. It cannot tell us after what amount of credit expansion the slump will start or when this event will occur. All that economists and other people say about these quantitative and calendar problems partakes of neither economics nor any other science.George Reisman drives home the point in his book Capitalism:
Economics predicts the outcome of definite modes of conduct, in our case, of a policy of credit expansion. But this prediction is qualitative only. Economic prediction can never disclose anything about the quantitative relations concerned. There is not, and there cannot be such a thing as quantitative economics ... [and any] forecasts about the course of economic affairs cannot be considered scientific.
Despite popular beliefs, economics is not a science of quantitative predictions. It does not provide reliable information on such matters as what the price of a common stock or commodity will be in the future, or what the 'gross national product' will be in the next year or quarter ......or what the Trade Weighted Index will ever be, except in the past. The future is unknown. There's no way to put a number on it. Real economists know that, and don't pretend otherwise.
Proper economics -- not the mathematical junk that squeezes real market processes into a Procrustean Bed of mumbo jumbo -- that is, real descriptive economics of the kind practiced by Austrian economists will, as Reisman goes on to say, "provide an important intellectual framework for making personal and business economic decisions." A proper knowledge of economics will help defend business and economic activity against regulators and politicians who continually seek to destroy both. It will not teach businessmen how to make money, he says -- a skill "they possess to an incalculably greater degree than economists" -- but it will explain why it is to the self-interest of everyone that businessmen should be free to make money.
That should surely be enough for anyone, you would think, without witchdoctoring up the world with lots of overpaid and under-successful clairvoyants.
One great thing about [Roger Douglas], as I argued recently, is that he's a conviction politician. But his convictions are not libertarian. If anything, Roger's return opens things up even more for Libertarianz. Rodney's born-again soft-cockery and Roger's compulsionism mean the chasm between Libz and ACT is greater than ever.
And what about those 'cabinet prospects' for Dodger Rugless that have got a few people hyperventilating? Perigo again:
Rodney wants National to commit to putting Roger in cabinet. Key says: "I'm not going to go and run a government that slashes benefits and privatises off all the assets that the state continues to own; I'm not going to run a radical agenda." Rodney says he wants nothing more radical than "caps" on taxes and spending.
Time was when blokes flashed their members to see who had the biggest. These guys are competing to see who has the limpest.
Nothing much left to say, is there?