Saturday, 28 February 2009

"No Future" - punk's past [updated]

I'm constantly amazed by the number of libertarians who I discover were former punks. And some people express amazement at some of the youthful records on my own shelves. But why be surprised? Why be amazed? There was something about punk, at least in the early days, that made you want to change the world -- and made you feel that you could. And should.

Punk erupted at the fag end of Britain's failed thirty-year post-war experiment with socialism. Labour wasn't working, as an election-winning billboard of the time pointed out. Indeed, in Britain's summer of 1976, barely anyone was working. Everything that once moved had been nationalised, the country was bankrupt (and being bailed out by the IMF), half the country was either on strike or seemed to be, and rubbish was piling up in the streets. In just over half-a century, Britain had voluntarily transformed itself from the richest country the world had ever seen to one that was on economic life support.

That's what socialism can do to you.

Punk started in the US of A, it had many godfathers, but with the UK in a state like that no wonder Britain took to punk like an alcoholic takes to Tennents Extra. No wonder the refrain from the Sex Pistols 'God Save the Queen' -- No Future! -- struck such a chord with a generation outraged at the world their elders had made. No wonder that a generation responded with all the incoherent rage it could muster at the whole gimcracked gallery of false gods their elders had created -- a rage expressed in the art form that speaks most volubly to a teenager: music.

The music was simple and angry and untutored -- sometimes laugh-out-loud funny -- it spoke its mind come what may-- and to millions of youngsters all over the world repelled by all the false gods, the anger was both an energy and an invitation to action. The first assault on the false god was (rightly or wrongly) against the musical dinosaurs so beloved of the generations past. This seemed the necessary first step in making the world over again, by doing it for themselves, however imperfectly. Making the (musical) world over again as a first step to seeing a way out of the hole the other generations had dropped them in.

And out of this teenage anger came some adult anthems that still speak to us.
  1. Blank Generation - Richard Hell & the Voidoids
  2. Blitzkrieg Bop - Ramones
  3. Johnny Hit And Run Paulene - X
  4. Marquee Moon - Television
  5. (I'm) Stranded - The Saints
  6. Horses - Patti Smith
  7. New Rose - The Damned
  8. Boredom - Buzzcocks
  9. No Future (God Save the Queen) - Sex Pistols
  10. Saturday Night Stay at Home - Suburban Reptiles
  11. Suspect Device - Stiff Little Fingers
  12. Oh Bondage, Up Yours - X Ray Spex
  13. Life's A Gamble - Penetration
  14. Peaches - Stranglers
  15. Shot By Both Sides - Magazine
  16. Tommy Gun - The Clash
  17. Public Image - Public Image Limited
  18. Shivers - Boys Next Door
  19. Love Will Tear Us Apart Again - Joy Division
  20. Into the Valley - Skids
  21. I Am the Fly - Wire
  22. Mysterex - Scavengers
  23. Squeeze - Toy Love
  24. Future Shock - Gordons
  25. Gangsters - Specials
As John Lydon/Rotten said in a recent video interview,
That’s what’s missing [today]. It’s an act of rebellion... That’s indeed what I’m always looking for. A sense of naturalness… If you’re true to what you like, how can you fail … it’s not so much whether it’s perfectly well played or so geniusly well written, because those things are kind of important, but it’s not as important as a sense of well-being – a sense of “I have a life, and I’m proud of it” – and that shows through in really, really good music, and it doesn’t [always] shine through in really, exceptionally well-played music.
For my money, that still shines through in those 25 wildy different tracks above plucked from punk's heyday.

The peak of punk passed quickly. It was all over bar the whining and puking in less than two or three years. It passed with the realisation, for those honest enough to see it, that creation was more difficult -- and more rewarding -- than destruction. It passed musically, with the realisation that all punk had done in the final analysis was to make the world safe for the likes of Duran Duran and the Thompson Twins to fill the vacuum the dinosaurs vacated -- or, worse, for the boot boys and the genuine nihilists who followed along to mop up the musical wreckage -- and most of us quickly hurried on to make and to discover better things for ourselves.

Those of us with brains to think with and eyes with which to see came to understand (to paraphrase Ayn Rand) that to change the world it was going to take more than a spikey haircut and a loud guitar.

But as I was reminded at a recent Spelling Mistakes reunion gig, it sure as hell was fun while it lasted. And it made those of us who embraced it at the time much more ready to embrace in a new and better form the importance of making the world over for ourselves, and the place of art in that great cause - above all of honesty in art, and that the honesty comes from within. Salut!

PS: Note that while the songs listed all came from those 'golden years' of 1976-79, many of the YouTube vids don't. Just sayin' is all. Still, when you consider how hard it was to get this stuff back in the days of vinyl, it's just amazing what you can find on YouTube these days]

UPDATE: The Canterbury Atheist reminds me to give Andrew Schmidt's excellent Mysterex blog a plug. If you were ever bitten by the local punk bug, you're gonna love it.

Ray Carvell, R.I.P.


Ray Carvell, pictured here in his Penrose gun shop, died this week. Ray was one of the good guys. The Carvell family and their shop hit the headlines in 2006 when a numb nut tried to attack the staff with a machete, and Ray’s son Greg shot him (the numb nut) in self-defence.

The resulting police persecution of son Greg, was very unpleasant for the family – as Free Radical readers will remember from Ray’s interview in issue 76. (You can read my posts on the shooting and subsequent prosecution here.)

I’d like to extend my best wishes and those of NOT PC’s readers to Ray’s family at this time.

Friday, 27 February 2009

The path from waste to glory

Reading Liberty Scott’s superb fiskng of the Obamessiah’s flatulent State of the Union speech, a point from history leapt up and bit me:

"I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud,” said the Messiah in his speech.  And you know something, back in the forties the US Senate under Franklin Roosevelt quickly realised the importance of “ferreting out any and all cases of waste and fraud,” which pretty much described all government spending at that time, that it set up a Committee to investigate the waste and the fraud. And that Committee was so busy and it found so much pork – this in the midst of wartime – that the Chairman of that Committee, one Harry Truman, a Democrat, was vaulted from obscurity right into the position of the Vice Presidency, just in order to shut him up.

And as history will show, within just a few months of being elected to the VP’s job he had the job of President.

Such is the way political advancement is made.

Keep an eye on the man or woman appointed Inspector General of Waste and Fraud.  This could cement their path to the top.

Jobs Summit, 3: Your Solutions, Large and Small [update 2]

So with my own thinking out of the way in my two posts below (thanks for listening), how about you add your own suggestions in the comments – suggestions both small and large.

Let me start you off with George Reisman’s solution, which looks at the larger picture:

Or, looking at the smaller picture:

  • Instead of meeting friends out for drinks and then dining at expensive restaurants, why not keep your friends and even the lifestyle, but without all the expense.  Why not keep an eye on all the Happy Hour deals in your neighbourhood, and when you go drinking go drinking at those times.  And then instead of eating out, why not learn to cook well and have your mates around for a dinner party at home – and even invite your friends to bring a dish each.  You can eat and drink for longer, and cheaper, and you don’t even have to drive home.

So what else have you got?  I’ll post the best ideas here on the front page (and don’t worry if you’re repeating something someone’s already said.  The best ideas can always bear repeating.)

  • In the current economic climate, it would obviously be insane to introduce new costs to business through either an Emissions Trading Scam or a Carbon Tax.  So it’s bound to be a certainty, then.

UPDATE 2My colleague Dr Richard McGrath says,

    On the morning of the government’s “Jobs Summit”, Libertarianz leader Richard McGrath released his party’s suggestions on how the New Zealand economy could create more jobs, not just this year, but on a permanent basis.
    “The best possible thing that could be done for the New Zealand economy would be to adopt all of our policies,” said Dr McGrath. These policies are set out on the party website at

That would naturally something to shoot for in the long term. In the meantime, Richard proffers several damn fine suggestions that can be effect now to keep New Zealand afloat in the crisis.

These initiatives are presented in support of a guiding principle: “New Zealand – Open For Business”.

Read it all here.

Jobs Summit, 2: The solutions [update 4]

Keynesians embraced the notion that the economy could settle into an equilibrium characterized  by persisting unemployment.  Critics such as Haberler, Pigou, and eventually  Patinkin argued [however]that falling wages and prices would increase the real value of money holdings and that the spending out of those real cash balances would restore the economy to full employment…
Roger Garrison, Time and Money (p. 20) 

Gathered there now in Manukau is a collection of folks who have all fallen prey to the ‘Grocer Fallacy.’  They all figure that if the government can only keep their own wages and prices up, and spend enough to keep customers coming through their own particular door, then all will be well with their little part of the world.

Poor fools. As anyone familiar with the Fallacy of Composition would understand, what is true for a part is not necessarily true for the whole.  This is certainly true about the myopia of the merchants who are currently huddled desperately around the government’s feet.

As I said in Part One of my piece on this Jobs Summit, which addressed some of the problems in most of the mainstream solutions, the primary problem is not to encourage spending but to afford it.  We are not in this position because we didn’t spend enough – Gawd help us – but because the world’s orgy consumption over the past few years consumed our pool of real savings – about US$39 trillion of real savings according to Mr Bollard. The primary problem we must now confront is not a drop in spending, but a drop in the resources we now have command over.

In that analysis is contained the necessary solutions to recovery: to refill the pool of real savings, and to correct prices and production as soon as possible to the new realities we now face.

We can rebuild the pool of real savings just as long as we ignore the hysterical exhortations to keep spending.

We can still produce all we need just as long as we allow costs to reflect the new realities.

We can still employ as many people as are willing to work, as long as they are willing to work for what their job is now worth.

Economy-wide, and across the board, we need to stop spending so extravagantly. Urgently. And we need – all of us – to recognise the new worldwide realities we all now face.

Which is to say,

  • Recovery requires lower wages and salaries across the board.  Government (both central and local) can certainly start this process, not by congratulating themselves when they refuse to take a pay rise, or when they "cap" their own wages and salaries to the rate of inflation, but by actively cutting the wages and salaries of all those employed by government, right across the board.
        Since the cost of government is such a large part of costs to business, in spending terms alone this will have a huge impact -- not to mention the tremendous example it gives to others.
        Ten percent is a nice round number, and as it happens that was the figure adopted in the thirties when the Forbes/Coates Government cut government salaries, helping to kick off the revival that began less than two years later (and back then government was only a fraction of the size and influence it is today).
    • Policy Solution: Cut government wages and salaries by ten percent.
  • Recovery requires the freedom of wage rates to fall so that (as George Reisman points out) the presently reduced supply of capital and the credit becomes capable of supporting a larger volume of employment and production.  The introduction of the minimum wage increased unemployment in the thirties beyond measure; it visibly discriminates against Maori and youth employment.  Let us keep people employed in the work they want at a price that is affordable.
  • Recovery requires that producers and investors -– those who control the pool of real savings – have certainty.  Sure, governments always like to look as if they’re doing something, but the more they do – and the more they look like they might do – the less certainty producers and investors have, and the more likely they are to keep their money in their pockets.  It was this very "regime uncertainty" that was one of the key reasons the Great Depression continued so damned long in the US.  Let’s learn from that mistake.  Don’t confuse government action, which consumes real capital, with private action – which builds it up.
    • Policy Solution: Reduce regime uncertainty by government doing as little as possible, by getting the hell out of the way, and by stating clearly in advance what little is going to be done so that everyone knows what’s happening – that is, a policy of No Surprises which is far better than a “rolling maul” of meddling before which no one is able to plan ahead.
  • Recovery requires the rapid liquidation of unsound investments.  Capital has already been consumed and is now in short supply. Creditors themselves can be endangered because they’re unable to collect what they are owed.  The quicker liquidations are allowed to happen, the more rapidly the resources tied up in those investments can be released, and made available for recovery.  Which means not listening to most of the whiners at the Jobs Summit who want their own bad positions propped up, but allowing all the malinvestments to be liquidated – to stop consuming capital – to allow mortgagee sales to happen – to insist that debts are paid.  (Except of course the “debts” that are owed to the IRD. Those bastards can wait.)
    • Policy Solution: Allow the remaining capital of lenders to be freed up as soon as physically possible by allowing the rapid liquidation of unsound investments.
  • Recovery requires that government stops spending so goddamn much.  The single biggest cost to producers is the dead weight of government.  Government spending is not investment – it is consumption.  We’ve consumed enough – what producers have needs to be made available for recovery.  Cutting their wages and salaries would be a good start (see above).  Cutting useless and intrusive government departments would be even better; it’s not like there’s a shortage of the bastards to choose from.
  • Recovery requires that the pool of real savings are built up again.  According to Mr Bollard, up to $39 trillion has been consumed so far in the current economic collapse.  Those savings need to be built back up again – and with real savings, not with the counterfeit capital that caused so much of that capital destruction. (And we must realise that it is not consumption spending that drives an economy, it is spending on production – and we must understand that it is the pool of real savings that drives production spending).  In order to achieve this goal, as Mark Skousen explains, the government needs to find ways to stimulate savings and genuine capital reformation – and the best method is simply to remove barriers to capital accumulation, and to encourage everyone, including wage and salary earners, to save.  Which means reducing their costs.
    • Policy Solution: Reduce or eliminate taxes on interest and dividends, and resist calls for a capital gains tax.
    • Policy solutions: Resist the temptation to lower interest rates to negative real rates, and let the market leave them where they need to be to encourage the rebuilding of real capital.
  • Recovery requires that the costs of regulation and compliance are urgently reduced.  We’ve been hearing the rhetoric for years, that governments are going to reduce compliance costs, and still there’s no serious intent on the horizon – nothing soon enough, anyway. So let’s offer two simple methods by which that can happen NOW.
    The first is to declare several free enterprise zones around the country, at least one in every major population area, in which all taxes and regulations for new development and new businesses are severely, if not savagely, reduced.  Which is to say, instead of throwing money we haven’t got at projects that don’t make sense, allow small, new enterprises to attract real investment and create real jobs without the heavy hand of government slowing that process down.
    The second is to introduce a network of Small Consents Tribunals for Resource Consent Applications for projects under, say, $300,000.  This, at a stroke, will get builders back to work, and the cost of home-owning come down.  You can read the details of how these would work here.  Do it now.
    • Policy Solution: Declare several free enterprise zones around the country, at least one in every major population area.
    • Policy Solution: Introduce a network of Small Consents Tribunals for Resource Consent Applications for projects under, say, $300,000.
  • Recovery requires tax cuts. During America’s Great Depression, Franklin Roosevelt raised taxes to usurious heights – as Stephen Moore from the WSJ points out, “the top tax rate under Roosevelt soared to almost 80 percent and then 90 percent, thus smothering any possibility of a [US-led] recovery.”  Let us not make that same mistake here.  Let us also realise that the single biggest cost to producers is their tax bill.  At a time of economic distress, that is a bill few businesses can afford.  Taxes must be reduced.
    They must be reduced for producers.  And they must be reduced for the person working two jobs to keep their family afloat, and who’s being punished for it.
    A responsible government however would know that they can’t cut taxes without cutting spending.  Reality cannot be faked in that way.  Roosevelt, for one, tried deficit spending on top of his enormous taxes, with the result that at the end of a decade of deficits fully 17.2 percent of Americans were still unemployed (which was up from 16.3 percent or 8,020,000 in 1931) and those who were still working were trying to pay off a debt that amounted to US$280 billion in 1930s dollars
    Deficits don’t work.  They still have to be paid for.  Leaving the bill for future generations is a form of ‘fiscal child abuse.’
    • Policy Solution: Cut taxes.  But make commensurate spending cuts first.
    • Policy Solution: Remove the imposition of added taxes on secondary jobs.
  • Recover requires that the purchasing power of money be at least maintained, and at best enhanced.  What this means is that the dollar in our pocket needs to be able to purchase more real goods and services, not less, with every month and year that passes.
    And what this means is that producers must be able to produce more with less, so that real prices can come down – and we can buy more with less.  It means that the Reserve Bank must resist the temptation to flood the country with counterfeit capital as they have been, every new dollar of which reduces the purchasing power of every dollar in your pocket.  It means they must lower the fractional reserve rate that has allow private banks to so profligately inflate the currency with a reserve backing only a fraction of what a responsible lender would contemplate. 
    In short it means they must pull their heads in, insist on deleveraging, and get the hell out of the way so that real saving and genuine capital accumulation can happen.
    • Policy Solution: Restrict the Reserve Bank’s ability to inflate the currency, and remove the ability of private banks to inflate their own credit lines.

In short, to borrow once again the words of CNBC’s courageous Rick Santelli, we need to reward people that could carry the water instead of drink the water.

If that doesn’t happen, then we’ll be needing our own tea party right here in NZ.

Part One of my posts on the Jobs Summit is here: Jobs Summit: The Problems.

UPDATE 1: First speaker up at the TalkFest was Reserve Bank Governor Alan Bollard … he is looking for ideas … he has none …

‘UPDATE 2: Matt Nolan at The Visible Hand says, “I get the feeling this ‘summit is going to provide some quality quotes.”  Based on the first two he’s harvested, I’d say he’s dead right:

  • JOHN KEY: “The Government doesn’t have a monopoly on good ideas…” 
    Responds Matt: “See I didn’t even think the government was in the market for good ideas…”
  • GERRY BROWNLEE says “there were two key messages coming out of the discussions he had been involved in at the summit today: the need to cut red-tape and the difficulty small and medium-sized businesses are facing in trying to raise capital in the current climate.
    Responds Matt: “Now if we asked businesses what is “restraining” their activity three years ago we would have gotten the same two responses…”

Keep ‘em coming!

UPDATE 3:  According to Stuff: “Another idea on the table [at the Jobs Summit] is a $50 million cycleway built the length of the country. It would provide 3700 jobs and would take two years to build. The government is keen on it…” [hat tip Standard]

Looks like they’re taking their Keynes too literally.  To paraphrase the destructive duffer,   Pyramid-building, earthquakes, even wars may serve to increase wealth.  To dig holes in the ground or build cycleways the length of the country will increase, not only employment, but the real national dividend of useful goods and services.

Fatuous fiscal foolishness.

UPDATE 4:  I need to make something explicit in my solutions above that at present is only implicit.  I say that we can still employ as many people as are willing to work, just as long as they are willing to work for what their job is now worth.  And I say that one solution to looming unemployment is to devise various means by which costs, including wages and salaries, can fall in order to reflect the new economic realities of lower costs.

But while this means lower wages and salaries in monetary terms, in fact in real terms this need not mean a fall at all – and could in act mean a rise in real wages.

This seemingly paradoxical conclusion is reached by means of two related arguments.  The first is that if all costs fall across the board, then it follows that the same amount of money will now command a greater number of goods and services – in other words, since the purchasing power of every dollar has been increased, we can now buy more real goods and service with our reduced monetary incomes.  In other words, even with reduced monetary incomes, our real incomes may have risen.

The second is that if we resort to cutting hours – or to the nonsensical idea of a nine-day fortnight – and if we maintain full employment, then by that means we are actually producing less, we are reducing our productivity, and so rather than putting us back on the path to prosperity we are instead only marking time at best, or even going backwards.  By contrast, if we can maintain full employment, even with reduced wages and salaries, then the economy will not need to fund the extra expenditure required to pay the doles, but it also means that productivity itself can be maintained. Which means we will be producing more with less cost – which is the necessary path to recovery.

This is not slight of hand.  This is just simple economic reality.

Jobs Summit, 1: The Problems

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

0_21_zombies_450I don‘t know about you, but when I first heard about today’s so called Job’s Summit I immediately thought of that famous quote above from Adam Smith’s Wealth of Nations, in which he berates the zombies of government for “not leaving things at perfect liberty” and thus raising prices by “by obstructing the free circulation of labour and stock.”

And I thought too of US President Hoover, who in the wake of the great Stock Market Crash of 1929 organised an economic conference and a committee on unemployment, which attempted to keep prices up by the sort of contrivances described above.

I fear the result of today’s Summit will be the same, since all the advice proffered in advance of tomorrow’s Job Summit has involved lots of merchants --almost to a man and woman  -- calling for lots of government help for their particular businesses, the net result of which is likely to see the government doing lots of stuff to restrain their competitors and to keep prices high, and paying for lots of stuff to keep “purchasing power” inflated.

There’s at least seven problems with those solutions – not the least of which is that when President Hoover tried precisely those same contrivances, it resulted in a drastic loss of production and a savage rise in unemployment (which by the end of his presidency had reached well over twenty percent!). 

First, the notion that governments need to act to keep prices up is exactly the opposite of what economic reality demands, and ignores the simple fact that one man’s prices are another woman’s costs. In a time of falling world prices, which all governments are powerless to diminish, what is most important is to lower costs to all producers, which governments can best effect by doing the opposite of what they normally do: which is to say they should get the hell out of the way.

Second, the idea that governments should protect local businesses at the expense of foreign suppliers is to invite a protectionist backlash – disastrous to an economy like ours that is entirely dependent on the world’s trade to stay afloat.

Third, the idea that government needs to spend money it doesn’t have in order to keep spending up and “purchasing power” elevated is another example of the notion I explained yesterday, by which the government steals from you with every inflated dollar it spends.  The notion that it needs to spend, or to encourage consumption, is the direct result of measuring national income without measuring real production -– which, as George Reisman thoroughly explains, is like playing macroeconomics with only half a deck of cards.  As he points out, it’s not consumption that drives an economy, it’s production.

Would that anyone at today’s Summit understood that, before we perish in an orgy of consumption that we couldn’t afford before, and we definitely can’t afford to pay for now.

Because the money to pay for lots of all the government’s spending “to create jobs” has to come from somewhere (and this is the fourth point here).  Government has no money of its own, so to get money to throw away it can only tax, borrow or print dollar bills – which means either from the incomes of existing taxpayers or from their pool of real savings. In the latter case it simply puts off the taxation until later (and the heavier the borrowing, the more it approximates a kind of “fiscal child abuse” of following generations).  And in the first case it just takes money right out of producers’ pocket, raising their costs once again and reducing the level of real investment they can make and the amount of productive employment they could purchase, and (as a consequence) lowering wages. And in the second case, if they borrow in order to spend, all they’re doing is crowding out the market of loanable funds and making it more difficult (and more expensive) for producers to borrow. 

“Stimulus” packages may create make-work jobs in the short term, but this is at the expense of many more real jobs in the long run.

Fifth, we desperately need tax cuts – producers desperately need tax cuts to lower their costs and employ more people productively – but responsible governments would know that every cut in taxes must be accompanied by corresponding cuts in government spending – since if they have to borrow to afford those cuts, they would know that’s only sleight of hand because the taxpayers are still paying anyway.

Sixth, the sort of spending already signalled (and the sort of shopping lists we’re likely to hear today)  suggests the ghost of John Maynard Keynes is behind most of the spending plans. “Pyramid-building, earthquakes, even wars may serve to increase wealth,” he advised many decades ago. “To dig holes in the ground, paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services,” he said, indicating the quality of his advice – and reflecting the quality of much of the spending we hear about.  With advice like this from so called friends, it’s hardly necessary to have enemies.

Seventh, it’s important to understand what real investment looks like.  Real productive investment produces more wealth than it consumes.  It takes existing capital, and it makes more of it. There is nothing in the lists of government spending that fits this bill, which is to say that all government spending is consumption, not investment.

Which is to reinforce the point that every dollar that government spends is not a dollar that is going into productive investment.  Sure, you’ll see the dollars the government is spending, and see the jobs “created” – but what you won’t see are the jobs that would have been created if that money had been left in producer’s pockets.  Henry Hazlitt explains with an example that demonstrates the fundamental error in all the solutions we’re going to hear today that involve government “doing more”:

    A bridge is built. If it is built to meet an insistent public demand, if it solves a traffic problem or a transportation problem otherwise insoluble, if, in short, it is even more necessary to the taxpayers collectively than the things for which they would have individually spent their money had it had not been taxed away from them, there can be no objection. But a bridge built primarily “to provide employment” is a different kind of bridge. When providing employment becomes the end, need becomes a subordinate consideration. “Projects” have to be invented. Instead of thinking only of where bridges must be built the government spenders begin to ask themselves where bridges can be built. Can they think of plausible reasons why an additional bridge should connect Easton and Weston? It soon becomes absolutely essential. Those who doubt the necessity are dismissed as obstructionists and reactionaries.
Two arguments are put forward for the bridge, one of which is mainly heard before it is built, the other of which is mainly heard after it has been completed. The first argument is that it will provide employment. It will provide, say, 500 jobs for a year. The implication is that these are jobs that would not otherwise have come into existence.
This is what is immediately seen. But if we have trained ourselves to look beyond immediate to secondary consequences, and beyond those who are directly benefited by a government project to others who are indirectly affected, a different picture presents itself. It is true that a particular group of bridgeworkers may receive more employment than otherwise. But the bridge has to be paid for out of taxes [or borrowing]. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $10 million the taxpayers will lose $10 million. They will have that much taken away from them which they would otherwise have spent on the things they needed most.
Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.
But then we come to the second argument. The bridge exists. It is, let us suppose, a beautiful and not an ugly bridge. It has come into being through the magic of government spending. Where would it have been if the obstructionists and the reactionaries had had their way? There would have been no bridge. The country would have been just that much poorer. Here again the government spenders have the better of the argument with all those who cannot see beyond the immediate range of their physical eyes. They can see the bridge. But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of imagination the possibilities that have never been allowed to come into existence. They can see the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs. To see these uncreated things requires a kind of imagination that not many people have. We can think of these nonexistent objects once, perhaps, but we cannot keep them before our minds as we can the bridge that we pass every working day. What has happened is merely that one thing has been created instead of others.

It does not matter whether the money to pay for the make-work projects is from taxes or from borrowing, since it’s essentially the same  source in both cases.  In either cases, any job created by taxpayer-backed projects means at least one private job has been destroyed somewhere else.

Think about that.

SO THERE’S THE PROBLEM WITH the “solutions” we’re going to see today.  The fundamental problem for a growing number of producer now, which is a problem characteristic of depressions, is that (even with the inflated prices we already see) their costs to produce goods and services are now higher than the price for which they can sell those goods and services.  House builders are a prime example.

More government spending is not the answer.  More debt-ridden consumption is not the solution. Keeping prices up is not going to sort things out.  Obstructing the free circulation of labour and stock is not going to help.  What will help is the opposite of this approach: More freedom, less government – which will lead to more enterprise, more wealth, more jobs – in that order.

Let’s recap: the fundamental problem that producers face right now is that their costs are now approaching (or are above) the prices they can get for their work.

Which means the most urgent need is to allow costs to fall -– which (if we remember our earlier point that one man’s prices are another woman’s costs) means to allow prices to fall.  We’ve just experienced an orgy of consumption in which whatever was produced at whatever price it was produced was snapped up.  Even unviable producers were viable.

Those days are gone.

Recession means correction. Prices need to correct, urgently. Unviable malinvestments need to be flushed out, urgently, so those resources can be put to work properly.

In short, to borrow the words of CNBC’s courageous Rick Santelli, we need to reward people that could carry the water instead of drink the water.

And government needs to urgently get the hell out of the way so that can happen.

More later today, when I’ll offer half-a-dozen solutions to help that happen…

Tiger attacking a wild horse - Delacroix


For romantic painters like Delacroix, the energy and violence of such an attack – expressed with such a few savage strokes to the horse’s main, and the shadows, and the background – was a physical expression of the intense emotions Delacroix sought to bring to life on canvas.

Thursday, 26 February 2009

Buy now!

tas_storeclosingpage The Atlas Society is closing. What this means for those of you who want to stock up on Objectivist (and Objectivish) books, tapes, lectures and CDs, then you now get forty percent off everything.  Forty percent! 

Sure, it makes less of a difference now that the NZ dollar has become the Pacific Peso once again, but there’s still some real bargains to be had.  Go take a look.

Who can resist bargains like these at forty percent off?

Wealth is not riches

There's a fundamental misunderstanding about the nature of wealth, and how to produce it. The misunderstanding leads to a serious error – an error explained by the concept of “purchasing power.” 

Let me explain in simple terms.

Wealth is not riches.  Whereas riches is a measure of the command we might have over dollar bills, wealth (in a simple sense) is a measure of the command we have over real goods and services

See the difference? 

Sure, dollar bills are generally our means of obtaining real goods and services, so it’s easy to confuse the two.  But confusion over the two is the chief means by which this basic economic error makes you poorer.

It’s true.  To demonstrate, let’s put our two clarifying statements together: Our own personal wealth is a measure of the command our dollar bills have over real goods and services –- in other words, of our purchasing power.  Which means, to take it a little further, that to increase our wealth means to increase our purchasing power.  (In places like New Zealand however, where in real terms wages and salaries haven’t risen for years, we’ve still yet to learn this point.)

There’s a corollary in this for pubic policy -– and the policy you support will depend on your understanding or misunderstanding of the distinction between wealth and riches.

If you understand the distinction, then you’ll understand that the means by which we make ourselves wealthier is by producing an increasing number of the goods and service we want at an ever lower price, which is what it means to increase the purchasing power of our dollars.  To put it another way, a society in which we see gently falling prices over time is a society that is making itself wealthier.

This, by the way, is precisely the sort of society our great-grandparents enjoyed from 1860 to 1914, when the gold standard was suspended to pay for World War I.

Conversely, if you misunderstand the distinction, if you think that the measure of your wealth is the number of dollar bills in your pocket, then you will also support the idea that the way to increase your wealth is simply to increase the number of dollar bills in your pocket, regardless of what those dollar bills can pay for.  You see, if we all have more dollar bills (perhaps because the government or its bankers are “injecting” more credit into the system) and this increased number of banknotes is chasing the same amount of real goods and services, then all we’ve done with our new tranche of printed paper is to reduce our purchasing power.

In places like Zimbabwe, they’re beginning to understand that.

In places like the US, the UK, Australia and New Zealand however, they call that injection “stimulus.” Or “stabilisation.”

And it only makes us poorer.

If we want to make ourselves wealthier, we need to learn how to make more for less – to increase the purchasing power of our money.  Conversely, if we want to keep making ourselves poorer, then we’ll continue with the delusion that more money means more wealth instead of less.

It all comes down to purchasing power – but not in the way the Keynesians ever thought.

“Green energy” is just a sophisticated make-work program

“Will a green energy industry be an engine of economic growth?” asks Keith Lockitch from the Ayn Rand Center for Individual Rights.

   Many want us to think so, including our new President. Apparently a booming green economy with millions of new jobs is just around the corner. All we need is the right mix of government “incentives.”
    These include a huge (de facto) tax on carbon emissions imposed through a cap-and-trade regulatory scheme, as well as huge government subsidies for “renewable,” carbon-free sources. The hope is that these government sticks and carrots will turn today’s pitiful “green energy” industry, which produces an insignificant fraction of American energy, into a source of abundant, affordable energy that can replace today’s fossil-fuel-dominated industry.

“This view is a fantasy,” says Lockitch, “one that could devastate America’s economy” – and our own.  The reality, as he says is that “green energy” – or renewable energy as our fashionable friends call it here -- is at best a sophisticated make-work program.

Read The Green Energy Fantasy.

NOT PJ: Kicking Arse for England

This week, the Queen has Bernard Darnton’s back in a scrap – but maybe not for much longer…

BernardDarnton One of the great comforts of having a second passport is the knowledge that if I ever get into trouble overseas Her Britannic Majesty is going to come over all arse-kicking and get me out of strife.

When I enter another country I proudly present them with a document that requests and requires in the Name of Her Majesty all those whom it may concern to allow the bearer to pass freely without let or hindrance, and to afford the bearer such assistance and protection as may be necessary.

This “request” is backed by the implied promise that if you don’t treat me nicely and give me any help I may require then Her Britannic Majesty is going to show up with her cavalry and sort you out.

Les Demoiselles dAvignon – Pablo Picasso [updated]

Les Demoiselles dAvignon

Although it was only built last year, Frank Gehry’s fractured ‘Serpentine Gallery’ posted here at NOT PC the other day is part of the mainstream of twentieth-century western art – architecture just took a few more decades to really catch up.

“Twentieth-century art,” explains Stephen Hicks, “is Pablo Picasso's fractured world populated by vacant-eyed, disjointed beings. It is Edward Hopper's emotionally out-of-tune men and women in bland, worn settings. It is the predatory horror of Willem de Kooning's Woman series. It is Salvador Dali's surreal world in which the distinction between subjective dream states and objective reality is obliterated. It is Andy Warhol's smirking trivialization and mechanical reproductions. It is a reality that is captured presciently in Edvard Munch's The Scream, the horror of being a cypher in a world of hideously swirling near-formless forms. 
    The twentieth-century world is also the story of its own self-elimination.”

This was an entirely conscious intention.  Sayeth the ‘great man’ himself:

"Most people can today no longer expect to receive consolation from art. The refined, the rich, the distillers of quintessence (art critics) desire only the peculiar, the eccentric, the scandalous in today's art. And I myself, since the advent of cubism, have fed these fellows what they wanted, and satisfied these critics with all the ridiculous ideas that have passed through my head. The less they understood them, the more they admired me. Through amusing myself with all these absurd farces, I became celebrated...but when I am alone, I do not have the effrontery to consider myself an artist at all, not in the grand old meaning of the word. Giotto, Titian, Rembrandt and Goya, they were great painters. I am only a public clown. I have understood my time and have exploited the imbecility, the vanity, the greed of my contemporaries. It is a bitter confession of mine - more painful than it may seem. But at least and at last, it does have the merit of being honest."
    --Pablo Picasso, November1951

Here’s Jonathan Richman.

Wednesday, 25 February 2009

More ‘stimulus’ stories

Here’s the result of a decade of economic stimulus, as described by Franklin Roosevelt’s Treasury Secretary Henry Morgenthau Jr. to the House Ways and Means Committee in May 1939:

We have tried spending money. We are spending more than we have ever spent before and it does not work.  And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises … I say after eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!

Here’s the explanation of why what was tried in the States was fortunately not tried elsewhere -- with the result that in the States the depression was both deeper and longer than almost anywhere else.

And here, in pictures, is the whole stimulus approach explained very simply.  It’s good.

DOWN TO THE DOCTOR’S: War chests, chunder and cannabusts

A weekly commentary on some of this week’s news items from Libertarianz Party leader Dr Richard McGrath

La Piazza San Marco: Looking South-East – Canaletto (1735-40)


Canaletto was a man for detail. The detail here is Venice’s great market square. Venice’s heart, and the embodiment of what what built it. In one image Canaletto captures the essence of the trade that made Venice great, and the wealth and civilisation that trade engendered – in Stephen Kinsella’s words the commerce, society, freedom, individualism, civilization, civility, and intellect.   In short, the civitas of the marketplace that gave birth to the modern world.

Tuesday, 24 February 2009

Ode to a fig leaf [updated]

On the occasion of the announced retirement of Genetix Fitzsimplesimons, Liberty Scott strides on to the stage not to praise her career, but to bury it and to spit on its grave:

    There is much more than can be laid at the feet of the wolf in sheep's clothing. She looks like and generally talks like she wouldn't hurt a fly, but the truth is that she has been a force against reason, against science, against economics, against individual rights and has happily used personal attacks when she saw fit to do so.
She is a simpering vapid scaremongerer. New Zealanders should be pleased this nice but dim woman has not been in Cabinet, and has at the most dabbled around the edges of power rather than been in control of it.

There’s more, much more where that came from.  Read on here: Farewell to the wolf in sheep's clothing.

The best thing about Fitzsimplesimon’s retirement?  In Rob Hosking's words in the NBR, the departure of Fitzsimons -- “who has become a sort of organically grown, carbon-credit-worthy fig leaf for what is basically a radical left-wing party” – and in particular the elevation of non-environmentalist Sue Bradford, will expose for all to see the antediluvian Marxism that is now the ideological base of the local Greens.

UPDATE: Searching Scott’s ‘Marxist Gits’ file uncovers another seriously good lambasting of the woman who is the human fig leaf for the Marxist martyrs in the Greens: Just one more chance.  [I thank our ActSupporting commenter for the pointer.]

Tuesday morning ramble [updated]

While I was off air yesterday, I was sent loads of links to so much good reading that I was in no position to post. So I figured I’d take a ramble through it all this morning.

  • How bad is the world’s economic crisis?  Take it from George Soros, who while never entirely disinterested is always worth listening to:
        “Renowned investor George Soros said the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.”
  • Things are so bad, even God is telling us to read Atlas Shrugged
        Crikey.  Get your copy now before it sells out: As Lindsay Perigo reports, “Ayn Rand's resurgent Atlas Shrugged, the most important novel of the twentieth century, exposing the moral bankruptcy of Chavez-Obamian collectivism and its catastrophic consequences, sits at 83 on's best-seller list in paperback, and 124 in hard cover, fifty years after publication.” One sign of good news in the gloom, perhaps.
  • So with those earthquake warnings ringing in our ears, let’s start off with three neat films you might want to bookmark. 
    First, The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo [hat tip Justin Ptak].
  • FRS And second, here’s Money as Debt by Paul Grignon, which explains the system by which banks organise debt into currency – creating money out of thin air that’s backed only by promises to pay - the termite mound in the monetary system that underpins the present collapse. (Buy the DVD here if you’d like to show the copy further afield.)  Yes, it’s a little conspiratorial, but it explains the mechanics of fractional reserve banking, and its inherent fragility, extraordinarily well.
  • And third, and much shorter, here’s George Soros’s former partner Jim Rogers speaking recently on Dutch TV.  Part Two is particularly good.
  • And now, if you really want to thoroughly understand the present crisis right down to the root, right down to the causes of it all, then George Reisman’s new series on Capital, Saving and Our Economic Crisis is really a must-read: “a series of articles that seeks to provide the intelligent layman with sufficient knowledge of sound economic theory to enable him to understand what must be done to overcome the present financial crisis and return to the path of economic progress and prosperity. The first article in the series was “Falling Prices Are Not Deflation but the Antidote to Deflation,” which you might already have seen.  
    And now the second article is now available, in two parts.  It’s compulsory reading:

Remember, this will be in the exam.

  • DJI-240209 So is stimulus working?  Well, what do you think?  “ Market Finds 11-Year Low Despite Bank Rally ” says CNBC summing up all the post-stimuli red ink.  It’s basically been downhill all the way since the stimulus was mooted – and the pace is now accelerating.
  • Speaking of downhill, let’s move on to the Greens.  While Sue Bradford and Metiria Turei fight it out for the local Green Party’s ‘I’m-furthest-left-than-you’ award, British Greens are now actively promoting nuclear power as the best way forward.
        “The four leading environmentalists who have come out in favour of nuclear power are Stephen Tindale, former director of Greenpeace; Lord Chris Smith of Finsbury, the chairman of the Environment Agency; Mark Lynas, author of the Royal Society's science book of the year, and Chris Goodall, a Green Party activist and prospective parliamentary candidate.
        “Mr Tindale, who described his turn-around as a "religious conversion", said many more in the environment movement think ‘nuclear power is not ideal but it's better than climate change’."

  • Have you heard the one about the Al Qaeda head man who’s started trashing his mates?  It’s no joke.  Tim Blair has the story. “Attacking America has become the shortest road to fame and leadership among the Arabs and Muslims,” wrote Al-Qaida founder Sayyid Imam al-Sharif, who also goes by the nom de guerre Dr. Fadl. “But what good is it if you destroy one of your enemy’s buildings, and he destroys one of your countries? What good is it if you kill one of his people, and he kills a thousand of yours? That, in short, is my evaluation of 9/11.”  Blair comments wryly, ”Just as well al-Sharif is safely in jail. Saying those sorts of things can get you in trouble.”
  • Have you heard the one about how Corrections Minister Judith ‘Crusher’ Collins and Corrections Department Supremo Barry ‘The Man’ Matthews are going to sort out their differences?  Danyl McLauchlan has the scoop on what could be the fight of the century. 
    Read his his hilarious account at Collins challenges Corrections CEO to knife fight in showers.  Commenters are already taking bets.
  • Speaking of people snapping, Butterpaper has the account (a true one this time) of a British architect applying to council to build a farm shed, who obviously had enough of the bullshit and let his feelings show in the Planning Report he was required to complete.
        “An example, Context Analysis: ‘The use is compatible with a farm because it is a farm building… It is located where it is because it is in the most convenient place, being on the farm and near the farmhouse.’
        '”Council accepted the report, and noted that it covered all clauses: ‘As long as the architect answers all the relevant headings then it doesn’t really matter what the tone of the application is’.”

  • Capitalism Magazine has a one-two-three hit of world-class economists scything through the myths. 
      • Read Thomas Sowell on Upside Down Economics:
            ”From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us.
            “What was lacking in the housing market, they say, was government regulation of the market's ‘greed.’ That makes great moral melodrama, but it turns the facts upside down.”
      • Read Walter Williams on the Economic Miracle:
           “The idea that even the brightest person or group of bright people, much less the U.S. Congress, can wisely manage an economy has to be the height of arrogance and conceit. Why? It is impossible for anyone to possess the knowledge that would be necessary for such an undertaking…
        ”Our economic system consists of billions of different elements that include members of our population, businesses, schools, parcels of land and homes. A list of possible relationships defies imagination and even more so if we include international relationships. Miraculously, there is a tendency for all of these relationships to operate smoothly without congressional meddling. Let's think about it.”
      • Read Ludwig von Mises on The Alleged Absence of Depressions Under Totalitarian Management:
            “Many socialist authors emphasize that the recurrence of economic crises and business depressions is a phenomenon inherent in the capitalist mode of production…
            “As has already become obvious and will be shown later again, the cyclical fluctuations of business are not an occurrence originating in the sphere of the unhampered market, but a product of government interference with business conditions designed to lower the rate of interest below the height at which the free market would have fixed it…
            “It is essential to realize that what makes the economic crisis emerge is the democratic process of the market…”

  • Another argument for property rights coming out of Australia. Australia’s water shortage, says Chris Brown, is another leading example of the tragedy of the commons.  “The government has blamed the shortage of water on drought and climate change. And while droughts may be created by a shortage of water, water shortages are created by an abundance of government rein.”  Nice pun. 
        Read the whole piece here to see why Australia urgently needs property rights in water: The Water Wizards of Oz.
  • You’ll have heard that Geert Wilders, the Dutch MP who was the director of the film Fitna has been banned from entering Britain on the basis that his film is “hate speech.”  Says a defiant Wilders in a speech in Rome [hat tip Sandi at SOLO],  
        Fitna is actually not made by me, but is made by radical Muslims, the Koran and Islam itself. If Fitna is considered to be hate speech, then what is the Koran? … Wilders: "If I am considered to be a threat to public security, then what is Islam?"
  • Owen McShane has been busy.  He’s writing four excellent essays from a Burkeian-Hayekian viewpoint on the clash between the Enlightenment and Environmentalism, and he’s just completed the third.
      • The first essay, The Rise of Urban Romanticism – or the New Road to Serfdom discussed the impact of the Romantic movement and its contemporary expression on urban planning theory, and in particular examined Smart Growth and Visioning as planning tools within this context.
      • The second essay, Beware the Dark Greens, explored the development of European environmentalism from the dark side of Romanticism as expressed in the early and mature phases of fascism. This passionate and spiritual form OF environmentalism, does not sit well within those nations still committed to the democratic tradition.
      • The third essay, The Age of Environmentalism – the American Story, explores the origins of Environmentalism in the United States during the 1960s and its rapid development during the 1970s, and implies that this form of Environmentalism… [has] determined so much of the political debate of the current “Age.”
      • The fourth essay (yet to be written) “European Communes and Urban Villages” will explore the story of the commune movement in Europe…

    Head to the index for the series here.

  • History.  History and children.  How early do children need to learn history?  Kids Need History Early says historian Scott Powell. How early? “The best time to start kids on a systematic history curriculum is when they are six or seven years old. Five is usually too young, and eight is possibly too late! Why start history at six or seven years old? Because children of that age are ready for history.”  In Montessori terms, at that age they have a ‘sensitive period’ for history that should be taken advantage of.  Don’t miss out.
  • I intended to blog this last week.  It relates to an argument I had over summer, and as TVHE explains it’s a common yet important economic misunderstanding: the difference between Average vs Marginal: The most common mistake in economics.
       To help you out in understanding the difference, from the Ideas-You-Need-To-Know file comes this beauty:  The Philosophical Mortician explains brilliantly the important economic notion of Marginal Utility, which explains among other things why diamonds are worth more than water (even though we’ll never die for lack of diamonds) and why CEOs of large companies, even bad ones, calculate their salaries by the number of zeroes at the end -- while teachers, even good ones, spend their spare time checking behind the cushions for spare coins.
  • Speaking of economic error, here’s a Finnish series of ads encouraging people to spend and not feed the recession.
  • And finally, while speaking of resistance to error, here’s a stirring call for a Chicago Tea Party: Rick Santelli’s magnificent tirade against the Obamessiah’s stimulunacy [hat tip Voices for Reason].
  •     On CNBC's "Squawk Box" Feb. 19, the Chicago Mercantile Exchange floor reporter, along with several traders, expressed his outrage about President Barack Obama's plan to "spread the wealth" for people that didn't deserve it. He said a stimulus should go to people who live responsibly rather than some sort of housing bailout to people that lived irresponsibly.
    "I tell you what, I have an idea," Santelli shouted. "The new administration is big on computers and technology - how about this, President and new administration? Why don't you put up a Web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers' mortgages, or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a change to actually prosper down the road and reward people that could carry the water instead of drink the water."


General debate

Feel free to take a crack at whatever, and whomever, you wish.  Have at it!

Serpentine ‘Gallery’ – Frank Gehry

serp1_37311aI give you tonight a complete piece of shit -- a work of total architectural fraud -- talked up as 'art' in a piece here from The Independent that is emblematic of the synergy between critic and charlatan. 

The critique is as bad as the ‘architecture.’  Like an artistic Ponzi scheme, both critic and the so-called ‘architect’ need each other -- and the arrival of new suckers -- to survive.

This is crap that needs the fertiliser of bullshit to flourish. Architecture that isn’t worth the enormous effort that it takes to assemble. A fraud that isn’t worth the energy to unravel.

In a word: it’s shit.  Very, very expensive shit.

Are you buying it?

Monday, 23 February 2009

Sometimes protest works…

NBR, 4:17pm: Government calls delay on S92
   The government is to delay implementation of the controversial Section 92A of the Copyright Amendment (New Technologies Act) due to come into force February 28.
    Prime Minister John Key announced at a post-cabinet press conference this afternoon that implementation of the controversial clause of the copyright legislation to be delayed until March 27.
   “We are hoping that by that time we will have come up with a voluntary code of practice,” Mr Key said.
    If no agreement is reached, Section 92A will be suspended.

Aucuns Oscars [updated]

No, I won't be commenting on the Oscars.

Why would I?

I’ve many better things to do, as I’m sure you have.  And awards to people I don't admire for 'skills’ I find questionable performed in movies I'm never likely to watch mean less to me than ... the price of garlic in Goz Beida, Chad. 

Which is, by the way, about 1850 CFA Francs per kg.

UPDATE:  Penelope Cruz just described the Academy Awards as “a moment of unity for the world.” In the words of Tim Blair, “That’s it for me.”

Depression differences [updated]

Since the Herald began a series over the weekend looking at the global depression, I figured I’d start posting a few pointed historical facts and figures here – including a few parallels.

According to Austrian economists like Peter Schiff, Mark Thornton and Thorstein Polleit – who all draw their theoretical powder from Ludwig von Mises’ theory of the business cycle, which allowed him to see the oncoming Great Depression --  the seeds of destruction in both the thirties depression and the present model occurred in the years before their respective bubbles exploded.

In both cases, ‘the Fed’ pumped up the money supply, which spilled over in the twenties into the stock market, and in the 2000s into the housing market.  These were the most obvious of the many malinvestments caused by the dramatic monetary inflation, a phenomena that both Keynesian and Friedmanite economists largely ignore. These are the figures which blew up the bubble; the inflationary figures they have no time for:


Compare that to the increases over the 2000s (graph pinched from Bob Murphy’s fine article ‘Evidence that the Fed Caused the Housing Boom’), which reflects too the post-bust frenzy in which the central bankers are still printing like mad.:


Now, note that both depressions started in the States (the thirties depression, albeit, as a result of European attempts to avoid paying for the First World War), but as the figures below will indicate, the effect of the global depression was different in every country. It was deep and it was long everywhere, but as it happens, it was deeper and lasted longer in those countries like the US who adopted the most profligate solutions (i.e., all the big-spending solutions favoured today) and who insisted on keeping wages and prices high so as to maintain ‘demand,’ and less so in those countries that weren’t so profligate, and who allowed wages and prices to fall to reflect the new realities.  (Note that the Scandinavians had another reason for their apparent immunity – they were supplying Hitler’s war economy, a bill that would be submitted to the world in the next decade).


The depth and distress can be seen by comparing year-on-year figures for major countries (and by including our own wee corner of paradise).  As you can see, there’s still a few gaps to fill in …


The world was just as globalised then –- at least it was before the passage of the US’s Smoot Hawley Tariff Disaster.  It was just as much prey to central bank meddling with the money supply.  And in both decades they the monetary inflation led to a credit bubble that popped.

Perhaps the biggest difference now is that more countries’ governments, including NZ’s, were prepared to let the ‘sharp edges’ of the world depression be taken off by the ‘classical’ solution of letting wages and prices fall, instead of trying to keep them up by profligacy.

And in the context of employment, there is now another another big difference between then and now: the number of people now directly employed by the state – which is to say, carried on the shoulders of the productive – is vastly more than it was back then.  And as Forbes magazine reminds us, there is no depression for the state.

UPDATE:  On a related note, Austrian economist David Gordon says,

In the present recession, advocates of government intervention often evoke the specter of the Great Depression. Unless the government intervenes massively, we are told, we risk an economic collapse comparable to that of the 1930s. To see the fallacy of this claim, it is imperative to understand that government intervention both led to the Depression and prevented recovery from it. The following books, I hope, will assist those interested in grasping what happened in this vital historical era.

Read on here: What You Must Read About the Great Depression.

Wait for the blackout



This is your last opportunity to help prevent Section 92A of the Copyright Act becoming law.

National Party MPs meet today (Monday)  for their Cabinet meeting tomorrow (Tuesday) for their Caucus meeting.  EMAIL THEM with your view of what they must do.  Tell them to Abolish s92.

All MP’s email addresses can be found on the NZCPR PARLIAMENT page - click here>>>.  Try to be polite, even though they demonstrably don’t deserve it.

In my own humble opinion, here’s the sort of thing you should be telling them.

Friday, 20 February 2009

Best NOT PC for the week

A week of recrimination, politicisation and exasperation -- dominated at this blog at least by a post where I shut up and let you talk, which was an order of magnitude more widely read than any other post here.

Maybe I should shut up more often?

Here’s the posts NOT PC readers  liked reading most over these last seven days or so.  If you missed out, here’s your chance to catch up:

  • General debate
    In which I say nothing, and you lot celebrate.  You think we should try this again sometime, huh?
  • As CO2 rises, temperatures … don’t
    Our carbon emissions are rising, say warmists!  Maybe, but our temperatures aren’t.  You think there’s maybe a problem with warmist theory?
  • Good news from ignoring bad law
    A Victorian family fined for “illegally” clearing the bush around their home to make a firebreak survived the savage bushfires.  Would that some of their neighbours had.
  • NOT PJ: Carisbroke
    What is it with politicians and stadiums? Even those rare politicians who are only slightly profligate, when presented with an artist’s impression of a stadium they develop all the self control of a half-Irish half-Frenchman with six hours to live who’s discovered a liquor cabinet in a brothel.
  • Law versus a lynch mob
    Contrast the words “The retaliatory use of force requires objective rules of evidence to establish that a crime has been committed” with what you read as you thumb through s92A of the Copyright Act…
  • ARI outreach hits London
    NOT PC readers who, like me, follow the progress of Objectivism with great interest will be very pleased to hear of the Ayn Rand Institute's new "outreach" programme.
  • NOT PJ: Free Bank (to a Good Home)
    Our correspondent Bernard Darnton serves up a history lesson this week – with the promise that obscene ranting will resume as usual next week.

And the favourite art post of the last seven days was … by Mr Matisse.  Enjoy, and thanks for reading and contributing.
Cheers, Peter Cresswell