Friday, 9 August 2013

Friday Morning Ramble: The ‘Failures of Modern Mercantilism’ Edition

The Dangers of Modern Mercantilism, 1: “It is critical to understand that the issues for the NZ economy arising from the current Fonterra debacle  (as opposed to dairy farmers and Fonterra directors and managers) is assuredly not a "public relations" issue or one of "reputational management". The best PR firm in the world cannot resolve such issues through spin - nor should it try. Calling for better "PR" is simply a form of denial.”
Economy Wide Lessons as the lustre of white gold loses its shine – EYE 2 THE LONG RUN
Answering the Ws – HOME PADDOCK 
“The Chinese don’t see milk as we do in the west.” – Nick Hubble, MONEY MORNING AUSTRALIA

The Dangers of Modern Mercantilism, 2: Government gives Rio Tinto nearly $40,000 per job to extend the Tiwai Point smelter’s closing by around one year, while keeping power prices higher for everyone else. Oh, and helping to tickle up the share prices of govt-controlled utilities.  They hoped. (Oops.)
“This is a transfer of resources to many in Southland (the workers and those they interact with), the firms owners, and buyers of aluminium … and by the sounds of things financial analysts…” One wonders what those resources might have created otherwise…
Smelter deal $30m worth of short-sighted thinking – NZ HERALD EDITORIAL
The Tiwai industrial bailout – Paul Walker, ANTI DISMAL 
The Tiwai industrial subsidy – Matt Nolan, TVHE

The Dangers of Modern Mercantilism, 3: “By exporting far more than it imports, Germany is providing loans to other countries. This keeps the German economy humming but it is no guarantee that in the long run this will be a good deal.”
Do not pass go: Germany's Monopoly moment – Dr Oliver Hartwich, NZ INITIATIVE

“There’s a reason Adam Smith called it an invisible hand. You don’t
need a lot of very visible committees or technocrats pulling at the levers
of government or NGOs to make the free enterprise system work. You
just need freedom and the rule of law (okay, respect for entrepreneurs, too).”
- Andrew Coulson, “Making a Market in Education

“Owners of earthquake-prone buildings now have a bit more time to bring them up to spec. The owners are mad because they say it isn't long enough; people who experienced Christchurch are mad because buildings will still fall on people and kill them in another quake. They could both be right.”
Earthquake-prone buildings – Eric Crampton, OFFSETTING BEHAVIOUR 

Ahem. Only one Auckland Mayoral candidate is running on a platform of rates CUTS!.
Stephen Berry: The Rates Cutter! – AFFORDABLE AUCKLAND

No, governments never lie. They’re sometimes just economical with the truth. (And by “sometimes,” we mean virtually all the time.)
Happy Gulf of Tonkin Anniversary (and Thanks, NSA, for Lying about It for 40 Years)! – CATO AT LIBERTY

“The range of percentages [in which the family unit provides comfort and care to elderly parents] is from 3% in Denmark to 61% in Portugal. Quite an astonishing range, I think. It shows how the behaviour of people is strongly influenced by their welfare states.”
Care of elderly and the welfare state – LINDSAY MITCHELL

A lesson in political compromise: giving your enemies some of what they want doesn’t stop them demanding more.
Real Politic: Carbon Tax Pessimism (Part I) – Kenneth P. Green, MASTER RESOURCE

Australia’s destructive carbon tax is in full political play this election season.
Dear Australia: Replace the Carbon Tax with . . . NOTHING (don’t cream consumers at the credit casino) – Vic Forbes, MASTER RESOURCE

So, about those predictions of an ice-free Arctic by 2013…
Another dud scare: ice where there was meant to be none – ANDREW BOLT

Chart of the week, 1: What happened when Professor Karl Erdman was asked to produce a record of surface temperature changes from his search of raw, historic US National Oceanic and Atmospheric Administration files. See below what he discovered.
NOAA Surface Temperature Dataset Shows Little to No Global Warming Since 1880 – OBJECTIVISTG INDIVIDUALIST

The new Bank of England governor has decided to target employment instead of prices. I wonder what folk think about that?
New Bank of England strategy is misguided and dangerous – I.E.A.
This will usher in a new age of monetary Kremlinology.” – Steve Baker, MP, THE COBDEN CENTRE

Should consumers be taxed to reflect the benefits of being part of the division of labour?  Then why subsidise them for some of the costs?
Trade-Economics Assistance – Don Boudreaux, CAFE HAYEK

Dear China, Is this what you call growth and prosperity? Or would you call it malinvestment.
China's Replica of Paris Is Now an Eerily Depressing Ghost Town – GIZMODO
China's Credit Crisis In Charts – ZERO HEDGE

“Supporters of laissez-faire capitalism are often asked, ‘If the government doesn’t build the roads, who will?’ Having lived in traffic-infested Northern Virginia and Southern California, I have always said that private roads are the best argument for capitalism, not the thorniest objection… History is on my side…”
Private Roads – Don Watkins, LAISSEZ FAIRE

“But the true genius of the market economy isn’t that it produces prominent, highly publicized goods to inspire retail queues, or the medical breakthroughs that make the nightly news. No, the genius of capitalism is found in the tiny things — the things that nobody notices.”
Capitalism Is Awesome – Don Boudreaux, CAFE HAYEK

What kind of policy thinking would Janet Yellen bring to the position of Fed chair? Oh. My goodness.
Janet Yellen: "A Wise and Humane Policy Is Occasionally to Let Inflation Rise" – E.P.J.

“Central banks cannot solve the problems they created
any more than an arsonist makes a good firefighter.”

- Steve Horwitz

Chart of the Week, 2: Ever wondered what would happen if you charted over time the market capitalisation of the New York Stock Exchange divided by the amount of counterfeit capital issued by the US Federal Reserve, ie., their central bank. Interesting, no.

President of the USA Barack Obama, Nobel Peace Prize Winner, speaking on the Jay Leno show: “The odds of people dying in a terrorist attack obviously are still a lot lower than in a car accident, unfortunately.”
Great Orator Gaffes Again – WSJ

“One would think that writers in the humanities would be delighted and energized by the efflorescence of new ideas from the sciences. But one would be wrong.”
Science is Not Your Enemy – Robin Varghese, 3 QUARKS DAILY

“New evidence coming to light in the National Archives and the Bodleian Library may soon change our entire view of the British slave trade, and the roots of institutional plantation slavery in the Americas… The slave system was built by monarchical tyranny, rather than by private citizens beyond control, as we like to think… Slavery was an excresence of absolutism, not free commerce. We cannot hold our own in the world's bare-knuckled battle of ideas if we concede this cardinal point of history.”
Towards a radical new theory of Anglo-American slavery, and vindication of free markets – Ambrose Evans-Pritchard, TELEGRAPH

In America the evidence has always been there, just ignored: “Little attention has been paid to the thinkers who made Democrats the party of slavery in the lead-up to the Civil War, and their influence on modern liberal ideas. ‘The Very Best Form of Socialism’: The Pro-Slavery Roots of the Modern Left – BREITBART

Now these are people you could drink with.
Greek Villagers Chase Tax Collectors Out Of Town – ZERO HEDGE

“Culture warriors, pseudo historians and opportunistic politicians have spent the last several decades peddling the myth that America was founded as a ‘Christian nation.’  The propaganda appears to be working… [In fact,] the drafters of the Constitution took the radical step of founding the first nation in history with no established religion.  Truth be told, they had little choice.”
Dispelling the myth of a ‘Christian nation’ – Charles Haynes, WASHINGTON POST

“The root idea at the bottom of this long history of reckless social
blueprinting … is that social planning is the peculiar mission of the poet,
the essayist, the novelist, the professor, and the technician.  I do not by
any means infer that all intellectuals are eggheads.  I merely suggest
that eggheadism is an occupational disease of the intellectual, to which
the shallow or the frustrated or the unsuccessful or the angry or vengeful
intellectual, particularly if he has a passion for hatred or notoriety, is exposed.”
John T. Flynn, “Eggheads Through History

“Whatever you think about topless pictures in daily newspapers, the feminist campaigns against them send a woeful message.”
No More Page Three? No thanks – SPIKED ONLINE

“He’s been dead for nearly 70 years, but Sigmund Freud’s provocative theories are still a huge part of psychology, neuroscience, and culture — this despite the fact that many of his ideas were mindboggingly, catastrophically wrong. Here’s why Freud just won’t go away.”
Why Freud Still Matters, When He Was Wrong About Almost Everything – George Dvorsky, io9

Atlas Shrugged number 36 in a surprisingly good list of all-time greatest novels. “Rarely does a book rivet you and make you ponder the Big Picture, but Rand's masterwork, about a man who decides to organize a strike and bring the world to a standstill, does both.”
Books: All-Time Greatest Novels – ENTERTAINMENT WEEKLY

“A common misconception often quoted by media, politicians, activists is that violence is on the rise and has historically been much lower. Similarly, the trend in post-colonial anthropology has been to regard historically indigenous and tribal societies as more peaceful than contemporary Western society. However, archaeological evidence shows that previous societies had very high level of violence. Likewise, modern tribal societies typically too have extremely high rates of violence… [non-tribal] modern societies [however are] the most peaceful the world has even seen.”
Modernity’s declining violence – STEPHEN HICKS

“’What are you? A quitter??’ These warm words of support … speak volumes about the speaker, not the quitter or failure… Quitting and failing is a natural part of life.”
In Praise of Quitters and Failures – JERRY KIRKPATRICK’S BLOG

So if it takes one-tenth of a second for your brain to process what it sees, then a ball from a tennis serve will have travelled 15 feet before your brain spots it. So how do we ever hit the thing?
How the human brain sees a 100-mph fastball – io9

Only in Europe?
The Builders of This Spanish Skyscraper Forgot the Elevator – GIZMODO

I think breast size relating to countries the most important. Although there’s one that tells you a lot about Russian foreign policy over the years.
40 Maps They Didn’t Teach You In School – BORED PANDA

Oh, and…
What Your Favourite Map Projection Says About You – XKCD

An amusing list of alternatives to Platonic Love. Like Heisenbergian Love, which moves fast but you don't know where it's going.
Alternatives to Platonic Love – Dan Smolinsky, McSWEENEY’S

And now, from the “serious philosopher” department, a handy flow chart to help you answer that age-old question.
Should You Send a Lady a Picture of Your Dick? The Flowchart – Diana Hsieh, NOODLE FOOD

Socratic & Sarcastic teaching methods contrasted.


[Hat tips History News Network, 3 Quarks Daily, Samizdata, Riko Stevens, Stephen Hicks, Keith Weiner, Edward Schatz, Jim Matzger, Gus Van Horn]

PS: Congratulations to Marlborough's Renaissance Brewery, just named the Champion Brewery in New Zealand. I concur. And also to Wellington’s Garage Project, Parrot Dog and Yeastie Boys for their citations.  Do yourself a favour, and track down some of their fine work.
And if you’re in Wellington this weekend…


  1. I have to say, Peter, that the Erdman graph is, well, "misleading" would be the charitable word.

    It's pretty easy to demonstrate. All you need to do is go back to the raw temperature data used and plot temperature anomaly vs time (temperature anomaly would be the difference from a defined base temperature, generally a particular year or the average over the record period).

    Temperature data is sourced here, according to the "Objectivist" blog:

    If you do that, you get a very different pattern. One very similar to the top graph presented here, in fact:

    Instead of presenting this clear image of what the temperature has been doing over time, Erdman (or whoever the graph originates from) has plotted change in temperature from one year to the next, which, given variability in temperature between individual years, will naturally fluctuate between positive and negative more than the raw data.

    That zero trend line looks sort of okay if you eyeball it, but doesn't stand up to any serious scrutiny. Indeed, even at a glance, the trend line seems to be slightly above zero most of the time. Which is about what you'd expect.

  2. Hi Chris, Yes, it plots temperature change from one year to another, just as it says on the label. Rather like graphs of monetary inflation.

  3. Just as a point of interest, Peter, do you approve of representing inflation in this way? Or would you rather show the cumulative impact of inflation by graphing nominal money supply over time?

    Now, it's not quite an exact analogy, considering inflation is almost always positive from one year to the next, but it really is a fairly similar principle we're looking at here. Individual changes are small, but cumulative changes add up.


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