… hope and prayers for the freedom fighters in Venezuela. Hoping for a Nicolae Ceaușescu style exit for Nicolas Maduro.
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The first piece is how pensions work, and what’s gone wrong with them. In our state pension (I’ll say a little about private schemes at the end), we don’t “save up for our retirement”. When we started the system after the war, we needed to pay retirees immediately. Pensions have therefore always been met each month out of taxes paid by workers that month. At any given moment, there is only a week or two of funds in the government’s “State Pension account”. While that arrangement solved an immediate problem, it created an enormous structural problem. When the pension scheme was started, life expectancy was about 68. Now it’s about 82. And birth rates started falling in the 1960s, meaning that more and more pensioners incomes are being funded by fewer and fewer workers. The result is that the average person born in 1956 now takes out around £290,000 more in retirement income than she paid over her working life. The plan for addressing that problem was to grow the economy each year by an amount sufficient to generate enough tax receipts to keep funding the expanding retirement bill. And for most of the 20th century, while we benefitted from a global hydrocarbon and nuclear energy system that for decades doubled in size every 7 years, that plan worked. “Net Zero” puts an end to that. July 30th, 2024 | 11 comments
The foreign ministers of Australia, Japan, India and the US issued a joint statement after the massacre, saying ‘We underscore the need to prevent the conflict from escalating’. Likewise, Britain’s foreign secretary, David Lammy, has said ‘we are deeply concerned about the risk of further escalation’. These are warnings to Israel, aren’t they? These powerhouses of Western diplomacy, with their noisy teeth-gnashing over ‘escalation’, are essentially telling Israel to chill out. Indeed, one US security analyst told the Guardian that ‘the most pressing task for US officials’ is to ‘delay any Israeli retaliation’ in order that we might ‘achieve de-escalation’. Relax, Israel – it’s only 12 kids. July 29th, 2024 | 14 comments
Steve Baker, the former Conservative MP (he lost his High Wycombe seat in the 2024 general election), ex-RAF officer, and a business figure in the IT sector, drops some solid truths in his new Substack:
Read it all. As Mr Baker writes, the UK Chancellor of the Exchequer, Rachel Reeves, is due to address parliament on Monday (29 July) on the state of the UK public finances, claiming that they are so much worse than originally thought (which is disingenuous, to be polite), and hence pave the way for even more tax hikes. Mr Baker’s essay contains some fairly eye-popping charts and data points about where the UK is in terms of its total tax burden. July 28th, 2024 | 53 comments
Natalie writes,
Amen to that. For years I have been trying to reconcile my belief in freedom with my doubts about immigration and have totally failed. I would prefer not to lose my Libertarian purity certificate. I want a political philosophy that is simple and has universal application. That way I don’t have to think too hard. For the last 30 years libertarianism has been that philosophy. Name an issue of the day and I can give you the answer. Sluggish growth? Privatise, lower taxes and de-regulate. Busy roads? Privatise. Inflation? Abolish the Bank of England or re-introduce the Gold Standard, or, er… privatise the Bank of England. OK, some issues are not quite that easy but usually they are. Until we get to immigration. Because if libertarianism means open borders then libertarianism is wrong because open borders are a disaster. July 27th, 2024 | 61 comments
As I keep saying jobs are a cost not a benefit. We do not want to go around the world – or even our own country – creating costs now, do we? No, no, jobs really are a cost, they are not a benefit. Think on it. We have some amount of human labour available to us. So, if we use that labour to do this thing here then we cannot use it to do this other thing over there. The cost to us of using the labour to do this thing is therefore losing the opportunity to do that other thing over there. Yes, I know, people like to be able to consume. For most of us that means having an income with which we can purchase our consumption. But even to us that job is a cost. The work we’ve got to do is the cost of gaining the income. And, obviously, a job is a cost to the employer – the production is what they desire, the job is a cost of gaining it. It’s entirely true that renewables require more human labour than other forms of energy collection and or generation. But that means they make us *poorer*. July 25th, 2024 | 31 comments
“How will the service rebuild in the wake of its catastrophic failure? The agency might argue that it is striving to bulk up, adding personnel needed to thwart assassins. On Monday, the Secret Service advertised two openings. The positions could be found at the U.S. government’s employment portal, USAJobs. Those hired will each be paid $139,395 annually. With what essential mission will they be tasked? Counter-sniping? Evasive driving? No. The title of both jobs is “Lead Public Affairs Specialist.” – Eric Felten, Wall Street Journal ($). The humorous writers and mockers of government idiocies, such as the late H L Mencken and P J O’Rourke, would have had much sport with this sort of story. July 24th, 2024 | 17 comments
Do people remember all those years back, at the time of the financial crash of 2008, about how so many wrote and spoke about dangers of an over-concentrated banking system, “too big to fail”, moral hazards of bailouts, poor risk management, etc? I do. I cannot count the articles, conferences, talks, books and videos about all this, and the lessons that must be learned. Well, here we go:
The comment is by Paul J Davies, a writer for Bloomberg ($). He is writing about the implications of the Microsoft/Crowdstrike outage that slammed banks, airlines, healthcare providers and others last Friday and through the weekend. Besides the level of “fragile” reliance on a few systems, is the fact that this saga, in my mind, makes it even more dangerous to proceed with things such as digital identities (an idea of Tony Blair), central bank digital currencies, and the rest of it. I think I need to re-read the Nassim Taleb book, Antifragile. July 23rd, 2024 | 23 comments
I wanted to reflect on how Mr Trump’s running mate – JD Vance (he came out of business and he worked in venture capital) – can nevertheless hold often anti-market views. (See his praise for the anti-trust stance of the Biden administration.) At best, Mr Vance seems to be a sort of “small business” champion with a dislike of bigness for bigness’s sake, conflating size with lack of competition. (Anyone who can understand the “Austrian” insight that competition is a dynamic process through time, and appreciate what Joseph Schumpeter called the creative destruction of capitalism, can see the flaw in this sort of prejudice.) The problem is not Big Business per se. The problem is when businessmen lobby Congress or whoever for favours, such as for tariffs, exemptions from rules applied to others, tax breaks, subsidies, appointments of their people into government for leverage, cheap loans from banks, etc. Anti-trust is absurd and ripe for arbitrary assaults on property and freedom of contract because one can be guilty of “anti-competitive” conduct regardless of whether one charges higher prices than a rival, the same price or a lower one. Without an objective measure, it is a wrecking ball. (Insider dealing suffers from the same problem.) That’s the sort of issue where Mr Vance needs to focus his anger. But has he? Has he made these points? Has he, for example, pointed out that central bank QE and the holding of interest below the natural rate creates “zombie” corporations, reduces investment into productive enterprise and reduces productivity, and hence wage growth ? Has he understood, and denounced, how finagling interest rates by central banks and politicians has distorted the capital structure of the West, and done so down the centuries, with ruinous consequences? Does he realise that all this monetary madness calcifies business, protects big firms, encourages financial engineering over investment, etc? If Mr Vance can answer my questions about QE, for instance, with a “yes”, I would like to see evidence of it. (Commenters: please do so!) Because there is a long and honourable tradition of radical politicians – and I mean real radicals, not just people who claim they are – doing this. In the 19th century, in the UK, liberals and progressive political activists such as Richard Cobden and John Bright denounced artificially cheap money, as well as mercantilism. They saw those who want to clip the coinage, and impose tariffs, as enemies of the Common Man. They supported gold-backed currencies. That’s radicalism. Mr Vance could, if he wanted, reacquaint America with that tradition. He could point out how tariffs favour incumbent firms and hurt small and medium sized firms with higher costs. He could point to a large and corrupting lobbying system that calls for all this stuff. To be fair to the Trump campaign, it appears that Trump is quite sound – if you believe Marc Andreesen and Ben Horowitz (both former Democrat voters) – who say that Trump is much saner and better on encouraging tech startups and the like than the Biden administration has been. July 22nd, 2024 | 25 comments
Ivory Coast and Ghana provide the bulk of the world’s cocoa crop. They’re getting richer, substantially so. Cocoa is a crop usually farmed by an old bloke and his machete, the plants spread through a few acres of forest. It’s labour intensive – which means that as the countries get richer they hit that servants/peasant problem. If it’s possible to make much more than being a cocoa farmer then why would people be cocoa farmers? The answer, obviously, is as with everything else – mechanise it. Ah, but no one’s really worked out how to grow cocoa at scale, in the sort of plantations that are suitable for that sort of large scale mechanisation. As far as technology is concerned it’s still, really, a peasant crop. A peasant crop in places rapidly getting much richer. In the long run choccies are going to get very much more expensive unless someone does work out that mechanised farming method. For the joyous and lovely reason that people are getting too rich to want to live like peasants any more. July 22nd, 2024 | 12 comments
We rarely comment on current affairs here, but the V-P has made an address to the Nation. So we are in for a hot summer. July 22nd, 2024 | 6 comments
You might be wondering, where does all this come from, can we blame those French thinkers? Is Foucault to blame? No, not really. It’s the American University that has whipped up this dish, and it all really started to take shape and form in the early nineties, so about 40 years ago. The second generation “thinkers” then were building on Neo-Marxist and Post-Modern ideas sourced from the 60s and 70s, but those ideas would not have had the influence they have today without a second and third generation of thinkers and professors in American Universities that have ended up influencing a generation that has then gone out into the world and redesigned that world along those ideas. We are all paying the price today. The right way to think about the American University as a generator and propagator of these ideas is the way that you already think about The Madras as a potentially indoctrinating breeding ground for Islamic Extremism. There is no easy way to say this but Yale, Stanford Harvard and a long list of other “prestigious” universities have become (or at the most generous “include”) Madrassas of dangerous indoctrination pumping out brainwashed graduates that are disconnected from what is true and disconnected from reality…they have “their” reality, “their” truth. Remember, what comes out of the American Madrassa gets exported to the rest of the world, with Australia (America-Lite) being a primary importer. July 21st, 2024 | 8 comments
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