Defining the benefit of spending as who gets the money rather than what gets bought is economic insanity. We might have a little insight there as to why government control of the economy ends up impoverishing.
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Samizdata quote of the day – Getting economics the wrong way aroundSamizdata Illuminatus (Arkham, Massachusetts) · Economics, Business & Globalization · Slogans & Quotations March 23rd, 2025 |
 21 comments to Samizdata quote of the day – Getting economics the wrong way aroundLeave a Reply |
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The only instance in the history of the universe where it is presented as better to have spent more money rather than less is when the government spends it. Blair renamed spending as “The Investment”. And he got away with it for a decade. He should have been called on it every time. If it isn’t still here next year – or at least some of it – you’ve just spent it.
Sadly, Tim understands economics but hasn’t a clue about politics. Under the laws of politics, defining the benefit of spending as who gets the money rather than what gets bought is … a tautology.
Or he’s saying that political reality IS economic insanity.
It’s all just buying votes. The only question is how subtle it is.
British economics has always had a bit of a weak spot when it comes to government spending.
French “Liberal School” economists (such as Bastiat and J.B. Say – but there were many others) were better at understanding that government spending, whether funded by taxation, borrowing money (gold, silver – whatever the money is), or creating money from nothing (the corrupt, totally corrupt, system that dominates now), does HARM.
Does HARM.
For example, British economists could not understand that as government Poor Law spending-and-taxation increased in Ireland so poverty got WORSE – not better, MORE people suffered rather than less people, not even the mass death of late 1840s Ireland shook their faith in tax-and-spend – indeed the mass death is blamed on “laissez-faire” – which to French speaking economists (who understand that the term does NOT mean “free trade” which is what British writers seem to think it means, it means the government generally not coercing people – including with taxes and spending, foreign trade is only a small part of that), would have seemed utterly bizarre – because it was utterly bizarre.
It is ironic that France today is one of the worst tax-and-spend countries in the world – perhaps even worse than the United Kingdom.
Take the example of California – a place of tens of millions of human beings.
California has incredibly high government spending, funded (mostly) by taxes on “business” and “the rich” (it has the highest State income tax on the wealthy) – the left do not understand that all taxes are passed on, they think that a tax on a rich person in California or Oregon does not hit the poor, but, of course, it does. Just as taxes on the landowners in Ireland (which is how the Poor Law was financed in the 1840s) hit the poorest peasants – all-taxes-are-passed-on all taxes hit the whole community, there is no such thing as a “good tax” – whether it is a “Progressive Income Tax” a “tax that just hits big landowners” or whatever.
California today has, adjusted for the cost of living, perhaps the most poverty in the United States.
But this was not always so – within living memory California was the most prosperous society on Earth.
And the response of the international establishment to the terrible transformation of California (in a single lifetime) via endless government spending, taxes and regulations?
Largely they just shut their eyes and put their fingers in their ears and go “La, La, La”.
They do not see what they do not want to see, and they do not hear what they do not want to hear.
Even if their own house burns down (say the houses of the wealthy in Los Angeles – surely this would make them wake up, but it does NOT – at least not with some of them) they do not blame government regulations that prevented the clearing of brush – they blame “Climate Change” (California is NOT hotter and drier than it was in the 1930s – and the sea level has NOT risen there) and demand MORE government regulations, spending and taxes.
Wealthy Corporate leftists (who went to universities, indoctrination factories, that cost more money to go to, than the average person earns in a lifetime) hate the California of Governor Ronald Reagan (they spit on his memory), and love the California of Governor Gavin Newsom.
Statism dominates internationally – the idea that the world is dominated by “free market” “neo liberal” ideas is utterly absurd.
Take the example of Turkey – it is supposed to have a “conservative” (boo-hiss say the international establishment) or “Islamist” government – but economically it has nothing of the kind.
The economic policies of the government of Turkey are NOT from the Koran, the Hadiths or the life of Mohammed. You will not find “create lots of money from nothing” in any of these texts, indeed if you had suggested such a policy to Mohammed he would have thought you were insane (and he would have been correct – the policy is insane), ditto the endless labour market regulations the government of Turkey has imposed – and then seem astonished at the large scale UNEMPLOYMENT – seemingly (like the BRITISH government) unable to understand that imposing more labour market regulations (“workers rights”) increases the number of people who are “economically inactive”, what we used to call “unemployed” before the unemployment statistics were rigged.
Higher government spending on services and benefits, and more regulations (especially on the labour market) has been the policy of the Turkish government – and this policy does NOT come from Islam.
No more than the endless babble about “Climate Change” on English language Turkish television (controlled by the government) comes from Islam – it does NOT come from Islam.
In reality – it is another government following international establishment style policies of wild government spending (and money created from nothing – i.e. INFLATION), and endless regulations.
Paul – taxes in California are not high only on the rich. Middle class taxes are also high by US standards, which has been driving the middle class exodus from the state (which is most of the population loss). A lot of the rich people don’t mind the high taxes as much as you might think – from their perspective the main problem with life in California is that are simply too many people who want to live there, and high middle class taxes are an effective way to limit the crowding – along with zoning laws that limit housing units and inflate the property values of current residents, including the rich. The entrepreneurial rich may be fleeing the state’s crushing tax and regulatory burden, but the rentier class doesn’t really mind it at all (you don’t pay state taxes on federal bond interest).
California’s governance really can’t be understood properly unless you understand how desirable a place it is to live. If California was governed like Texas the population pressure would be unbelievable, and the strain on the local environment would be severe. Even as it stands the state is home to around 1/8th of the nation’s population. It could easily be double that if everyone who wanted to live there could. When California was governed competently its growth was phenomenal, and it was the impact of that growth on the residents, particularly its wealthy residents, that drove the state’s switch to what is at its core an anti-growth governing agenda. California’s state government is completely captive to its wealthy donor class, and the state is governed the way they want it. Once you look at the state through this lens, everything actually makes sense.
For reference, CA income tax hits 8% at an income of $55k, which is above the average maximum state income tax rate (a bit over 7%) at an income level that is only marginally viable for a single person in any of the major metro areas. The core middle and upper-middle class bracket is 9.3% from $70k to $360k. Add to this a sales tax that runs from 7.75% to 10.75% (depending on local taxes), the highest gas taxes in the country, well above average property tax rates and high license fees, all of which hit the middle and working classes much harder than the wealthy.
As to the fires, if you want to get a real understanding of the challenges of living with the risk of natural disaster in the LA area and how people deal with them I would highly recommend the book “Control of Nature” by John McPhee (author on some of the finest non-fiction ever published). It is a collection of three long-form New Yorker articles on man’s effort to live in and control hazardous environments. One is about a town fighting a volcano in Iceland, another is about the Army Corps of Engineers and its never-ending battle to control the Mississippi River, and the third is a detailed treatment of the earthquakes, wildfires and mudslides that will forever loom over the LA basin. It was written back in the 70s, well before everyone starting blaming everything on climate change, and McPhee gives you a very clear picture of how capable people are of ignoring or discounting obvious long term risks in the pursuit of an immediate improvement in their quality of life. One amusing aside is an Italian geologist joking to a local one how sad it is that all the erosion (mudslides) means that he will soon have no mountains to study, and the local responds that he doesn’t worry about that, the earthquakes mean the mountains are going up faster than they are eroding away.
The LA metro area is huge, and as big as this season’s fires were they only impacted a small fraction of the population directly. Most of the population doesn’t live in the hills and canyons that are home to the worst fires, and while the Hollywood types that make up much of the Palisades residents make for good news fodder (note that the equally devastating fires in Altadena that impacted more working class neighborhoods have been given little independent coverage) much of the local population, particularly the working and welfare classes, are largely indifferent. The donor class builds either in less vulnerable locations or spends the money to build and landscape their properties to resist wildfires. Between the donors and the voting base, that’s enough political power to wait out the immediate outrage and defeat the reformers. Already you can see signs that the recall of Mayor Bass will probably fail as the donor class is retreating from supporting the recall amidst the usual cries of racism and sexism.
One last thought about LA. It is hard to appreciate just how dramatically LA changed as it rapidly converted what had been largely rural land into a massive, sprawling suburb right up to the mountains. One of the things I really liked about Taratino’s “Once Upon a Time in LA” was the vision it gave you of LA in the ’60s, when the freeways were still new and there were still open spaces. The movie is more a reflection on how the culture of LA changed, but it takes the time to show you how it has changed physically as well.
phwest
I agree that middle class people are highly taxed in California.
But I do not agree that the Democrats (whether rich “donor class” or otherwise) are concerned about keeping the population down.
If that was concern they would not offer illegal immigrants public services and benefits.
Millions of illegals have arrived from Mexico and many other nations – and the vast majority of them are NOT servants of the “donor class”.
When the ordinary taxpayers of California voted to limit public services and benefits to illegal immigrants – the intellectually corrupt Californian Supreme Court struck the vote down.
As for fires destroying homes – this is not a matter of overdevelopment, whenever in Californian history (or the history of many other places) people stopped clearing brush, homes burned.
Tony Heller (real climate science.com) is good at digging up the old newspaper stories showing that lots of homes burned in California.
If the open space is full of brush the fire will cross it – and burn homes, regardless of how big or small the city is.
An open space is not a fire break – unless it is properly cleared. And even then there are the winds – which can carry sparks long distances.
Not that I support the building of the massive “free” roads – I do not.
Nor do I support the price controls on trolly cars and other mass transit – which were the real reason it became unprofitable in the 1930s.
It was not really a conspiracy by General Motors – they just took advantage of the situation, to buy up the system and shut it down (I believe that was done in 1938).
Put price controls on mass transit (including long distance railroads) and build “free” roads – and the rest will happen by itself.
By the way – I am told that the railroad no longer reaches the port in Los Angeles. That trains unload onto trucks – and then these trucks drive the last couple of miles to the port. And vice versa – that goods from ships can not be directly loaded onto trains – that they have to be loaded onto trucks and then the trucks go to the railroad station for the goods to be loaded on to the freight trains.
Surely all that can NOT be true? That would be utterly insane.
phwest – do you know the truth of this? Has someone been pulling my leg?
phwest.
If the people of Los Angeles do not even remove Karan Bass (a weird combination of Marxist and moron) then the city is bleeped.
A random person, plucked off the street, would do a better job.
They would know, for example, that you do not go off to Ghana (having promised in your election campaign that you would stop your endless foreign trips) after you have received a fire warning.
And they would know that you do NOT pick the people in charge of fire and rescue on the grounds of their race, gender, and sexual orientation.
Frankfurt School “Woke” “Critical Theory” Marxism is not even proper Marxism – it is Marxism for people who have been lobotomised. Like the Hollywood crowd – who are destroying their industry.
If that is the doctrine of modern California – then the place is finished.
phwest: It’s amazing watching movies from the silent era just how *EMPTY* Los Angeles was.
Paul: Satellite views of the Port of Los Angles show railway heads, but well over two thirds of the area is lorry parking.
Much of the huge-container traffic does go from ship to rail in Port of LA, but the unions have resisted further improvements.
jgh and bobby b – thank you both, I understand better now.
According to Hollywood (“On The Waterfront”) the problem of the ports is corruption – the idea that unions, “Collective Bargaining” (created by government – see W.H. Hutt “The Strike Threat System”, which shows how changes to the laws created this insane system) is the problem, passes them by – indeed they would hotly deny it (especially as Hollywood is itself unionized).
As far back as 1904, in the campaign of the otherwise moderate Mr Parker for the Presidency, the Democrats were demanding that “arbitration” (a form of Collective Bargaining) should settle “disputes” – rather then have supply and demand set wages and conditions. That this would lead to structural unemployment (and undermine industry) did not seem to occur to them.
In the United Kingdom the people who campaigned for the Acts of 1875 and 1906 complained the most about the unemployment these Acts of Parliament created.
In 1994 the citizens of California voted to limit the services and government benefits that illegal immigrants could get.
The State Supreme Court struck that down – because it was racist or something.
The United States (i.e. Federal) Supreme Court had demanded, back in 1982, that Texas spend taxpayer money on illegal immigrant children.
And the State Supreme Court in New Hampshire demanded a tax increase to pay for more government education spending – for the general population (they did not even bother to trot out the “racism” argument, it was just the people in funny robes want more government spending and taxes – so everyone has to obey the people in funny robes, “priest-craft”).
When judges stop people controlling tax and government spending – democracy is dead.
Ditto when judges can change the laws – for example redefine what “marriage” means, or declare that centuries of vagrancy laws no longer apply.
There was a time when Americans would have tarred and feathered such judges.
But now Americans, like British people, just grumble.
Thus tyranny wins – and the nation is destroyed.
I say again – if the people, and those they elect, are not allowed to control taxes and government spending – democracy (indeed any form of government by the people – whether called “democracy” or not) is dead.
When, for example, the people of California did not rise up against the State Supreme Court in 1994 – their self government was at an end.
If you do not control government spending and taxation – you are not self governing.
Whether there is any free government left at the Federal level is being decided now – with some judges seeking to snuff out what little is left of elected control of the government.
Chief Justice Taft, formally President Taft, hoped (indeed just assumed) that the Supreme Court would stand for Constitutionally limited government – so he got Cass Gilbert to build them a special building (before that the Supreme Court had just met in a room in the Capitol Building – and had done their paper work at home).
That building was barely finished before the Supreme Court ruled, 5 to 4, that Franklin Roosevelt could steal (by threat of violence – which is WORSE than just stealing) all privately owned monetary gold (the gold is the money – please note), and violate all contracts – public and private.
So much for “SCOTUS”,
But after World War II it actually got worse – with the “justices” making stuff up which the politicians had not thought of themselves, hence such things as the attack on the vagrancy laws, the destruction of State Senates (if they do not represent rural areas to counter balance the corrupt cities – there is no point in having State Senates), and on and on.
Chief Justice Robert knew very well that Obamacare was unconstitutional – but he let it through anyway.
Ditto he allowed election laws to be systematically violated in 2020 – with “Covid” being used as a magic word to “justify” the ripping up of election laws.
The judges, sorry “justices”, are a waste of space.
As for the specific matter that Tim Worstall raises – but then goes on to talk about something else.
No – the United Kingdom should not pay its “fair share” to the European Union for some Euro Army.
Indeed we should have stopped paying them in 2016 – the day we voted to leave.
Threats of trade sanctions would have been laughed at by a strong elected government loyal to Britain (sadly we have not had one of those for a very long time indeed) – as the European Union sold (and sells) us vastly more than we sold them, there was (and is) a massive trade deficit with the European Union.
And Northern Ireland should not have been left in the European Union – which ties the rest of the United Kingdom to E.U. law, otherwise our laws would diverge from those of Northern Ireland (thus making “independence” a legal fiction).
Nor should British fishermen have been betrayed – or all the other betrayals.
As for war with Russia over Ukraine.
Well that was not the objective in the Crimean War – no one (as far as I know) suggested “liberating” Odessa and so on, back in the 1850s. The objective was to get the Russians to stop threatening the Ottoman Empire – a brutal despotism that Britain and France supported (for some reason – they also supported the brutal Ottoman Despotism in 1878, a lot of people regretted that during the First World War) – although Russia itself was a brutal despotism, indeed perhaps half the population were serfs, Alexander II freed more people than any other ruler in history – far more than Prime Minister Grey or President Lincoln, but he was NOT Czar at the time of the Crimean War.
Still times change – policies change. And thermonuclear war would mean I would not have to worry about things – as I would be dead.
Is foreign policy, peace and war, determined by the interests of arms companies, as Tim Worstall implies?
Well the policy was defended in this way – especially in the United States (“a lot of the money stays in America – with the defense industry…..”), but I do NOT believe that foreign policy is determined by some Corporatist Plan to benefit the “merchants of death”.
Foreign policy is a lot more random (chaotic) than that.
For example, in 1939 Nazi Germany and the Soviet Union invaded Poland – Britain and France declared war on Germany, but NOT on the Soviet Union.
The Soviet Union then took land from Romania – and invaded Estonia, Latvia and Lithuania, and then invaded Finland.
Still no Declaration of War on the Soviet Union from Britain and France.
Nothing to do with the interests of arms companies – we declare war on some countries, but not on others (who do the same thing) – the matter is chaotic there is no corporatist plan involved.
It is the same with other countries.
For example, the Kingdom of Piedmont sent men to die in the Crimean War – it had no treaty of alliance with the Ottoman Empire, the government of Piedmont just sent men to die because it felt like it.
On the other hand the Austrian Empire (the Empire of the Hapsburgs) was an ally of Russia (Russia had saved Hapsburg Empire in 1848 – only a few years before) – and had been an enemy of the Ottomans for many centuries.
The Hapsburg Empire did not turn up to help Russia. The alliance was thrown away.
Foreign policy follows no rational rules – not self interest, not any rational rules.
Perhaps it is pointless to try and make sense of foreign policy.
Paul Marks:
LA’s pro-immigrant, soft-on-crime policies mirror other elite bastions like NYC.
The wealthy donor class is insulated from the effects of these policies – that is what they are paying for.
These policies serve to:
-Drive out the middle class, which prevents a political reform/opposition movement from forming.
-Populate the inner city with reliable Dem voters dependent on government.
Awareness of this class divide will help many to understand Trump Derangement Syndrome – Trump and Musk are traitors to their own (chattering) class, who show up liberal hypocrisy.