We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
|
TIME Magazine has made Donald J Trump, re-elected to the White House, as its Person of the Year. These POTY titles don’t necessarily mean the publication thinks that X or Y are good or praiseworthy; what counts is that they are significant in some overwhelming way. Trump fits the bill perfectly. Without a doubt, his election in November will shake things up, not always for the better. But shake them up they surely will.
If I were to choose an alternative POTY from the ranks of politics, my choice would be Javier Milei, president of Argentina. He’s been in the job for just over a year. On his watch, inflation in a high-inflation country has sunk to low single-digits. He’s deregulated the rental market and prompted a flood of new rental housing, cutting rents as a result. He brandished a chainsaw as his symbol of what he wanted to do to government. Thousands of public workers have been laid off; a number of regulations have been scrapped. The price of Argentinian debt, both public and private, has risen, and the yields have fallen. This represents a massive vote of confidence in the creditworthiness of a nation renowned for its fecklessness for decades. This will attract capital and investment, helping the country pull out of recession and hopefully, boost living standards in a sustainable way. It needs to happen: there is a lot of poverty in that country.
As a result of some of this free market medicine, the Argentinian peso has risen in value: The peso-dollar has surged 22 per cent a year before. So much so, in fact, that Keynesian columnist Ambrose Evans Pritchard, who often predicts the case for reflating this or that country with lots of cheap money, has denounced this situation. For those who have seen Latin American currencies reduced to dogfood (apart from maybe in Chile) in recent decades, no higher praise for Milei can be higher than catching the glare of a columnist who is so often wrong in his predictions.
So there you are: My choice for Man of the Year would be a chainsaw-wielding fan of Austrian economics in Buenos Aires, an actual classical liberal in a world gone increasingly collectivist.
Update: I fixed the way of expressing the foreign exchange rate; apologies. The point stands: the peso is worth a lot more today than a year ago.
Another update: Does a stronger Argentina make it more likely the government might try and re-take the Falklands? Maybe; one risk factor now in play is that under a socialist and self-hating PM, Sir Keir Starmer (who has an inferiority complex about Mrs Thatcher), the Argentinian public might, with some reason, think there is a chance the UK could be persuaded to transfer control. There is a lot of oil down in the South Atlantic; Milei does not, as far as I know, give a damn about Net Zero and might eye the area as a key resource. But he is also not a fool and might, with justice, think that a row with the UK is not worth the trouble, particularly if Argentina looks to rebuild trade relationships, particularly in a world of rising tariff barriers.
“Argentina’s Javier Milei has made a horrible mistake”, says Ambrose Evans-Pritchard in the Telegraph. The article can also be read here.
A year after his landslide victory, Milei is still not letting market forces set the peso exchange rate, and it now looks as if his crawling dollar peg will continue into the middle of next year. He has jammed the process of macroeconomic cleansing.
Argentina is now among the most expensive countries in the world, close to Norway on the Big Mac index. It costs almost twice as much to buy a hamburger in Buenos Aires as it does in Tokyo, even though the pampas are full of cattle, while the rice terraces of Japan are not.
The peso is as overvalued today as it has ever been in Argentine history, or very close. This has suppressed inflation temporarily to a monthly rate of 2.4pc – so has economic contraction – but has in the process strangled the traded sectors of the textile, shoe and toy industries. Car parts, electronics, metallurgy, and heavy manufacturing are the next dominoes.
[…]
He should have taken his chainsaw to currency and capital controls on his first day in office. He is now trapped. Either he claws back lost competitiveness by means of deflationary wage cuts for year after year – nigh impossible in any democracy – or he lets the peso find its level and unleashes a fresh inflation, shattering his reputation at home and abroad as the Friedmanite purist who tamed prices.
A commenter called Krassi Stoyanova says, “Well, Ambrose, having listened to Milei and his plans for the Argentine economy, I have far more confidence in him than I do you.”
I want to agree. But, truth to tell, I do not have a good understanding of this branch of economics. Some of you guys do. What do you think?
Whether Jaguar’s new electric car flops as a result of all this remains to be seen. It would hardly be surprising if Jaguar’s traditional audience – the people who actually buy its cars – give up on the company in response to all this insufferable virtue-signalling. After bending the knee so readily to the trans cause, that would be the least Jaguar deserves.
– Malcolm Clark
Macroeconomic management doesn’t work because the data available to do detailed macroeconomic management is shit. Therefore let’s not try doing detailed macroeconomic management. Get the basics right, the incentives, markets, then leave be.
Of course, this then leaves a paucity of jobs for economists but then as I’m not one of them why would I give that proverbial?
– Tim Worstall
As most of us are aware the almost all Western governments are living beyond their means. Every year they spend more than they raise and their debts spiral ever upwards. But there is a solution: ask the voters. Here is how it would work:
- On his birthday the voter is asked what he would like the government to spend its money – sorry ill-gotten gains – on.
- The voter gets to select from the departments of state: defence, interior, health, education etc.
- At the end of the month the selections of all the voters who have responded are totted up and government revenues for that moth are divided amongst government deportments in proportion to how many voters have selected them.
At a stroke:
- Spending and revenues are brought into line.
- Voters cannot complain that the government isn’t spending enough on such and such because it is in their power to do something about it.
- If it becomes apparent that a department has too much money (or too little) then that will (one hopes) become public knowledge and voters will change their selections accordingly.
- There will no longer be interdepartmental rows over spending. It is taken out of the hands of politicians.
- Departments would have a strong incentive to keep waste to a minimum. If it becomes known that they are being wasteful, voters are likely to move their money to a different department.
I can see some objections/issues:
- How should voters make their preferences known? In person? By mail? Should the voters get one vote or several? 90% of me wants to spend on defence but 10% wants the money spent on prisons.
- War. If a war starts it could take a while for the state to get on a war-footing. About a month but I would guess there would be provision for such an emergency.
- Publicity. Humans being humans and politicians being politicians, there will be great competition between departments for voters’ favour. Would there be a danger of advertising budgets getting out of hand? If advertising was banned what else might politicians get up to?
- Revenue is lumpy as are birthdays. The government does not raise the same amount every month and birthdays are not evenly distributed throughout the year. This could have some interesting effects.
“Britain’s biggest problem is a lack of economic growth – so much else is downstream from that. In per person terms, annual real growth averaged more than 2 percent in the run up to the financial crisis. From the crash to COVID-19, growth was just 0.6 percent on average. And of course these growth rates compound. Before the financial crisis, living standards were on course to double every 35 years; afterwards, it was every 120 years. This is a change with profound societal – and even civilizational – consequences.
“From tax and regulation to institutional malaise, demographic decline, and a culture that denigrates success – there are all sorts of explanations for our economic slowdown. But the way I see it is that we are suffering a progressive loss of economic dynamism, as we gradually replace market processes with bureaucratic ones – often to reduce risk or increase ‘fairness’. To many observers, every individual step along the road is reasonable and easy enough to justify. But over time, the effect is suffocating.”
– Tom Clougherty, Institute of Economic Affairs
First time is happenstance, second is coincidence and third is enemy action. As it happens Bolivia has a third natural resource which, currently, is in high demand. Lithium. Those salt flats up at 12,000 feet and so on. One of the great deposits of easily extractable lithium they are. So, why aren’t they being extracted?
Because the government has insisted that they’re a great natural resource. Therefore, rather than greedy capitalists extracting and shipping out those batteries should be made up at 12,000 feet. Even, in fact, the cars that use the batteries.
The result is obvious – the lithium isn’t being extracted, the batteries aren’t being made and nor are the cars. Because idiot fuckwits are in charge of what happens to Bolivia’s natural resources of course.
– Tim Worstall
I have not watched this yet. But I am certain it is worth watching.
Steve Baker on Why Government is Failing you Debt & Inflation Peter McCormack Podcast
In this episode, we discuss pressing economic and political issues such as the challenges of government debt, inflation, and the often overlooked consequences of central bank policies. With a focus on the impact of taxation and government spending on individual freedoms and economic productivity,. We also discuss the structural inefficiencies in politics and examine the growing disconnect between politicians and economic realities.
“Britain’s deluded politics are downstream of a deluded public. This country simply doesn’t realise how poor it is; the gulf between public expectations of the state and the state’s means of financing itself has widened to dangerous levels. People on relatively high incomes don’t feel rich and therefore assume that there are plenty of actually rich people who could be squeezed to pay for stuff. Entitlement spending, in particular, is eating British democracy alive. Council budgets are increasingly consumed by social care and special educational needs and disabilities (SEND) spending, with services cut to the bone. Meanwhile in Westminster, successive governments continually forestall capital investment to avoid tinkering with absurd commitments such as the pension triple lock.”
– Henry Hill, writing about the UK Budget statement of Chancellor of the Exchequer, Rachel Reeves. (For non-British readers who want to know what the “triple lock” is, it is a safeguard that ensures the state pension increases each year by the highest of three measures: Inflation: The Consumer Price Index (CPI) for the previous September; Average earnings: The average increase in total wages across the UK for May to June of the previous year; and a minimum rise of 2.5%.)
I agree with Hill that many members of the public, and not just the chattering class, are so economically illiterate they have little idea of how screwed the UK is financially, given demography, state bloat, over-regulation and tax, and the rest. And anyone who pushes against it is one of those sinister people known as “neoliberals”.
Just to make the problem clearer. Economies do add up. If this happens here then that over there must also happen. If we don’t see that second then we’re mistaken in our assumption that the first has. If productivity has risen and wages haven’t then the labour share must have fallen. The labour share – up to when PK wrote in 1996 – had not fallen. Therefore that confident blue line from 1970 to 1996 is wrong.
We don’t even have to worry about why it’s wrong. It just is – so bollocks to the rest of it.
Chakrabortty’s getting on a bit to be an enfant terrible of course, his unwillingness to spend time and energy understanding the economics he’s attempting to write about is easier to explain for he’s at The Guardian. In fact, he writes the economic editorials for The Guardian and an actual knowledge of economics in that job – let alone time and effort spent gaining it – would be a positive hindrance.
No, really.
– Tim Worstall putting the boot in 😀
The current tax rate as a proportion of net national income (according to the Adam Smith Institute) is 44%. See if you can guess what it was in
a) 1924 and
b) 1913.
Answer below the fold.
→ Continue reading: Sunday morning quiz
But moving away from the obvious and serious to something more jocular.
Borrowing costs imposed on France
And, no, really, just no. Yes, yes, we all know what they’re saying but it doesn’t work as a construction.
Think of the average nutter – the average socialist but I repeat myself – who’ll scream the house down about the power of The City, of “the market”. This is to make a category error, it is to reify the markets. Those markets are not, for all the linguistic ease of our saying so, “a thing”. They’re just you and me and the folk holding our chequebooks, that’s all. There’s no thing there, no market view, no market control – either control of the market or the market controlling other things. Just that interaction of 8 billion people each counting their own pennies.
The markets – as opposed to the market – do not impose borrowing costs upon anyone. They don’t impose anything at all. There’s a price at which people will lend you their pennies, a price at which they won’t. That changes over time. And, erm, that’s it. This is not an imposition.
– Tim Worstall
|
Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
|
