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“Don’t give us $2bn loan, Kenyans tell IMF”, reports the Times.
A $2.34 billion bailout for Kenya from the International Monetary Fund (IMF) has provoked anger among its citizens rather than relief.
Since the three-year package was disclosed, the IMF’s social media sites have been peppered with complaints under the hashtag #StopGivingKenyaLoans. A petition demanding that the loan be cancelled has gathered a quarter of a million signatures in a few days.
The east African state is already struggling to pay off debts that are expected to peak next year at 73 per cent of GDP. President Kenyatta has admitted that every day $18 million is lost from state coffers to corruption.
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In a post on the IMF Facebook page, Mwihaki Mwangi said that the loan would do more harm than good. “Stop lending money to the Kenyan government,” he wrote. “It ends up in a few corrupt pockets. No change in living standards to the common citizens. We are becoming poorer and poorer. Heavy taxes levied on our meagre salaries. Reverse the loans.”
“Konrad Adenauer, the first post-war West German chancellor, reportedly once said that people who own a detached house rarely become revolutionaries. Whether he actually said that or not, his government certainly acted upon it, facilitating large-scale housebuilding as a means to promote political and social stability (as well as, presumably, for the more self-interested motive of winning votes). The dictum also holds in reverse: if you deliberately wanted to alienate an entire generation and turn them against the market economy, creating a severely supply-constrained housing market like the British one is exactly the way you would do it.”
– Kristian Niemietz
In case anyone brings this up, central bank money printing is a factor behind the inflation in residential prices (rents, mortgages) relative to post-tax income, but probably not the only factor. There’s also a rising population as birthrates are a touch above replacement level, immigration (although that might have changed a bit since the Brexit vote of 2016) and changed household composition (divorce, more people living in single-person units, etc).
“On the surface, it is hard to understand why the EU is resorting to such extreme measures. According to the consultancy firm Airfinity, even if the EU does ban exports, it will gain only an extra week of supply, while the British will lose two months. The political and economic price will be high. The EU will trash its reputation as a place in which to do business. Why base a plant in somewhere such as Leiden if the authorities will seize control of production lines whenever it is convenient? If these contracts get overridden by bureaucratic fiat, then so can any other agreement. (After all, if the AstraZeneca deal with the EU was legally binding, the company would have been hauled before a judge in Brussels by now.) The EU risks turning itself into a pirate state, for very little gain, which helps explain why smaller countries that depend on multinational investment, such as Ireland, have become nervous. Blind panic is the only explanation that makes sense.”
– Matthew Lynn.
In the past, some classical free market types preferred that the UK stay in the EU as the lesser of two evils, and although I think they were misguided, I understood that basis of such a concern (loss of free movement, etc). Given the behaviour of the EU over vaccines, including an obvious contempt for private property, contracts and so forth, the classical liberal case for EU membership looks very ragged now. At the very least, the risk-reward trade-off of being in such a bloc must have shifted. I wonder whether one or more of the smaller nations might bug out if this sort of shit continues. And I am sure some Scottish voters, tempted by independence but concerned about what it means to stay in the EU and be under its single currency, are now thinking.
These days, government laws mandate that food produce sold in stores must contain lots of information in the label, such as trans-fats, sugar, salt, etc. There are warning labels on certain products, such as cigarettes, all the way through to household detergents, home DIY equipment, paints, plastic bags, you name it. It isn’t clear to me how much of this ever is read closely by consumers, but presumably policymakers hope people do study the label. And when it comes to food allergies, those who suffer from them (nuts, gluten, dairy, etc) will look at them.
I have been listening to this Reason podcast about Phil Harvey and Lisa Conyers, authors of a book who go into the gazillions paid out in subsidies to various business sectors in the US. Their book covers everything from Elon Musk’s Telsa through to the sugar farmer lobby. And during the podcast a suggestion was made – perhaps tongue-in-cheek – that goods and services that have received a subsidy/tariff or other privilege from the State should have that fact posted on the label. Imagine buying a car and having a label in the contract stating “this car has been produced with taxpayers’ money”, or, to take a different example, “This sugar has been made more expensive because of public policy”, etc.
Inflation, like sin, is an inevitable consequence of choices people make. But to strategise it as a policy is wrong. It undermines confidence not just in the money supply of the moment, but in the nature of money itself. This government, via the Ponzi scheme of “quantitative easing” is pumping inflation into the financial structures of the UK. This is a deep subversion of the concept of money itself.
– Sean Walsh
Once the continent of innovation, art, democracy and non-conformity, Europe has been laid low by a heady brew of bureaucracy, over-regulation, over-taxation and debt. A crisis of political leadership has in turn produced a deficiency of bold, innovative ideas, a shortage of vision and a huge expansion of government intervention. Nowhere is this clearer than in the EU’s ill-fated monetary misadventures.
– Nikola Kedhi
“Though you can’t move for pundits and politicians demanding more public spending, the big lesson of the postwar recoveries is that with robust consumer and investor confidence there is negligible need for government stimulus. History, not abstract theory, shows that the best way to boost growth after a ‘wartime’ period such as the pandemic is for the state to take a step back. This is particularly true with unemployment, which is undoubtedly a top priority, given the millions who have been furloughed or laid off in the last year. There will be countless calls for schemes and subsidies to support various groups. But we should take our cue here from post-war America, where household spending and private investment were the key ingredients for getting people back into work. Ministers should also be hard-headed about withdrawing support from companies which are no longer viable, especially once restrictions are removed. Overall, the lesson of the postwar recoveries is a simple one: with robust consumer and investor confidence, there is negligible need for government stimulus. The best way to repair the damage is not through schemes, subsidies and special treatment, but by getting out of the way and giving markets the flexibility they need.”
– Jethro Elsden
We are going to get a lot of folk claiming that recovering from COVID-19 justifies a bigger state. We see this sort of commentary from the likes of former UK policy advisor Nick Timothy, who constantly talks about how Tory MPs must shed their suspicion of “industrial strategy” (translation: getting politicians and bureaucrats to support sectors they favour and predict what will be hot and what will not). Given the UK’s sorry history in this regard, it is hard to have to summon breath to point to the foolishness of this.
Governments don’t oppose gig economy jobs because of a concern for working conditions, they do it because “real employees” are the most heavily taxed people in the economy, and the more of them there are the more the government can milk them for their outrageous vote buying schemes. Employees are much easier to manage and control both by employers and bureaucracies than freelancers. Consequently, bureaucracies prefer them.
– Fraser Orr
Two days ago the BBC reported that the Supreme Court had ruled that Uber drivers are workers rather than being self-employed.
With what glad hosannas did the drivers greet the news of their liberation!
Er, no. As Sam Dumitriu writes in CapX,
Putting questions of legality to one side, it’s clear Uber’s business model works for drivers. If you don’t believe me, just ask them. Countless surveys have found that the majority of Uber drivers are happy with the status quo and would not sacrifice flexibility for greater security.
A survey carried out by Oxford University academics Carl Benedikt Frey and Thor Berger, in partnership with Uber, found that drivers reported higher levels of life satisfaction compared to other London workers, despite on average earning less. And, counter to the conventional wisdom, drivers typically worked full-time in other jobs before choosing to shift to Uber. Furthermore, more than four-fifths of drivers agreed with the statement: ‘Being able to choose my own hours is more important than having holiday pay and a guaranteed minimum wage’. They found that drivers would accept a move to fixed hours – but only if it came with a 25% pay rise.
Perhaps they had looked across the Atlantic and seen the results of California’s attempt to save gig economy workers from working in the gig economy:
In Uber’s home state of California, 70% of drivers backed Proposition 22, a ballot measure that created a carve-out for ridesharing services from the state’s tough laws on freelance work. The measure passed with 59% of the vote in November.
AB 5, the freelancer law which Prop 22 was responding to highlights how interventions designed to solve a problem in one market can have unintended consequences in others.
When it passed, Vox published an article: “Gig workers’ win in California is a victory for workers everywhere”. A month later they published another article: “Freelance journalists are mad about a new California law. Here’s what’s missing from the debate. The alternative to AB5 would be worse”. Two months later, Vox Media itself cut hundreds of freelance writing jobs in California.
It is hard to overstate the importance of trying to use alternatives to oligopolistic companies seeking control what you can see or purchase. Sadly, Amazon is very hard to avoid these days but at least people can seek out competitors in specific areas, such as e-books.
The chaps at Creative Destruction Media suggest Smashwords. Highlighting the existence of alternatives where they exist is important.
Tim Worstall was recently quotulated, and from that quotulation I extracted this much smaller quote:
The entire point of any form of automation is to destroy jobs so as to free up that labour to do something else. The new technology doesn’t create jobs, it allows other jobs to be done.
Well it’s a snappy quote, but I disagree. The entire point? Surely, part of the point of automation is, often, to make certain sorts of product possible that otherwise wouldn’t be possible, many of which products make other sorts of work both necessary and possible. The point of automation, to use a well-worn metaphor, is not merely to break eggs, in the form of existing jobs that it destroys; it is also to create new kinds of omelette in the form of new products previously unmakeable and new jobs previously undoable, by creating inputs and materials for these new jobs that used not to exist. Oftentimes, new technology does create new jobs, and often this happens on purpose. An often, that’s at the very least part of the point of the exercise. The new technology does not merely allow other jobs, jobs in general, to be done by those it throws out of their existing jobs. It creates particular new jobs that people must then be hired to do.
I think I get where Worstall is coming from. The grand aim of economic life is to create a world that requires us all to do less work rather than merely to remain on progressively more elaborate treadmills and still slaving away at the same old pace for the same old number of hours, for the same old money. But, he overstates that case. The “purpose” of any particular enterprise can be whatever may reasonably be expected to result from it. That can indeed be more freed up labour, but it can also be particular new kinds of labour, which are more fun, more significant, and better remunerated.
Also, the first impact of new technology is often to destroy existing jobs. But that is often only the beginning of the story, as those unleashing the new technology are typically well aware.
What Worstall says reminds me of that claim that you regularly hear that “the entire purpose of any business is to make profits”. Again, snappy, but again, in most cases, wrong. Any enterprise must stay solvent. One way or another, it must pay its bills. But the idea that all that matters to the people who run some particular enterprise is its profitability is, more often than not, just plain wrong. Often, what unites them is not the love of profit but the love of making whatever they make, doing whatever they do. They know that they must be profitable, and can’t be too wasteful, but that’s because that way they get to keep on serving up this stuff, stuff that they love to create for its own sake.
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