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]
Labour is prepared to force pension funds to invest in a proposed £50bn “future growth fund”, as the party aims to boost the amount of capital available for fast-growing UK companies.
Rachel Reeves, shadow chancellor, said she did not believe Labour would need to mandate retirement schemes to invest in the new fund because of the goodwill in the sector, but added: “Nothing is off the table.”
Speaking to the Financial Times on a three-day visit to the US, she said she also wanted to accelerate the merger of smaller UK pension funds so as to consolidate a fragmented market.
Reeves, who visited the New York Stock Exchange on Monday, said she wanted to change the culture of Britain’s savings industry, unleashing homegrown funds that could persuade UK companies to list in London.
She also wants pension funds to work alongside the state-owned British Business Bank to improve the UK’s “start up, scale up” landscape, with Labour warning that the country is trying to do “capitalism without capital”.
Reeves said: “A lack of confidence in Britain’s economy has led to too many businesses leaving our shores.”
Confidence in the British economy is not likely to be improved by the woman who will probably be the next Chancellor of the Exchequer announcing that she has so little confidence that pension funds will invest in it voluntarily that she thinking about making them do it by force. It would be unfair to call this the Walter Ulbricht strategy. Unlike Comrade Ulbricht, who said “No one has the intention of erecting a wall!”, Ms Reeves has sportingly given pension funds warning of her intentions so they can get out before the wall goes up.
Investments can go down as well as up. The record of the state in “picking winners” is particularly poor. British workers are not going to be happy bunnies if their pensions lose value because a Labour government forced them to put some of their pot into risky start-ups that venture capitalists wouldn’t touch.
– Bernard Condon and the Associated Press in a major article for Fortune magazine.
Here are some excerpts from the article that struck me:
In the past under such circumstances [debtor countries being unable to make interest payments], big government lenders such as the U.S., Japan and France would work out deals to forgive some debt, with each lender disclosing clearly what they were owed and on what terms so no one would feel cheated.
But China didn’t play by those rules. It refused at first to even join in multinational talks, negotiating separately with Zambia and insisting on confidentiality that barred the country from telling non-Chinese lenders the terms of the loans and whether China had devised a way of muscling to the front of the repayment line.
And
Along with the usual mix of government mismanagement and corruption are two unexpected and devastating events: the war in Ukraine, which has sent prices of grain and oil soaring, and the U.S. Federal Reserve’s decision to raise interest rates 10 times in a row, the latest this month. That has made variable rate loans to countries suddenly much more expensive.
All of it is roiling domestic politics and upending strategic alliances.
In March, heavily indebted Honduras cited “financial pressures” in its decision to establish formal diplomatic ties to China and sever those with Taiwan.
Last month, Pakistan was so desperate to prevent more blackouts that it struck a deal to buy discounted oil from Russia, breaking ranks with the U.S.-led effort to shut off Vladimir Putin’s funds.
“Making it harder to evict residents is only likely to make it harder to rent. Landlords will inevitably be more selective about who they offer properties to and charge higher rents when they cannot quickly evict bad tenants. That is likely to disproportionately hurt those who are poorer, younger, and from minority communities.”
– Matthew Lesh, of the Institute of Economic Affairs, commenting on measures by the current “Conservative” government, to make it more difficult for landlords to evict tenants in certain cases (there appears to be some issue about the details). The impact is the same as making it harder to fire workers. Other things being equal, fewer people get hired. (Look at Italy, where firing people is hard and produces bizarre effects.)
The inverted quotes around “Conservative” are, as you might guess, there for a reason.
“It might be exhausting just trying to keep up with Musk and he will get plenty wrong. And yet, all the criticism is hopelessly wide of the mark. Our political and economic culture sneers at and neglects men and women like him. But if Musk and his ilk ever chose to go on strike, like a seemingly endless number of workers in both the public and private sectors, the system could grind to a complete halt.”
– Matthew Lynn, Daily Telegraph. Lynn’s article (£) is spot on. Yes, Musk received public subsidies for Tesla and the SpaceX business gets deals from NASA, but the point is also that he has made, particularly in the spacefaring area, a tremendous go of massively reducing launch costs via the recoverability of the rockets. He did it when far more expensive ways of space flight failed to deliver. If he did nothing else, that puts him on my list of heroes.
The line about him ever going on strike makes me wonder if Lynn thinks of Musk as a sort of Ayn Rand hero. It’s almost uncanny. Of course, some people, including Musk himself, tend to think of him more as a bit of a Tony Stark.
Musk can be maddening to some, and vexatious even to his admirers. But overall, I am glad he is around.
Saturday, the German government closed its last four nuclear power plants, finally fulfilling Angela Merkel’s Fukushima-era promise to destroy her nation’s most abundant source of safe, clean, cheap power — in the middle of an energy crisis. To fill the giant hole in the nation’s energy portfolio, the famously “environmentally conscious” Germans will be burning more coal, a degree of stupidity almost impossible to fathom. In America, this specific genre of Clown World policy was last observed at the Diablo Canyon power plant, which the state attempted to shut down in the middle of its own series of energy-related crises. At the last possible moment, following a tremendous groundswell of counter activism, that decision was reversed. But today, with the activist group “Friends of Earth” trying to override this rare California flirtation with logic, and with activists around the world celebrating the end of German nuclear power, rational policy is once again on the wrong side of political momentum. So let’s just break it down: poverty and global warming are both real, and they exist because of “environmentalism.” If you stand opposed to nuclear, you are either 1) too dumb to comprehend the risks inherent of the technology, 2) dedicated to some nefarious ulterior motive, or 3) pseudo-religiously obsessed with the belief mass murder is not only inevitable, but necessary to keep the human population “in check.” There is no steelman for these positions. The debate is over. Nuclear is the way.
“The Soviet Union was world-renowned for maths and science instruction but that failed to translate into a strong economy. Similarly, the UK has some of the top universities in the world yet has experienced stagnant growth for the last decade. Prosperity requires creating the right institutional environment for entrepreneurship, not dictating curriculums from the top.”
Matthew Lesh, Director of Public Policy and Communications, at the UK-based Institute of Economic Affairs, the UK think tank. (The quote is from an emailed press release I was sent today.) He responded to UK Prime Minister Rishi Sunak’s comments on the case for extending the teaching of maths and how far too many people think it is okay to be poor at the subject. (I used to be poor at maths, but certainly did not wear that as a silly badge of pride.)
Lesh’s point, however, is certainly worth focusing on. Being good at certain subjects and having knowledge about subjects is not the same as having a flourishing economy, particularly if one has oppressively high taxes, heavy regulations, spending on flashy projects such as HS2 that crowd out private investment, etc. At the margins, having a more maths-literate population might have a positive effect if, for example, more people can get their heads around statistics – and how they can be manipulated – and important concepts for business and finance such as compound interest, for example. Of course, in an age when the teaching of STEM subjects (Science, Technology, Engineering and Mathematics) gets more attention, this all fits.
I do worry that Mr Sunak, in his understandable and laudable desire to encourage teaching and better grasp of such subjects, can come across as assuming that this might be a sort of silver bullet to the UK’s economic woes. As the Lesh comment about Soviet Russia shows, having lots of maths whizzes in a country is no good if the underlying economics is poor. And by the way, a lot of those Russian maths aces, such as those of Jewish descent, emigrated to Israel as soon as they could, which explains, among other things, why Israel has been a STEM and start-up powerhouse.
On a final point, I remember some years ago (I cannot find the link, sorry) watching a televised talk by Michael Collins, the Apollo 11 and Gemini astronaut, given at MIT. He talked about teaching, and about why there needs to be another “E” in the STEM acronym: E for English. There’s no point in having all this knowledge if you are lousy at communicating it. He’s right. An example of how to communicate complex ideas brilliantly and clearly is that of Edward Chancellor in his recent book The Price of Time, where he writes about interest rates, and why manipulation of them is dangerous and a folly that goes back centuries. It is an outstanding case of clear exposition, fascinating facts and an enjoyable tone of voice.
“Over the next few years, all those heavily subsidised plants in the US, Germany and France are going to come on stream, selling chips into a global market where there are too many of them and prices are tumbling. The losses could be vast. Taxpayer money will have been put to terrible use and, in the UK, Treasury officials will perhaps be quietly breathing a sigh of relief that we were too hopelessly disorganised. There is a lesson to be taken, not least at a time when when `industrial strategies’ are more popular than ever. Just because a product is important it does not mean any particular country has to produce it. And if demand is growing, it is safe to assume private companies will be capable of meeting that need without help from the state. Too often, governments end up subsidising the wrong industries at the wrong time. They have a poor record of picking winners, and should instead set low and fair taxes, lower tariffs, keep competition open, and break up any cartels. Once they have done all that, the market can decide which are the industries of the future.”
My only quibble with the quote from this excellent article is that his support for trust-busting activity needs to be qualified with the point that a lot of anti-monopoly activities by governments are often based on a misunderstanding of competition as a static game, not a dynamic process through time. We see this regularly in the recent wailing about Big Tech. (See an article here.)
Those were reportedly the last words of General John Sedgwick at the Battle of Spotsylvania Court House in the American Civil War. (Wikipedia boringly says that he did complete the sentence. Just.)
General Sedgwick was a brave man to stride along the front like that. He sought to encourage his men, some of whom had been seen to flinch as the Confederate bullets landed all around.
I hope our Scottish readers will forgive me if I say that, though all the hearts that beat under Scottish skies are brave, not all of them are quite as brave as General Sedgwick. But some are:
“Deficits are nothing to be afraid of”, writes Jim Byrne for Bylines Scotland. You see, taxes don’t fund spending and a sovereign government can create new money to pay off its debts whenever it likes and so all Scotland needs to do make its deficit disappear is declare independence. This is called “Modern Monetary Theory”. Mr Byrne posts a link to a 14-page Bank of England document that, he says, shows that the Bank agrees with him. Which does make one wonder why the Bank doesn’t just declare “the deficit is nothing to be afraid of, let the rejoicing commence”. Unless it’s a case of “Gary, no”?
I am saddened to read that Nigel Lawson, former UK Chancellor of the Exchequer, and an articulate advocate of the UK’s departure from the EU (and also a rigorous debunker of global warming catastrophism), has died at the grand age of 91. My condolences to his family and friends.
It is ironic that he fell out with Mrs Thatcher in the late 80s over the issue of the UK joining the Exchange Rate Mechanism in Europe. He was opposed to the euro, but saw ERM entry as a necessary way for the UK to try and control inflation. In that sense he was a fixed-exchange rate man, and in the 19th century he’d have been a Gold Standard defender, I suspect. In the end, he was at one with Mrs T. on the dangers of a centralising Europe. And of course, in his time at 11 Downing Street, he cut top rates of tax and simplified the system dramatically. Alas, his successors haven’t continued that trend. Lawson was also the intellectual driving force behind privatisation of state-owned businesses, and while arguably not enough was done to promote competition, the overall benefit in my view was considerable.
His speech explaining why the UK had to leave the EU remains, in my mind, one of the most brilliant and succinct explanations for why this was the right course. He focused, rightly, on the issues of democratic accountability and freedom.
Right to the very end, his mind was as sharp as those of all too many in power are blunt.
As a “lukewarmer”, I am more of a believer in climate change than many here. One thing that pulls me towards scepticism is the habitually dishonest language used by advocates of measures against climate change. Take this BBC article: “Climate change: UK risks losing investment in net-zero race, MPs warn”. It says,
The government is set to announce its revised energy strategy on Thursday.
It argues the UK is a “world-leader” in working towards net-zero.
But cross-party MPs fear investors – and jobs – could move elsewhere if the strategy is not ambitious enough.
The BBC article makes me want to riff on Mary McCarthy’s famous quip about Lillian Hellman – every word in it is a lie, including ‘and’ and ‘the’.
In particular, the words “race”, “investment” and “jobs” are all used in a sense that means the opposite of their usual meanings. “Investment” means something you buy in the hope that its price will rise so that you can sell it later as a profit. The “investment” the article talks about is simply spending. Argue if you wish that it is justified spending, but that doesn’t make it investment.
The article, taking its tone from the government, talks about “green jobs” as if they are a good thing. As Tim Worstall often points out, all jobs are a cost not a benefit. Perhaps a necessary cost, but a cost. And the purest, costliest, unbeneficialliest jobs of all are jobs that are created solely to comply with government regulations. Not unexpectedly, the people who get these make-work jobs like having them, because they get paid. But the money to pay their wages has to come from somewhere. It comes from (a) taxes, i.e. making everyone a little bit poorer, and (b) companies diverting money that could have been truly invested in making or doing things that people actually wanted made or done (which would have created genuine new jobs) into the hamster-wheel of fulfilling green regulations, filling in government forms to say that they have done so, paying to be trained to fill out the forms, paying protection money to Green organisations to get a little green smiley logo saying they comply, and so on and on and on.
What’s wrong of the word “race” in the phrase “net-zero race”? This word is dishonest because a race is meant to indicate a competition in which some prize or benefit is won by whoever is fastest – and in which said prize or benefit goes in lesser degree or not at all to the other competitors. In this case “the race to net-zero” is a race to lose benefits, a race in which the prize is being hobbled. That is still true even if one accepts the necessity of being hobbled. The choice of the US to hobble itself first by passing Biden’s “Inflation Reduction Act” (another example of dishonest language) hands a competitive advantage to the UK, so long as we do not do likewise.
As to why the race to net zero is a racist concept, only a racist needs such an obvious thing explained.
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.
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