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Record cold temperatures in Europe disprove global warming?

January 8, 2010 Leave a comment

Remember when “climate scientists” (climate zealots) tried to “prove” global warming by pointing to record high temperatures in Australia and Europe last year?

What are they doing now that Europe and North America are experiencing one of the worst winters on record, with Scotland going down to an Arctic -21 degrees?

Well, now they are saying recent cold temperatures in Europe don’t disprove global warming.

I would be fine with that if they hadn’t already pointed to recent high temperatures as proving the existence of global warming.

Could the climate guys be any dumber?  First, they schedule a conference on global warming in Copenhagen in the middle of winter.  Then, they point to recent high temperatures as proving global warming but run away from the implications of the record cold snap in Europe.  Then, they display unbelievable cynicism about the whole process of science by cooking the books on climate science. Then they try to deny the cover-up. 

The whole thing is sad.

If this is what academics spend their time doing, I’d prefer it if they all got new jobs in some more reputable, productive profession.  Like porn, or drug trafficking.  At least in those industries you have to deliver a real product with a real bang.

Keynesian Krugman writes his own obituary

January 8, 2010 Leave a comment

Paul Krugman made me laugh today.  Really laugh!  Here is the funny piece from his blog:

This is the way the Chicago School ends.

Not with a bang, but with a cackle.

Brad DeLong, Justin Fox, and Paul Kedrosky have already weighed in on the not-available-online John Cassidy piece on Chicago economics.

Like them, I find it really sad. Here’s Eugene Fama, insisting that there was no financial crisis, just markets reacting rationally to an economic crisis caused by brain-eating aliens flouridated water something or other — hey, macro isn’t his department. John Cochrane, on the other hand, says that it’s all because George W. Bush gave a scary speech.

What struck me was the fact that Cochrane is still trying the argument-from-authority thing: this was all proved false in the 1970s, nobody serious believes in it, etc.. At this point he knows (although one wonders whether he did originally) that there’s this thing called New Keynesian economics on which a lot of smart people have been working since the mid-1980s. And yes, the models do allow for effective fiscal policy. But Cochrane is still using the Lucas giggles and whispers line.

It’s hard to avoid the sense that Chicago just turned inward on itself circa 1982, and stopped paying attention either to the world or to anyone not of its tribe. And now it finds that the rest of the world is returning the favor.

Two things made me laugh.

First, the brain-eating aliens/flouridated water line was both unexpected and very witty.  I liked it from an economist who is normally so serious about his own profession.

Second, the obituary he writes for the Chicago School is exactly the obituary I would write for the whole mainstream – particularly the Keynesians.  Henry Hazlitt cut Keynes to bits half a century ago, and Keynesianism still carries on, like a zombie, brain-dead, lifeless, causing death and destruction wherever it is allowed in.  After the Keynesian-induced disasters of Japan and the US, each time PK visits any country the call should go out across the land:

“A Keynesian is approaching!  Shut the town gates!  Hide the women and children!  Run!  To the men: Get the crucifixes, the Holy Water and the garlic and the shot guns and let’s all meet in the town square to distract the Keynesian zombie away from the gold and our women!  Apparently all Keynesian zombies love brains – give me some mad cow brains and perhaps he’ll eat those!”

Paul Krugman writes accurately of the Chicago School’s demise but doesn’t realise his words could apply equally to himself and Keynesians generally.

Then again, zombies can never tell that they’re already dead. 

Shhh…. don’t tell him (he might start staggering my way!).

What the Hell happened to “Swine Flu”?

January 7, 2010 Leave a comment

Remember the ads?  The govt’s warnings about this being potentially catastrophic “pandemic” (the formal UN classification)?  The millions wasted on contingency plans?

What the Hell happened?

Should we just ignore similar UN-issued warnings in the future if this one was such a joke, such a non-event, such a complete waste of time?

I suspect it’s a dry run, but who knows what the world’s governments are up to?

The motivating madness of government fascism

January 5, 2010 Leave a comment

People don’t see crises coming because they believe in the rationality of government.  They don’t see the dynamic inherent in a coercive rent seeking entity that necessarily compels governments worldwide towards madness again and again and again.

WWI was madness.  The Great Depression was madness.  WWII was madness.  Hiroshima was madness.  The Cold War was madness.  Chernobyl was madness.  The deliberate death of the Aral Sea was madness.  The destruction of arable land worldwide to convert this precious fertile land into low-density residential development is complete madness.  Deliberate and govt-supported over-fishing worldwide is unsustainable madness.  The GFC was predictable madness.  The continued presence of the West in Afghanistan is madness.

Why do governments the world over act with such apparent suicidal, manic-depressive blind stupidity, such venal short-termism, such environmental destruction, such barbarity?

Because very simple incentive structures built up over time around the coercive activities of government compel it towards destructive barbaric madness.  Simple.

Those contractors supplying government make money out of what government does.  Government (originally) was developed to provide a limited range of essential services – law and order and defence.  Suppliers to government have a natural incentive to try to convince government to spend more, to make government bigger.  It’s an easy gig because governments can print to finance their own spending habits (unlike the private sector).

Governments then get bigger doing things they shouldn’t do.  And because there is no appeal process beyond government (all you can do is appeal to another agent of government), government has a natural tendency to get bigger because nothing can stop it short of complete anarchy.  So it keeps growing until chaos really does ensue.

This happens again and again throughout history and every time people are “shocked” by the chaos, by the suddenness of the social breakdown.  The Soviet Union, Iran, the US in the ’60s, Cambodia, the former Yugoslavia, Europe after WWI… all these regions experienced government-induced chaos, government supported madness.

The US will experience exactly the same social breakdown, the same insane bankruptcy, the same comic-tragic stupidity.  Why?  Because the dynamics of government compel the country towards this inevitable denouement.

Let me explain by providing a quote from Bill Bonner of Daily Reckoning:

Bethesda is one of America’s wealthiest suburbs. Money from all over the nation rolls this way. The playing field is tilted in Bethesda’s direction.

“I was sitting in the Starbucks, having a cup of coffee,” Elizabeth reported. “One man next to me was on the phone. He was talking about some deal he had done with the US Army in Afghanistan. It sounded as though he was very happy with it. The man next to me on the other side was on the phone too. He was a jollier fellow, talking loudly about how much money he had made. I thought he was a stockbroker or something like that. Then, I realized he was talking about a contract with the government.”

While the rest of the nation has suffered a setback over the last ten years…the Washington metropolitan area has boomed more than ever. Real estate prices are down…but less than other areas.

And when we looked for a house to rent, we expected to be able to name our price. We thought it would be a buyer’s market. Not so. Nice houses in Bethesda are still being sought after. How so?

Wars…bailouts…boondoggles – this area loves them. Federal employees’ earnings keep going up…and a higher portion of the US national income goes to Washington.

People make money out of the government’s fascist madness.  So the fascist madness increases.

Simple.

What’s hard to understand about rent-seeking?

Keynesian claptrap

January 4, 2010 Leave a comment

When a policy is tried again and again and doesn’t work, if you keep trying it, you’re madVerifiably insane.

Our politicians in the UK, the US and Australia are all verifiably insane.

Example 142,426,273 in the long, sorry tale of governments trying to “do something” to fix problems they themselves created, is fiscal deficit spending to “cure” a slump caused by too much credit creation (itself caused by the govt’s support of central banking).

The solution to most government-generated economic “problems” is for the government to shrink, to get out of the damn way, to stop interfering, to stop meddling, to stop creating uncertainty in the business plans of real businessmen and women.  In other words for bureaucrats to shoot themselves in the head.  Of course, that’s the last thing a bureaucrat (or banker) wants to hear, so the madness continues until they really stuff up an economy beyond the point of no return.  Like Japan.  Or the UK.  Ha Ha Ha!

I know it’s old-fashioned to remind the anti-trust regulators, or the cops picking up someone for possessing a few grams of coke or pot, or the central bankers that the real purpose of monopoly government was very limited.  It was to provide (1) defence and (2) security services to allow citizens to protect their property rights and (3) very little else (perhaps provide public goods where they genuinely existed).

Now the government appears to try to do everything BUT these things.

They are allowing our soldiers to be killed in Afghanistan, but laughing at me when I say my wallet was stolen in my own suburb at home.  They tax me so they can give the money to another homeowner for home improvements (since when was it government’s job to decide who should get home insulation?) or they bailout bankers instead of saving bankrupted small businesses and farmers (since when was the government’s role to pick winners in the economy?  Where’s my bailout?).  They steal my guns, my gold (gold coin sales are often suspended for no reason), my income, my livelihood, my right to smoke what I want where I want – and yet they don’t provide regular running water (water restrictions are a regular occurrence around here), they don’t defend me against embezzling bankers and they don’t stop robberies in my local area.  But they think they’re geniuses when it comes to curing an economic slump!

Are these guys delusional?

Sterling T. Terrell writes:

Fiscal policy, the attempt to use government outlays and revenue to better the economy, simply does not work either a priori or in practice.

But just ask any undergraduate student in Macroeconomics 101 about fiscal policy. They know the “correct” answer: If the economy is “too slow,” the government should lower interest rates and increase government spending. If the economy is “overheated,” the government should raise interest rates and decrease government spending.

The horrors of monetary policy aside, fiscal policy cannot stimulate the economy. As we know, the government has no money of its own. It has only the power to tax and spend the money of others. There can only be a transfer that takes place, not a creation of wealth: jobs in X are gained, but jobs in Y are lost.

However, this transfer is actually a loss. Taxing away a person’s ability to fulfill his own wants and then providing him with things he may not care about makes him worse off. This process condescendingly supposes that individuals cannot decide for themselves what they need.

Furthermore, taxing is not done in a uniform manner. Progressive income taxes, double corporate taxes, and estate taxes all disproportionally take from the people that make, create, invest, and speculate to the betterment of all. Henry Hazlitt famously explained this in his well-known work Economics in One Lesson (see chapter five).

The common objection to such a theoretical analysis is: “Well. No. You have to look at the fiscal multiplier. One dollar in government spending, once it filters through the economy, will make GDP increase by more than one dollar.”

Let us agree to play the empirical game, momentarily.

New work done by Ethan Ilzetzki, Enrique Mendoza, and Carlos Vegh, covering data from 45 countries from 1960 to 2007, casts doubt on the validity of the multiplier in many cases.

Our findings lead to the usual “it depends” answer to the size of the fiscal multiplier question. As those familiar with macroeconomic theory likely anticipated, the size of the fiscal multipliers critically depends on key characteristics of the economy (closed versus open, predetermined versus flexible exchange rate regimes, high versus low debt) or on the type of aggregate being considered (government consumption versus government investment). Policymakers would therefore be well -served in taking into account a given country’s characteristics in evaluating the benefits of any fiscal stimulus package.

Read the details for yourself, but the differences they found seem to be the largest when comparing fixed- and flexible-exchange-rate economies,

and closed and open economies:

This all suggests that in a country such as the United States the fiscal multiplier is virtually zero. Robert Barrow agrees.

So, in addition to fiscal policy taking away the freedom to choose, robbing X to hand it to Y, and penalizing the very people that improve our lives, it also fails empirically. Even if it did not, as is seemingly the case in certain closed economies graphed above, there would still not be a valid reason to oppress people further by taxing away their money for “stimulation.” By that rationale, a fiscal policy taking up 95% of GDP would make people better off than a fiscal policy taking up 5% of GDP. Clearly, this is not the case.

Earlier this year, Frank Shostak predicted that the recent fiscal stimulus would not help the US economy. Looking at unemployment, he was right.

Fiscal policy does not work, a priori or empirically, but the Austrians already knew that.

John Quiggin on Plimer

December 18, 2009 Leave a comment

JQ goes after Plimer.  Again.

I am no great admirer of Plimer.  Why JQ wants to lump all critics of an ETS as right-wing psychopaths robotically parroting the same point of view is beyond me.

I have the following issues to raise with JQ (of course he won’t respond, but my frustration compels me to act):

1.  George Monbiot admits he is ashamed and embarrassed as a scientist regarding Jones’ (and other climate scientists’) attempts to suppress contrary research, to “mould” the debate to suit their agenda and their cynicism regarding the whole process of science.  Is JQ equally ashamed?

2.  If scientists are willing to plunge to these depths, what integrity can we expect from the political process regarding an ETS, which is much more corrupt and is subject to rent seeking pressures?

3.  Even if Plimer is a madman financed by the mining industry (neither of which I accept) what has this got to do with the efficacy of an ETS in tackling climate change?  Satyajit Das (noted derivatives expert and trader) has come out on Phillip Adams’ LNL in support of a carbon tax NOT an ETS.  He thinks an ETS would be subject to corruption and wouldn’t achieve the goals needed on climate change.  Is he mad too?

4.  Why the focus on climate change when dry land salinity, phosphate depletion, the destruction of farm lands in WA and in central NSW, irrigation rights, the destruction of the Murray-Darling Basin are all more pressing issues?

Name one recent government innovation or policy that has “worked” regarding the environment. 

$2 billion in free insulation?  Corruption, deaths from faulty installation… requiring govt to step in and regulate the industry even more because of govt incompetence in the first place. 

Reserving land for climate change?  Farmers are protesting in NSW (one is on a hunger strike) because of the effect this policy has had on farmland.  This amounts to compulsory acquisition of land without compensation – a violation of the Constitution.  No one seems to care.  Certainly not from the NSW or Federal govts.

Everywhere govt goes, disaster, corruption, incompetence and rent-seeking parasites seem to follow.

Does anyone see a pattern here?

Baiji “fundamentals”

December 17, 2009 1 comment

This is going to be an even “crazier” post than usual, so please keep up with me and just go with the flow for a little while and hopefully things will make sense at the end.

Assume you’re a fan of freshwater dolphin meat.  I know you’re not, but just go with me here.  Assume you’re also an investor.

The “fundamentals” regarding freshwater dolphins from an “investor” perspective are very good.  The baiji on the Yangtze are dying due to their food source (fish) being massively overfished and appalling pollution problems contaminating the Yangtze from China’s industrialisation.  Some have declared that the baiji are “functionally extinct.”

As an investor, it would be wise to try to “invest” in baiji, wouldn’t it?  Supply down, demand either steady or up (on anticipation of limited supply).  Price should be higher.

Two points immediately need to be addressed from this hypothetical.

First, for those who think it’s “distasteful” to even consider valuing dolphins in terms of their meat, I say to you – think it through carefully.  The harsh reality of life is that animals and plants which are useful to humans are “protected” by humans and flourish. 

Those with no value to humans are vulnerable to extinction.

This has been proven time and time again throughout modern history.

I don’t like this either, and I wish the human population would not grow exponentially.  Then again, I wish I was a dictator so I could turn this loser nation of overconsuming mindless debt-drones on to a more sustainable path of development.  In both cases, I’m dreaming. 

We have to deal with reality.

And the reality is that animals that we can eat survive in this crazy world much better than animals that serve us no purpose. 

The absolutist thinking of so-called conservationists drives me crazy.  This kind of “leave alone!” thinking is naive and dangerous and infects so much of the environment movement.  I cannot believe their basic naive stupidity.

The ban on the sale of elephant tusks in my mind is crazy.  Elephants have become less valuable to local communities in Africa.  Elephants “compete” for arable land.  Guess what’s going to happen when you ban the sale of elephant products?  There’s going to be ongoing tension between local communities and international organisations who don’t have to live with the problem (and who coercively scream for a ban on the sale of anything elephant related).  Ultimately, the local communities will have even more of an incentive to kill the elephants and not help sustain the elephant population.  What do you think is going to happen over the long-run? 

Obviously, land will be taken over by local communities in need of food.  Elephants will die due to lack of natural habitat.  They will not have been “killed” literally by a gunshot, so the zealots in the international conservation organisations will be silent.  But the elephants will die just as surely as if they had been killed for their tusks.

Same with whaling.  Why we are so paranoid about Japanese whaling I will never understand.  We overfish, we pollute the waters with oilspills, chemicals, toxic sludge and refuse, we kill the natural habitat of the whales with a massive toxic plastic waste dump in the middle of the Pacific Ocean – and yet we criticise the Japanese for “hunting” the poor whales.  We kill them slowly but just as surely through starvation, through the destruction of their natural habitat, but because that’s one step removed, because it doesn’t involve a direct bullet to the head, somehow everyone is OK with that.  But when the Japanese actually kill a single whale – whoa… that’s barbaric! 

I can’t stand this hypocrisy, this stupidity, the childish incapacity to directly connect up destruction of natural habitat with the death of an animal.  As an animal I’d prefer the quick and relatively painless death of a bullet to the head (safe in the knowledge that some of my family would survive and possibly even by protected by my killers) rather than a slow and excruciating and depressing death by starvation and destruction of my whole natural habitat, grieving knowing my children will slowly but surely starve to death, perhaps be forced to eat toxic plastic… knowing that none of us will survive. 

Which would you prefer, if there was no other choice?  And don’t say there’s a third choice.  There isn’t. 

Unless humans agree TODAY to stop all human reproduction and start consuming less, there is no third option.

Given this sad reality, I have another invariable rule for environmentalists to consider:  Once an animal is valued by man, it is protected by man.

Sheep outnumber New Zealanders for a reason – sheep are valuable.  New Zealanders take care (good care) of their sheep. 

Kiwi birds can’t be eaten.  They have no direct intrinsic value.  They are difficult to spot in their natural habitat so they are not even valuable from a tourist perspective.  Guess what – they are dying and are nearly extinct.

So discussing dolphin meat for me is perfectly reasonable.  Ironically, if freshwater dolphin meat was more valuable perhaps the baiji would not be functionally extinct today.

But this is not even the main point of this post.

Let’s continue with this thought experiment. 

In a superficial sense, you would think as a naive investor (supply down, demand up) that somehow “getting into” freshwater dolphins would be a good idea.  BUT THE WHOLE HABITAT OF THE DOLPHIN IS BEING WIPED OUT.  This is not a matter of being able to “invest” in dolphins.  What we are witnessing in the case of the baiji, I’m sure you would agree, is inevitable extinction.

Similarly, Jim Rogers consistently states that the “fundamentals” for agriculture are incredibly positive.  He states that investors should get into agriculture.  Supply is down.  Demand (with population growth and rising Asian incomes) will inevitably go up.

Although I respect Jim Rogers as an investor, this shows his limited thinking, his inability to see the full implications of the trends here.  He has spent his whole life as a commercial trader and investor, not as a social scientist or economist or philosopher.  He sees the problem, thinks in terms of supply and demand and then concludes that investment in agriculture is a good idea.

I beg to differ.  Although I respect Jim Rogers as an investor, I don’t respect him as a deep thinker.

My view is that we are watching EXACTLY THE SAME PROCESS AS THE EXTINCTION OF THE FRESHWATER DOLPHIN, APPLIED TO HUMANS!

Overfarming cannot be reversed.  Topsoil is irreplaceable.  Phosphates, once lost, cannot be replaced if there is no supply.  The water table once polluted cannot ever be cleansed of chemical toxins.  Destruction of arable land is in most cases irreversible.

The price mechanism cannot transform houses into farmland, cities into arable land.  Once destroyed these things (vital for our very survival) cannot ever be put back in place. 

Similarly, once the freshwater dolphin is extinct no amount of hedge fund investment is going to get its natural habitat back.

So Jim Rogers is right to see the trend, but he hasn’t worked out the full implications. 

WE ARE ACTUALLY WATCHING THE DESTRUCTION OF OUR OWN FOOD SOURCE.  WE ARE WITNESSING BEFORE OUR VERY EYES THE DESTRUCTION OF OUR OWN HABITAT.  WE ARE INEXORABLY CAUSING OUR OWN EXTINCTION.

If you think I’m crazy, please read this article and this previous post and then tell me you’re 100% confident that governments and investors will get us through this little problem.

Sometimes the price mechanism has become so corrupted by bankers and governments that the warning bells don’t go off until it’s too late

I don’t believe we are watching a “bull market” in agriculture.

What we are watching is the massive extinction of our various food sources, resulting in a massive food crisis for the (much higher!) human population in a few short decades.

No amount of hedge fund money will turn Asian cities back to rice paddies, Western suburbs back into farmland, or polluted toxic African mining towns back to unspoilt Savannah.

It’s already too late, in my view.  The trends are “locked in”. 

We are the next freshwater dolphin.   We are killing ourselves.  Climate change, if it exists, will simply accelerate this process.

Those institutions supposedly designed to “forward plan” us out of this mess also happen to have control of the guns.  History records that when a crisis hits, governments turn from protector to predator, plundering the people for food.  Chile.  Zimbabwe.  Cambodia.  Talk to indigenous peoples in Australia, in New Zealand, in Hawaii, in North America, in South America, in Asia, in Africa about what elite governments do to those they supposedly have a duty to protect.

Sorry, that’s right. You can’t.

Because they’re already dead.