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January 08, 2019

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Scratch

The near instant triumph of cartelisation and oligopoly in Silicon Valley, the newest and last vigorous branch of capital with minimal startup costs, no ossified brand identities, minimal government intervention and limitless investment capital - all you supposedly needed was a computer and an idea - must have given 'em something to think about too.

Robert Mitchell

"the average level of prices will behave in a known way in the future."

Friedman did not know about inflation swaps, which take inflation out of the picture for a contract's duration. No matter what inflation does, your funding ratio remains the same: your assets and liabilities stay in the same proportion.

Derivatives such as inflation swaps had yet to be invented when Friedman was alive. I doubt most economists have bothered to study them and thus stick to crusty old notions of inflation management while private finance has left them far behind.

Andrew

Sir John "Norwegian blue" Redwood, nailed to his perch but possibly pining for the fjords

Jo Park

The greatest reduction in absolute poverty, in fact the only reduction in the absolute numbers in poverty using that world bank poverty line of $1.90/day has occurred since central bank inflation targeting rode into town. Correlation isn't causation but I certainly would not ride round saying that the current system is broke as a generalisation. And even allowing for the events of 2007-8 it's true to say that most of the world live in countries that didn't have a recession in those years.
However, there is still some nuance worth exploring in right vs left libertarianism in the UK ( assuming this is on the questionable Lab vs Con axis ). The right like to ban things - e.g the ban on khat, spice and other mood altering synthetics, smoking in prisons, all in the last 8 years. Propose a ban on paying for sex, and up will pop John McDonnell and Jeremy Corbyn to oppose such a ban.
The left like to tax things instead, or at least in the case of MUP on alcohol to raise prices to squeeze the poor and those unresponsive to incentives.
That's an axis of division worth more analysis imv.
I'd give Snowdon more credit - he would support the raising of any tax that is currently not set or that is set below the Pigouvian level, so is both a sincere and a slightly left of centre libertarian. Imv, of course.

georgesdelatour

For a Libertarian, immigration is only okay if the immigrant imposes no costs on others. 19th century European immigration to the USA happened when there was no welfare state; and in fact a third of such immigrants gave up and returned to their country of origin (presumably the most economically productive immigrants were the ones who stuck it out). But modern immigration happens now that there is a welfare state, and at least some of it forces up government spending on housing, infrastructure, schools and benefits.

One American Libertarian, Bryan Caplan, argues for open borders precisely because he believes it will quickly bankrupt the welfare state and force a return to a 19th century minimal state. Ultimately he wants to “rub the Left’s nose in diversity”, to reverse Andrew Neather’s quote from Tony Blair.

For a Libertarian, drug legalisation is only okay if the drug user’s drug use imposes no extra costs on others. But in practice, if legalisation raises the incidence of marijuana-related schizophrenia or driving-while-stoned car accidents, the state will probably wind up having to spend more as a consequence. One Libertarian solution would be to require would-be drug users to first purchase private insurance, which would pay out in such cases. Irresponsible drug users would presumably be unable to get insured, and would therefore be unable to buy drugs. (Please note, I’m merely describing a Libertarian argument, not agreeing with it).

georgesdelatour

With drugs, is it really about whether you should be free to put any drug you want into your own body? Or is it about whether an individual drug is believed to make you more left wing or right wing? People think marijuana makes you more left wing, while anabolic steroids make you more right wing. (Over a million Brits currently take illegal steroids, BTW)

Ralph Musgrave

“The idea that capitalism could thrive with only minimal state intervention was disproved the moment the government bailed out the banks in 2008.” Wrong.

Banks have got taxpayers by the balls because banks have managed to set up a bank system where if banks make silly loans, the entire money storage and money transfer system collapses. There’s absolutely no need for that daft system: i.e. a system where if lenders make silly loans, those funding the silly lender take a hit, while the money storage and transfer system remains untouched.

Unfortunately that point is a mile above the heads of 99% of politicians and about 75% of economists. Thus we will probably continue with the existing bank system for a while yet.

Nick Drew

A phenomenon that is worth pondering is the widespread and essentially successful ban on smoking in public places (in many countries). Widely predicted to be unenforceable, and much decried at the time by libertarians of all shades as the epitome of fascism, it has of course been 99.99% effective; and quickly, too.

And without any serious residual moaning or (as far as I can tell) resentment. Very many professed libertarians are, at heart, entirely law abiding and conventional - it's often more an attachment to a romantic notion of individualism.

Taking this observation one step further: it is truly remarkable how many Americans profess libertarianism, whilst being pretty conformist (sometimes aggressively so) in actual behaviours. 'The Land of the Free': but try raising a dissenting opinion within an American corporation, for example.

Ray Mears

I'm afraid there is a central flaw in the argument that 2008 proved the need for state intervention. Remember banks were, and still are, funded in large part by state-guaranteed deposits. The whole banking system was de-facto a nationalised industry way before the crisis. A good example of a private sector collapse and rescue is the 1908 US crisis that made the reputation of J.P. Morgan.

georgesdelatour

@Nick Drew

Maybe non-conformists can only non-conform safely inside a benevolently safe conformist culture. When Monty Python made “Life Of Brian”, there was a fairly clear idea what the establishment was, and the established Church was clearly part of it. This made it safe to mock in a way it wouldn’t have been in, say, 1588. By the time we get to the Charlie Hebdo cartoons and subsequent murders, French society is simply too fractured for that kind of irreverence. In the case of Islam, everyone can see that it’s rapidly becoming a more important element in the emerging new France, and there’s an intense power struggle over whose version of it is going to prevail. Poking fun at it during such a power flux becomes literally fatal.

I sense that we’re in a far more conformist period now than at any time between the start of the 60s satire boom and the end of Spitting Image.

georgesdelatour

Chris

I think there’s an elephant in the room you’re not seeing.

We have reliable polling data showing that Libertarianism is basically a White eccentricity. There are individual Black and Asian advocates for Libertarianism, such as Thomas Sowell in America and the writers of Pragati in India. But the macro trend is for Nonwhites to be far more pro big government than Whites. A 2013 paper by Hal Pashler found that, among US voters, an expansion of government was favoured by only 27% of Whites, but by 55% of Asians, 64% of Blacks, and 73% of Hispanics. Bear in mind that, in the US, Asians are on average significantly wealthier than Whites; so this is not simply a matter of rich people wanting small government. It really seems to be a White thing.

On the other hand, when Visegrad countries try to keep their polities as White as possible, it winds up making everything very un-Libertarian. So it really looks as if macro-scale Libertarianism is doomed, and thoughtful Libertarians probably realise as much. Patri Friedman and others see their only hope in charter cities and seasteads. That is, in small intentional communities in out-of-the-way places, which might just escape governmental attention. They’re trying to set one up in French Polynesia.

GCarty80

I'd argue that libertarianism isn't even a white eccentricity but rather a white _settler_ eccentricity (which is naturally strongest in the USA due to the frontier mythos), that comes from having so much land and resources at one's disposal that people inherently don't need to compete or co-operate very much.

Ralph Musgrave

There's just one slight problem with
Georgesdelatour's theory about white / Libertarian thinking being a disaster: the most desirable countries to live in (which those non Libertarian non-whites are all trying to get into) were all set up by whites.

Simon Cooke

Grief there's some nonsense here.

Nope. Libertarianism isn't "white supremecy".

Nope. Libertarianism isn't Thatcherism

But,yes, there's a crisis (not a new one) with right libertarianism - the preference for sex and drugs and rock 'n' roll over stuff that really matters for most folk.

Liberalism is right about almost everything but the essentially conservative nature of its opposition means you can point to the damage of freedom ("look at the addicts, the drunks, the fraudsters, the closed factory...") and ignore the benefits. And we hate the bad stuff more that we'll ever love the good stuff - I mean, what would your mother say?

georgesdelatour

@GCarty80

You may be right. Have you read David Hackett Fischer’s “Albion’s Seed”, which traces the ideological fault lines in US politics to the cultural attitudes of four different colonising groups of Brits in the 17th century?

@Ralph Musgrave

I’m not claiming Libertarianism is a set of impractical bad ideas which can never ever work. Nor am I claiming it’s a White supremacist plot to subjugate Non-whites.

I’m simply claiming it’s highly situated. It’s only really popular among WEIRDOs (Westernised Educated Industrialised Rich Democratic Outbred populations). This strongly suggests that its origins in societies with Hajnal Line marriage patterns is not accidental; and Pope Gregory I may be a more important figure for Libertarianism than Ayn Rand, Mises or Rothbard.

And that’s the problem. There are fewer and fewer polities left with a high enough proportion of WEIRDOs in the population to make a Libertarian victory plausible. Lichtenstein, maybe?

GCarty80

Georgesdelatour,

I was thinking more in terms of libertarianism being a product of the settler experience itself: of finding oneself in a fertile land where the native population was negligible, (and thus where there was so much free land for the taking that no rentier elite could come into being except by using a physically-coerced workforce, as was the case in the US South).

I suspect the original culture of the settlers was important too though, as otherwise libertarianism would also have become popular in Argentina (where the native population was just as sparse as it was in Anglo-America).

G Money

“I'm afraid there is a central flaw in the argument that 2008 proved the need for state intervention. Remember banks were, and still are, funded in large part by state-guaranteed deposits.”

Yeah, because as the article points out, reality has kind of sunk in a bit for people that are forced to exist in objective reality. There is no realistic way to have a well-functioning banking, monetary and financial system at the national level without lots of state involvement. The alternative to that would be what, the free banking era in the US? Or the international markets that have created a worldwide derivatives monster? In fact, given the actual real world impacts, I don’t think it should be assumed that we should continue to allow private banks to create most money, and we should stop assuming that banks shouldn’t either be publicly owned, or at least run as public utilities. I don’t see a logical argument that allowing banks to create most money and allowing the free flowing of financial capital is a net societal benefit. It, again, certainly shouldn’t be assumed away. After WWII, many leaders in the West did support moving slowly towards free trade, rhetorically at least, but in order to do that they thought that finance had to be controlled. That is why, in part, Keynes called for the socialization of finance in the last chapter of The General Theory. Libertarians have lots of ideas about the state’s monopoly in regards to money creation, they want a sea of private currencies, not a state currency with domination over private alternatives. Sounds really neat in theory, in actuality it is entirely unworkable and would be a nightmare.

No country has ever developed while utilizing a libertarian program, and no functioning economy in the world operates along those lines. There is a reason for that.

Ralph Musgrave

G.Money, Re your claim that “I don’t see a logical argument that allowing banks to create most money….is a net social benefit”, the reality is I’m afraid that there are dozens, if not hundreds of academics who fiercely defend commercial banks’ money creation activities. E.g. Malcolm Sawyer, Ann Pettifor and Jo Michell, to name just three.

Demolishing their arguments is a long hard slog. Here are a couple of my contributions to demolishing their arguments:

https://medium.com/@ralph_47183/ann-pettifors-incompetent-criticisms-of-positive-money-and-martin-wolf-26c416d0e9ba
http://books.ksplibrary.org/978-605-2132-59-3/


G Money

Thanks Ralph. I will read those tonight. I have The Production of Money from Pettifor, and I have read a lot about the subject. I have read and heard many arguments, and I just don't see a logical argument, and I say that as someone with a pretty strong background in ecological economics, as well as MMT economics too. Thanks!

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