The case for capitalism

I have just received through the post a first edition copy of Hartley Withers, The Case for Capitalism. The preface is found below but comes with this one warning which to modern sensibilities can set them off in every direction but towards trying to understand what the author was saying. This was written when the most wealthy countries in the world were the capitalist economies of the British Isles, northern Europe, North America along with Australia and New Zealand. His reference to the Anglo-Saxon nations only refers to their social and economic organisations which anyone else is free to adopt, as some have since the 1920s, with exactly the results he describes. But the effect is moral rather than just economic since, as he makes clear, people who are challenged to do their best become better people. This is a moral statement even more than an economic. Written in 1920 just after the Russian Revolution, the book has not lost a beat in its ability to articulate why free enterprise is beyond all doubt the only system capable of providing prosperity and human freedom, not just together but you cannot have either without a free market economy in place.

PREFACE

To make a better world we want better men and women. No reform of laws and institutions and economic systems will bring it unless it produces them. Institutions and systems that turn men and women into machines working under the control of officials or of monopolies will not make them better even if, as is very far from likely, they make them better off. It is only through facing life’s problems for ourselves, making our own mistakes and scoring our own hits, that we can train and hammer ourselves into something better. Individual freedom, initiative and enterprise, have been the life-blood of the Anglo-Saxon nations and have made it what it is, pre-eminent among the nations of the world because its men and women can think and act for themselves. If we throwaway this heritage because we think that regulation and regimentation will serve us better, we shall do a bad day’s work for ourselves and for human progress. And yet this seems to be the object to which many earnest and sincere reformers are now trying to lead us, when they ask us to accept nationalization of industry or its organization under Guild monopolies, as a remedy for the evils which are evident in our economic system. If they succeed life will cease to be an adventure and become a drill; the tendency to variation which, as science teaches us, is the secret of development, will be killed or checked, and we shall be standardized, like Government boots.

This book is written to show that the greater output of goods and services on which material progress depends cannot be expected with certainty under any form of Socialism that has yet been proposed; that Capitalism, though a certain amount of robbery goes on in its backyard, does not itself rob anybody, but has wrought great benefits for all classes; and that, if improved and expanded as it may be without any sudden change in human nature such as other systems demand, it may earn for us the great material advance that is needed to provide us with a better, nobler, and more beautiful world.

HARTLEY WITHERS.

London, January 1920.

Climate change alarmism is a belief system

I thought the role of a monarch was to stay above the fray. This is the kind of stupidity you would have thought his more politically tuned-in minders would have saved him from. Apparently not.

Prince Charles has called for an end to capitalism as we know it in order to save the planet from global warming.

In a speech to business leaders in London, the Prince said that a “fundamental transformation of global capitalism” was necessary in order to halt “dangerously accelerating climate change” that would “bring us to our own destruction”.

He called for companies to focus on “approaches that achieve lasting and meaningful returns” by protecting the environment, improving their employment practices and helping the vulnerable to develop a new “inclusive capitalism”.

But with a different perspective, and in this case from someone who understands politics in a way HRH never will, there is this, by Nigel Lawson, former Chancellor of the Exchequer, in a presentation with the title, “The Trouble With Climate Change“. And the trouble for him is that many of those who have a different view are beyond any rational discussion of this issue, something he knows from first hand experience. Here is the text:

There is something odd about the global warming debate — or the climate change debate, as we are now expected to call it, since global warming has for the time being come to a halt.

I have never shied away from controversy, nor — for example, as Chancellor — worried about being unpopular if I believed that what I was saying and doing was in the public interest.

But I have never in my life experienced the extremes of personal hostility, vituperation and vilification which I — along with other dissenters, of course — have received for my views on global warming and global warming policies.

For example, according to the Climate Change Secretary, Ed Davey, the global warming dissenters are, without exception, “wilfully ignorant” and in the view of the Prince of Wales we are “headless chickens”. Not that “dissenter” is a term they use. We are regularly referred to as “climate change deniers”, a phrase deliberately designed to echo “Holocaust denier” — as if questioning present policies and forecasts of the future is equivalent to casting malign doubt about a historical fact.

The heir to the throne and the minister are senior public figures, who watch their language. The abuse I received after appearing on the BBC’s Today programme last February was far less restrained. Both the BBC and I received an orchestrated barrage of complaints to the effect that it was an outrage that I was allowed to discuss the issue on the programme at all. And even the Science and Technology Committee of the House of Commons shamefully joined the chorus of those who seek to suppress debate.

In fact, despite having written a thoroughly documented book about global warming more than five years ago, which happily became something of a bestseller, and having founded a think tank on the subject — the Global Warming Policy Foundation — the following year, and despite frequently being invited on Today to discuss economic issues, this was the first time I had ever been asked to discuss climate change. I strongly suspect it will also be the last time.

The BBC received a well-organised deluge of complaints — some of them, inevitably, from those with a vested interest in renewable energy — accusing me, among other things, of being a geriatric retired politician and not a climate scientist, and so wholly unqualified to discuss the issue.

Perhaps, in passing, I should address the frequent accusation from those who violently object to any challenge to any aspect of the prevailing climate change doctrine, that the Global Warming Policy Foundation’s non-disclosure of the names of our donors is proof that we are a thoroughly sinister organisation and a front for the fossil fuel industry.

As I have pointed out on a number of occasions, the Foundation’s Board of Trustees decided, from the outset, that it would neither solicit nor accept any money from the energy industry or from anyone with a significant interest in the energy industry. And to those who are not-regrettably-prepared to accept my word, I would point out that among our trustees are a bishop of the Church of England, a former private secretary to the Queen, and a former head of the Civil Service. Anyone who imagines that we are all engaged in a conspiracy to lie is clearly in an advanced stage of paranoia.

The reason why we do not reveal the names of our donors, who are private citizens of a philanthropic disposition, is in fact pretty obvious. Were we to do so, they, too, would be likely to be subject to the vilification and abuse I mentioned earlier. And that is something which, understandably, they can do without.

That said, I must admit I am strongly tempted to agree that, since I am not a climate scientist, I should from now on remain silent on the subject — on the clear understanding, of course, that everyone else plays by the same rules. No more statements by Ed Davey, or indeed any other politician, including Ed Milliband, Lord Deben and Al Gore. Nothing more from the Prince of Wales, or from Lord Stern. What bliss!

But of course this is not going to happen. Nor should it; for at bottom this is not a scientific issue. That is to say, the issue is not climate change but climate change alarmism, and the hugely damaging policies that are advocated, and in some cases put in place, in its name. And alarmism is a feature not of the physical world, which is what climate scientists study, but of human behaviour; the province, in other words, of economists, historians, sociologists, psychologists and — dare I say it — politicians.

And en passant, the problem for dissenting politicians, and indeed for dissenting climate scientists for that matter, who certainly exist, is that dissent can be career-threatening. The advantage of being geriatric is that my career is behind me: there is nothing left to threaten.

But to return: the climate changes all the time, in different and unpredictable (certainly unpredicted) ways, and indeed often in different ways in different parts of the world. It always has done and no doubt it always will. The issue is whether that is a cause for alarm — and not just moderate alarm. According to the alarmists it is the greatest threat facing humankind today: far worse than any of the manifold evils we see around the globe which stem from what Pope called “man’s inhumanity to man”.

Climate change alarmism is a belief system, and needs to be evaluated as such.

It is beyond rational argument and into the realm of good and evil. We must reform capitalism, ruin our economies, devastate living standards in the name of a forecast change in global temperatures for which evidence has evaporated over the past fifteen years.

The Obama constituency

Victor Davis Hanson looks at the incredible staying power of a president who is ruining his own country and yet finds its critics at the other end of the garden. They don’t even describe him as a Teflon President since, to his supporters, Obama has hardly put a foot wrong. Nothings sticks because, in their view, there is nothing to stick. Here are three of the factors that keep Obama’s numbers in the acceptable zone.

1) His record support among minorities will not change since 70-90% of various hyphenated groups see the Obama tenure as long-overdue representation of their own interests — economic, ethnic, and symbolic. . . .

2) The media is not just overwhelmingly hard left, but hard left with a chip on its shoulder that its own views are neither accepted by the majority nor usually implemented by government.

All the above scandals and embarrassments would have ruined a Bush, given that such mishaps would have been headlined daily in the New York Times (e.g., “VA, Benghazi, AP, NSA, IRS overwhelm sinking Bush administration”) or Washington Post (“Bush Cabinet Paralyzed by Scandal”). . . .

3) The well-off are indifferent to the Obama record, interested only in its symbolic resonance. Doctrinaire liberalism resonates mostly with the very wealthy. We see that by the voting patterns of our bluest counties, or the contributions of the very affluent. In contrast, Republicanism is mostly embedded within the middle class and upper middle class, while liberalism is a coalition of the affluent and the poor.

But while these are important according to Hanson, the area he specially identifies is this:

For the liberal grandee . . . Obama represents their utopian dreams where an anointed technocracy, exempt from the messy ramifications of its own ideology, directs from on high a socially just society — diverse, green, non-judgmental, neutral abroad, tribal at home — in which an equality of result is ensured, albeit with proper exemptions for the better educated and more sophisticated, whose perks are necessary to give them proper downtime for their exhausting work on our behalf.

He may throw like a girl, screw everything up he touches, make America a worse place to live, leave the world far more dangerous than it was, but at least he’s not one of those rubes like Sarah Palin. And for this, and this alone, all is forgiven assuming it is even noticed there is anything he has to ask forgiveness for.

Did you think everyone was going to love the budget on sight?

In the news this morning, Coalition to step up budget sales pitch, as MPs voice concerns.

FINANCE Minister Mathias Cormann has flagged a new taxpayer-funded advertising campaign to market the budget, amid backbench frustration over cabinet’s sales pitch.

It’s not just the cabinet that’s a frustrated. You were elected to keep Labor out of the Lodge for six years and maybe nine. There were many things that needed to be done, with fixing 18C a low priority and getting the economy right second from the top, just after stopping the boats. The boats have been stopped, but by 2016, even Shorten will work out what he has to say. I won’t believe him, but that’s not the point since millions will.

But it’s the economy, stupid. The great political genius of Labor was to store the spending outside the forward estimates so that the don’t immediately show up. I think I know that, but if it’s true, I only just know it and I am paying attention.

You have done a hopeless job of selling anything. If you have a message, I don’t know what it is. If you stand for anything other than that you are better economic managers than Labor, I don’t know what it is? Think then about how strange this is:

Tony Abbott last night hosted a private dinner for a large group of backbenchers ahead of the meeting to personally reassure MPs and provide further information about the budget.

Only now they are giving information about the budget to the backbench?!? This is bizarre and pathetic. And how bout this:

Some Coalition MPs are frustrated about directives from the Prime Minister’s office that limited the media exposure of senior Coalition figures ahead of the budget, allowing Labor to fill the void with criticism of budget measures.

Well, at least from here you have nowhere to go but up.

Piketty and scientific fraud

scientific method phd comics

The diagram above works just as well for climate change as it does for almost every left-of-centre political meme based on some kind of scientific conclusion. But I mention it because of Piketty and his apparently fraudulent data on income distribution. It doesn’t surprise me that hiding the decline is a universal practice on the left. But the real issue is that it should not matter.

You have to be ignorant as the day is long not to know that capitalism has made us wealthy beyond all possible expectation, even going back thirty years never mind three hundred. We now have a vast number of people who do not work because we produce at such a prodigious rate that it just doesn’t require more than about a quarter of the working population to produce enough for us to maintain a 1950s and better lifestyle for those who choose not to bother actually earning an income. In our society who hasn’t got a phone, a car, a colour TV, enough to eat, clothes to wear and a place to live. There are always people on the fringe who circumstances have dealt a bad card, but really we are beyond any issue of deprivation that had existed for the entire course of human history up until say around that same 1950s mark.

So Piketty lied. The people who line up behind the book will care about that as much as they did about Climategate. It is about power and wealth, with the facts of the case as close to a non-issue as it is possible to be. The only interesting question about wealth distribution to these people is that they would like more of our wealth distributed to themselves.

QPR v Derby

Tonight’s the night to decide who will go back to the Premier League. The video is of my QPR side from the 1970s that ended up runners up to Liverpool. A great great side.

UPDATE: THE goal:

60 min: Gary O’Neil is sent off! Lee Mason took a moment or two to consult with his assistant and although Clint Hill was trying to make up the ground from the left, he was too far away and O’Neil had to go. O’Neil doesn’t bother complaining and QPR are down to 10 men!

GOAL! Derby 0-1 QPR (Zamora, 90 min)
Bobby Zamora has repeated his heroics from 2005 and surely won it for QPR! Derby are stunned. It all came from a throw, but what a horrible mess. Hoilett battled his way past a limp challenge to reach the byline on the right and send a low ball into the area. There wasn’t much of a problem for Derby – until Keogh took a hapless swipe at it and sent it straight to Zamora, who sized it up, opened up his body and then curled a delicious first-time effort high past Grant and into the top-right corner with his left foot! What a finish! The 10 men lead!

Full-time: Derby 0-1 QPR
Bobby Zamora has sent QPR back into the Premier League! Incredible!

The highlights tape of the whole game.

Some needed balance, however, from Theodore Dalrymple:

Sport is morally and financially corrupt from top to bottom. Of the corruption at the top it is hardly necessary to speak. And the lessons it teaches, even at an amateur level, are horrible: win at all costs, be unscrupulous, cheat if necessary, take drugs to make you stronger. It arouses primitive, violent emotions, and appears to be worsening in this regard: the authors quote statistics showing that severe aggression was reported in 7,750 amateur football matches in France in 2006-7, and in the year following in 12,008 matches (half of the incidents were of real violence).

AND ONE MORE:

A policy experiment in the South Pacific

Apparently we ran an experiment in economic policy here in the South Pacific which is described here:

[New Zealand] Treasurer Bill English said last week that he would cut public spending as a share of gross domestic product by more than twice as much as the Abbott government has announced.

In fact, without a minerals boom to line government coffers and despite a huge repair bill from two devastating earthquakes, New Zealand’s budget will be back in surplus by $NZ400 million ($370m) next financial year, rising to $NZ3.5bn by 2018.

English, now in his sixth year as New Zealand’s Treasurer, commendably chose not to emulate the world’s greatest treasurer Wayne Swan and kept a tight leash on public spending before and after the global financial crisis, preferring to cut income taxes and lift consumption tax. The Key government, facing election again later this year, is now reaping the rewards.

It wasn’t just our Wayne who took this road to ruin. Virtually everywhere was the same, with the US leading the way into an economic darkness it is impossible to see ending any time soon. But try to tell someone that Y=C+I+G is an economic death trap. But if you doubt it, look at the comparison with Australia.

The culmination of almost two decades of mainly populist budgets, the Abbott government will spend $6200 a person on cash welfare next year, over 25 per cent more than New Zealand’s government will on each of its citizens (converting all amounts to Australian dollars).

Education spending, at $2900 a person, is 10 per cent more generous in Australia but health expenditure is torrential by comparison: Australian state and federal governments will lavish more than $4600 a person to keep Australians alive and healthy, almost 50 per cent more than is spent in New Zealand. No methodological quibble could bridge such stark differences.

The relative splurge extends to hiring, too. Australia’s population of 23.5 million is about 5.2 times New Zealand’s, but as of June last year we had 8.4 times as many public servants: 1.89 million across our state, federal and local governments compared with New Zealand’s 226,000. . . .

Apart from a bloated public sector and a wellspring of whingeing, what does Australia get for its vastly more indulgent public spending? Much higher taxes, for one thing. The marginal income rate most Australians will pay from July — 34.5 per cent — will be higher even than New Zealand’s top 33 per cent rate, which makes a mockery of our 49 per cent top rate, which will be higher than China’s and France’s.

Undisciplined government spending will pull an economy into the dust. Such spending is a disaster both economically and then politically as governments try to pull things right.

And then there is also the delusion that low interest rates will propel an economy upwards, yet another Keynesian bequest.

Even rising interest rates have been unable to dent record high confidence levels among New Zealand households and businesses.

There is no “even” about it. High interest rates, or at least high enough to shut non-productive borrowers out of the money market, are a major factor in keeping an economy on track and growing. Economic theory today is comparable to the theories Adam Smith was writing about criticising in 1776 if not actually worse.