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What do statistics have to do with it?

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Now that we know almost every official number of Covid deaths is a gross exaggeration, continue with this from the front page of The Oz

Daniel Andrews is locking Victoria and the national economy into a long and ugly grind towards Christmas, with grave consequences for many businesses.

This is the depressing consequence of the severity of Victoria’s second wave.

No one wants to be here; the document that charts the way forward for Australia’s second-­biggest state is a horror show for tens of thousands of businesses employing millions of people.

The Andrews measures are even tougher than many were expecting. The business reaction has been blistering. And the political consequences will be lasting.

Right, so obviously what comes next is something along the lines of call off the dogs. I’m afraid not.

But anyone who has kept a serious eye on the coronavirus numbers will know the current infection rate is still too high to ­justify any significant reopening of the economy.

The infection rate!!! Not the death rate, which is trivial and focused on people of a certain age with an average of 2.6 “co-morbidities”. In the meantime, since nothing can be done about the fools, simpletons and hysterics running the place, it is obviously time to just lie back and enjoy it. Although I will endorse Robert Gottliebson’s view that A third mistake by Victoria will mean it’s time for intervention assuming there is some form of intervention. This is Victoria’s Captain Queeg moment but there will be no mutinies on the Good Ship Victoria. All doubters will be made to walk the plank.

BTW the official death rate in Victoria is 666 dead out of a population of 6.5 million, which comes to 0.01%, which is one death per 10,000.

Australia’s penal colony roots

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There is, perhaps, this one extenuating circumstance to explain our craven submission to authority, and particularly Victoria’s, that Australia was founded as a penal colony, so there may remain an overlay of a marshal-law mentality that lies very near the surface within Australian governments, with a matching tendency to submit to this authority within the community. But we were also an English colony with a legal foundation built on the English common law, so that one can still hope there is still somewhere within our national DNA a love of freedom and a hatred of dictatorial restraint.

Thomas Sowell turns ninety

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Happy 90th birthday (June 30) to Thomas Sowell, one of the greatest living economists, which begins:

One of my two all-time most favorite economists — Thomas Sowell — turns 90 tomorrow, he was born on June 30, 1930. Here is Thomas Sowell’s webpage and here is his Wikipedia entry. Milton Friedman (my other all-time favorite economist) once said, “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”

In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (49 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics.

And while no one else unfortunately understands how he was able to become the economist he became, let me point out that his PhD was on Say’s Law and two of his earliest books were on Say’s Law and Classical Economic Theory. Nor was that just an early part of his career, but he came back to Classical Theory again in 2006.

Sowell, Thomas (1972), Say’s Law: A Historical Analysis, Princeton University Press, ISBN 978-0-691-04166-7.

——— (1974). Classical Economics Reconsidered. Princeton University Press. ISBN 978-0691003580.

——— (2006). On Classical Economics. New Haven, CT: Yale University Press. ISBN 978-0-300-12606-8.

And on this, let me add to what Currency Lad has already written on it’s always our money, via Adam Creighton. Money is a metaphor – probably actually a synecdoche – for the word resources. If you use the word “money” you can be deceived by government spending since a government can always print more of the stuff. Resources, actual labour and capital, are much harder to come by. Here is the point made by Adam Smith in 1776:

Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands.

That, by the way, is from the chapter “On the Accumulation of Capital, or of Productive and Unproductive Labour”. There is more sense in that chapter than in the whole of a modern economics text. It is Thomas Sowell amongst a very few others who is keeping that tradition alive.

If you are looking for a modern discussion of classical economic theory, and amongst other things a discussion of productive and unproductive labour, might I recommend my own Classical Economic Theory and the Modern Economy which has just been published.

People on the left never disagree with each other

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As near as I can tell, people on the left never disagree with each other. They certainly disagree with people on the right, but other than in relation to to all the things they all agree about amongst themselves, where are the internal debates so that you can find examples of one person on the left saying something that another person, still on the left, disagrees with, and yet both remain on the same side of politics.

On the left there is a single acceptable position and after that, no deviation is permitted. That they believe themselves to be critical thinkers is only because they all collectively disagree with people who disagree with any element of the common set of beliefs.

One does not have to be on the left to believe that climate change is a problem. Or that gay marriage should be legal. Or that many aspects of the market economy are unacceptable. Or that Donald Trump is not a nice person. On the right, all these are open for debate. On the left, they are fixed positions, in no sense open for discussion.

This is a depiction of conservatism as I see it, written by Irving Kristol. Titled The right stuff, it explains the difference between the conservative perspective in the US and in the UK. Being from the New World myself, and Australians fit into this pattern as well, I find myself siding here with Kristol.

Conservatism in the US today is a movement, a popular movement, not a faction within any political party. Although most conservatives vote Republican, they are not party loyalists and the party has to woo them to win their votes. The movement is issue-oriented. It will happily combine with the Republicans if the party is “right” on the issues. If not, it will walk away. This troubled relationship between the conservative movement and the Republicans is a key to the understanding of American politics today. The conservative movement is a powerful force within the party, but it does not dominate. And there is no possibility of the party ever dominating the movement.

American conservatism after the second world war begins to take shape with the American publication of Hayek’s The Road to Serfdom in 1943 and the founding in 1955 of William F Buckley’s National Review. Previously, there had been a small circle who were admirers of the Jeffersonian, quasi-anarchist, teaching of the likes of Albert Jay Nock, but no one paid much attention to them. Hayek’s polemic against socialism did strike a chord, however, especially among members of the business community. There may have been people converted from statism to anti-statism by that book, but my impression is that most admirers of the book were already pro-free market. What Hayek did was to mobilise them intellectually, and to make their views more respectable.

I will take you to the final para which seems more relevant today than when it was first written in 1996.

The US today shares all of the evils, all of the problems, to be found among the western democracies, sometimes in an exaggerated form. But it is also the only western democracy that is witnessing a serious conservative revival that is an active response to these evils and problems. The fact that it is a populist conservatism dismays the conservative elites of Britain and western Europe, who prefer a more orderly and dignified kind of conservatism. It is true that populism can be a danger to our democratic orders. But it is also true that populism can be a corrective to the defects of democratic order, defects often arising from the intellectual influence and the entrepreneurial politics, of our democratic elites. Classical political thought was wary of democracy because it saw the people as fickle, envious and inherently turbulent. They had no knowledge of democracies where the people were conservative and the educated elites that governed them were ideological, always busy provoking disorder and discontent in the name of some utopian goal. Populist conservatism is a distinctly modern phenomenon, and conservative thinking has not yet caught up with it. That is why the “exceptional” kind of conservative politics we are now witnessing in the US is so important. It could turn out to represent the “last, best hope” of contemporary conservatism.

Whether it is the best hope or not is uncertain, but that it may be the last hope is looking all to possible all the time.

“Our political class just needs to just get the hell out of the way”

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This was posted first at Powerline and then at Instapundit.

APRIL 28, 2020

I, MECHANICAL PENCIL: Why a socialist economy can never work.

This followed the posting by Steve Hayward about how difficult things might be to re-start after the compulsory shutdown which is disrupting so many markets in so many novel ways: “WHAT HAPPENS IF WE BREAK THE PENCIL?”. This is the point he was making.

I don’t think our political class in Washington or the state capitols have the slightest idea of how they have disrupted the workings of our economy beyond the mere measure of the (huge) number of people filing for unemployment, which they think can be fixed simply by printing more money and sending out checks….

Contemplate the effects the shutdown is having on the millions of daily decisions made by producers and consumers alike. Maybe our political class just needs to just get the hell out of the way.

On a cost-benefit basis, the entire shutdown process has already turned out to be economic monstrosity: such a fantastically high cost – so few benefits (have there actually been any?). But if these same people start using the restarting of our economies as an excuse to add a few more of their favourite “stimulus”-type schemes, the costs will be magnified many times over.

The point of “I, Mechanical Pencil”, as well as its predecessor, “I, Pencil”, was to emphasise governments know nothing about how to direct economic activity or have the slightest idea how to choose projects that raise living standards and hasten economic growth. Seriously, would you want Scott Morrison to start funding his favourite projects? Or any of the state premiers any of theirs? More streetcars, say, or rail projects, perhaps? How bout pumping water up hill?

What is most notable to me about “I, Mechanical Pencil” is how difficult the point it makes is to understand, and how easy it is to ignore since most people never get the point. I will just say again, that if anyone actually believes an economy is driven forward by aggregate demand, they are as ignorant as the day is long about what it takes to make an economy grow.

How to structure public spending so it actually does some good

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I have an article up at the American Institute for Economic Research explaining how idiotic a “stimulus” at this time is: A Classical Economic Response to the Coronavirus Recession. It takes as read that we are going to have a massive amount of public spending, and given that as the certainty, how to do it with minimal economic damage. That we are even having a lock-down is also taken as read since others have already made that decision. This is the central point made in the article.

Let me take you back to the economics before Keynes, to when economists understood the nature of the cycle.

Recessions in those days were rightly understood as due to structural faults in the economy. A recession occurred when the bits did not properly mesh. Some parts of the economy were no longer able to run at a profit because of structural changes in the economy, sometimes on the demand side but more often on the supply side. There, therefore, needed to be some shifts in the entire apparatus of production. What turned the adjustment process into a recession occurred when the adjustment process required was too large to occur as in normal times when as one business would close down another would open.

During recessions, for whatever the reason might be, the number of businesses closing would exceed the number opening, and along with the slowing of production in total, there would be a rise in unemployment. If ever there has been a downturn that cannot in any way be explained as a fall in demand it is the forced closures that have followed the coronavirus panic. The downturn is entirely structural in nature. That is why when I hear discussions of the need for a stimulus I am even more than usual amazed at how beyond sense economic policy has become. What is needed, and what is largely being done, are measures to hold both capital and labour in place until the closures are brought to an end.

The last thing we need now is a Keynesian-type “stimulus” where government spending on wasteful junk takes over from actual productive firms.

But the policy everywhere is never let a crisis go to waste. It is not you and me the political class are thinking about, but themselves in how they can use the crisis to benefit themselves. You just have to hope against all likelihood that the damage done is kept to a minimum.

A sampler of the politics of The Atlantic

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If you are interested in the politics of The Atlantic, let me present you with the final paras of this long and astonishingly inane article which I have just received: How the Pandemic Will End.

One could easily conceive of a world in which most of the nation believes that America defeated COVID-19. Despite his many lapses, Trump’s approval rating has surged. Imagine that he succeeds in diverting blame for the crisis to China, casting it as the villain and America as the resilient hero. During the second term of his presidency, the U.S. turns further inward and pulls out of NATO and other international alliances, builds actual and figurative walls, and disinvests in other nations. As Gen C grows up, foreign plagues replace communists and terrorists as the new generational threat.

One could also envisage a future in which America learns a different lesson. A communal spirit, ironically born through social distancing, causes people to turn outward, to neighbors both foreign and domestic. The election of November 2020 becomes a repudiation of “America first” politics. The nation pivots, as it did after World War II, from isolationism to international cooperation. Buoyed by steady investments and an influx of the brightest minds, the health-care workforce surges. Gen C kids write school essays about growing up to be epidemiologists. Public health becomes the centerpiece of foreign policy. The U.S. leads a new global partnership focused on solving challenges like pandemics and climate change.

In 2030, SARS-CoV-3 emerges from nowhere, and is brought to heel within a month.

It’s all politics on the left. Saving lives is the last thing on their minds.