Friday, 27 July 2012

Shovels, Spoons & Internet Banking


Larry Broderick of the Irish Bank Officials Union was on the Radio speaking on economics with the practised fluency of an atheist talking about transubstantiation.  Mr Broderick declared that there was a need to “maximise” the amount of people employed in AIB & because he was being interviewed by State owned radio this outrageous nonsense was not challenged.

The opposite is the case, not just for AIB but for every single business that exists. Employment must be minimised as far as possible, not just for the sake of the business but for the economy too.
There is a story, repeated to the point of cliché, about Milton Friedman (The story is most likely apocryphal & the original words belong to William Aberhart of Alberta). Friedman (the story goes) was in China in the 1960s & saw a large group of men digging a canal. When he asked why no earth moving machinery was being used, his hosts told him that this was a Job Creation Project. Friedman told them if they were really serious about Job Creation they would take the shovels & give the men spoons…..

No business can successfully work on spoons instead of JCBs. Every worker employed in a business is a cost, a bigger cost because we tax employment but a cost nonetheless. Every cost has to be charged to the consumers of the business’s products or services. Customers may pay but they may just also go elsewhere.

Competition enforces frugality & that frugality is good for all of us. Every resource is scarce, every input, every good, is not only scarce but has alternative uses. You want more turkeys? Then we have less chickens & hens or more grain consumed & poultry houses built. 

Labour, for all the best efforts of Trades Unions & Governments to obscure the truth, is no different. More people employed in banks mean less to work in other areas. Doing more business online does not just reduce AIB’s costs, it reduces costs & frees up resources for the rest of the economy. Internet banking, by reducing bank costs, benefits the entire economy.

Flint knappers went out of business but were employed by the tin smelters, once the only way to dig a canal was with picks & shovels & a lot of men. Each improvement, each displacement makes people available to satisfy our needs in other ways & our needs are insatiable.

Competition making us all better off can only happen in a free market. Broderick & his septic economics have no power but Broderick & a few politicians might have a disastrous effect on our economy: history is littered with examples of efforts to protect employment in some industry at the cost to the general good. Reagan famously cost America billions by protecting the six thousand jobs in the steel industry with tariffs, losing an estimated twenty six thousand jobs in industries forced to buy more expensive steel  (Thomas Sowell).

We need AIB back to profitability & off the governments hands quickly. Banks are not social services, they are companies in a capitalist economy. The less efficient the economy works, the poorer we all are. Poorer is fine for those that start out with plenty, deeper poverty for the already badly off is disastrous. 

Free trade & small Government make us all better off, it is important never to let go that in favour of old fashioned economic error dressed up as compassion & masquerading as a social concern.

Thursday, 26 July 2012

The Nun & The Letter from Nigeria


My Aunt Cathleen was too kind for her own good. She was a tiny woman, thin, a TB survivor & badly dressed because she gave away money instead of buying clothes. Oxfam was her boutique of choice, she liked the prices. We knew her both by her religious name of Sr (Mary) Aloysius and as Aunt Cate. 

That was a different Ireland, you had Aunts in convents & brothers and sisters in classes with your cousin's brothers & sisters: an Ireland not yet used to low child mortality or the cool of modernity. Despite having five aunts nuns, two bachelor uncles and one childless married aunt we had seventy one first cousins. All now dead but one, the nun-aunts, swept away, Salve Regina sung in old womens' fading, cracking voices by their Sisters, my father & his brothers crying. The Batchelor uncles too, gone. The price of a wonderful childhood is an adulthood burying those you loved.

Cate was a Mercy Sister and lived was the poverty-vowed life of a nun in a small Yorkshire convent. She elected by her sisters as Mother of the small community in brass-band Barnsley. Her clothes were so bad they were a shame to my parents. My mother tells the story that she & Dad decided to buy her a coat one year she arrived home without one, my mother suspecting she had given it away. Aloysius demurred, she could buy a coat much cheaper in England if she had a little money. Next year she return in what my mother described as " a black rag so old it had faded green that you wouldn't put under the dog". Clothes were not her priority.

With few or no novices coming from the developed world the Sisters of Mercy were not alone in advertising for them in the developing world. Did Sr Aloysius place the advertisements or was it the organised by the order? An ad that ended with "If you would like to be a Sister of Mercy, write to the Convent of Mercy, Barnsley" was published in a Missionary Magazine distributed in Nigeria.

That was before email, before email scams. A letter arrived, from a boy, desperate for an education but too poor to continue at school. My Aunt sent ten shillings. The correspondence continued between the boy and the tiny nun, encouragement to continue despite the hardships, and, when she could small sums of money. 

Aunt Cate kept her own council on the correspondence. In the last years of her life I think she suffered from the dementia that has haunted my father and his siblings but I do not think she would have spoken about her charity."When you give to the needy, do not let your left hand know what your right hand is doing."

The good is oft interred with their bones….

The boy, yes there was a boy, Boniface Ezaegu, is now the Barrister General of the Ebonyi State in Nigeria. In memory of the woman who helped him he is helping others: he financed and built the Sr Mary Aloysius High School in his home district.  There are Four hundred & fifty students and a staff of twenty. A red bus is proudly marked in my Aunt’s name. Her religious sisters are justifiably proud. So am I.

There may be morals to be drawn here but I don’t want them. Aunt Cate was kind; the memory of that kindness lives on far from home, in a country she never visited.  Somehow I get pepper behind my eyes when I read that the anniversary of the death this tiny quiet woman, January 19, is a school holiday and the students have mass in her memory. I picture them, bored, distracted as children often are, thinking of other things, at mass, in a small town in Nigeria, very far away.

In The Name of The People, The Hive Mind Delusion


There is a delusion, common amongst left-wing politicians & those who believe them, that we share a hive mind. They speak of a need for “us” to control some aspect of commercial life: “we must decide” is spoken as if this mythical hive mind had a moral compulsion.

Mr Boyd-Barrett of the wonderfully named “People before Profit” regularly speaks of the need for this “we” to control banking decisions & loan capital allocations but he is just the exhibitionist in this particular brothel, all politicians hint & nod at the idea of this hive mind, this fictional “We” who could do things better than crude anarchic markets. They want us to believe that there is a common consciousness, replete with our total collective wisdom which could allocate resources better, make better commercial decisions,  create a better world.

In their world we are ants, worker ants striving for some goal, not of our choosing but of theirs. We, as ants, are too stupid, too short-sighted to know what is good for us. Our individual decisions are the mere whims of children. The adults in the form of Government will make the decisions for us. Our labour, the resources we generate will be taken & used for "us". 

There is no hive mind, no shared consciousness, no “We” taking decisions. There are only politicians making grand plans & at the level of foot soldiers, bureaucrats in offices making decisions for on the basis of rules laid down rather than customer desires, bureaucrats obeying their own rules & ideas but with no stake in the outcomes.

"We" does not exist.

Decisions made by non-stakeholders are invariably bad decisions. 
Government decisions are always made by people who will suffer no loss or financial pain for that decision. By contrast decisions made by privately owned companies always have direct consequences for the people involved. With no tax payer to pillage & competitors willing to serve customers, fear is a constant accompaniment & goad. Serve the public or die!

What we as individuals want matters to the economy. We each take decisions every day about our spending, guiding businesses to our needs by our purchases & investments. The We-speakers would absolve business from that guidance substituting their goals for our individual goals, their priorities for ours. That is not we, that is them.

Every cent we spend guides resources into fulfilling our needs for cheaper, better different products & services. Enterprises that fail that guidance, that do not serve us, die & in a biological analogy, resources of labour, capital, land they held are salvaged for use in enterprises attempting to satisfy us. In a free market resources are allocated not where a few hundred politicians & a few thousand bureaucrats want but to satisfy the wants of all of us. That efficient resource allocation makes us all richer.

Private property is not some middle class illusion but a fundamental essential to that process. Mr Boyd Barret & ultimately every politician that speaks of “us” controlling some aspect of commercial life, must abandon private property rights & its role in economic calculations.

Limiting the government’s role in the economic life of the nation is the easiest best road to prosperity. Private property is the basis of that limitation. 

Ants don't own anything.

Wednesday, 25 July 2012

CIE, Making Us All Poorer, With Government Help


Yesterday the Government announced they were "giving" CIE* another €36 million.

Nothing says so much about our thoughtless, intellectually torpid time as the silence with which the theft of €36 million extra from the country was greeted. No outrage was voiced, no economist excoriated the government and no taxpayers rioted at the waste. Have we become inured to waste because of the colossal figures Government has burnt on the banks?

Let me translate the news story from offialese into some semblance of truth:
“Yesterday the Grand Panjandrum of Transport, Leo Varadkar, announced that in addition to the €242 million that the loss making Government “transport company” was to receive this year, another €36 million would be robbed as a gift to this waste-wealth.”

That €278 million must be robbed from wealth producing parts of the economy to subsidise commercial operations that customers do not want, that have no reason to exist & are merely waste of wealth to satisfy the political urges of the powerful.

How do we know this? Not just because passenger numbers are falling, and they are plummeting, but because of the losses. Economies are run on money prices. In a normal commercial operation, say a real transport company, declines in sales are the signal that something is seriously wrong. Losses are a signal disaster. The product is not attracting enough buyers to be viable.

Prices are pain, guiding resources into the best use. The market, not the Government, is the ultimate democracy as people guide the market with their power as consumers. Taking decisions over & over again consumers preferences guide resource to their most efficient use, making all of us richer. Government uses its coercive powers to buck that democracy, to force us to spend our money on something we clearly do not want. Instead of the decisions taken over and over again of ordinary people, CIE obeys the decisions of Trades Unions & bureaucrats in an unholy marriage of destruction.

The Social Engineers & know-betters insist they do know better how to organise the economy. They will say that there are “non-economic” values to be taken into account. What the mean by this is that THEIR issues are much higher in priority than everyone else’s, they are entitled to distort the economy, steal wealth and ultimately make us all poorer EVERY year in pursuit of their goals. 


 Economics is just the ONLY way of measuring the cost of various values. As the great Thomas Sowell said “There are, of course, noneconomic values. Indeed, there are only noneconomic values. Economics is not a value itself but merely a method of trading off one value against another. If statements about "noneconomic values" (or, more specifically, "social values" or "human values") are meant to deny the inherent reality of trade-offs, or to exempt some particular value from the trade-off process, then such propositions need to be made explicit and confronted.”

The KnowBetters have no intention of making anything explicit. By shovelling vast amounts of stolen wealth into CIE, some of it stolen from companies that compete with CIE, the Government distorts the economy, refusing to let the decisions of ordinary people have effect. What we are watching is the expensive fetishisation of some types of transport & their public ownership. Public transportation does not need to be publically owned or controlled: markets will provide a better & more flexible system than any the bureaucrats could design & do it without robbing the public.

Population densities in most urban centres are far too low for mass transit systems & this is especially the case in Ireland. Instead of thinking up schemes which require enormous transfers of wealth we would do much better to allow markets to solve those parts of the transport system that are seen as having problems. Every single task that CIE does could be done better, cheaper & with no theft from us all by private operators. CIE is a wealth waste that Ireland, particularly Ireland’s poorest people, cannot afford. Instead of stealing money on its behalf Mr Varadkar should be announcing its demise, break up & sale. Sadly a man who was elected for being an economic realist has signed off on nightmarish waste of wealth.

*CIE is Ireland's Publically owned Transport Company, operating the monopoly rail network & Dublin Bus among other transport interests.

Tuesday, 24 July 2012

Defending Michelle Bachmann

Defending Michelle Bachmann is a very difficult task. I'm not even going to try. Bachmann is the quintessential Red State representative & Ireland does not understand the Red States. I admire her firm pro-life beliefs & her Tea Party activity however the whiff of Christian Theocracy she carries is too much for me. It should not hide the fact that Bachman is as often more right than wrong & much of what she gets wrong is in scope or presentation, not fact.


Bachmann does outrage not always from choice but because far too much of the truth is regarded as an outrageous slander on Good People & Know Betters. In 2008 there was  outrage when she questioned Barack Obama's attitude to America in the light of his friendship with Jeremiah Wright and Bill Ayers. None of the Outraged seemed bothered by Wright's appalling sermons or the twenty years Obama gave sitting in a pew listening to his bile, nor that Ayers was a Marxist terrorist bomber. Instead the outrage focused on Bachman's impudence, her failure to play the game. She was denounced as not being "bi-partisan". Four years on we can only regret that she got so little credit for being right.


Now she has done it again by by alleging that Hilary Clinton's deputy chief of staff Huma Abedin had family ties to the Muslim Brotherhood. This was greeted with the usual round of outrage & horror, even from Republican luminaries such as John McCain & John Boehner.


The problem is, Bachman was right if not on the import, on the facts. Huma Abedin's mother, Saleha Mahmood Abedin is the founder of the Islamic Sisterhood, the female counterpart to the MB. Saleha Mahmood Abedin is Professor of Sociology at King Abdulaziz University Women's College & Associate Professor of sociology at Dar Al-Hekma College in Jeddah, Saudi Arabia. 
The important piece about her CV is her founding & continued work with the Islamic Sisterhood. The Sisterhood campaigns for a variety of issues but most tellingly for the legalisation of Female Genital Mutilation & Child Marriages. It is a very twisted sisterhood.


Senator Joe McCarthy was a bully & a bigot but when he said Communists were infiltrating & operating at the highest levels of the US Government, he was right. Many who are now revered as victim-heroes of McCarthy's witch-hunts were more than willing to to put the US under Stalin's heel. Flinging charges of "McCarthyism" at those who point out that Bachmann had facts on her side reveals little but the intellectual bankruptcy of the charger.


Mrs Bachmann may be wrong that there is a concerted Islamic infiltration of the US State Department but her allegation, that Hilary Clinton's Deputy Chief of Staff had family ties to the Muslim Brotherhood was utterly accurate. Imagine for a change that we are talking about a Republican Secretary of State employed the daughter of a member of the Argentinian Junta & then hared a platform with daughter & Dad. I wager we would hear very little about "sins of the father" and a lot of very articulate outrage. However that would be the Junta are gone, not a threat to either the security of the US or her allies. The Muslim Brotherhood & Sisterhood are on the other hand, very much alive.


None of us would want to be judged on our parents views, however mild but we might expect some questions if we worked in Foreign Affairs & our mother was the worlds leading campaigner for the legalisation of FMG & a founder & governing member of an organisation which claims  Christians were second class citizens & that secularism & atheism were the work of Satan to be smashed? 


Hillary Clinton shares a platform with Saleh Abedin
 in Jeddah,Saudi Arabia.
Huma Mahmood Abedin is in no way responsible for her mother's evil campaigns. No one could expect a daughter not to have ongoing contact with their mother, however depraved that mother's views on women possessing their full genitalia. What we might expect is a better, more logical response than the execration of Bachmann.


"Ms Abedin has received full security clearance" would have been a start. "Ms Abedin retains cordial relations with her mother but does not share her political views" would be an advance. Instead, in a way that demeaned American Muslims, the wagons have been circled & Bachmann is targeted for being wild & dangerous. Much has been made of a threat to Ms Abedin in the wake of the controversy, the subtext is that this was Bachmann's fault. In the absence of any evidence it made a good stick with which to beat Bachmann.


There are rightly no religious tests for Government posts & the strength of the US is it's continued ability to accept & integrate people of all faiths & none. That process demands trust & transparency.


It is entirely illogical not to expect questions about the founder of the Islamic Sisterhood when her daughter & the Secretary of State appear on a platform with her. The family of anyone involved in the international campaigns for world wide religious law, legalised female genital mutilation & child marriage could only expect to be questioned on their precise relationship to that kin. Ms Clinton is not a private employer & her actions affect her country. She has faith in Hume Abedin, in the interest of both her country & her employee she needs to make clear the basis of that faith. In the absence of such clarity, with nothing but doting affirmations & vicious attacks in the air one is entitled to ask why such clarity is so difficult to give?

Anglo Irish, Matrix Churchill & Unanswered Questions.....


Remember Matrix Churchill, the Arms to Iraq trial that collapsed in 1992? 
The charges laid against Anglo staffers today may lead to just the same defence though not perhaps to the same resounding collapse.

Sean Quinn didn't just bet on Anglo Irish Bank, he attempted to take it over by a back door method by betting the shares would rise in value- taking out Contracts for Difference. 

He got it wrong. 

The shares fell continuously in part because the combination of his bet becoming known & the early revelation (by Merrill Lynch analyst Phil Ingram) of the bank's likely parlous financial state and partly because share buyers & analysts were incresingly dubious about the banks hitherto stellar performance. 
Quinn was either woefully ill advised or wonderfully autocratic. The Contracts for Difference contained no stop loss, no end point where the deal was off. The more the shares fell, the worse Quinn's position became. Short selling, a normal market mechanism where borrowed shares are sold & bought back at a lower price, was accelerating the fall. 

In the end the only solution was to buy out the shares.
To do this Quinn needed to borrow money from Anglo Irish itself. If this was done it was strictly illegal under company law.

Quinn could not hold the massive block of shares for long and that was obvious to the markets. The prospect of a massive unloading was depressing the already bad share price & threatening the bank's capitalisation. Thus this overhang became a concern to all of the authorities: the Banking Regulator, the Central Bank & through the Department of Finance, ultimately the Minister for Finance.


Anglo solved the problem.

They solved it by loaning money to ten customers, the "Golden Circle", to buy a large body of shares of the shares. These loans, if they occurred, were strictly illegal under company law.
This leaves a number of questions which have been asked but never answered about the role of the The Banking Regulator, The Central Bank, Department & The Minister Mr Cowen.

  1. When did Mr Cowen as Minister for Finance become aware of Mr Sean Quinn's enormous contracts for difference exposure on Anglo Irish Bank Shares?
  2. What effort did Mr Cowen or his Department make to clarify the ownership of Anglo Irish Bank in the first three months of 2008 given that there were strong indications that the Quinn Group or Mr Sean Quinn had built a considerable stake in the bank through a combination of CDFs and direct share purchase?
  3. When did Mr Cowen become aware that the positions held by Mr Sean Quinn on Anglo Irish Bank Shares was untenable and needed to be unwound?
  4. Did Mr Cowen, or officials at the Department of Finance, the Financial Regulator and the Governor of the Central Bank express any concern to either Mr Sean Quinn or Anglo Irish Bank management or board at the short selling of the banks stock resulting from the rumours about the size of Mr Sean Quinn's CDF position?
  5. When and by whom was approval given, as is required by law, for either Mr Sean Quinn or the Quinn Group to own ten per cent or more of Anglo Irish Bank?
  6. Did Mr Cowen discuss such approval with the Central Bank or its Governor?
  7. If such approval was given then why were the public and other shareholders not informed?
  8. If approval was not sought and given then why & by whom was the law flouted?
  9. When did Mr Cowen become aware that the twenty five per cent stake that resulted from this unwinding of Mr Sean Quinn's position was beyond Mr Quinn’s capacity and thus overhung the market, threatening a catastrophic slide in Anglo Irish Bank's share price, capitalisation and very existence?
  10. What contact did Mr Cowen, or officials at the Department of Finance, the Financial Regulator and the Governor of the Central Bank have with the board and management of Anglo Irish Bank on the issue of this shareholding and its implications for the bank in March and April 2008?
  11. Did Mr Cowen, officials at the Department of Finance , the Financial Regulator or the Governor of the Central Bank indicate in any way to Management or Board at Anglo Irish Bank that the bank should place its own shares?
  12. Did Mr Cowen, officials at the Department of Finance , the Financial Regulator or the Governor of the Central Bank question how ten business people were induced to buy shares in a bank whose share price had been in steep decline for several months and barely one month after the bank had suffered a near fatal catastrophic sell of on March 17th?
  13. Did Mr Cowen, officials at the Department of Finance, the Financial Regulator or the Governor of the Central Bank ask or were aware from where the €451,000,000 used by the ten businessmen came?
  14. Did Mr Cowen discuss or become aware in 2008 that Anglo Irish Bank had loaned these monies to the purchasers of the Quinn ten per cent ?
  15. What effort was made by the financial regulator, the Governor of the Central Bank and Mr Cowen to check if this stake was in anyway financed by loans from the bank itself?
  16. Did Mr Cowen discuss the matter of the purchase of Anglo Irish Bank shares with Mr Brian O Farrell, a member of the Golden Circle that bought the Anglo Irish shares, at the fundraising dinner in the Shelbourne Hotel in March 2008 at which Mr Farrell was one of only 13 payed-up invitees?
  17. Did Mr Cowen discuss the purchase by ten businessmen of Anglo Irish Bank shares from the Quinn tranche when he attended a dinner for himself and his top Department officials at the bank headquarters on April 24th 2008?
  18. These questions have never been answered. Questions 9-16 go to the heart of not just this trial but the also to the heart of the worst, most expensive financial scandal ever to occur in Ireland.
  19. There is for the Dublin & London Exchanges where Anglo was once listed another question, not pertinent to the trial but to fate of the other shareholders in early 2008, a group ill served by company management, the stock Exchanges & the regulatory Authorities:
  20. Did the shareholding of Mr Sean Quinn or the Quinn Group in Anglo Irish Bank reach or exceed thirty percent at any stage during his purchases and the unwinding his CDF position?

The Matrix Churchill trial collapsed because the directors of the precision engineering firm had been advised the the Government on how to sell the arms with which sale they were charged. 

We need to how much of the Anglo/Quinn share debacle was advised by government or its agencies.It is time that those who wielded power, who were paid magnificent salaries to guard our interests & who have retired on annual lottery winnings of pensions should start telling the truth. 

4 years & €70 billion later, that is not an unreasonable request. 

Monday, 23 July 2012

Quota Sows: Making Women Second Rate Canditates

Last week the Oireachtais in it's wisdom made every female candidate for a political party a second rater & the politicians did this in the firm belief they were "helping" women. With friends like that ...


There has been a bubbling background complaint culture that women were "under-represented" in the Dáil, a view of representation that divides humans into warring classes & insists that any difference on an outcome metric is obviously the result of discrimination. We know where that thinking originates & it is not a healthy place. By a piece of wonderfully selective thinking the complainers believe that one may only be properly represented by ones own gender while believing that gender has no effect on choices/ambitions/non-sexual desires. 


Gender is massively important until they say it's not.


Internal party politics is merely the politics of an odd subset of Irish life. Each party has it's own shibboleths & key phrases but essentially all share a common ground of purpose. This informs the choices where members are allowed make electoral choices. Mostly they are so allowed because party bosses know that this is the most effective way of keeping campaigning canvassers on board. For their own twisted reasons the proponents of Gender Quotas insist that sexism is endemic among those ordinary Irish people and using the metric of Women in Politics they have what they consider to be proof. After all if the world was fair would women not make up 50% of EVERY metric....... 


As a county director for elections for a large (the largest as it turns out) Irish Political party I was privileged to work with five successful County Council female candidates (their gender was irrelevant to me: I had thirteen people to get elected) all of whom were selected by their fellow party members for being the best, most electable, able available. That will never happen again. Now female candidates are to be selected because the know-betters say the must be selected. The wonderful, capable, savagely organised ladies with which I worked have been demoted by affirmative action to a form of  gender politics serving handicap. 


Gender Quotas demean women, turn them not into candidates but second class candidates, there only by grace of legal fiat, not talent. ideas, or persuasionThe intention was to have women taken seriously, instead this law merely turns women's candidates into a must have accessories, baubles to be brought along to the political party. Ordinary party members are expected to give their time & effort but not have decide for whom to apply that effort. .This is perfectly in line with the infantilising & demonising of ordinary people by the Knowbetters.


Any new woman standing for a political party will now be tainted by this patronising nonsense.  When, as the proponents intend it will, the quota is set at 50% of candidates all of the female candidates will be Quota Sows, not standing on their merits but on gender & bad law.



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