Wednesday, 27 February 2013

Gravity is not for repealing

It is one of the great pities that the politicians who profess the most care for the poorest generally believe in a flawed economics that would either keep those people poor or make them even worse off. One should pay very little attention to the protestations of politicians and none at all to their tears.


Justifying bad ideas on the grounds one means well is the corrollary of the argument that goes "you only care about the rich/you don't care about the poor", a type of as hominem that is both disingenuous and illogical.

Meaning well is not enough. Bad economics helps no one but it is the poor who suffer the most when jobs are scarce and wealth creation stops.

No matter how much we much want to fly simply by stretching our arms and tingling our toes, gravity won't repeal. Whether it pleases us or not economics is just as inflexible in the limits it places upon us. We can either work within those limits or stretch out our arms and talk to that imaginery control tower in our head. If we chose to do that on the top edge of a high building the results are catastrophic.

Unfortunately any descriptions of the realities of economic activity are just dismissed with the caring argument. Enough chancers, power seekers and conmen from Marx to Keynes and beyond  have weighed in to justify wingless flying that any forum is simply thick with dreams.

Economics is always the study of scarce resources with multiple alternate uses. No matter what the resource is: land, labour widgets, money, there is never enought to satisfy everyones every need. This means making choosing between possible uses.

Money prices allow us to calculate and decide what to use and how much to use. Left to our selves we will buy cheaper of similar quality but quality is what the consumer says it is: adding a logo-ed label may increase the price of some goods enormously. Always price is what someone will pay, not what you think your widget,land or labour are worth but at what price you can exchange them for money. Put more elegantly this runs "Value is subjective".

Subjective value makes trade possible: if the value of goods is inherent or fixed then trade would at best be a win/lose situation. Instead when I sell my labour for your money I value the money more highly than the hours spent working and you value what I do higher than the money you pay me: we have engaged in a win/win operation. Trade only happens when both parties feel a gain.

Because value is subjective no one can force us to believe anything is worth more or less than we think it is worth. This means when government tries to do just that, establish a high price by edict, either we don't buy the goods or  resort to a black market. Should Government decree a too low a price then we won't sell except again on a black market.

All those subjective prices, and there are countless million in the economy, guide consumption and thus production /distribution. Higher price for any good both discourages use and makes alternatives more appealing for consumers while at the same time encouraging producers to switch to to the higher return good.

Price acts as a signal and a method of rationing so high value uses of scarce resources are chosen.

Government cannot wave a wand to make resources any more plentiful than they are. Edicts won't make one extra hour's labour, one extra widget or cent of wealth. Every cent spent by Government is a cent from somewhere else in the economy.
This is the ultimate harsh reality, nothing is free, some one always pays. Should Government print money the same applies: as a token for wealth more cents for the same amount of goods mean a lower value tokens, higher priced goods. Those who get the new money early, before that ripple of new valuations has worked it's way through do well, those who don't and ultimately  everyone, suffer from the created price rises.

All sound economics starts with subjective price, every false theory rejects it. left alone those subjective pricing decisions make us all bettter off by guiding the economy to produce what we want a t a price we will pay. That is what is meant by a market economy.
When you hear a politician or would-be power broker say the words "market economy" a if he/she was spitting acid they are merely rejecting your and my right to make or influence decisions on what is economic. They think that they know better than the countless million little people. Don't give people with that attitude a scintilla of power!

Sunday, 24 February 2013

The Repo Man is coming...

If Patrick Honohan, Governor of the Central Bank, wants to see the mortgage arrears crisis handled, then he should try either talk to the people who can do most to speed up the resolution: people with mortgages in arrears or improve the interface between the i-doting t-crossing quadruplicate-form filling civil servants in the Central Bank and the bank staff working to resolve the problem.

Honohan's intevention last week to castigate the banks on their "failure" to deal with mortgage arrears crisis" was a direct re-statement of his remarks 11 months ago (http://irishtimes.newspaperdirect.com/epaper/viewer.aspx), reminding us once again how ineffectual the Central Bank has been and is.

Since there are no blanket solutions to the mortgage arrears problem, no jubilee, no Government payments, only a case by case approach, individually negotiated with up to one hundred thousand households, can happen. Even with a those householders' best will that takes enormous, skilled manpower. That good will does not exist, and the manpower is tied up settling the vast sea of non-performing commercial loans. 

The threat made to punish banks by changing capital rules is a very dangerous one. Central banking by it's nature is either a crony-capitalist game (US Fed) or a direct government restraint of trade & markets (everywhere else). Now Dr Honohan has taken onto himself the power to punish selected companies for not doing as government wish. Honohan is no Mussolini but the practise of Government control of supposedly private enterprises is old fashioned 1930s Fascism. Such talk is popular because banks are unpopular but anything that further erodes commercial freedom and property rights helps undermine the economy.

With over 11% of of the roughly three quarters of a million Irish mortgages distressed, a rate ten times that of the UK, there is an urgent need for constructive comment from the Central Bank. Much more effective would have been a speech telling those in mortgage arrears what options they had & with which options & restructuring options they might expect their mortgage provider to agree. 

Even with mutiple options (debt for equity, interest free bonds, rent back) the current very low level of home reposessions here will rise dramatically. Despite having ten times the troubled mortgage rate prevailing in the UK , Ireland has more than four times lower a reposession rate. Such a large divergence in practice across two relatively similar legal systems will not continue.

Honahan's advice should have been to holders of troubled mortgages and it should have been brutal. Get in to your bank and make a workable deal now, the future will be much worse.

Saturday, 2 February 2013

Love and only love

He was ahead of me in the short queue in the Credit Union, his face it's normal sullen mask. 

I have known him to see for years, a big, chunky surly  man with a reputation for ferocious violence and a small time prison record.  He has letters in blue ink tattoos on his fingers that I've never wanted to read. Several years ago he and his brothers gave a terrible beating to the brother of a friend. I've never known him to work & now, that he is well over 30 years of age he is hardly employable. 


The surprise was he was pushing a buggy. Fatherhood usually happens earlier to such men and he never seemed like a man who would take to the idea with any degree of delight. There was a startling and unfair instant of of envy that he should have such a gift so easily. 

His business done, as he was passed the waiting queue a tiny hand pitched a soft toy out on the floor. The sullen, frozen face transformed as he crouched, replacing the toy gently, speaking those beautiful inanities of love we talk to infants. Love made him glow as if he crouched in sunlight, he was at that moment illuminated. His face became beautiful in it's transfixation, radiating affection for the tiny child. He touched the childs face tenderly with a tattoed finger. He rose with a grace foreign to him, pushed the buggy out of the office, his face made astonishing by love. I stood, amazed & had to be prompted to move to the counter. 


There are moments of epiphany to great to express in language or when so expressed seem small, trite, clumsy & pointless . I just know I had been granted a glimpse of the transformative power of love, had seen a mani illuminated by its power so that I saw him fo the first time though I knew his image for a long time. Love it is that makes us human, and in being fully human, closest to the divine, however you choose to define that divinity. We may only really see anothers humanity when we see them love. 

The traditional and horror of violence done to another before those they love, of death inflicted in front of family may be based on an instinctive knowledge of that fact: however evil the deed the perpetrators make them selves less than human in the act of killing love.

For me I see that man differently, less sullen thug and much more human touched by the infinite. A small epiphany but one none the less.


Friday, 1 February 2013

In Chaos there is Wisdom

The great and terrible myth of the left is planning. 

For Big Staters nothing exists that cannot be improved by some planning & coordination. Enough well qualified bureaucrats & a few politicians will do much better, produce more desirable outcomes across a whole range of human activities,investment, construction, energy provision, than the mere chaos of multiple individual decisions. 



The idea is seductive. Reasoned decisions by experts has a sounds-likely attraction, a cleaner, shinier promise than that of  decisions taken by filthy market forces. Plans made without the pressure of profit, money or entrepreneurial zeal must yield better outcomes for everyone....

Seductive but wrong. "Planning" is, of course, a chimera, a monstrous, mythical beast of an idea.

Vast quantities of knowledge, much of it not even recognised as "knowledge", are used and needed to create economy. That knowledge is so extensive it cannot be held, that is known, by any group  but is distributed throughout the individuals throughout society. 

Mary knows how to make scones but more importantly she knows just which size & flavour scones sell best. Joe knows how to drive Martin's coal truck but also gets enough feedback from customers that he knows what price points the coal & other fuels change places in customer preferences. Multiply that by the millions of people involved in the economy and the  billions of much more complex, continuous interactions and you have some idea of the vast,ever-changing sea of knowledge used. 

Entrepreneurs continuously seek opportunity, using their slice of  knowledge of costs, needs and values to create goods and services market will purchase. Without knowledge, or using data which is not true (NO! I'm not getting into the philosophical discussion of precisely what constitutes knowledge) they will get investments, pricing & products wrong. That means they lose money and either cease trading or adjust to reality. Only by serving our needs & wants can they continue in business

Profit is not an evil but both the reward and signal of successful  service. In a free market prices are a set of signals to buy more, provide more, buy less, make more or less. When the planners decide they will buck that market the result is miss-pricing, miss signalling & disaster. 

If those entrepeneurs are distracted from our needs, forced to answer not to our cents, euros and dollars but to the fiat of politicians & bureaucrats then we are made poorer.

"Planners" have only a tiny piece of that embedded knowledge & still less of the knowledge about their supposed area of expertise. Worse they have no "skin in the game" : planners have no danger of loss from their own decisions, no matter how stupid or destructive. Planners are not neutral, not disinterested divine beings but a group of humans as corruptable, stupid & prone to whim as any small group. Because theit decisions don't particularly affect their own lives (the skin in the game) they are free to pursue whatever is the current whim, fashion, ideology or vendetta they like. 

All planning by government entails a restriction or abrogation of private property rights in the name of the collective good: a dubious proposition at best and, in the case of Government planning, a deeply destructive idea. Taken to it's logical extreme, as in Obama's America, legalised planning leads to an effectively fascist state with the free market almost abandoned, business & property retained nominally in private hands but the Government making all the decisions. 

Planning is thus both the Road to Serfdom of which Hayek so presciencently wrote in the 1940s and a route to poverty. Business take better decisions for themselves & us when free to make decisions, Government replaces the free market at enormous cost to our ability to satisfy our needs or create wealth. 

It is now an article of faith as unquestioned as the the need for human sacrifice in ancient Tenochtitlan that central banks must "plan" the economy. In the face of the destructive boom-busts produced by such "planning" and Government interference in market mechanisms by misspricing money the answer has been the same as that of the High Priests of Tenochtitlan: MORE! More bodies, more blood, more planning more poverty, becuase to admit failure or alternative is to threaten the very belief system that sustains the problem.


The bad results of expertise & planning are nowhere more visible or more insane than in the building regulations. The intimate experience of urban living demands an enforced respect for the physical geography of others. Instead of correctly being a mediation of clearly defined private property rights, planning regulation is now that monstrous, wealth consuming chimera, unaccountable, unexamined, opague & corrupt. The most potent effect of this charade is a vicious tax on the working poor: unable to afford accomodation inside cities they must waste vast portions of their working lives in transit to cheaper destinations. This monstrous time tax is imposed for our own good: truely C. S. Lewis was right when he said the dictatorship of the benevolent was the worst of all.

In Ireland the planning permission system allows a small group at it's apex- the secretive & unexamined Bord Planála- to enforce an entirely insane anti-car policy. In a country that lacks even in it's major city, the population density for a proper mass transit system & has almost nowhere the population density required for profitable public transport, grounds for refusal for major investment projects are regularly the the over dependence on the proposed development on cars. it seems no one has asked that august body of kept idiots how we are to get ourselves from any A to B in Ireland without cars.

Planning regulations impose a huge cost with no benefit. An army of well connected leeches now exists in Ireland to interpret, explain & massage the process. Worse are the delays to investment or the refusal to allow investment to happen at all- from a shop & petrol station in meath to a hlf billion investment in Louth canceled on whim.

Famously, on his first visit to London, Mikail Gorbachov expressed puzzlement as to how London was fed sans Central Planning. His ignorance of the beautiful, functional free market was,perhaps, given his background,understandable. There is no excuse for our current politburos.

Tuesday, 18 September 2012

Suicide is Painful

Once, not long ago, I decided to kill myself.
It was, it seemed, an entirely logical choice. I had borrowed a lot of money & each of the separate ventures had failed. I was farming but daily I was reminded that I had a reverse Midas touch. No matter how hard I worked the were results appalling.


I was in a world full of shit.

Noise hurt, talking was beyond me. Faced with deciding whether to use a spoon or a fork I would be reduced to tears at the enormity of the decision. Sleep was something other people did, I spent the night wandering the house, watching TV or crying. My skin crawled, I was a piece of barely living dirt.


Nameless, horrible anxieties tore at me. The open space of the yard threatened so much that I was forced to walk by the walls to the milking parlour because panic would strip the air around me of oxygen.


I knew how suicide hurt families. I could not bear the to add to my mother's and sisters' grief the pain of knowing I choose to die. An accident would need to be manufactured by the worlds most incompetent fool. Chainsaws hurt & there was nothing tall enough from which to fall.



Farming equips a man with little in the line of saleable skill but an odd set of competencies. I could inject an air bubble into a vein but it would have to be a massive bubble- over four times the capacity of the hypodermic I had. A combination of an old skinny spare wheel & farm veterinary equipment promised an end to this misery. I had to find the vein in one go, no marks, no suspicion. An unexplained and sudden death.

On a cold day in February I stood in my farmyard listening to a self worshipping clod tell me how successful his farm was, how his cows had calved in a six week period in January to abundant grass, high milk yields .... The Horn of Plenty had been planted in his domain and in every way I was his opposite. All I could focus on was if this bastard did not leave I would be too cold to find a vein without making a tell tale mess.


By the time he left I was reduced to a shivering self loathing lump, my abject failure as a farmer drilled into me by a man with the tact of a charging rhino & near-psychotic, narcissistic sense of his own value. I was too cold to find a vein easily.....


The next day instead I went to my GP.


I'm writing this because in the last week I've encountered three suicides, three unfortunates in my extended circle who found no choice but their own deaths.  Depression kills and it is not possible that no one noticed that there was something wrong in the lives of those unfortunate people. We need to know the symptoms & signs of depression  and we need to know how to intervene. That means knowing just how ill depression makes a friend or family member. Never try to force someone talk!


More importantly we need to live with a rule:


THINKING OF KILLING YOURSELF  MEANS YOU NOW NEED HELP URGENTLY.


Even if no one notices, even if it seems utterly logical, if you are thinking of suicide you are not fit to think.


The corollary of that rule is that we must be able to to help. I was lucky, Dr John Cuddihy (Uncle of the sister Irish Olympians Joanne & Catriona!)  is expert, magnificently tactful and deeply compassionate but not every GP is as sympathetic or capable of managing depression. At the very least any one  should be able to stop the world falling in for someone we care about if the tell or hint that they are in that dark & terrible place.


The multiplication of anti suicide charities, twenty & rising now, is of dubious value. Is there an experienced psychiatrist or psychiatric team that would put together a guide on the symptoms, danger signals, and a how best to gently but effectively point a depressed person to help? I know how I felt and how deaf I was.



Anti-depressant drugs have made me eat more than I should. I'm a tubby little middle-aged  man with of no discernible purpose but I am alive. My brain is no longer sludge, I can think. There are bad days still, but now they are days and I know happiness again on the good days. The Dementors are exiled, if not to Azkaban, at least to enough distance for me to hear other memories and voices.

Depression is curable, for all it's wretched misery it is survivable. Every person that dies of suicide leaves a devasted family & an increased risk to others in their social group. Suicide normalises itself. Every death also represents what the Prison Captain told Cool Hand Luke: a failure to communicate.


The question is how do can we get more people to know that they need a Patronus spell and that  the strength to cast it is within their grasp?


Monday, 17 September 2012

A Terrible Confession

I have come to a gradual & horrible realisation.
I can no longer live a lie, nothing can justify pretending to be somebody else. I am coming out. I am a gold-bug.
I know this is a shocking admission & only my closest friends will stand by a man with such a horrendous affliction. Flat-Earthers, morons, dark-age clowns are some of the kinder words the great & good have hurled at those afflicted with the entirely bizarre view that hard currency, backed by gold, is good or desirable. 

Gold currency must be a very bad idea because those brilliant people who inhabit the higher echelons of central banks & government finance departments would not, in a gold currency situation, be able to exercise their magnificent minds managing the economy. Their intellects & wisdom, greater by far than the collective wisdom expressed through freely made choices that we call the markets would no longer be employed in their arcane & esoteric arts & the unfortunate economy would be left to itself....

That we might be so lucky.

Economies are not manageable entities. It can be argued they are by far to large & to complex for effective intervention but although size & complexity would make their management beyond human power it is the very nature of a market economy that precludes management.

Free markets work because they are merely our free choices exercised again & again, the repetition of all our choices informing the goods & services that are made available. Price is a constant exploration by all of us, collectively in whatever market we are operating. (There is neither perfect knowledge, perfect opportunity or equilibrium- that last the daftest ignorance of markets ever committed  by intellectual clowns) That exploration is a constant pushing & pulling, a tug of war always to the consumers benefit in a free market.

Management of this process is a ridiculous concept: we all mange the market with our purchasing & selling decisions. When a politician or a bureaucrat threatens to "manage" an economy what they threaten is to replace our choices with their own. Instead of the democracy of our values implemented by our preferences with our money they will substitute an oligarchy, the options of a tiny coterie in offices, very much less concerned with our lives than we are.

Such oligarchs, no matter how intelligent or wonderfully educated, can have only a fraction of the knowledge distributed throughout the players in whatever market they are trying to manage. We know more than they do simply because there are far, far more of us. The same rule applies to market power: the very rich have more money but the rest of us buy much more because there are just so much more of us.

The size of the economy is not the essential problem: that merely multiplies the issue that idea of "management" presents.

Gold robs the oligarchs of their central plank: management of the money supply. Oligarchs manage the money supply by printing money for their cronies. Ordinary citizens are robbed by inflation of the money supply because by the time the newly printed money is circulating to them, it has devalued the money they have or earn.

It is first users, banksters & their executives who benefit because they have the use of the new money before the effect of the increased supply robs money of its value. Borrowers benefit in a second tier, purchasing assets or labour with the new money, allowing it leak it into the economy & devalue all the currency.

This robbery is usually done under the pretext of "stimulating" the economy in a boom but such sugar rushes are by their very nature a fleeting phenomenon. Once every market in the economy adjusts in prices then the printing has to be done again to "stimulate". Inflation is the enemy, not deflation.A stable gold currency does not create depresion/deflation: that is a function of oversupplied credit & capital destruction.

Inflating the money supply clouds the exploration of price. Low interest rates, pressure on banks to grow loan books & continuously rising asset prices create a wonderfully fun but utterly toxic spiral: ask any Irish person. Four years in to a recession that may well last all of this decade & after the clueless reigns of Greenspan & Trichet the arguments for management are as threadbare as Barroso & Bernanke's economics.

Gold cannot be printed.
It robs not just the politicians & the bureaucrats of their self appointed management function but of the very monopoly on money itself. Gold cannot be counterfeited either.

In a week that Ben Bernanke & Mario Draghi both announced an inflation fuelling robbery of American & European citizens the idea of an honest currency that cannot be debauched under the ridiculous Keynesian pretext of liquidity looks much more attractive. I have never seen an argument against Gold that I found convincing but then, I have never seen an argument against Gold. Lots of insults, ad hominem attacks but no rigorous defence of fiat currency & the power to inflation-tax ordinary people.


There are good reasons to be a Goldbug. Schumpeter, in his usual contradictory manner said "This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era. It imposes restrictions upon governments or bureaucracies that are much more powerful than is parliamentary criticism. It is both the badge and the guarantee of bourgeois freedom—of freedom not simply of the bourgeois interest, but of freedom in the bourgeois sense. From this standpoint a man may quite rationally fight for it, even if fully convinced of the validity of all that has ever been urged against it on economic grounds. From the standpoint of etatisme and planning, a man may not less rationally condemn it, even if fully convinced of the validity of all that has ever been urged for it on economic grounds."

There are reasons why a Gold Standard may not be possible or that a return may face insurmountable obstacles. That does not mean we should not discuss a currency free from government mismanagement.

Sunday, 16 September 2012

Free Speech & A Mistaken President

Shamefully & disgracefully President Obama's own unexamined  politics & poorly grounded belief system has led him & his administration to betray  freedom of speech not just for Americans but for all of us. Tonight, because of the craven, progressive-politics reaction by the President of America, we are all a little less free & the world is a poorer, narrower and more dangerous place.

No one has the right not to be offended. The very nature of freedom of speech demands that it is the very act of offence that we protect because without that the freedom is meaningless. If, by claiming offence, I may silence speech then all useful or competing speech is silenced & discussion halted. If by rioting I force the President of the most powerful nation on earth to grovel & attempt to extinguish a silly film (of dubious connection to the incident) then we reduce the world to competing mobs of rioters & murderers & end every debate with the threat of death to a diplomat.


Such a world as Obama is building will have neither diplomats nor debates.
Voltaire laid down a principal by which America lived, one that  inspired  Jefferson when writing the First Amendment: I may not agree with what you say, but I will defend to the death your right to say it.

If today an idiot cannot say Mohammed was a a thieving child molester, tomorrow a wise man will be silenced for arguing against carbon taxes or zoning: that is the inexorable law of diminution. "It is seldom that liberty of any kind is lost all at once. Slavery has so frightful an aspect to men accustomed to freedom that it must steal in upon them by degrees and must disguise itself in a thousand shapes in order to be received" and tonight Hume's words seem a little more threatening. The freedom to offend, to dissent radically from the acceptable, the safe is far more important because vast swathes of the worlds population either do not enjoy it or are living in societies where it is culturally so alien it will never be supported.

Obama is heir to the title of Leader of the Free World, an encomium earned in a long & successful a struggle against a vile tyranny. Would Eisenhower, Kennedy or Reagan have apologised for the exercise of free speech within the borders of the United States? Would any President bow to the wishes of the murderers of one of the countries ambassadors and try to silence what they said they wanted silenced?

Barack Obama does not believe in free speech as a concept. Just as he believes in the stupid ideas of a managed economy so too he believes in a managed form of freedom: a freedom limited by others ability to be offended. This is a poor, castrated, useless shadow of that vital freedom. It is a that monstrous perverted version of freedom that Marcuse would impose, repressive tolerance.

Sadly, incredibly, a man more influenced by Marcuse than Jefferson sits behind the desk in the Oval Office.  He has abandoned the constitution he swore to uphold. The shades of Voltaire, Kennedy & Reagan can look on and weep for for America, for freedom, for the future.

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