Friday, October 31, 2014

Friday Afternoon Ramble: ‘Halloween’ Edition

For years now Halloween has been eclipsing Guy Fawkes night in popularity, and it’s not just because of creeping Americanism: it’s because for years now we've been banned from buying anything that goes BANG!
    These days –if you can get them -- they all, by law, just let out a gentle 'poof.'
    No wonder kids would rather dress up and celebrate an age-old pagan ritual by heading out and bludging sweets and chocolate instead.
    Enjoy it before that’s banned too. And in the meantime…

The lowdown on…
Tolling Auckland motorways – LIBERTY SCOTT

May I again recommend to Aucklanders my Don’t-Spend-So-Goddamned-Much Plan?
"About 116,000 Auckland households face a rates increase of more than 10 per cent under a rating formula released by Mayor Len Brown yesterday." – NZ HERALD

Speaking of losing money…
KiwiRail lost $250m - boss picked up extra $80k – NZ HERALD

They grey ones do listen sometimes, you know.
Feedback douses council fireplace ban – NZ HERALD

“In the last six years National has done more to address working-age welfare dependence than Labour did in the prior nine.” Which is not great competition.
Douglas Wrong About NationalLindsay Mitchell, WHALE OIL

On this evidence, it would be the bland leading the blind.
”Yesterday Labour leadership contender Nanaia Mahuta had a Q & A at The Standard…” – YOUR NZ

And the Greens were calling Colin Craig loony!
Green MP promotes antidote to Ebola: 0.625 of SFA – PM of NZ
The idiot – DIM POST

The flip side of police speed claims based on too little data:
No discernable link between road toll and reduced speed tolerance – WHALE OIL

Minimum-wage legislation harms the very people its well-meaning proponents mean to help

“A poll released last week by the Washington Institute suggests the Islamic State may be more popular in Europe than in the Middle East.”
Michael J Totten: The Twisted Appeal of ISIS – BLAZING CAT FUR

If it doesn't work, we'll just keep doing it.
Punitive drug law enforcement failing, says Home Office study – GUARDIAN

The American left would rather forget its old slogan, “Bush lied, thousands died.”
The Biggest Lie – Victor Davis Hanson, N.R.O.

Is she really stupid enough to believe it?
Hillary Clinton: "Don't Let Anyone Tell You It's Corporations and Businesses that Create Jobs"; Ten Spectacular Failures – MISH’S GLOBAL ECONOMIC TREND ANALYSIS
Clintonomics, where costs don’t count and business don’t make work – ANDREW BOLT

“Unlike most astrologers who just mess up the lives of a few ordinary people with their phony mumbo-jumbo, Quigley had the ear of Nancy Reagan during most of the years of the Reagan Administration. For seven years, Quigley had extraordinary power over the events of the Reagan White House.”
Woo in the White House – Donald Prothero, SKEPTIC.COM

When properly understood, privacy rules will be an essential and valuable part of our digital future. Do it now, or it will be too damn late.
The right to privacy in a big data world: When properly understood, privacy rules essential, experts say – SCIENCE DAILY

Why is modern art so bad?

Go on, see if you can spot a connection.
UK wind power sets new summer record – BUSINESS GREEN
Britain Announces Emergency Measures To Prevent Winter Blackouts – WATTS UP WITH THAT

Yep, there certainly is a lot of money out there paying for climate lies…
The climate industry wall of money – JO NOVA
Billionaires club fund Green Blob “Climate Works” – JO NOVA

No, the Walrus’s aren’t going away, any more than the polar bears.
New Paper Refutes Walrus-Climate Scare – GWPF
Desperate Wildlife Extinction Claims are Part of the Warming Hoax – Alan Caruba, SOMEWHAT REASONABLE

Oh, just so you know…
Sea Ice Extent – Day 297 – Global Sea Ice Higher Than 1984, 1986, 1987, 1991, 1995, 1997, and more – SUNSHINE HOURS

“With the end of QE3 coming that stock market bulls need to take a note of caution because the Austrian measure of the money supply is already falling. This is typically a sign of trouble for stock markets.”
The End of QE3, Trouble Ahead for the Bulls? – Michael Pollaro, CIRCLE BASTIAT

“Given the current environment of low growth and politically challenging fiscal adjustments, it bears asking if the unconventional strategy [for government debt reduction] is feasible.”
Advanced economies’ sovereign debt: 100 years of data – VOX E.U.

Oh yes, he’s very bold now he hasn’t got the big job.
Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold" – ZERO HEDGE

“On October 13th, the 2014 Nobel Prize in Economics was announced in Stockholm, Sweden, with French economist, Jean Tirole, the recipient for his work on developing models to better assist governments in regulating private enterprise.
The Austrian Economist Who Should Have Received Nobel Prize – Richard Ebeling, EPIC  TIMES

Detailed Cross-section of the Kowloon Walled City

Kowloon Walled City is gone, but has not lost its fascination for folk.
Detailed Cross-section of the Kowloon Walled City Created by Japanese Researchers – SPOON & TOMAGO
Kowloon Walled City--Proof for Anarchy? – DEBATE.ORG

“China now has over 140 cities of more than one million people; America has nine.”
China's obsession with vertical cities – GUARDIAN

“Architects design buildings that will characterize cities for decades or even centuries to come. How difficult is it to design buildings for an unknown future?”
Lord Foster: The role of architecture in today’s society  - THE EUROPEAN

Frank Gehry giver journo the finger

Starchitect describes 98% of modern architecture as ‘pure shit.’
Frank Gehry (right) gives journalist the finger – GUARDIAN

It’s life-threatening being a popstar.
The 27 Club Is a Myth, But Rock Stars Do Die Younger – WALL STREET JOURNAL

You can overdo a headline … but this does look promising.
The End of Cancer in Your Lifetime? One Picture Has the Answer – LAISSEZ FAIRE TODAY

“With a degree of seriousness that has yet to be determined, the city authorities have designated a 30 metre (100ft) “cellphone lane” for people who use their phones while walking…”

Chinese city opens 'phone lane' for texting pedestrians

New art blog from an old business.
It's My Blog and I'll Brag If I Want To! – ROMANTIC REALIST

image

Vale Jack Bruce.

Okay, bring out the brunch.

It’s amazing what you can do with a cello.

I said, it’s amazing what you can do with a cello!

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Thursday, October 30, 2014

Nobel Winner Jean Tirole’s Faulty Views on Monopoly

This guest post by Frank Shostak explains that Nobel Prize-winning economist Jean Tirole comes from that school of economists who consider when reality doesn’t fit their faulty models of the economic system, they demand laws written to change the reality.

Frenchman Jean Tirole of the University of Toulouse won the 2014 Nobel Prize in Economic Sciences for devising methods to improve regulation of industries dominated by a few large firms. According to Tirole, large firms undermine the efficient functioning of the market economy by being able to influence the prices and the quantity of products.

Consequently, in the game according to Tirole, the well-being of individuals in the economy is undermined.

On this way of thinking the alleged inefficiency emerges as a result of the deviation from the “ideal state” of the market as depicted by mainstream economics’ idealised model of“perfect competition.”

The “Perfect Competition” Model

In the idealised world of “perfect competition” so idolised by the mainstream, a market is characterised by the following features:

  • There are a perfectly infinite number of buyers and sellers in the market (or, at least, so many that none can affect outcomes)
  • Products traded are all homogeneous – that is, they are all perfectly alike
  • Buyers and sellers are all perfectly informed
  • Obstacles or barriers to enter the market are all perfectly non-existent.

This describes an economic system that never was, ignoring everything that makes economics an actual system.

In this Walter Mitty-like dream world of perfect competition, neither buyers nor sellers have any control at all over the price of the product. They are all simply price takers.

The assumption of perfect information and thus absolute certainty implies that there is no room left for entrepreneurial activity. For in the world of certainty there are no risks and therefore no need for entrepreneurs.

And if this is so,then who introduces new products? How do they go about it? And why would they?

Such questions do not worry proponents of perfect competition.  According to the proponents of the perfect competition model, any real situation in a market that deviates from this model is regarded (by their models) as “sub-optimal” to consumers' well being. It is then recommended that the government intervene whenever such deviation occurs.

The model is fundamentally flawed.

Contrary to this way of thinking, competition is not at all a function account of a large number of participants as such, but as a result of a large variety of products.

Competition in Products, Not in Firms

The greater the variety is, the greater the competition will be and therefore more benefits for the consumer.

Once an entrepreneur introduces a product — the outcome of his intellectual effort — he acquires 100 per cent of the newly-established market.

Following the logic of the popular way of thinking, however, this situation must not be allowed for it will undermine consumers' well being. If this way of thinking (i.e., the perfect competition model) were to be strictly adhered to, no new products would ever emerge. In such an environment, people would struggle to stay alive.

Once an entrepreneur successfully introduces a product and makes a profit, he attracts competition. Notice that what gives rise to the competition is that consumers have endorsed the new product. Now the producers of older products must come with new ideas and new products to catch the attention of consumers.

The popular view that a producer that dominates a market could exploit his position by raising the price above the truly competitive level is erroneous.

The goal of every business is to make profits. This, however, cannot be achieved without offering consumers a suitable price.

It is in the interest of every businessman to secure a price where the quantity that is produced can be sold at a profit.

In setting this price the producer-entrepreneur will have to consider how much money consumers are likely to spend on the product. He will have to consider the prices of various competitive products. He will also have to consider his production costs.

Any attempt on behalf of the alleged dominant producer to disregard these facts will cause him to suffer losses.

Further to this, how can government officials establish whether the price of a product charged by a dominant producer is above the so-called competitive price level?

How can they know – how can they and nobody else know – just what the allegedly competitive price is supposed to be?

Not only does this imply knowledge no-one else allegedly has, but if government officials attempt to enforce a lower price this price could wipe out the incentive to produce the product. [Not to mention the jail time threatened on producers if they find themselves becoming “too dominant” as defined by these government officials – Ed.]

So rather than improving consumers’ well-being, government policies will only make things much worse. (On this, no mathematical methods, no matter how sophisticated, could tell us what the competitive price level is. Those who hold that game theories could do the trick are on the wrong path. If models could tall us what prices arise, we wouldn’t need a market to discover them.)

Again, contrary to the perfect competition model, what gives rise to a greater competitive environment is not a large number of participants in a particular market but rather a large variety of competitive products. Government policies, in the spirit of the perfect competition model, however, are destroying product differentiation and therefore competition.

Products are Heterogeneous

The whole idea that various suppliers can offer a homogeneous product is not tenable. For if this was the case why would a buyer prefer one seller to another? (The whole idea to enforce product homogeneity in order to emulate the perfect competition model will lead to no competition at all.)

Since product differentiation is what free market competition is all about, it means that every supplier of a product has 100 percent control as far as the product is concerned. In other words, he is a monopolist.

What gives rise to product differentiation is that every entrepreneur has different ideas and talents. This difference in ideas and talents is manifested in the way the product is made, the way it is packaged, the place in which it is sold, the way it is offered to the client, etc.

For instance, a hamburger that is sold in a beautiful restaurant is a different product from a hamburger sold in a takeaway shop. So if the owner of a restaurant gains dominance in the sales of hamburgers should he then be restrained for this? Should he then alter his mode of operation and convert his restaurant into a takeaway shop in order to comply with the perfect competition model?

All that has happened here is that consumers have expressed a greater preference to dine in the restaurant rather than buying from the takeaway shop. So what is wrong with this?

Let us now assume that consumers have completely abandoned takeaway shops and buying hamburgers only from the restaurant, does this mean that the government must step in and intervene?

The whole issue of a harmful monopoly has no relevance in an unhampered market. A harmful monopolist – an actual coercive monopoly – is only likely to emerge when the government puts its powers of coercion behind selected businessmen; by means of permits, for example,  restricting the variety of products in a particular market (the government bureaucrats decide what products should be supplied in the market); or means of occupational licensing, restricting the number and scope of tradesmen or professionals in a particular market (the government bureaucrats decide what tradesmen or professionals may do, and what restrictions to impose on becoming one).

By imposing restrictions and thus limiting the variety of goods and services offered to consumers, government curtails consumers' choices, thereby lowering their well-being.

Lowering their well-being in fact, not just in the hyperbolic projections of these perfectly arid theorists.

Summary and conclusion

We suggest that the whole idea of government regulating large firms in order to promote competition and defend people’s well-being is a fallacy. If anything, such intervention only stifles market competition and lowers living standards.

Alfred Nobel’s goal was to reward scientists whose inventions and discoveries bettered people’s lives and well-being. However, enhancing government controls of markets runs contrary to that spirit.


Photo of Frank    ShostakDr Frank Shostak is the head of Australian research firm Applied Austrian Economics Ltd, and one of the world leaders in the applied Austrian School of Economics. An adjunct scholar at the Mises Institute in the US, Dr Shostak has been an economist and market strategist for MF Global Australia (previously Ord Minnett) since 1986. During 1974 to 1980 he was head of the econometric department at the Standard Bank in Johannesburg South Africa. During 1981 to 1985 he was head of an economic consulting firm Econometrix in Johannesburg.
This post first appeared in its original form at the Mises Daily. It has been lightly edited.

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The Anatomy of Compromise

It’s supposed to be a virtue to compromise.

Most of the time people say this, they don’t mean compromise: they often just mean recognising what’s most important, and not losing it to what’s least important. 

Compromise isn’t always wrong though. “A compromise is an adjustment of conflicting claims by mutual concessions. This means that both parties to a compromise have some valid claim and some value to offer each other. And this means that both parties agree upon some fundamental principle which serves as a base for their deal.”1

Simple enough.

But so often compromise sacrifices the higher value to the lesser. It comes down to the parties’ fundamental principles:

The three rules listed below are by no means exhaustive; they are merely the first leads to the understanding of a vast subject.

  1. In any conflict between two men (or two groups) who hold the same basic principles, it is the more consistent one who wins.

  2. In any collaboration between two men (or two groups) who hold different basic principles, it is the more evil or irrational one who wins.

  3. When opposite basic principles are clearly and openly defined, it works to the advantage of the rational side; when they are not clearly defined, but are hidden or evaded, it works to the advantage of the irrational side.2

Allow me to demonstrate with a cat, an elephant, and Gareth Morgan:


1. Ayn Rand, “Doesn’t Life Require Compromise?” published in The Virtue of Selfishness
2. Ayn Rand, “The Anatomy of Compromise,” in Capitalism: The Unknown Ideal

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Why westerners are joining jihadis

It’s been widely noted that recruits to jihad and Islamic State come overwhelmingly not from the poor and downtrodden struggling under Middle-East dictatorships, but are often well-fed, well-educated middle-class citizens who have grown up in western countries – suggesting something lacking in what these well-fed folk absorbed in their western education, and maybe what they see from the west’s alleged “leaders.”

US Secretary of State John Kerry for example seems to want to outdo his predecessor in the competition for being the least informed Secretary of State this decade, claiming a leading motivation young men to move from the west in undertake jihad is the lack of peace between Israel and the Palestinians.

This ignores so much about modern reality it’s hard to know where to begin, not least with the fundamental fact that if Palestinians put down their rockets there would be peace – but if Israel put down their arms there would be no Israelis. As Elan Journo points out at the Voices for Reason blog, the Syrian civil war is just one of many other countervailing data points.

Journo points to a great piece by

scholar Michael Rubin [who] offers a sarcastic tweak of a Clinton-era slogan: “It’s the Ideology, Stupid!” Rubin suggests that [if we want to understand why westerners become jihadis] we ought instead to look at the ideas that jihadists embrace, and points out some of the facts that bely that alleged grievances-terrorism link that Kerry and others put forward:

the most oft-cited grievances — poverty and lack of education — have no statistical link to terror. Suicide bombers tend not to be those with the least opportunities; rather, they tend to be those from educated, middle-class backgrounds. In the Gaza Strip, Pakistan, Turkey, and elsewhere, recruitment occurs in the schools. Nor do we see a rash of terrorists and murders arising from the ten poorest countries on earth.

Read the whole thing.

Journo adds that the thirteen years since 9/11 are the story of the west’s ongoing refusal to look seriously at the ideas motivating the jihadist cause.

One leading cause of recruitment, I’d suggest, is the failure of western “leaders” to fully articulate what makes the west great – leaving multiculturalism to flaccidly proclaim that all cultures are equal anyway, even if one self-admittedly loves death as much as we love life.

And one leading cause of the inability to understand real causes is the unwillingness to recognise the enemy for what it is: that when their book talks about beheading and holy war, that it means it.

[Cartoon by Cox and Forkum]

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David Parker had a dream!

Once upon a time, Labour-leader wannabe David Parker had a dream. 

It’s a dream he’s still reluctant to abandon. The problem is not his tax, he claims, just the “glitches” he had in selling it. In other words, the problem with the tax was the sales pitch, not that it was “soak the rich.”

He – or at least those contemplating voting for him – might care to read some recent research from the Canadian Fraser Institute: saying Canada's capital gains taxes hurt economy…

“While capital gains taxes raise a small amount of revenues for government, they do so at considerable economic cost by reducing returns on investment, which discourages private sector investment and entrepreneurship--two things we need more of," said Charles Lammam, associate director of tax and fiscal policy at the Fraser Institute.

Not that that sort of result would bother a would-be Labour leader at all.

[Hat tip Small Dead Animals]

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“There is little evidence in existence … of being engaged in criminal sexual offending”

Boast-trusters around the country are angry this morning, say the papers, because the police have found themselves unable to prosecute teenagers boasting about raping drunk teenagers.

The anger was universal. The presumption of innocence, not at all. And the evidence? After a year’s long investigation, not so much, it seems. Police have investigated, but officer in charge  Karyn Malthus, a child sexual abuse specialist, has concluded there is insufficient evidence to confirm the boasts.

This investigation began based on boasts on social media, beaten up and fanned by mainstream media.  It began “with an extensive analysis of social media,”  identifying 110 girls engaged in online discussions that were “cause for concern.” Formal interviews with those willing to make their allegations specific resulted in Malthus’s team investigating 8 incidents involving 7 victims, and 35 males “of interest.”

The relevant evidential paragraph is probably this one:

We want to be clear that the basis for interviews of the majority of these individuals was hearsay and rumour. There is little evidence in existence to accuse the majority of persons of interest of being engaged in criminal sexual offending.

As Home Paddock concludes, “Immoral’s not illegal.”

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Wednesday, October 29, 2014

How to bridge Len Brown’s gap.

Drivers could pay an Auckland motorway toll of about $2 under a congestion-busting, road-building plan being unveiled today.

Len Brown says there are very few choices to make up Auckland Council’s spending shortfall.

The first option is a motorway toll.

The second is higher rates.

The third is a complicated combination of those first two, along with addition fuel taxes.

It is said these are Auckland’s only choices to bridge the spending gap.

But that’s bollocks.

There is  a fourth choice.

I like to call it my Stop-Spending-So-Goddamned-Much Plan.

Unlike the other plans, it’s very uncomplicated – it is, by far, the simplest way to bridge the gap between what Len Brown’s council spends, and what it takes our of your pockets.

It looks like this: Stop Spending So Goddamned Much.

I commend it to Loopy Len’s attention.

[Pic NZ Herald]

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Tuesday, October 28, 2014

National are “seeking to undermine collective bargaining” aka the strike-threat system

National are “seeking to undermine collective bargaining,” say unionists.

Even if that were true, which is arguable, would that be a bad thing?

In his tightly-argued classic The Theory of Collective Bargaining, William Hutt argued otherwise.

The Theory of Collective BargainingIn 1930, W.H. Hutt demonstrated several spectacular points: labour unions cannot lift wages overall; their earnings come at the expense of the consumer; their effect is to cartelize business and reduce free competition to the detriment of everyone. He demonstrated these points with intricate logic that took on the main economic arguments for labour unions. In 1954, this little volume was published in the United States, with a very complimentary essay by none other than Ludwig von Mises, who saw Hutt's work as valid for the ages. Now this great essay is back in print, and all his points still hold true, particularly the least intuitive one that unions actually benefit some producers at the expense of others, and always harm the consumer. The brevity of this essay is as notable as its power to persuade…

Hutt demolished two long-standing myths about the labour market that were tirelessly propagated by late-19th-century socialists and trade unionists, and accepted even by market-oriented economists. These involved the assertion that "collective bargaining," compelled by law or induced by the threat of legally sanctioned union coercion, was necessary in the case of labour, because the competitive market process placed the labourer at a disadvantage vis-à-vis the capitalist employer and/or generated a wide margin of indeterminacy for the price of labour.
   
In a later work, Hutt rigorously demonstrated that, contrary to prevailing belief, collective bargaining, or "the strike-threat system" as he labelled it, cannot succeed in increasing the aggregate income share of labour at the expense of the share of capital. Rather, as Hutt showed, the wage gains of unionised labourers come at the expense of non-union workers and consumers in general.
    Non-union workers suffer a decrease in their incomes because some of the labourers who lose jobs in those industries where collective bargaining forces wage rates above market-clearing levels will swell labour supplies and drive wage rates down in nonunionized industries and occupations. Consumers, including union members, experience an erosion of their real incomes, as consumer goods become more scarce and expensive in response to the increased unemployment in unionized sectors of the economy, and to the diversion of labour to less-productive employments in non-union industries.
    Capital is misallocated, and consumer sovereignty and satisfaction further impaired, as investors seek to inure themselves against strike-threat exploitation by reducing their investment in unionized industries and changing the form of their remaining investments to less-productive assets that may be quickly and easily converted to uses outside unionized industries in the event of a strike-induced rise in costs.

If National really were weakening the strike-threat system, that would be a bonus for everyone other than union leaders.

Would that be a bad thing?

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Friday, October 24, 2014

Friday Afternoon Ramble

A random walk through a few things that caught my eye this week …

“I am thoroughly encouraged that young people are espousing  "individual and property rights." And me, I’m thoroughly surprised!
Dispirited Delahunty – LINDSAY MITCHELL

Yes, it’s rhetorical.
Is It Possible to Create New Wealth? –THOUGHTS FROM 40o SOUTH

“Commissioner Mike Bush said arming the police would change the police's relationship with the public beyond repair.”
Things that make me want to get citizenship here... – Eric Crampton, OFFSETTING BEHAVIOUR
And if you have to carry a gun to keep your fragile seat at number one ... – Andrew Geddis, PUNDIT

Use your open fire in Auckland next winter, and expect a knock on the door from a clot with a clipboard.
Open fire could cost you $20,000 – NZ HERALD

“You need exceptional designers, urban planners and architects to look at it and figure it out. What you don't want to do though is to open it up to the free market."
Grand Designs mean government designs?
Kevin McCloud's Grand [Government] Designs on NZ – STUFF

“Democracy Action is alarmed by a number of provisions in the Proposed Auckland Unitary Plan (PAUP) that provide one class of citizens, loosely defined as “Mana Whenua”, with new and substantial powers over Auckland’s resources and the private property of its citizens.”
Democracy Action are the good guys. If you oppose legal favour to a special class of citizens, get behind their campaign.
Auckland's Unitary Plan – DEMOCRACY ACTION

But I thought the internet was the new media?
Dotcom and Internet Party still blaming “the media” – YOUR NZ

“While Chinese demand for Australian property is not showing signs of waning, there does appear to be a softening in demand from China for education places in Australia.”
Dodgy Chinese money already drying up at unis? – MACROBUSINESS.COM.AU

I can think of a few who should be signing up.
Australia & New Zealand Students for Liberty

Here’s a simple way to save taxpayers nearly $1.5 billion per year – and give consumers more choice.
New Report on Corporate Welfare in New Zealand – UTOPIA  - YOU’RE STANDING IN IT

“Chorus's ultra-fast broadband competition Gigatown is a waste of money and is stealing copyright, critics say
Gigatown waste of money, say critics – RADIO NZ

“Homeowners who install solar panels to cut their power bills are pushing up prices for everyone else, lines companies say.”
Solar costs handed on – NZ HERALD

Too soon?

“With the end of QE3 coming, stock market bulls need to take a note of caution because the Austrian measure of the money supply is already falling -- typically a sign of trouble for stock markets…”
The End of QE3, Trouble Ahead for the Bulls? – Mark Thornton, CIRCLE BASTIAT

“Australian housing bubble: part of a global cycle.”
Property Bubbles: Why “the Whole World has Become a City” and Australia [and NZ] is a Part of It – NUOVO NOVALIS

“The 2% inflation mantra has been repeated so early and often by Fed speakers, their court economists and the Wall Street stock peddlers known as “strategists” that it appears to amount to the monetary equivalent of the Pythagorean theorem.”
The Fed’s 2% Inflation Target: The Ultimate Keynesian Con Job – David Stockman, ECONOMICS POLICY JOURNAL

“The ECB has been concerned about falling consumer prices. I propose that's 100% stupid.”
Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"  – MISH’S GLOBAL ECONOMIC TREND ANALYSIS

“Surely we can find groups or situations which don’t look good also under inflation? So what is the point Wessel is trying to make, unless he has friends only in these categories and no friends in categories affected by inflation?”
Deflation Hysteria – Per Bylund, ECONOMIC REASONING

“Many years ago, falling prices were a sign of improved efficiency and expanding wealth, and of widening consumer choice. Thanks to the spread of electricity and other such wonders in the final quarter of the 19th century, prices dwindled year by year at a rate of 1.5% to 2% per year. People didn’t call it deflation – they called it progress.”
We’re in an Era of ‘Central Bank Worship’ – Jim Grant, JIM GRANT BLOG

“Ladies and gentlemen, we have no interest rates. We used to have them and they were swell. Some of your parents may have lived off them."
James Grant Conference Video: Inflation Expectations, Growth, Policy Problems; Europe Has Become Japan – MISH’S GLOBAL ECONOMIC TREND ANALYSIS

To allow capitalism again, end central banking.
The End of Central Banking, Part I – Richard Salsman, OBJECTIVE STANDARD
The End of Central Banking, Part II - Richard Salsman, OBJECTIVE STANDARD

Casey Research are calling it for 2014 (we report, you decide):

“The man shot dead by the Canadian Parliament's Sergeant-at-Arms has been named as Michael Zehaf-Bibeau, a man born in Quebec as Michael Joseph Hall and reported to be a "revert" to Islam.”
Non-"Senseless" Violence – Mark Steyn, STEYN ONLINE
Talking Treason – Mark Steyn, STEYN ONLINE

“Surprise! Obama's New Ebola Czar Is A Long-Time Lobbyist, Dem Operative With No Public Health Expertise.”
New Ebola Czar Ron Klain Is A Long-Time Lobbyist, Democratic Operative – THE FEDERALIST

“It is not Hayek the UK is starting to embrace with its flirtation with UKIP - it is Hansonism.”
Britain's Pauline Hanson moment – CENTRE FOR INDEPENDENT STUDIES

“Nigeria's improbable victory: How it squashed Ebola, despite chaotic health system.”
Nigeria’s hard-earned lesson for quashing Ebola – FINANCIAL TIMES

“Tirole for all his technical proficiency and inventiveness is a garden-variety neoclassical economist [who] uncritically accepts the long-entrenched neoclassical view that “oligopolistic” firms commit the unpardonable sin against economic efficiency of being able to influence prices.”
Jean Tirole wins Nobel Prize in economics for a pseudo-problem – Joseph Salerno, FINANCIAL POST

“But perhaps the most encouraging thing about Hong Kong is that the nation’s top officials genuinely seem to understand the importance of small government.”
Hong Kong’s Remarkable Fiscal Policy – UTOPIA – YOU ARE STANDING IN IT

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Unless we take immediate action and move back into caves, the Arctic will be ice-free in the blink of an eye. Or approximately 552,311 years.
Arctic To Be Ice-Free Very Soon – Steven Goddard, REAL SCIENCE

GEt climate sensitivity wrong, and you get your models wrong. And they’ve got climate sensitivity wrong.
The Climate Sensitivity Controversy – Fred Singer, AMERICAN THINKER

Green Growth: Killing Five Birds with One Stone?
Religion and Reality in the Search for Green Growth -

How’s that renewable energy working for you?

“Research, including medical research, is subject to a range of biases which mean that misleading or useless work is sometimes pursued and published while work of value is ignored.”
Most published medical research is FALSE — 85% of research funding WASTED, says Stanford study – JUNK SCIENCE

“The problem of government-funded research is not only moral; it also affects the long-term prosperity of society…”
Government Funding Vs. The Progress Of Science – Malini Kolchar, ATLAS SOCIETY

“The find shows that vertebrates lost and regained the ability to efficiently deliver sperm internally, many times over. Copulation was such fun, evolution discovered it again and again.”
Oldest genitals found. Went out of fashion for eons – NEW SCIENTIST

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When Auckland was closer to London than Greenland.
Isochronic Map Showing 1914 Travel Times From London – GEEK PRESS

“As a result of a change in habits, Mr Price said that out of town supermarkets and the weekly shop were now a ‘thing of the past.’”
Supermarkets are 20 years out of date, says Waitrose boss – TELEGRAPH

Days gone by, you’d pour out your late-night heartache to a barman over a  Sinatra song. These days…

The Basie band is Open All Night – and the normally-Zen like Count pulls out some stride piano – to the obvious pleasure of Jo Jones.

[Hat tips Jazz on the TubePaul Litterick, Catallaxy Files, Joe Bastardi , Susan Lund, Jesse Colombo, Rudolf E. Havenstein, Climate Realists, The Federalist, Libertarian Comic, Jeffrey A Tucker, F Bastiat , Intereconomics, Richard Calhoun]

Thanks for reading,
Have a great weekend,
PC

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Wednesday, October 22, 2014

The Spectre, or Otherwise, of Deflation

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Here’s what’s on tomorrow night, Thursday, with our friends at the Auckland Uni Economics Group…

A new spectre is haunting the world’s financial houses, say economists.
    After decades of warning that inflation must be kept in check, and years in which central banks claim to have produced price stability -- a little healthy inflation will do you good, they say -- many economists are now fearing an imminent deflation.
    Falling consumer and commodity prices are on the immediate horizon, they say, which will lead to a deadly downward spiral from which only the central banks provide hope of escape.
    Yet falling consumer and commodity prices were precisely the result of the industrial revolution, producing the conditions that created the modern world.
    **So what's the truth about falling prices?  Can that really be all bad?
    **What are the problems of "deflation" that many economists see? And is it possible that deflation may be a blessing, rather than a curse?

Join us to discuss these and other questions.

        Date: Thursday, October 23
        Time: 6-7pm
        Location: Case Room Two, Level Zero, Auckland Uni Business School
                             (plenty of parking in the Business School basement, entrance off Grafton Rd)

We look forward to seeing you there.

PS: Check us out on the web at our Facebook page.

“You didn’t tick Box 6”

Clients sometimes ask me about lodging past at Auckland Council. 

It’s something like this …

,,, except the plan processors still get to reject everything once you've gone.

[Hat tip Auckland Transport Blog]

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Tuesday, October 21, 2014

When the answer is Bryan Gould…

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Bryan Gould has been selected to run the post-election review of Labour’s failure.

He is a man fully qualified for the job.

What he doesn’t know about failing Labour parties isn’t worth knowing. After all, that’s where he spent a whole lifetime.

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_BryanGouldGould was a senior part of the British Labour Party that made themselves unelectable for virtually a generation. Leaders Neil Kinnock and Michael Foot were Labour’s gifts to Margaret Thatcher and John Major – making even the sub-mediocre Major look good enough to bring home the electoral bacon.

Gould however kept the blinders on, describing Welsh windbag Neil Kinnock as a statesman and the insane Michael Foot a genius, before discovering that even  as bad as Labour was, it wasn’t so bad it wanted him as leader – a man the rank and file knew could bore for Britain. (Gould was the man wheeled out at conferences when you wanted to clear a room.)

British Labour’s gain was our loss.

He left party and country in high dudgeon and returned home to nurse his grudges -- with a lifetime’s good timing, just as Tony Blair finally turned the party and its fortunes around. He watched from afar at accolades he thought should have been his, having achieved nothing in his time in politics but rejection.

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The Wairarapa  windbag now nurses his unrecognised genius at the University of Waikato.

And on failing Labour Parties, he has made a career-long study: indeed, it’s the only subject on which he has any expertise at all.

Which makes him an excellent choice, especially if long-term failure is what you’re after.

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Windfall profits for some at the expense of affordable housing for others

Here is how the housing market works under John Key’s crony capitalism: he and his housing minister and the council’s planners have between them just made around half-a-dozen land-owners around Auckland rich beyond their wildest dreams.*

In announcing the “Housing Accord” with the Greater Auckland Council, planners and politicians failed to understand the power of Mr Market.

Announcing out of the blue some land allowed to slip through the council’s zoning net, the land-owners quickly discovered their land formerly zoned rural by planners now had the politicians’ and planners’ tick to build houses – and the value of said land immediately went through the roof.

Some have put land up for sale soon after gaining designation as a Special Housing Area, achieving prices up three times higher than previous valuations.
    In one case, adjoining rural properties valued three years ago at $4.5 million sold for nearly $11 million, after being approved for fast-track housing development.
    A property developer has sold large blocks in the Huapai Triangle, valued three years ago at $8.65 million, for more than $20 million.

By locking up land and releasing it only in dribbles – favouring some land-owners over others, particularly those with pull – planners generate not only the carpet sprawl they claim to despise, but windfall profits for some at the expense of affordable and reasonably priced land for others.

The solution is to shoot the planners – or at least to make them unemployed – and let people exercise their own choice over where and how they live.


* National cronies? No, I don’t know either  (a good job for a good journalist that, discovering the details), but if they weren’t before, you’d think they’d certainly be supporters now. Because that’s how public-private partnerships roll, baby.

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Get your apostrophes right

It’s never the wrong time to get apostrophes right.

Apostrophes are the difference between a supermarket that knows its shit and one that knows it's shit; between feeling you're nuts and feeling your nuts; between "Hell mend them" (an old-fashioned curse) and "He'll mend them" (a bloke's coming round to fix your tiles).

If you can't use an apostrophe, you don't know your shit.

Monday, October 20, 2014

Don’t steal

A would-be purse snatcher in Chile gets some instant justice.

In Chile, the bus driver is a hero.

In New Zealand? It’d probably be him who was arrested.

[Hat tip Julian D.]

Send in your horror stories

I fear it’s simply a ruse to absorb dissatisfaction rather than the blunt instrument it should be to hit councils around the head, but new Local Government minister Paula Bennett has now

formally launched her Rules Reduction Taskforce aimed at finding 'loopy' property rules and regulations, naming the heads of the new body and setting up a website to solicit examples.
    "People can now head to this
rules reduction website, to start telling us what bugs them when it comes to loopy rules and regulations," Bennett said.

The “Taskforce” is headed by  National MP Jacqui Dean, with no particular qualifications for the task, and Auckland Chamber of Commerce CEO Michael Barnett.

"I'm asking property owners, builders, tradespeople and businesses who have experienced the issues caused by irrelevant or unnecessary regulations, to help draw these to our attention," Bennett said…
    "We need to hear from New Zealanders about examples that have got in the way of their building, renovation, landscaping, and home improvement plans, so that we can cut the red tape where it needs to be cut, to help them get on with the job."

I expect little – and still say the single best thing Bennett could do in her portfolio is to reverse the “powers of general competence” that former minister Sandra Lee granted councils -- but I’d still recommend you fill Bennett’s rules reduction website with all your genuine horror stories, of which I know you will have several dozen each.

At least it will give you somewhere to get them off your chest.

Lindsay Mitchell has already made a start.

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Four Reasons the Bernanke-Yellen Asset-Price Inflation May Be Nearing Its End

The American central bank – the Fed – has exported asset-price inflation to the world. But in  recent times there are signs this asset bubble is beginning to burst. In this guest post, Joseph Salerno offers four reasons the Federal Reserve’s asset-price inflation may be nearing its end.

There are strong indications that the remarkable run up of asset prices in the last few years is beginning to run out of steam and may be on the verge of collapse. (We will leave aside the question of whether the asset inflation is symptomatic of a garden-variety inflationary boom or is a more virulent bubble phenomenon in which prices are rising today simply because buyers anticipate that they will rise tomorrow.)

The Evidence

1. The dizzying climb of London real estate prices since the financial crisis, noted in a recent post by Dave Howden, may be fizzling out. Survey data from real-estate agents indicate London housing prices in September fell 0.1 percent from August, their first decline since November 2012. Meanwhile, an index of U.K. housing prices declined for the first time in 17 months. In explaining the "pronounced slowdown" in the London real estate market, the research director of Hometrack Ltd. commented, “Buyer uncertainty is growing in the face of a possible interest-rate rise, a general election on the horizon and recent warnings of a house-price bubble,” which is playing out "against a backdrop of tougher mortgage affordability checks and limits on high loan-to-income lending."

2. Just released data from the Dow Jones S&P/Case Schiller Composite Home Price Indices through July 2014 shows a marked deceleration of U.S. housing prices. 17 of the 20 cities included in the 20-City Composite Index experienced lower price increases in July than in the previous month. Both the 10- and 20-City Index recorded a 6.7 percent year-over-year rate of increase, down sharply from the post-crisis peak of almost 14 percent less than a year ago.

3. More ominously…

Click here to read more ... >>

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Open Letter to KiwiBank

Dear Sir

I recently had the misfortune of watching your “take the leap” advert on television, apparently aimed at those who have left the security of their jobs to set up a business. In the advert, you claim to know how this feels and that your bank also “took the leap.”

I find this not only an insult to the intelligence, but a bare-faced lie.

At no time since your bank’s inception did anyone in your organisation invest their own capital in your bank. Your bank was started off the backs of the taxpayer, and had continued that way. You risked nothing but the taxpayer’s anger. Thus your future was and still is assured – by the taxpayer. Regardless of how badly managed KiwiBank is, the taxpayer will always be forced to foot the bill.

In short your bank is another example of the State overstepping its mandate, and involving itself in areas of life in which it has no business.

I would therefore ask that you remove this advert from view as a gross misrepresentation of the truth, and an insult to those of us who have risked our own money to start a business -- and who would have  rather kept our earnings in our own pockets and our own businesses, instead of having it go to your own dubious enterprise.

Yours Sincerely

Peter Osborne

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Friday, October 17, 2014

‘Napoleon Visits the Plague House at Jaffa,’ by Antoine-Jean Gros


Bonaparte visitant les pestiférés de Jaffa, 1804, oil on canvas, 5320mm × 7200mm, Louvre, Paris

Dictator visits the severely afflicted, affecting Christ-like stature.

This is a huge canvas (17 feet high and 23 feet wide) divided in three, portraying the conquering hero as a cross between Christ and Apollo, visiting his afflicted troops in Egypt stricken with the deadly disease.

In reality, he was leaving Egypt in defeat, having order the patients’/prisoners’ death.

Such is the power of great art that the portrait nonetheless sticks.

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Thursday, October 16, 2014

A ‘Minarchist’ Environmentalism

Guest post by Nick Sorrentino from the blog Against Crony Capitalism

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This essay has little (directly) to do with crony capitalism, however I wanted to post it here for our readers’ consideration. People who read Against Crony Capitalism regularly know that we care about the environment. We love the ocean, and hiking, and clear skies on a moonless night. We are saddened by the clear cutting of rain forest, (usually due to a wilful lack of property rights) and by plastic floating in our seas; we care about “sustainability” generally.

However we despise the command and control methods which have traditionally been the weapons of choice for the environmentalist movement. This general disposition toward control has muddied the water on environmental issues. For many outside of the environmentalist movement the perception now is that “environmentalism” is not actually the end. A clean planet is not the end. Instead, the actual end is state domination and regulation of every single aspect of life which is . Indeed that “green” is the new “red.”

I think one can be “green” and pro-market. In fact being “green” and pro-market is not some quaint contrarian position, but the way forward.

Click here to read more ... >>

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Governments Need Inflation, Economies Don't

Guest post by Peter Schiff

In an article in the UK's Telegraph on October 10, veteran economic correspondent and central bank shill Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of monetary inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that monetary inflation is all, and always, about debt management.

Most especially government’s debt management.

Every year the levels of government debt as a percentage of GDP, for both emerging market and developed economies, continue to go higher and higher. As the ratios push out into uncharted territories, particularly in Europe's southern tier, the ability to "inflate away" debt through monetisation remains the only means available to postpone default.

Evans-Pritchard quotes a Bank of America analyst as saying that even "low inflation" (not to mention actual deflation) is the "biggest threat to the dynamics of public debt." IMF Managing Director Christine Lagarde ramped up the rhetoric further when she recently told the Washington Press Club that "deflation is the ogre that must be fought decisively." In other words, governments need inflation to remain viable. It's the drug they just can't do without.  [And “deflation” – falling prices -- My God! -- how would they ever pay back those trillions! – Ed]

But because this simple truth is just too embarrassing to admit, politicians and central bankers (and their academic, journalistic, and financial apologists) have concocted a variety of tortured theories as to why inflation is not just good for overly indebted governments, but an essential economic good for all.

Click here to read more ... >>

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“Avoid , remedy or mitigate”

As minister in charge of housing, building and National’s Resource Management Act, Nick Smith can now do whatever he likes to fix the housing affordability crisis.

Now he has his feet under the cabinet table again, he says that as a matter of urgency he will be amending the Resource Management Act to “address” the housing affordability issue.

Nick Smith was in charge of the Resource Management before, back in the nineties, for around three years. He did nothing.  He told me it was “a wonderful piece of legislation,” bequeathing it to a generation (upon his then departure) as the handbrake on land supply it has become.

He was in charge of it again just five years ago, when he “reformed” it a first time – delivering a chocolate-coated turd allowing an easier passage for government projects and easier theft of property rights.

He now says, again, after six years in aggregate in charge of this Act – longer than any other minister has had their hands on it – that it now needs “urgent” reform “to ease urban development.” [AUDIO]

Click here to read more ... >>

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Wednesday, October 15, 2014

NZ Housing Crisis: Local Government Still Confused

Guest post by Hugh Pavletich

Early 2007, soon after the release of Demographia’s housing affordability survey showing NZ’s housing beccoming increasingly unaffordable, Local Government New Zealand® and the New Zealand Planning Institute® expressed concern about housing affordability, stating:

The New Zealand Planning Institute® strongly supports Demographia’s call for planners, local councils and developers to collaborate more proactively and effectively on the provision of an adequate supply of affordable new residential housing.

Now, some seven-and-a-half years later, 10th October 2014, Local Government New Zealand®  issues a media release stating … stating …

Local Government New Zealand (LGNZ) says local government, central government and the business sector need to work together with communities to address housing affordability across New Zealand.

The emphasis is mine. The sappy confusion is theirs.

My own assessment: Local Government New Zealand® is still lost and confused.

Click here to read more ... >>

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Large Interior 175 (Richard), by Jude Rae

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Large Interior 175 (Richard), 2005, Oil on linen,
1800mm x 1200mm, James Wallace Collection, Auckland, NZ.

No, this isn’t a Vermeer or Caravaggio – you can tell by the watch and T-short it’s not an old master – this is the work of NZ artist Jude Rae, now living in Canberra.

Can you see why I was so excited when I discovered it over the weekend?

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Tuesday, October 14, 2014

On poverty

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The other day one of this blog’s regular trolls expressed amazement that I’d linked to a post on poverty in good faith. Surely, reasoned the troll, the only reason a blog promoting “capitalist acts” would link to the story of a woman living in poverty would be to point and laugh.

The troll doesn’t get it.

Because it is capitalist acts that are lifting people out of poverty all the time. And that’s one of the things this blog was created to celebrate.

Consider this: capitalism inherited millennia of poverty, and (despite battling statism all the way) delivered two centuries of prosperity unimaginable  at any other time in history. That’s a great thing.

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 Nearly 1 billion people have been lifted out of poverty in the last 2o years alone.   That’s a really great thing.

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1 billion people lifted out of poverty not through charity, welfare, or the donations of the pope or Gwyneth Paltrow. But through greater capitalism: its markets, its rule of law, its production, its innovations.

Click here to read more ... >>

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Does the “Left” actually need people to be on welfare to win elections?

This guest post by  Nick Sorrentino is something we might wonder about Labour…

First, what is called “Right ” and “Left” in politics today is increasingly up for grabs. The left-wing/right-wing political paradigm makes much less sense now that a significant part of the population self identifies as “libertarian,” which does not fit into the 20th Century way of looking at politics.

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But the question of terminology is less important than whether those who advocate ever-larger government have to keep people “hooked” on welfare of one sort or another in order to win elections. Whether creating dependence on government is in itself a political strategy.

These are pretty fair questions. If the government sends money in the mail, and one comes to rely of that money, would one ever vote for someone who threatens to limit or eliminate that check? Probably not.

Is it fair then to say that statist politicians might actually seek to expand government reliance simply to increase their political power?

I think the answer is obviously yes. But I’ll leave the question open, especially for our lefty readers.

And I’ll ask another related question.

Isn’t the elimination of various types of welfare 100% the ultimate goal? Isn’t that what we’d want ideally? A private sector so vital that the issue of jobs is a non issue? Isn’t that where we’d want to go, and isn’t that what we should be aiming for?

Or are there people who in fact need other people to rely on government to remain in power? Political people who need other humans to remain permanent wards of the state. Modern serfs. And that’s a kind way of putting it.

Here’s a case study, from IBD.com:

Brazil's Election Shows How The Left Thrives On Welfare Dependency
A Brazilian economist has shown a near-exact correlation between last Sunday’s presidential election voting choices and each state’s welfare ratios. Sure enough, handouts are the lifeblood of the left…

Click here to read more ... >>

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