Wednesday, 10 February 2016

2016's economy begins with a whimper


Global markets are showing they can't handle even a tiny bit of tightening by the Federal Reserve, observes David Haggith in this guest post, and other central banks are doubling down on rock-bottom interest rates. So after six years of "recovery" can we ever abandon endless easy money?

January was the winter of our discontented stock market. It was the worst January since 2008, when the Great Recession officially began. It was, in fact, the worst January in the history of the New York Stock Exchange. According to Citigroup, Inc., it was also the worst January ever for credit markets.

During many Fed tightenings, the stock market and overall economy improved for years afterward because the Fed stimulus had actually brought a temporary form of economic recovery. But rarely, if ever, has the mood turned dark so fast after the Fed officially announced that the recovery is sound and the life support can be removed.

So, even while I knew the global economic news was bleak, I didn’t expect the market bulls to snuff out their own ecstasy the day after the ball began. I can only imagine how much the permabulls wanted to go on air that next morning to revel in their we-told-you-sos about how the economy would do just fine after a Fed rate hike. Only they could not. They woke up to face reality.

Now that the Fed has decided to hold the Fed Funds target rate steady at their January meeting, everyone is nervously guessing which way the market will continue.

The Party in the Bull Pen Is Over

In December, Federal Reserve Chair Janet Yellen looked visibly happy when she was able to make the announcement of her lifetime — the claim that things looked optimistic enough for the Fed’s recovery that the Fed could finally end its economic aid. Never before has a Fed chairman looked less dour and more ready to crack open the champagne for the big Fed Christmas party.

Markets gleefully rewarded her with an immediate rise of 200 points in the Dow Jones Industrial Average during the remains of the day (December 16) after she delivered her glad yule tidings.

The market, however, decided to crash the party along Wall Street the next morning by dropping 253 points on December 17 — farther than it had risen during the celebration. The real gravity of those numbers was proven when the fall picked up speed for a 367-point plunge the next day, bringing the stock market down over 600 points before it closed at the end of last week.

And, so, the Fed’s rate hike made December the most volatile December for the Dow since the economic crisis of 2008. Moreover, since 1990, Decembers have been the least volatile month of the year. So, something is different this time. Something is very deeply and disturbingly different if you compare this seventy-degree day of winter solstice in Washington to any other.

It wasn’t your typical placid and merry December. Friday’s sell-off was the sharpest one-day plunge since September (up until January 7th’s 374-point plunge), and trading volume has been higher than usual in December as investors jockeyed to position themselves for the Fed’s anticipated rate rise. This is the feel of something big beginning to creep.

The sharp sell-off in stocks across all sectors of the Dow in the heaviest trading of the year came because of news that oil prices were still falling and fear over what this means for banks that are heavily involved in financing highly leveraged oil companies. For the past several years, such news would have caused the stock market to rise because it would mean another year of struggle in which the Fed would be hard at work trying to re-inflate the economy by giving free money to its friends in the financial sector.

All ten sectors of the S&P 500 also closed in negative territory the week of the Fed’s announcement. For the Dow, it was the third weekly decline in four weeks. Reality, in other words, hit the face like a glass of ice water the morning after the party. For the market bulls, it was off to work with a hangover.

The sobering fact that bank stocks were the first to decline was a surprise to many (including myself). Common wisdom throughout the market expected bank stocks to rise the fastest when the Fed raised rates because the rise in interest would actually improve bank profits since so many of their adjustable-rate loans and credit cards are pegged to interest rates that are strongly affected by the Fed’s target.

Banks will be collecting more in interest but they will be slow to start paying more interest on deposits, so were expected to benefit. Yet, financials went down because banks ensnared in a commodities massacre look edgy.

Even high-tech stocks, which have been supporting the narrowly traded market have been falling with the king of stocks — Apple — down 15 percent since the rate hike.

The global market had gone into a similar slide two weeks earlier when the European Central Bank did a little “quantitative wheezing” that didn’t satisfy the demands of its junkies. It was the same with Japan, where five rounds of QE have now failed to jack up the economy any longer than the QE lasted. QE is so unsuccessful that Japanese income and household spending are in decline again, even with the Bank of Japan embracing negative interest rates for the first time ever.

2016's phony crony Fed-led economy begins with a whimper. Will it end with a bang?

David-Haggith-ImageDavid Haggith is editor of The Great Recession Blog, where this post first appeared.
Having foreseen the beginning of what is now called The Great Recession half a year before it hit, the economic collapse seemed to him the kind of thing anyone should have seen if his eyes were wide open.
A version of this post appeared at the Mises Daily.

[Pic at head of post by MONETARY MAYHEM]


  • “Thanks to relentless government and central-bank intervention, debt is growing at the same time that workers are becoming less entrepreneurial and less productive. That's not a good combination...”
    Three Reasons to Be Worried About the US Economy – Yonathan Amselem, MISES DAILY
  • “The larger point is that the monthly jobs report has now become the essential vehicle for propagating a false recovery narrative that serves the interest of Wall Street and Washington alike.
        “Month after month the artificially concocted and misleading headline jobs number is used to drive home a comforting meme. Namely, that the nightmare of the financial crisis and recession is fading into the rearview mirror; that the Fed and Washington have fixed the underlying ills, for instance, via Dodd-Frank; and that the soaring values of stocks and other financial assets since the March 2009 bottom are real, sustainable and deserved. …
        “[And yet] food stamp participation rates are still the highest in history, and bear no resemblance to where these ratios stood during earlier intervals of so-called full employment. In a word, 4.9% unemployment can’t be true in a setting where the food stamp participation rate is nearly 15%.”
    Why The Bulls Will Get Slaughtered – David Stockman, CONTRA CORNER
  • “I am writing to assure you this bitter January is a harbinger of global economic collapse. Let me make it repeatedly clear that this is far more than a stock market crash. We have entered the Epocalypse. We are standing in the dragon’s mouth as it dives into the abyss. Leaning against the dragon’s teeth, our central planners and gabby gurus look out at the spinning world around us and assure us they see no sign of anything that looks like a dragon; and, though the world appears to be spinning, it does not mean we are falling.”
    Irrational Exuberance in Stock Market Knows No Bounds – David Haggith, THE GREAT RECESSION BLOG

Quote of the Day: Hemingway’s advice to tourists

“Don’t bother with churches, government buildings
or city squares; if you want to know about a culture,
spend a night in its bars.”

~ Ernest Hemingway, quoted in
   ‘To Have and Have Another Revised Edition: A Hemingway Cocktail Companion
    by Philip Greene

Tuesday, 9 February 2016

Quote of the Day: Because ‘borrowing’ like this is actually theft

“The sad part is Coleman died homeless in September 2006
without seeing a dime but still having watched the ungodly
riches roll in for those who borrowed his work.”

~ from an article by Karl Ernest:
Artist Behind One of the Most Sampled Tracks of All Time Finally Gets Paid (Sort Of)

Monday, 8 February 2016

Quote of the Day: Two different crises, two different regulatory regimes

“The banking crisis that began in August 2007 shocked markets and
precipitated the Great Recession. To fully explain the banking crisis,
one must account for its timing, severity, and global impact. One must
also confront a startling historical contrast.
    “If we define ‘banking crisis’ to mean bank failures and system losses
exceeding 1 percent of a country’s gross domestic product (GDP), we
find that in the period 1875-1913, a period of [light regulation,] marked
expansion in international trade and capital flows comparable to the last three decades, there were only four banking crises worldwide.
    “By contrast, in the period 1978-2009, a period of much more extensive
bank regulation, central bank intervention, government protection of
depositors and other bank creditors, and government control of mortgage
markets, about 140 banking crises occurred worldwide. Of these, 20 were
more severe than any crisis from the earlier period of 1875-1913 . . . ”

~ Mark Perry & Robert Dell, in their article How Government Failure Caused the Great Recession

Friday, 5 February 2016

Friday Morning Ramble, 05.02.16

Feel like celebrating this weekend the birth of the best little country in the world? We could, you know. There is much to celebrate—and much misunderstanding to slay.
Waitangi Day: Something to celebrate – NOT PC
It’s NZ’s own Emancipation Proclamation! – NOT PC
Why does Waitangi Day belong to one race? – NOT PC
Waitangi? It imposed no such obligation – NOT PC
‘When Two Cultures Meet: The New Zealand Experience’ – NOT PC
How did colonists’ treatment of indigenous people help cause today’s tribalism – NOT PC
Property Rights: A Blessing for Maori New Zealand – PC, REBIRTH OF REASON
Maori were protected *from* property rights, suggests recent book – NOT PC

Was something signed yesterday, amidst the din?
Quote of the Day: On tariffs and cronyism – NOT PC
TPP opposition: it’s not about democracy – NOT PC
TPP: Dismantling the negative railroad – NOT PC
Jane Kelsey struggles to find things to object to #tpp #tppa – NOT PC
#TPP : Mooching on drug producers and consumers – NOT PC

Today’s good news about globalisation:
Despite population growth, see how the total number of people in extreme poverty has fallen – UTOPIA – YOU ARE STANDING IN IT

”More sickness? More diagnosis?” Whatever the reason, beneficiary numbers track registered psych conditions.
Growth in psych conditions in the welfare system – LINDSAY MITCHELL

One man gets one victory over one council. Do we have a new unit of measurement for humble heroes?
Auckland rates battler defeats Council bureaucracy – JO HOLMES

Never thought I’d support a parliamentary Bill dreamed up by the Greens’s Catherine Delahunty. But I do, even if it doesn’t go far enough – because if property rights are to mean anything, they must mean that everyone should be safe from having their property confiscated—and not just one race.
“Not one more acre” – Catherine Delahunty, GREENS BLOG

“The usual objection to farming endangered wildlife for the pet trade is that it’s too hard to then tell the difference between legal farmed animals and illegally poached ones. Stephen Franks and Digby Livingston have a potential solution.”
Digby Livingston and Stephen Franks suggest the way to protect indigenous species is to farm them – NZ HERALD

“What are the rights of the dying? Barbara Mancini of Compassion and Choices discusses the end of her father's life.”
The Rights of the Dying: A Personal Story – CATO AT LIBERTY

Sydney-by-night is dying. Killed by the same things killing NZ’s nightlife.
Would the last person in Sydney please turn the lights out? – LINKED IN

Seymour: "If you'll excuse me, I have to say I am sorry to see you referencing the Maxim Institute's publication on this matter, much of which is difficult to argue is above intellectual dishonesty."
MP: Don't embarrass yourself – STUFF

Team New Zealand has received another Government grant worth up to $17.25 million. This is on top of taxpayer and ratepayer money given to other profession sports teams. Please sign our petition to tell the Government to STOP the corporate welfare for professional sports teams.
Sign the petition: No more corporate welfare for professional sports teams – ACTION SPROUT

The Christchurch disaster in microcosm:  “Town planners want a clean slate for their white elephants but the quake didn't quite get the slate clean enough.” ~ Bernard Darnton
Central Christchurch bar will close its doors to make way for the city's proposed stadium – STUFF

Come on, which Aucklander isn’t going to see Shakespeare performed in Shakespeare’s original theatre?
The Game's Afoot – POP-UP GLOBE

Saudi singer speaks truth to power.

“Obama and people who support his policies should have to answer for this. “Why are we less economically free than ever; and how do you defend this as a good thing?” I don’t hear Donald Trump, Ted Cruz or any of the other candidates doing so. I hear a lot about personal attacks, and about the urgent importance of preserving traditional marriage, but not about what really matters: Making America great again by making America fully free again.”
Economic Freedom Ranking: USA No Longer in Top 10 – Michael Hurd, LIVING RESOURCES CENTER

“The best evidence of this [Progressive] power to date has been the policies of Obama, the first New Left president….”
Leonard Peikoff on Obama, The First New Left President – DOLLARS & CROSSES

“The revolutionary left and right have merged in a way that is lost on their respective supporters.”
Two Flavours of Tyranny: Red? Or Brown? – Jeffrey Tucker, ANYTHING PEACEFUL

Steyn nails the difference between Sanders and Clinton: "He would be the oldest man ever elected president and 83 years old at the end of two terms - which we won't have to worry about because the entire country will have slid off the cliff long before then. But he's enthusing the base, and any base wants to be enthused.
    “Hillary, by contrast, is in trouble not because she's a sleazy, corrupt, cronyist, money-laundering, Saud-kissing liar. Democrats have a strong stomach and boundless tolerance for all of that and wouldn't care were it not for the fact that she's a dud and a bore.”
Second-Degree Bern – Mark Steyn, STEYN ONLINE

"Former US President Jimmy Carter tonight told the UK Parliament he wants Donald Trump to land the Republican nomination ahead of frontrunner Ted Cruz .
"Speaking on a visit to Britain, the 91-year-old Democrat warned Mr Cruz is committed to “Far Right-wing politics” which he would pursue “aggressively” if he makes it to the White House.
"By contrast, Carter said, outspoken billionaire *Mr Trump has no fixed views at all*."
[Says Cruz: "I'm going to pay to air Jimmy Carter attacking me."]
Famous left-winger Jimmy Carter is now backing Donald Trump - here's why – DAILY MIRROR

Asked if you like Donald Trump’s policies, you might well ask, which policies?
Trump’s positions since 1990 – REAL DONALD TRUMP

“As Trump held forth, Wesley Mouch smiled to himself. Finally, here was an industrialist who understoood. Mouch ran to the nearest telephone, and dialed Washington…”
Atlas Mugged – POPEHAT

A profound reason to support him nonetheless:
Poll: 25 percent of federal employees would quit under President Trump – THE HILL

So why do you think they do that, when unionists and academics say they should do the opposite?
Low-Skilled Workers Flee the Minimum Wage: How State Lawmakers Exile the Needy – Corey Iacono, THE FREEMAN

Catholic “social justice” ideology has left the most Catholic continent with the 2nd largest population of poor persons on the planet.
Can Social Justice Be Rescued? – James Bruce, LIBRARY OF LAW

“My only criticism is that China does not need to create a "consumer-driven economy" Their economy is production driven, and will stay that way. The idea of an economy driven by consumption is ridiculous. It's like saying a cart pulls the houses. What China needs to do is consume its production domestically rather than exporting it to America, so that Americans can consume it. A stronger yuan will help bring that transition about, to the benefit of Chinese consumers, and to the detriment of American consumers.” ~ Peter Schiff
The $3 Trillion Question – Patrick Chovanec, FOREIGN POLICY

“If all of that dispersed and decentralized knowledge that exists in the individual minds of all the members of society is to be effectively used and brought to bear for mutual improvement of the human condition, each of us must be left free to use that knowledge as we, respectively, think best and most advantageous.”
Individualism and Capitalism vs. Central Planning and Statism: The Political Battle of the 21st Century – Richard Ebeling, CAPITALISM MAGAZINE

“Voters choose on the basis of partisan loyalties, and these days party voting has a much bigger influence on state and local elections than it used to. … Given all this, the natural and appropriate policy response should be to a) expand the responsibilities of democratic government, or b) consider limiting the responsibilities of democraticgovernment?”
*Democracy for Realists* – Tyler Cowen, MARGINAL REVOLUTION

“If democratically elected officials are capable of such large-scale deception and malfeasance, why should we think that these same people can help reduce “manuipulation and deception” in the market place?”
Are Government Regulators More Virtuous than Everyone Else? – Ivan Carrino, MISES DAILY

“In the third part in this series [video below], the focus is on the development of mainstream microeconomics in the first half of the twentieth century, during which the standard textbook conceptions of “perfect competition” and “monopoly” were being “rigorously” formalised.
    “The discussion explains their assumptions, their unrealism and their misplaced use in the arena of public policy such as in anti-trust regulation.
The ‘mathematisation’ of economics is also looked at and its resulting distorted understanding and analysis of economic processes in the real world.”
The History of Economic Thought Part III – Richard Ebeling, ECONOMIC POLICY JOURNAL

The Warmist’s Fiscal Paradox: So, if the science really is settled, why should you pay all those hundreds of scientists to research already settled science?
Settled science bites – BISHOP HILL
Aussie CSIRO: Massive cuts to Government Climate Jobs – WATTS UP WITH THAT

And yet thousands of honest scientists continue to be shunned for pointing out the science is far from settled.
Professor Emiritus Hal Lewis Resigns from American Physical Society – Hal Lewis, TELEGRAPH


One actual use for royalty: publicising the good.
Montessori schools give students like Prince George free reign – DAILY NEWS

“Online job boards burst with ads recruiting “idea people” and “out of the box” thinkers. We are taught that our own creativity will be celebrated as well, and that if we have good ideas, we will succeed. It’s all a lie.”
Inside the Box: People don’t actually like creativity – Jessica Olien, SLATE

“Q: Early in your new book, A Companion to Ayn Rand, you lament the fact that two generations of academics didn’t take Rand’s work seriously. You frame the book, at least in part, as an attempt to remediate that attitude. In basic terms, why wasn’t Rand taken seriously in the academy, and why would she be?”
Reflections on Ayn Rand and Campus Culture: An Interview with Greg Salmieri (Part One) – THE UNDERCURRENT

We all need philosophy and all artists too.
Why Musicians Need Philosophy – Roger Scruton, FUTURE SYMPHONY

Ending the naked emperor's reign - Truth fights back...
The Truth About Modern Art – Paul Joseph Watson, INFOWARS

So they’re only American jokes (so they’re not actually funny) but still interesting.
The 100 Jokes That Shaped Modern Comedy: "Now take my wife... Please!" – 3 QUARKS DAILY

“I believe it is fundamental to write each day.”
What are we losing with the death of handwriting? – BRISBANE TIMES

“’'Speed-reading courses, meanwhile, can take the premise that ‘it is possible to use peripheral vision to simultaneously read large segments of a page, perhaps even a whole page, instead of one word at a time,’ they write. ‘However, such a process is not biologically or psychologically possible,’ the scientists say.”
Speed reading claims discredited by new report – GUARDIAN

Why did I spend so many years thinking Australia was so close to New Zealand when it’s actually far? Why isn’t Australia closer to New Zealand?
“Well, to answer your first question, I would say you have the American schooling system to thank for your poor understanding of geography. I know where Canada is. You should know where New Zealand is.”
Australians Answer Americans’ Dumb Questions – BUZZFEED

Progressive education has also succeeded in destroying the past for an entire generation.

“Are kids learning the phrase, “Sticks and stones…” anymore? Or has it gone the way of lawn darts?”

And finally, your music listening for the next three days starts with the top three most thrilling classical pieces recently recommended here and here (as voted by you lot with yout clicks) , , ,

. . .  and this . . .

. . .  oh, and probably this:

Have a great NZ Birthday Weekend!

Thursday, 4 February 2016

Architecture: Making ‘a home for man.’ Part 3: The essence of the home

“Whatever space and time mean, place and occasion mean more.
For space in the image of man is place, and time in the image of
man is occasion. ... We are not building buildings, we are building
ritual, building occasion, building life itself.”
~ Claude Megson (after Aldo Van Eyck)

Over the last two days we talked about man and how to begin making a home for him on this earth: It’s not just about marking a spot; it’s about making places: human places, for human occasions.
But isn’t it the case that much of our built environment, and hence much of what architects do, is normally beyond our immediate awareness? Most people just don’t notice too much about the buildings they’re in, do they (at least not consciously) – they quickly become ‘second nature’ to us, unless of course something goes wrong!

We might ‘feel’ a space or a building as being good or bad or uplifting or stultifying or bland or glorious … but we don’t always consciously know why. So let’s start looking at what architecture is trying to say to you, and how you can begin to ‘listen.’  And let’s literally start in the home . . .

Part 3: The essence of the home

“A house is not an object but a universe we construct
for ourselves – not a garage where we park ourselves.”

Claude Megson

SINCE WE TEND TO take for granted the architectural experiences we are offered, so Jay Farbstein and Min Kantrowitz in their book People in Places suggest a starting point for learning to understand what architecture can say to you if you let it (assuming of course that the architecture has something to say!):
Architecture [they say] begins with the five senses, plus other (sub-senses) like those to do with temperature, humidity, air movement across the skin, and especially the kinaesthetic or haptic; the senses must come first!

Next, These sensations must be integrated into patterns i) of day-to day life – entering the house, engaging in conversation, cooking, eating, watching television, bathing, lying in bed – and ii)of integration with the wider world with the perceiver at the centre – detailed and complex recognition of siting, eye lines into the distant ( and close) landscape.

Of harbour, valley and hilltop (each with their own resonance for us) and even the gradual exclusion of the public realm (“this is our space”) down to individual realms (“this is my space”).

Architecture recognises and builds in all these patterns or rituals – try and identify them in the place you’re in now, and think too about that special place from childhood and see how its patterns go together, and if they played some part in making it special for you.

The point here is that all architecture begins with you – it doesn’t begin with some gods-eye view from above, or from some arid analysis of string-courses and pendentives. It starts from the point of view of the observer, of the person experiencing the whole ensemble---it starts there, and it radiates out1.

From this starting point then, architecture needs to integrate the material sensed (nothing should be accidental in art), and integrate it conceptually into a pattern that gives to the person experiencing it a meaning to life on this earth. It should be life-enhancing, on a distinctively human scale, because, as we’ve said, architecture is about making a home for man ­ - literally MAKING a home for man – and at the same time EXPRESSING the facts about our world and our place in it, and then underscoring whatever emotional evaluation follows from that.
* * *

Sometimes the house grows and spreads so that, in order to live in it,
greater elasticity of daydreaming, a daydream that is less clearly
outlined, are needed. "My house," writes Georges Spyridaki, "is
diaphanous, but it is not of glass. It is more the nature of vapour.
Its walls contract and expand as I desire. At times, I draw them close
about me like protective armour .. But at others, I let the walls of my
house blossom out in their own space, which is infinitely extensible.”
Spyridaki's house breathes. First it is a coat of armour, then it extends ad
infinitum, which amounts to saying that we live in it in alternate security
and adventure. It is both cell and world. Here geometry is transcended.

~ Gaston Bachelard, The Poetics of Space

AS WE’VE SEEN in Part Two of our story, the essential meaning -- the very essence of the dining occasion-- is celebration. Giving to a home this essential human meaning of celebration is what we’re doing when we build a space for dining (or, if we’re not very good, we build something that might give almost the opposite impression).

Thus, the essential human meaning given to the dining space of a home is not eating, but celebration.

In the same way, architect Claude Megson suggested that every space in a home has its own essential human meaning that must be given its essential place and expressed appropriately in the architecture (and in the following outline I use Megson’s schema). When we build a house, in the words of Megson “we build a whole universe for ourselves to inhabit” – that place must reflect our whole universe of needs and emotions. The universe of our own soul. So let’s take a tour round our ‘soul,’ and the essence of all that it contains.

If our Dining area isn’t just a place in which to gnaw on a raw bone, then the Bathroom isn’t just a place to hose ourselves down. It is, or should be, a place wherein we experience our physical selves (visually via our mirrors) and receive our full physical sensation of being; a place in which to cleanse and refresh ourselves both physically and spiritually (it’s no accident that religionists adopted bathing as a symbol of baptism.) It should express, if we can manage it, a feeling of cleansing and rejuvenation -- almost of rebirth.2 The term used by Megson was “Regeneration.” That, oddly enough, is the feeling a good bathroom should give.

Just to clarify here: A good bathroom, or indeed any space designed and built properly, should both support the function intended for that space, and at the same time express the human meaning -- the essence – of the space. Both feeling and function are equally important – indeed, the feeling is an integral part of the function that needs to be built into the form I f form and function are realy going to be made one. (And as Frank Lloyd Wright said on a somewhat related subject, if done properly “form and feeling become one.”)

So Dining = Celebration; Bathroom = Regeneration. What else needs to be expressed in Megson’s schema?

Our Living Room is the place where life reveals itself; wherein a stage is set for our lives, for all our entrances and exits; a place of both continuity and permanence; both adventure and security; a place for books, for relaxation, for discourse, for the good news and the disappointments of our lives; for the gatherings and the adventures and occasional withdrawing from the world we all do and need to do .. the place wherein the nature of our selves is worked out and revealed, with all the other spaces in the house acting as support.

And like a stage (and like our own private souls) the Living Room both exposes and hides us: as Gaston Bachelard explains the house should sometimes be around us like an armour, like a cloak, and at others it should hardly be there at all.

Most of all, a living room should express the adventure of life. All these things described in the living space reveal the nature of a full life, so the living room as a who;e shows us the whole cosmos of life. If dining is a mark in time, then our living rooms should reveal a sense of the infinite. So a Living Room worth its name must both support the function of lounging, and at the same time it should, Megson argues, express the concept of Revelation. That concept, he argues, best describes the human need fulfilled in our best Living Rooms. In this place, more than in any other part of the house, this concept should be most evident.

The Entrance: Here is our hinge, our place of welcome and farewell, the place in which we are midway between coming and going, where we are poised “cat-like” between entrance and exit, between rejection and welcome … a dynamic equilibrium representing the occasion of greeting; the concept best expressed here is Poise.

The Bedroom is our ultimate place of withdrawal; our place for solace and sexual excitement, for peace and repose, and for reflecting, planning and dreaming. Bedroom = Reflection.

The Kitchen is the place in which life is sustained and nurtured; in which the first lessons are learned of chemistry and physics; of safety and danger. The essence of the Kitchen is Sustenance, or Nurture.

All these functions and feelings and meanings take place under one roof, in one house. In the same sense that all artwork is making a statement about the world in which we live – whether the artist likes it or not -- every piece of art is a microcosm of what the artist considers to be fundamentally important within this universe – so too the house should contain a whole universe in microcosm.

In Megson’s words, the house is not just a garage where we park ourselves; nor is it merely an object: it is instead a whole universe we construct for ourselves -- “it should embody the complete human spirit.”

This is how we go about our task, of literally making a home for for man . . .

NOTES 1. A point to anyone who can see the similarity to Austrian economics, or to Montessori education.
2. We cleanse ourselves of ‘the outside’ while symbolically cleaning ourselves within; we emerge physically revitalised and metaphorically reborn. (It is no accident that bathing is the essential religious symbol of baptism.)
    Water represents purity; as does its complement, light; which together produce an essential sparkling, uplifting effect.

[Cross-posted to the Organon Architecture Blog and the Claude Megson Blog]

Sad news about an iconic pub


From the Owners:

As some of you have no doubt heard, Jackson’s Tavern has closed to the public effective 31 January 2016, and for now available for organised functions only. Details of that to follow in future posts.

Trade has steadily increased since reopening in November 2014, and we’ve just had a very busy holiday period. However the remote location makes it a difficult business when you are not hands on owner-operators with your finger on the pulse. Both the owners and managing director are based in Christchurch, and we cannot continue to support the tavern financially.

We are looking for an owner-operator to take over the business, ideally a family who could live on site in the comfortable living quarters. This would allow staffing and other costs to be reduced dramatically and make it financially viable.

We have ploughed a lot of money into the business to get it to an excellent condition, and it’s now looking great inside and out. Recent figures show that with the reduced costs that would come with an owner-operator, you will make money on current figures, and this should only improve with time. Tourism is set to increasingly become the economic lifeblood of the West Coast. The tavern booms in the summer holiday period, but last year did go quiet in Winter. A future owner may even want to close in Winter and take a break.

The property also lends itself to many alternative tourism uses, sitting right on SH73 at the gateway to the West Coast. Guest accommodation in the future is an option. The tavern comes complete with comfortable 4 bedroom living quarters, sits on 1 hectare of land, and could be yours for much less than the average Auckland house price.

If funding is an issue we are also open to alternative arrangements to a straight purchase, including a ‘rent to buy’ arrangement. In return for a small deposit and hard work you could own the property outright in 10-15 years time.

We thank our customers and staff for their support over the past 15 months. Anyone interested in taking on the property, and building on our momentum and recent improvements are invited to contact our agent, Andrew Swift of Harcourts Gold (0274 319 621), or email the owners at

Well, this is confusing

I took a US election poll, and this is what I discovered, that three unlikely candidates should be practically equal in my support:


To complicate matters:


So either I’m all over the park, they’re all of them all over the park, or elections (and quizzes about elections) are a complete waste of time.

A comedian talks about political correctness [updated]

John Cleese reckons political correctness is killing comedy—and strangling freedom.

We Can't Have Comedy and Be Politically Correct at the Same Time

… I’ve been warned recently, don’t go to most university campuses because the political correctness has been taken from being a good idea—which is, let’s not be mean particularly to people who are not able to look after themselves very well, that’s a good idea—to the point where any kind of criticism of any individual or group can be labelled cruel. And the whole point about humor, the whole point about comedy—and believe you me, I’ve thought about it—is that all comedy is critical. Even if you make a very inclusive joke—like, How do you make God laugh? Tell him your plans—that’s about the human condition, it’s not excluding anyone, it’s saying we all have all these plans that probably won’t come and isn’t it funny that we still believe they’re going to happen. So that’s a very inclusive joke, but it’s still critical. All humor is critical. If we start saying, oh, we musn’t criticise or offend them, then humour is gone, and with humour goes a sense of proportion, and then, as far as I’m concerned, you’re living in 1984.

UPDATE: George Carlin: Political Correctness is fascism pretending to be manners … [hat tip Law of Markets]

A comedian talks about immigration


[Hat tip economist David Henderson]

So there’s a Laffer Curve for anarchists

So you’re familiar with the idea of the Laffer Curve, right?


Put in its simplest possible form, the Curve posits the non-intuitive idea that the maximum possible tax revenue does not necessarily come in at the highest tax rates.

The curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows however that increasing tax rates after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100% (the far right of the curve), then all people would choose not to work because everything they earned would go to the government.
    Governments would like to be at point T*, because it is the point at which the government collects maximum amount of tax revenue while people continue to work hard.

So there are two places on the curve that would attract zero revenue: those with tax rates of 0% and 100%; and there is one place that attracts the most revenue: and that is some place in between.

Interesting idea.

Let’s call this the Curve for the Taxman – with all that that implies.

Did you know however that you can draw a similar relationship of sorts between the size of government, and our degree of freedom? One that should be a lesson for every anarchist everywhere.

Put in its simplest possible form, the Curve for Anarchists would posit the idea that the maximum possible freedom does not necessarily come about at the lowest possible size of government.

In particular, the curve would recognise that freedom is not the absence of government but the absence of physical coercion -- protecting against physical coercion or fraud being the primary job of any good government, but the initiation of it being many a bad government’s primary activity.

So as we’d expect the curve suggests that, as the size of government decreases from higher levels, our degree of individual freedom from government coercion also increases. It also suggests however that decreasing the size of government after a certain point would cause individual freedom to diminish not by the coercion of government, but from those of whom government is no longer protecting against.




Self-described “protection agencies,” i.e., gangsters, criminals and mobs.

Eventually, if rights-protecting government were snuffed out altogether (the far left of the curve), then all freedom would be snuffed out altogether too. As it was in places like Somalia recently, Beirut in the Eighties, or warlord-era China.

The curve recognises that the idea of competing governments or “protection agencies” is simply a market in force that guarantees freedom from coercion for no-one.

And it recognises that anarchy itself, the total absence of government and law, is in fact only metastable, a system that is rapidly on the way to some other system – probably gangsterism or worse – and not at all one benevolent to the concept or preservation of freedom.

Now, we can certainly argue where our ideal place, F*, might be. Like the original Laffer Curve, it’s just a conceptual notion so it’s only drawn in the middle to make a nice-looking picture.


It would be more accurate, as we know, to move the curve to something more realistic:


So we can argue if we like about where that point might be. But we should also recognise that size might be a good way to judge things after dark, but should not on its own be the primary consideration when judging governments. What is of primary importance is not that government is small, but that it protects individual rights.

That, after all, is what government is for - to protect you from me, and me from you. And there’s no government like no government to ensure the absence of adequate protection.

[Laffer Curve pic by Investopedia]


  • “All that is spoken about by anarcho-capitalist ‘hippies of the right’ about the systems of anarchy amount to no more than wishful thinking about the state of things and the nature of men. Of some men. As James Madison said, ‘If all men were angels no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.’ But all men ain't angels, hence the need both for goverment and for controls on that government. We call those controls a constitution, just as Madison did.”
    Cue Card Libertarianism – Anarchy – NOT PC
  • “You see, anarchists sincerely believe that they are merely advocating "competition" in the protection of rights. In fact, what their position would necessitate is "competition" in defining what "rights" are.” …
        “Without a philosophical consensus, "competing agencies" (driven to maximize profits by satisfying their paying customers) will offer opposing, rival social factions any interpretations each wants. Definitions of "rights" and "liberty" and "justice" will become as much a matter of "competition" as will the methods, personnel and procedures each agency will offer to provide. And which agency will attract the most customers? Of course, the one that "gets results" by best satisfying consumer demand: i.e., the one which can impose its own definitions of "aggression" and "self-defense" on competitors.”
    The Contradiction in Anarchism – Robert Bidinotto, RED BARN
  • “Anarchy, as a political concept, is a naive floating abstraction: . . . a society without an organized government would be at the mercy of the first criminal who came along and who would precipitate it into the chaos of gang warfare. But the possibility of human immorality is not the only objection to anarchy: even a society whose every member were fully rational and faultlessly moral, could not function in a state of anarchy; it is the need of objective laws and of an arbiter for honest disagreements among men that necessitates the establishment of a government.”
    The Nature of Government – Ayn Rand, AYN RAND LEXICON
  • “’I know of no anarchist,’ [writes an anarchist], ‘who ever proposed that society be constituted without agreed standards, even if these were crystallised into one simple maxim such as 'you are free to do what you like except interfere with someone else's freedom,’ nor have any of them ever suggested that we stand idly by if our rights are abused by others.’
        “This raises a number of questions. What if this ‘simple maxim’ is not the ‘agreed standard’? Why should it be? ‘Why shouldn't the Mongrel Mob's maxims be the ‘agreed standards’? How are "freedom’ and ‘rights’ to be defined? If someone, acting on a different definition from mine, proposes to abuse my rights, who stops him and on what grounds? Of what does ‘not standing idly by’ consist — blowing him away? It is in answering such questions that one encounters the inescapable need for government [and law].”
    Freedom vs. Anarchy – Lindsay Perigo, FREE RADICAL
  • “The anarchists do not object to retaliatory force, only to it being wielded by a government. Why? Because, they say, it excludes ‘competitors.’ It sure does: it excludes vigilantes, lynch mobs, terrorists, and anyone else wanting to use force subjectively.
        “’A government is the means of placing the retaliatory use of physical force under objective control–i.e., under objectively defined laws.’ (Ayn Rand, Capitalism: The Unknown Ideal)
        “There can be only one supreme law of the land and only one government to enforce it. (State and local governments are necessarily subordinate to [a] federal government.)
        “Could conflict among ‘competing governments’ be taken care of by treaties? Treaties?–enforced by whom? I once asked Ayn Rand about the feasibility of such treaties between sovereign ‘competing governments.’ She looked at me grimly and said, ‘You mean like at the U.N.?’”
    Sorry Libertarian Anarchists, Capitalism Requires Government – Harry Binswanger, FORBES
  • “That anarchism is incompatible with the protection of individual rights is obvious from reading the news. Look at what the Mafia Defense Agency does. Look at what the PLO Defense Agency does. Look at what the Al Qaeda Defense Agency does. Such annoyingly obtrusive facts as the chronic conduct of these defense agencies are meaningless, though, we’re told. Anarchists tend to reply, “There you go again. That kind of bloody conflict among power-lusting gangs is not what we mean by defense agencies or an anarcho-capitalist society. What we mean is the smoothly functioning rights-respecting ‘defense agencies’ of our disconnected-from-facts-on-the-ground theoretical books and journal papers …
        “In other words, anarchists merely assume that none of the proposed defense agencies would in fact actually be competing at the most fundamental level—i.e., [with force] …
        “Or would there, after all, be some kind of mutually accepted and enforced ban on the wrongful use of force? If the latter, would there or would there not be enforceable mechanisms in place for adjudicating disputes among the defense agencies, and for declining to renew the license of a defense agency that tries to blow up World Trade Centers in the name of the Allah Defense Code?
        “Problem, though: as soon as any such reasonable, enforceable constraints are imposed on the defense agencies independently of their preferences in a particular dispute, we are talking about an apparatus of limited government, not about anarchism or anarcho-capitalism….”
    Did Roy A. Childs Jr. suffer from ‘Archist Illusions’? – DAVID M. BROWN’S BLOG

Quote of the Day: On tariffs and cronyism


“The tariff … [is simply] an elaborate system by which corporate interests
‘get control of legislation in order to tax their fellow-citizens for their own benefit.’”

~ William Graham Sumner, from his 1906 book
Folkways: A Study of Mores, Manners, Customs and Morals,
as quoted in Thomas Leonard’s 2016 book
Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era

TPP opposition: it’s not about democracy

Funny, the noisier opponents of the TPP argue against the semi-free-trade agreement being signed because, they say, it represents a "threat to our democracy" -- that it threatens our sovereignty -- that its measures "constrain domestic law and limit our [government's] regulatory freedom."

And yet the same objections can be made about every single international agreement ever signed.

And the very same protestors can be heard just as noisily on every other day demanding that the govt sign up immediately to international agreements on labour standards, and climate change, and "indigenous rights," and whatever else social injustic campaigners dream up..

So consistency is not their strong suit.

But neither is "democracy" their aim.

And in any case, what’s wrong with constraining governments to protect contracts, and to prevent them enacting wilful regulatory changes?

Wednesday, 3 February 2016

Barr House, by Claude Megson (1972)


Built in Auckland’s Meadowbank back in 1972, the Barr House – on a small suburban site embracing a bush reserve – is described by Megson biographer Giles Reid as one of the finest spaces he has ever been in. Yet, astonishingly, up until now it has been all but unpublished.

If there is a reason for this omission [says Reid], it is not due to the building’s lack of importance. The Barr House represents a huge advance in [Megson’s] ability to conceive and manipulate space. Of all [Megson’s houses discussed in Reid’s monograph], its spaces and forms are by far the most memorable.

The design of the house, as Megson virtually described it to an interviewer in the year of its birth, “takes its shape from the relation to the bush and the fan-shaped section.” 


The clients approached the School of Architecture in 1971 asking for the best architect they knew. The name they kept hearing was Claude Megson.

The client wanted a house that would be, as it were, a work of art [recounts Megson’s 1971 interviewer Winifred Wilson]. He wanted something good, yet out of the ordinary, and it was to be a  reasonably quiet house in which to live. The site, at the end of a cul-de-sac, overlooks the bush basin . . .
    Colours, too, relate to the bush background. Basically, the house … built along the edge of this bush, forms a crescent around a large walled entry court.
    From here one goes up to the bedrooms or down to the living quarters. It [is clad] in cedar boards … [originally] oiled a yellow brown, with solid piers in reinforced brickwork of a rich warm brown. The motor court and garden walls are also done in this warm brick work.


    Inside, the brick walls are left exposed and the timber walls are lined with the same cedar boards … The high ceilings on the first floor are white plaster plainted white. The timber floors are covered in shag pile buff carpet and the whole house has a warm mellow glow of honey gold.

Having just spent a few days there, I can attest to the ingenious treatment of space Reid describes, powerfully assisted by the rhombic geometry suggested by the site.


As with the hexagonal design module used so deftly by Frank Lloyd Wright in his Hannah House, for example, the rhombic geometry opens up the house and gives a much greater feeling of freedom—movement systems and vision for example being on different paths, a feeling enhanced by the shafts of space shooting “laser like” from one side of the house to another.

Standing in the living room [for example, writes Reid,] one can see past the entry, across the stairs, just missing the back of the kitchen, through the family space and then breakfast area and out to the terraces beyond. Every plane seems to fold away from this invisible line with only moments to spare.

It is a wonderful house to visit—and still owned by the owners who originally commissioned it back in 1971; now reluctantly ready to sell after enjoying half a lifetime inhabiting the house.


They have nothing but praise for the house and the man who designed it for them. They would change nothing they say, and from the time the house came in under budget (costing less per square foot than state houses did at the time, reports the owner) to now when old age means they finally have to leave, they say they have loved every moment of living there.


[Photos by Barfoots, courtesy Philip Oldham. Plans from Building Progress magazine, 1972. Cross-posted at the Claude Megson blog]

Architecture: Making ‘a home for man.’ Part 2: What is a man?

If we’re going to make “a home for man,” as we talked about in Part One, we need to know why man needs a home. And to answer that there’s a more fundamental question we have to address first . . .  

* * * *

Part 2: What is a Man?

Hamlet: What is a man?
If the chief good and market of his time
Be but to sleep and feed? A beast, no more.
William Shakespeare

LET’S BEGIN TO ANSWER our two questions  – what is man, and what it means to make a home for him -- by looking at two very special spaces which will help us get a grip on what sort of people we human beings are, and what ‘home’ means to man: two dining rooms (pictured below) created by Frank Lloyd Wright, one in 1902 for Susan Lawrence Dana, and the other in 1941 for an un-built project. Each one creates a space for people to celebrate the event of dining together, because for humans the act of dining together is something to celebrate. Not just time for a feed, but a stop, a reward for succeeding at the job of existence.

Wild animals hunt down their food and eat it raw. A lion rips the innards out of a lesser beast and eats it while the blood is still warm, and the heart still beating. A hyena finds the windfall and tears the remaining flesh from the bones, and vultures fortunate enough to discover the remains pick over what’s left.

Not us. That’s the way of the beast. We’re animals, true, but we’re rational animals. Our enormous brains have enabled us to succeed at life, to plan ahead, to flourish and to celebrate our successes. If the chief good and market of our time be but to sleep and feed, then we truly are no more than a beast. But we don’t just do this. We don’t just gnaw on a raw bone then fall asleep in a darkened cave: we sleep in comfort and we eat gloriously prepared food in the most elegant surroundings we can manage with the people we like and admire, and we celebrate we can do that by building into our homes this important ritual –this occasion.

In this sense, a dining space is not just a place to eat and be fed; it is the place in which we mark the occasion of dining – a place in which we share in goodwill the goods of the world together; where we mark the occasion of coming together, of our celebratory. Understood this way, as architect Claude Megson explained, the one-word essence of our dining space is: Celebration.

In a very concrete way then, architecture is simply built-in ritual, making a special place to host each of our special occasions.

From man’s earliest days, we’ve marked the things of importance to us with our rituals. The ritual of saying Grace at dinners has a good secular reason, a pause for thanksgiving, a moment in which to reflect on our success in providing for ourselves.

Man raises himself above bestiality partly by a simple elegance that speaks to who we are and what we need, and partly by marking these regular rituals as something life-sustaining. As architect Claude Megson used to say (echoing Aldo Van Eyck),

whatever space and time mean, place and occasion mean more. For space in the image of man is place, and time in the image of man is occasion. ... We are not building buildings, we are building ritual, building occasion, building life itself.

If you’re a Frank Lloyd Wright, then you do it in a particularly life-enhancing manner.

Frank Lloyd Wright: Dining space, Susan Lawrence Dana House, Chicago - 1902

Note for example those two very different dining areas by Wright, above and below. Study them, and try and imagine yourself there—how it might feel to be there. Note for instance the lighting fixtures, the high-back chairs and the moulding lines, all of which help to contain the seating group and also to bring the focus of the diners’ attention down to the group, making it a smaller, cosier space but still part of a much larger space in which the diners are framed by the seating, and their faces lit up by the lighting fixtures to become the centre of interest that they should be in such a gathering.

Frank Lloyd Wright: ‘Sijistan’ Project, 1941

The vaulted ceilings contain, gathering without overpowering – like a tent canopy above – giving a very human scale to what is quite a large ensemble. Warm colours and special detailing massage the space to fit the occasion – offering the sense of a group that is gathering together to celebrate their own efficacy, the bounty they have produced, and their joy in each other’s company. In short: a celebration of thanksgiving – every day.

“ARCHITECTURE,” AS FRANK LLOYD WRIGHT SAID, “makes human life more natural, and nature more humane.” And THAT is the starting point of understanding the meaning of architecture: that it’s about life – human life – in ALL its forms – literally all of its forms – and the job of architecture is to keep us connected to what’s important in our lives; celebrating our important occasions; making the most of the material the earth provides in all its forms, and at the same time mediating, excluding and shutting out that which isn’t wanted.

Hamlet’s question above affirms for himself thatthe unexamined life is not worth living” He’s right. ‘Building in’ such simple rituals as our celebration of dining gives us the opportunity to daily examine and celebrate our lives as we go through those daily rituals that give and keep on giving meaning to our lives. The result is a heightened sense of existence connecting us to our most fundamental values. “We build our homes,” said Winston Churchill, “and then our homes build us.” And so they do.

What good architecture does is to deal with the totality of a human existence, to provide at one level the support structure to make human life possible, and at another much richer level to express back to us what it means to be human by giving a sense of place to all our occasions, by building in all our important rituals, by connecting us to what is meaningful in our lives: To sunrises and sunsets; to the sharing of food together; to relaxing with friends; to having time and space for contemplation and for conversation, and for rest, and for sex -- and for rest and contemplation (and conversation) after (and during) sex.

That’s about as important as a job gets, right?

* * * *

BUT ISN’T IT THE CASE that much of our built environment, and hence much of what architects do, is normally beyond our immediate awareness? Most people just don’t notice too much about the buildings they’re in, do they (at least not consciously) – they become ‘second nature’ to us -- unless of course something goes wrong!

We might ‘feel’ a space or a building as being good or bad or uplifting or stultifying or bland or glorious … but we don’t always consciously know why. So tomorrow, we start looking at what architecture is trying to say to you in your home, and how you can ‘listen.’


Science skepticism is growing–for one good reason

Science skepticism is growing, and for one very good reason: Science and the bureaucratic state do not mix.

Scientists in recent years have been getting so devoted to sucking off the public tit that public trust of public science is rapidly and deservedly diminishing.

The usual narrative in the science-communication literature [suggests Mises Institute’s Peter Klein] is that public skepticism toward "science" is rooted in ignorance and fear, that it reflects scientists' failure to engage the public with lively and convincing stories. But what if scientists deliberately mislead the public, for careerist, pecuniary, or other reasons?

If they do, and when they increasingly do, then public skepticism must jutifiably increase.

The latest story on point here is the lead found in Flint, Michigan’s town water supply, and the story around its concealment – a scandal only exposed at great personal expense by a scientist from out of state with no public connection to local authorities (because all the local ‘scientists’ had other loyalties.

That scientist too says “public science is broken.”

I am very concerned about the culture of academia … and the perverse incentives that are given to young faculty. The pressures to get funding are just extraordinary. We’re all on this hedonistic treadmill — pursuing funding, pursuing fame, pursuing h-index — and the idea of science as a public good is being lost.
    This is something that I’m upset about deeply. I’ve kind of dedicated my career to try to raise awareness about this. I’m losing a lot of friends. People don’t want to hear this. But we have to get this fixed, and fixed fast, or else we are going to lose this symbiotic relationship with the public. They will stop supporting us. …
    In Flint the agencies paid to protect these people weren’t solving the problem. They were the problem. What faculty person out there is going to take on their state, the Michigan Department of Environmental Quality, and the U.S. Environmental Protection Agency?
    I don’t blame anyone, because I know the culture of academia. You are your funding network as a professor. You can destroy that network that took you 25 years to build with one word. I’ve done it. When was the last time you heard anyone in academia publicly criticize a funding agency, no matter how outrageous their behavior? We just don’t do these things.
    If an environmental injustice is occurring, someone in a government agency is not doing their job. Everyone we wanted to partner said, Well, this sounds really cool, but we want to work with the government. We want to work with the city. And I’m like, You’re living in a fantasy land, because these people are the problem. …
    What these agencies did in was the most fundamental betrayal of public trust that I’ve ever seen. When I realized what they had done, as a scientist, I was just outraged and appalled.
    I grew up worshiping at the altar of science, and in my wildest dreams I never thought scientists would behave this way. The only way I can construct a worldview that accommodates this is to say, These people are unscientific. Science should be about pursuing the truth and helping people. If you’re doing it for any other reason, you really ought to question your motives.
    Unfortunately, in general, academic research and scientists … are no longer deserving of the public trust. We’re not.

Donald Trump is a total loser

Hoist by his own petard . . .


Meanwhile, “Donald Trump fans reacted to the news that their candidate was a total loser Monday by coming up with a nefarious plot to rob him of the presidency, summarized in the hashtag #MicrosoftRubioFraud.” Read about it if conspiratorial excuses for losing are your thing…

Meanwhile, Ted Cruz won in a state that is awash with corn subsidies for biofuels—and he won after a video went viral of Cruz denouncing those subsidies to a local farmer, and turning him from angry antagonist to reluctant supporter.

Whatever else you think of him, that the winner in a subsidy-ridden state was someone willing to denounce them, and to rationally explain why, is to my way of thinking very encouraging.

Repost: TPP - Dismantling the negative railroad

(Photo: Kim Choe/3 News)

“Why the TPPA is a better trade agreement than you think: In a word, Vietnam.
… Vietnam will be the biggest gainer from TPP.  Do you get that, progressives?
Poorest country = biggest gainer.  Isn’t that what we are looking for?”

- Tyler Cowen, “Why the TPP is a better trade agreement than you think

In evaluating the deal that places us smack bang into the world’s largest semi-free-trade zone (to be excluded from which would be, as former PM Helen Clark suggested, unthinkable), it’s worth just recalling why human beings trade at all: because as Frederic Bastiat pointed out many years ago, left to our own devices few if any of us would be able to produce enough just to get through a mild winter, let alone produce enough to survive and flourish and hang around long enough to produce a mid-life crisis and a second family. We can’t produce enough on our own, yet when we trade with each other the products of our efforts we can, and we do. (Turns out we’re so helpless that, without trade, even a simple sandwich is beyond our individual means.)

As John Stossel would say, “What could be more benign than the freedom to trade with whomever you wish?”

Somewhere or other, I’ve called this the Miracle of Breakfast, the realisation that the division of labour is as benevolent as Adam Smith once explained.

Trade between nations connects us to the worldwide division of labour.

Trade between individuals demonstrates how trade benefits each party to the trade—the double thank-you moment demonstrating that we each benefited from the exchange. 

How many times have you paid $1 for a cup of coffee and after the clerk said, "thank you," you responded, "thank you "? There's a wealth of economics wisdom in the weird double thank-you moment. Why does it happen? Because you want the coffee more than the buck, and the store wants the buck more than the coffee. Both of you win.
    Economists have long understood that two people trade because each wants what the other has more than what he already has. In their respective eyes, the things traded are unequal in value. But this means each comes out ahead, having given up something he wants less for something he wants more. It's just not true that one gains and the other loses. If that were the case, the loser wouldn't have traded. It's win-win, or as economists would say, positive-sum.
    We experience this every time we have that double thank-you moment in a store or restaurant.

It is just bullshit to say that because NZ has already removed most of its tariffsNZ negotiators were arguing with one hand behind their backs, with is about to get our pants down. The benefits from trade accrue not just because we allow access to our markets—to use the language being bandied around by peak-Kelseyites—but because the benefits of trade increase exponentially as the network of exchange expands. And this semi-free-trade deal expands the network about as far as it’s politically possible to go.

* * * *

The two facts at the heart of free trade’s many benefits are these:

  1. that we each trade to get the things we want, and
  2. we all want very different things 

Of course, we don’t need volumes of paper to make a “free-trade deal.” All it takes for free exchange to happen is 1) legal protection for contracts and 2) no outright bans. (In Adam Smith’s words, "the Division of Labour is limited by the Extent of the Market.")

But free exchange can be hampered. It can be hampered by distance—which is why people build shipping lines, roads and railways to get goods and people to markets more easily and more cheaply—or it can be hampered by tariffs and quotas that make getting goods and people to markets is more difficult and more expensive, all but cancelling out the many benefits of those shipping lines and railroads. No wonder Bastiat likened the effect of tariffs and quotas to a negative railroad—one with so many breaks in the track that costs and delay are as certain with the railroad as they are with tariffs and quotas.

I have said that as long as one has regard, as unfortunately happens, only to the interest of the producer, it is impossible to avoid running counter to the general interest, since the producer, as such, demands nothing but the multiplication of obstacles, wants, and efforts. . .
    Whatever the protectionists may say, it is no less certain that the basic principle of restriction is the same as the basic principle of breaks in the tracks: the sacrifice of the consumer to the producer, of the end to the means.

The TPP deal doesn’t take away all the breaks in the track, but it does remove many of them:

In terms of the substance, there seem to be three broad themes.

  1. Eventual elimination of all tariffs in all industries except beef and dairy
  2. Minor concessions from Canada on dairy but better deal with Japan on beef (tariff dropping from 40% to 9%)
  3. Most of the potentially “bad”* stuff has been resisted (change to Pharmac model, the US demands on ISP liability for copyright, tobacco companies can’t use ISDS provisions)

And it begins momentum to for those other breaks to be dismantled. Eventually.

Because free trade really is breaking out everywhere.

* * * *

Look, the TPP looks to be about as close to full-blown, unhampered, knock-your-socks-off free trade as Andrew LIttle looks to pulling the Labour Party together. But to complain, as both Gould and Kelsey do, that because, you know, NZ dairy doesn’t achieve full tariff-free access to the US, Canada and Japan while ignoring the small sliding tariff reductions that are allowed for is like a teenager whinging because their mummy has bought them the wrong coloured iPhone for their birthday.

It’s not full free trade—but trade between the 12 nations will be freer than it is now. There is some cronyism, but since even the cronies are quietly whimpering about things there’s less clearly less than they thought they paid for. So on balance, there are more reasons to be for than against-and being against would be to make the perfect the enemy of the good.

And since the increasing expansion of the worldwide division of labour has already meant around 138,000 people have nbeen moved out of poverty every day for the last 25 years, unless you think that’s a bad thing rather than a good, the you and I would surely see very little to complain about that expansion continuing.

Embedded image permalink

* “Bad” is by the estimation of David Farrar, whose summary this is. There is much to be said about each of these things at some point, but suffice to say now that extended 12-year patent protection for drugs pertains not to present drugs but to future miracle drugs, preserving at least some part of the golden goose that will help us all age disgracefully.
Oh, and NZers are moochers on foreign drug producers and consumers