Friday, 1 July 2016

Friday Morning Ramble: Still only one big news story…



“Either fraternity is spontaneous, or it does
not exist. To decree it is to annihilate it.”
~ Frederic Bastiat

“Boris claims this year’s Mal Meninga prize.”

“Whinging about democracy when it doesn't go your way, whilst embracing it otherwise, is beyond the pale, as are some of the hate filled attacks on older votes coming from those whose own identity politics is supposed to decry hate speech.  The truth being that the so-called liberal leftwing anti-hate, anti-violence activists are full of hate and quite happily embrace violence to get their "own way".  It's emotion laden petulance, of the kind you would have only seen from the fringes of the far-right and conspiracy theorists had the vote gone to Remain.
    “So what should happen now?”
Brexit: An opportunity that could be wrecked by politicians – LIBERTY SCOTT
Yes, this is a crisis: a brilliant crisis packed with possibility – Brendan O’Neill, SPIKED
The Future of the UK After Leaving The EU: Capitalism or Socialism? – Richard Ebeling, CAPMAG
In & Out backers must unite to build fraternity for liberty – Philip Booth, CITY AM

“With 187 of 650 MPs - fewer than one third of the House of Commons - in favour of Leave, how did anyone ever think voting Leave was a vote for a specific plan? And you suggest our voters were too uneducated to vote...”
"A plan was never on the ballot paper. We've got to determine that ourselves now." – Andrew Bates, FACEBOOK

First, Brexit means Brexit. The campaign was fought, the vote
was held, turnout was high, and the public gave their verdict.
There must be no attempts to remain inside the EU, no attempts
to rejoin it through the backdoor, and no second referendum. The
country voted to leave the European Union, and it is the duty
of the government and Parliament to make sure we do just that.

~ Theresa May, currently front-runner to be the next British Prime Minister

The referendum has revealed how closed-minded some have become—and how hypocritical those who talk loudest about “democracy.”
Brexit: this was a vote against bigotry, not for it – Brendan O’Neill, SPIKED
After Brexit: Academics need to get out more – Joanna Williams, SPIKED
After Brexit: The ugly scourge of ageism – Ella Whelan, SPIKED
Brexit a Victory for Xenophobia? Not So Fast. – Jerome Tuccille, REASON
What exactly is meant by "The People"? – Bernie Greene, FACEBOOK

Europeans and the commentariat are measuring their “need” for Britain by how much Britain exports to them and how little is sent in return. This, they say, means Britain needs them more than they need Britain. This shows they know as little about trade as Donald Trump.
Donald Trump's free-trade follies – Shikha Dalmia, THE WEEK
Reflections on free trade – Johnathan Pearce, SAMIZDATA
Trading in Fallacies – Steve Landsburg, THE BIG QUESTIONS
And the Winner Is…. – Steve Landsburg, THE BIG QUESTIONS

And a gentle reminder about the effect of the trade bloc on those its policies excludes…
The European Union is an ongoing disaster for Africa | Letters – GUARDIAN

“A pleasant side effect from Brexit has been a lack of focus on Australia’s election. Which is kind of nice….
    “I confess that I’m a cynic when it comes to politics. But it’s hard not be, on the evidence. From Rudd, to Gillard, to Abbott and Turnbull, it’s all been the same. Each one tinkers around the edges according to their ideologies but, in the meantime, the underlying structure of the economy continues to deteriorate.
    “Despite all the rhetoric, there is no long term plan for Australia’s economy. The only plan is for more debt to drive house prices higher and increase demand, which in turn encourages people to take on more debt.
    “It’s a model that works in the short term because it makes a lot of people believe they are getting wealthy. But in the long term it will fail. And when it does, it will do so spectacularly.”
Whoever Wins the Election on Saturday Will Inherit a Ticking Time Bomb – Greg Canavan, MONEY MORNING AUSTRALIA

What next for Britain? What about the European Economic Area (EEA), “which would provide many of the free trade and movement benefits of EU membership without being in the EU or beholden to most of its rules.”
Evolution not Revolution: The case for the EEA option – ADAM SMITH INSTITUTE

“Using migrants to push multiculturalism has been a disaster.”
How the elite weaponised immigration – Tim Black, SPIKED
Britain has not become racist overnight – Luke Gittos, SPIKED

“That was quick. With nearly 85% of the Brexit loss recovered in three days and the market now up for the quarter and the year, what’s not to like?” Well, perhaps the death of real price discovery – killed stone dead by central-bank manipulation.
Price Discovery, RIP – David Stockman, CONTRA CORNER
Brexit: From 'Project Fear'to 'Project Hysteria' – Phil Mullan, SPIKED
Brexit & economic growth: Is there any link? – Frank Shostak, COBDEN CENTRE

“And they worry the pound might crash? Pay attention to the euro.”
Civil Uprising Escalates As 8th EU Nation Threatens Referendum – ZERO HEDGE
MERKEL'S WORST NIGHTMARE: Germany calls for Referendum as 'people want to be free of EU – EXPRESS

“Recent analysis has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a ‘revolt’ of the world’s economic ‘losers.’  Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades…”
Globalisation’s So-Called Winners and Losers – Chelsea Follett, CATO

“What’s on the menu when bishops gather for a Brexit breakfast at Lambeth Palace following Britain’s historic vote to leave the European Union? Egg on face. Mitres in sanctimonious sermon sauce. Burnt reputations on French toast. Honeyed Brussels rhetorical waffle. Side dish for guest invitee Primus of the Scottish Episcopal Church—haggis with a dash of hogwash. Breakfast includes two archbishops’ specials: a Sentamu special—sausages stuffed with pious platitudes and a Welby special: Eton mess.
    “This is the most momentous decision in the recent history of the United Kingdom. And the bishops got it wrong.”
Rev Jules Gomes: Bishops choke on Brexit humble pie – Rev Jules Gomes, CONSERVATIVE WOMAN

Reminder: “The EU grew out of attempts that began in the 1950s to establish a free-trade zone among a number of western European countries.
    “But soon the free-trade idea was superseded by various interventionist programs for intergovernmental planning of agriculture and industry, and for a welfare-state social safety net.”
The European Union and the Interventionist State – Richard Ebeling, FEE

A bit rich of Geoffrey Palmer though to talk about the resentment of the political class however, as if membership and maintenance of it hadn't been his life's work. (Unbridling Power might be a fairer title for his legal doctrines in practice.) So, no wonder he wants to muddy the waters by talking about a phony 'inequality.'
The political elites foisted a new system on ordinary Brits. Little wonder they're grabbing it back – Geoffrey Palmer, SPINOFF

"Freedom granted only when it is known beforehand
that its effects will be beneficial is not freedom."

~ F.A. Hayek

“Dear sir, I have recently learned how voting works and I am APPALLED.”
Don’t rely on polls when you vote – YOUR NZ

“Not twice but three times he said that 'we' need to deal with poverty or more of this will happen.
“What an insult to the many thousands of parents who would be financially in the same boat as the killers were, but who still manage to make their children's safety and well-being paramount.
“Resorting to the poverty excuse is just facile.”
Lawyer blames Moko's death on "extreme poverty" – LINDSAY MITCHELL

“With the stroke of a pen, the number of people unemployed dropped by 12,000, while the number in the workforce has also dropped. But the changes are purely statistical, with not a single job being created or lost in the changes.”
NZ unemployment rate tumbles, and workforce shrinks, in recalculation – STUFF


“…and as long as the condition of the ‘working class’ is improving, we should not care so much about income inequality.”


Bubble, bubble, toil and trouble…
The annual rate of growth in household borrowing is continuing to climb at rates last seen in 2008 – INTEREST.CO.NZ

“Cannabis prohibitionists have long cautioned that legalizing the plant will inevitably lead to increased use among teens, couching their restrictive beliefs in concern for the youth.”
After Legalizing Recreational Weed, Colorado Has Lowest Teen Use in the Country – Carey Wedler, FEE

“The man who reads nothing at all
is better educated than the man who
reads nothing but newspapers.”

~  Thomas Jefferson

How to visit an art gallery.
The Art of Interaction – Alexandra York, NEWSMAX

"A Companion to Ayn Rand lets the reader get a deeper insight into Rand’s philosophical ideas and her methods. Ayn Rand was a controversial and understudied thinker with an expansive body of work, and the Companion therefore is a rare triumph for a scholarly study."
Book Review: A Companion to Ayn Rand – Anoop Verma, FOR THE NEW INTELLECTUAL

Concepts and Their Role in Knowledge offers scholarly analysis of key elements of Ayn Rand’s radically new approach to epistemology. The four essays, by contributors intimately familiar with this area of her work, discuss Rand’s theory of concepts—including its new account of abstraction and essence—and its central role in her epistemology; how that view leads to a distinctive conception of the justification of knowledge; her realist account of perceptual awareness and its role in the acquisition of knowledge; and finally, the implications of that theory for understanding the growth of scientific knowledge. The volume concludes with critical commentary on the essays by distinguished philosophers with differing philosophical viewpoints and the author’s responses to those commentaries.”
Concepts and Their Role in Knowledge: Reflections on Objectivist Epistemology – AMAZON

“No man can expect to be an innovator and,
simultaneously, expect to find a ready-made audience
sharing ... the values he has not yet produced.”

~ Ayn Rand

So. Maybe some Mozart at this point?



Excuse me while I go take something for my heart …



… no cure there; maybe this from Ed Kuepper …



[Hat tips Cafe Hayek, Samizdata,, Ayn Rand Bot, Jim Rose]


‘Coming to the Nuisance’? What’s that about?


After reading Eric Crampton’s superb piece on solving the Auckland housing crisis, a few commenters here were asking about the Coming to the Nuisance doctrine, mentioned by Eric, that was a feature of common law jurisdictions until partially killed by statute, and all-but euthanased by the judiciary. (See for example Sturges v Bridgman – the case of a confectioner and a busybody doctor.) It lives on, partially, in Lord Denning’s famous dissenting opinion against a couple bewailing cricket balls coming through their greenhouse after moving next to a cricket oval.  Conveniently, there are a few posts already written to help you read up on the doctrine:

  • “The Coming to the Nuisance Doctrine is the only objective means of determining who has the right to continue using his property in the event of a nuisance. If zoning is to be replaced, therefore, it must be replaced with the Coming to the Nuisance doctrine.”
    The "Coming to the Nuisance" doctrine: The antidote to zoning – CAPMAG
  • “… it’s practical to remove the RMA overnight… Here’s how it could be done. FIRST, ENACT A CODIFICATION of basic common law principles such as the Coming to the Nuisance Doctrine and rights to light and air and the like.  
        “Second, register on all land titles (as voluntary restrictive covenants) the basic “no bullshit” provisions of District Plans (stuff like height-to-boundary rules, density requirements and the like).
        “Next, and this will take a little more time, insist that councils set up a ‘Small Consents Tribunals…”
    What would 'Party X' do about the environment? - PART 3: Small Consents
  • “What sort of person moves next door to a chicken farm and then complains about the smell?
    The sort of people who live in Inglewood in Taranaki perhaps, who come to the nuisance and then seek to make windfall profits from someone else's destruction.”
    "What nuisance?" And who came to it?
  • What I’m going to propose here is another simple modification to law that would allow New Zealanders to once again repair to the common law protections that “The Hammer” had made possible. In particular, the codification of the common law principle of Coming to the Nuisance (seen in palimpsest in point three above), which on its own would a powerful antidote to the zoning that the RMA has entrenched -- perhaps the strongest possible antidote to zoning there is. Supplementary to putting property rights in the Bill of Rights, then, ‘Party X’ could promote the reintroduction of the Coming to the Nuisance doctrine for use as an absolute in neighbourhood disputes.
    What would 'Party X 'do about the environment? Part 2: 'A Nuisance and a BOR'
  • “The principle of ‘coming to the nuisance’ was established (and then sadly in some jurisdictions dis-established); as was the principle of a ‘bundle of rights’ being associated with land, and some of those rights being acquired over time by ‘prescription.’”
    Cue Card Libertarianism -- Common law
  • .

Blog Stats



I haven’t posted my blog stats here for a few months (well, apart from that permanent Google App down there on the left-hand sidebar you can consult anytime you feel like it, just above those automatically generated, and most incorrect, ‘popular posts), so there’s what Google says, above, about how things looked this month, and here below is what Statcounter says:


Apart from both demonstrating that you lot don’t read much when you’re not at work … if you can reconcile the two then you’re a better man than I. So, anyway, here are Statcounter’s figures for the month just finished:

Unique visitors [from Statcounter]: 38,453
Page Views [from Statcounter]: 54,235

As you might notice that looks a bit different to the Google figures at the top, which is a little perplexing:

This sort of suggests that counting stats is far from exact science, one reason I’d stopped posting them. Still, even the lower Statcounter figures would make me the tenth-most read blog in the only place that records NZ blog rankings, and the fifth-most read political blog – and with way fewer ads! (But that blog-ranking system uses SiteMeter, which I don’t use. And for reasons of their own it excludes the two ‘biggies’ who keep their numbers close, their enemies closer, and the advertising smeared all across their pages: Whale Oil and Public Address.)

Anyway, for what it’s worth Google says these are the Top Ten Most-Read Posts from June:

  1. Leaky Homes Part 2: What's going on behind your walls
  2. A villa is not a bungalow
  3. We've got to do something about Islam's war on the west
  4. EU v Liberty: It's all about the law
  5. "Admit it, these terrorists are Muslim"
  6. #NeverTrump: Voting advice from Ayn Rand
  7. Why “releasing” land doesn’t necessarily make land cheaper
  8. The EU explained in one pic
  9. Quote of the Day: On Brexit howling
  10. Immigration is a fundamental human right

And these seem to be the Top-ten sites that send people here:

Kiwiblog, No Minister, Lindsay Mitchell, NZ Conservative, Gus Van Horn, Facebook, Life Behind the IRon Drape (odd, since he doesn’t post any more), Twitter, and Real Good Name. (Thank you all.)

And, clearly, a big but unmeasured hat tip to Leighton Smith. (Thank you, sir.)

So in summary, things are going moderately well, and it seems the blog is still a force in the thinking world. (So if you want to donate to help keep that going, please be my guest at that Pay Pal link up on the top left!) 

Either way: Cheers, and thanks to you all for reading, linking to and talking about NOT PC this month,
Peter Cresswell

PS: Now, for the geeks …

they’re reading Not PC here:


Thursday, 30 June 2016

Quote of the Day: On the breach just keeps getting more visible…


"One the paradoxes of our age is the fact that the intellectuals, the politicians and all the sundry voices that choke, like asthma, the throat of our communication media have never gasped and stuttered so loudly about …the people’s will as the supreme criterion of value – and never have they been so grossly indifferent to the people…
    “The most profound breach [today] is not between the rich and the poor, but between the people and the intellectuals."
~ Ayn Rand in 'Apollo and Dionysus'


[Hat tip Anoop Verma]


Another post-disaster disaster: Brownlee’s failure the only thing that keeps building


Christchurch Disaster Gerry Brownlee [pic Getty Images]

Christchurch City’s Earthquake Gauleiter Gerry Brownlee has been a bigger disaster for the city than the quake.  Instead of enabling investors and property owners to do their own rebuilding, since Day One he has squatted over them all and stamped down any signs of entrepreneurial breakout. He has simply refused to learn the lesson that cities only grow and flourish because of private energy and investment, and the post-disaster lesson heard from around the world: that public inertia and uncertainty kills private effort and investment – that handing a city over to self-declared experts is the best way to kill it, whereas taking a city off welfare and making it an enterprise zone allows it to rebuild. And fast. (Unlike here.)

No wonder then that, more than five years on, recovery is still a dirty word.

Brownlee’s busybody “plan” for the city was to throw taxpayers’ money into government “anchor projects” in order to suck in private investment. Yesterday’s announcement that “progress” is finally being seen in building his much-delayed new convention centre, progress that will cost the taxpayer around $300 million plus cockups and without any private involvement whatsoever – a pig in the middle of a big empty carpark -- tells you once more how well that strategy is going. As a fellow twitterer sagely observed:


This is a man who could make a pig’s breakfast out of a private drinking party.

A walking disaster.

He should resign, along the the policy he walked in on.


“How to fix a crisis: An Auckland housing manifesto” [updated]


ERic1There’s no excuse for it, but the housing crisis has now badly affected people’s brains. This morning on air, for example, the supine Bill English was attacked by Guyon Espiner, a sadly-impaired thinker apparently under the illusion that the finance minister decides how all the money in the country is spent, and who personally goes round putting children into cars every night. (You should listen [from about 6:10] -- it’s sadly and unintentionally amusing.)

Fortunately, some clearer thinking about the crisis has emerged this week from the unlikely pen of an economist. A fellow called Eric Crampton. He’s overlooked two legs of the whole cause-of-the-housing crisis trifecta – the fact that two-thirds of new money in New Zealand is borrowed into existence by the billions just to buy existing housing – and that the law (the RMA) removes property rights from home-owners who do know their own desires to give powers to planners who don’t -- but this explanation of who and what to blame for Auckland’s escalating housing crisis is otherwise authoritative.

Just look at the mess in Auckland where a developer wanting to build housing for 1500 households in an old gravel pit at Three Kings, turning much of it into parks and open spaces, has bought almost a decade’s worth of objections and processes and hearings. How can anybody build anything to scale under those conditions? In the middle of a housing crisis, with daily news stories about the number of children having to live in cars with their parents because there are not enough houses to go round, NIMBY activists block new construction.
    Every time a NIMBY cries, an angel has to sleep in a car, or in a garage.

Eric2All other explanations need to answer his first, including his two reasons for NIMBYism – because the law as it is gives home-owners no other protection apart from complaining very loudly, and because high infrastructure costs mean council gets no financial boost from new development – which means no real incentive.

So, to make things very simple: 

Q: Why is there a crisis?
A: Because Auckland is adding houses less quickly than it is adding households.

But why isn’t the housing market working properly? Good question.

    Avocado shortages aside, high migration figures haven’t led to shortages of anything else that people buy – and I would not blame migrants for the avocado shortages either. Auckland doesn’t have a barber crisis induced by the tens of thousands more people who need haircuts every month as compared to the same time last year.
    Fundamentally, the problem has to be constraints on supply: either the building industry simply cannot keep up, or the council isn’t zoning enough land for either building up or building out.
    The constraint, so far, has not been the construction industry. When I was at the University of Canterbury, you couldn’t walk between two buildings during the earthquake rebuild without meeting Irish accents in fluoro vests. Markets can scale up to meet demand if they expect that demand to be sustained. Builders can come in from overseas. Cement plants can be expanded and upgraded. Unexpected housing demand can then cause price blips, but you shouldn’t get the years-long rolling maul we’ve seen in prices.
The series of three reports the Initiative released in 2013, our reports since, and the Productivity Commission’s reports, point pretty strongly to council-level constraints on new building. Pro-density activists made it too hard to expand at the outskirts of town; Not In My Back Yard activists made it too hard to build apartment towers or terraced housing close to downtown. When a city can’t go out or up, prices can only go one way when population increases.

Eric3Read that again with one important change in wording: “When a city can’t go out or up, prices can only go one way when population demand increases.” And all the incentives people have make both sides of the equation many times worse (with billions in new money borrowed into existence for new mortages turbocharging demand and making that whole equation even more potent).

There a several red herrings raised against this simple argument that are frequently floated by those who, for reasons of their own, would like to complicate the causes – empty houses, capital gains tax, those darned foreigners, a dearth of state housing, a too-small construction sector; all are thoroughly explained and all summarily dismissed.

So the obvious conclusion is: to flip things around, we must have ourselves much better incentives. Eric suggests six quick-fixes to the law, all of which caught my eye, and a fundamental and necessary change in mindset:

Fundamentally, the country is not going to solve Auckland’s housing affordability problems without building more houses at a much faster rate. That will not happen without changes in zoning allowing both building up and building out. And getting durable changes to town planning likely requires changing the incentive structures within which councils operate. Part of that can involve financial incentives. Part of it should involve changes to the Resource Management Act making it easier to subdivide, easier to change district plans, and harder to block new developments.
    And some of it has to involve a change in mindset. When you buy a house, you aren’t really buying a right to stasis, locking all of the neighbours under thick clear plastic wrap like your grandmother’s living room set. Neighbourhoods and cities have to be able to change and move to meet changing demand. The formal planning structures the government has built, and the financial incentives facing councils, create far too much bias towards stasis, and stasis is the enemy of growing, vibrant cities.
    We are at a crisis, and hopefully a crisis in the best and proper sense of the term: a time for change. Let’s hope that local and central government can make the most of it.

I urge you to read the whole piece: How to fix a crisis: An Auckland housing manifesto.

And I urge that necessary and long-overdue change in mindset – and in law.


UPDATE: A few commenters have asked about the Coming to the Nuisance doctrine, mentioned by Eric, that was a feature of common law jurisdictions until partially killed by statute, and all-but euthanased by the judiciary. (See for example Sturges v Bridges.) It lives on, partially, in Lord Denning’s famous decision against a couple bewailing cricket balls coming through their greenhouse after moving next to a cricket oval.  A few posts here on the doctrine:

  • “The Coming to the Nuisance Doctrine is the only objective means of determining who has the right to continue using his property in the event of a nuisance. If zoning is to be replaced, therefore, it must be replaced with the Coming to the Nuisance doctrine.”
    The "Coming to the Nuisance" doctrine: The antidote to zoning – CAPMAG
  • “… it’s practical to remove the RMA overnight… Here’s how it could be done. FIRST, ENACT A CODIFICATION of basic common law principles such as the Coming to the Nuisance Doctrine and rights to light and air and the like.  
        “Second, register on all land titles (as voluntary restrictive covenants) the basic “no bullshit” provisions of District Plans (stuff like height-to-boundary rules, density requirements and the like).
        “Next, and this will take a little more time, insist that councils set up a ‘Small Consents Tribunals…”
    What would 'Party X' do about the environment? - PART 3: Small Consents
  • “What sort of person moves next door to a chicken farm and then complains about the smell?
    The sort of people who live in Inglewood in Taranaki perhaps, who come to the nuisance and then seek to make windfall profits from someone else's destruction.”
    "What nuisance?" And who came to it?
  • What I’m going to propose here is another simple modification to law that would allow New Zealanders to once again repair to the common law protections that “The Hammer” had made possible. In particular, the codification of the common law principle of Coming to the Nuisance (seen in palimpsest in point three above), which on its own would a powerful antidote to the zoning that the RMA has entrenched -- perhaps the strongest possible antidote to zoning there is. Supplementary to putting property rights in the Bill of Rights, then, ‘Party X’ could promote the reintroduction of the Coming to the Nuisance doctrine for use as an absolute in neighbourhood disputes.
    What would 'Party X 'do about the environment? Part 2: 'A Nuisance and a BOR'
  • “The principle of ‘coming to the nuisance’ was established (and then sadly in some jurisdictions dis-established); as was the principle of a ‘bundle of rights’ being associated with land, and some of those rights being acquired over time by ‘prescription.’”
    Cue Card Libertarianism -- Common law

You know, there *are* better options than #ClintonTrump


This is two minutes worth sharing for any voters not happy with the Clinton/Trump option in 2016 (and who in the hell they would both make would be happy?):



But these Libertarian Party candidates have no chance, you say? But Johnson is polling between 12% - 16% in battleground states – and once polls show the ticket at15% then by law (yes, I know) Johnson must be included in all presidential debates. (And you know what a gamechanger that would be.)

But it’s still a wasted vote? The only wasted vote is one for something you don’t believe.

And you can hardly, seriously, say that you could believe in what either of the alternatives represent, can you. Come on, repeat after me:


[Hat tips Monica B.]


Olympic-grade motivation?


Interesting to hear that golfers are talking about pulling the plug on Rio because of their fears about the Zika virus, and the feeling that being there doesn’t mean that much to them.

The fears of the Zika virus are real, and only the fact the Olympics these days have become a virtual Government-Games means that decisions about the disease‘s threat to the athletes are not being made rationally, or individually, but by committee.

But the golfers talking about how much competing at the Olympics maybe doesn’t mean to them highlights again that, just maybe, some of the sports now appearing at the Olympics shouldn’t even be there at all. Because every new one that does appear at the Games (like sevens, like soccer, like tennis, like golf, all of which have much bigger fixtures to fry than this one) dilutes the impact of those events that have always been there and always have been associated with the Olympics – the gold medal for which is the biggest thing in an athlete’s life, for which they would crawl across broken glass if they had to.

A simple standard to follow if judging inclusion of a sport or game could be: if the Olympic gold is not the highest trophy in your sport, then your your sport should not be there.

Which is like saying that, you know, unless the Olympic gold means this much to the sportsmen and women involved (and let’s face it, golf isn’t even a sport!) then maybe just give this one away and stick to your Wimbledons and World Cups:




Today’s EU is about control, not free trade


Politicians like Juncker and Merkel speak of the EU as if it were a marriage or a family, to which one is bound by some transcendental duty, says Sascha Klocke. Readers of Hegel would be familiar with the idea.

6.27.1On Tuesday, during a somewhat raucous session of the European parliament, Nigel Farage delivered his post-Brexit “victory speech.” Besides his trademark taunting of his pro-EU colleagues, Mr Farage made an important point, suggesting:

Why don’t we be grown up, pragmatic, sensible, realistic and let’s cut between us a sensible tariff-free deal and thereafter recognise that the United Kingdom will be your friend, that we will trade with you, cooperate with you, we will be your best friends in the world.

This statement, like most of Mr Farage's speech, was greeted with jeers. While the reaction could simply be regarded as being due to Mr Farage's earlier taunting and to the emotional nature of the post-Brexit debate, the reception also seems to hint at a deeper issue, which has been brought up on the Mises Wire several times:  That the European Union is not primarily about free trade for mutual benefit, but about political integration and economic harmonisation; in which free trade is just the reward for going along with the political ambitions of Brussels.

This alternative explanation seems to be confirmed by comments made in May by the president of the European Commission, Jean-Claude Juncker, that “deserters” will “not be welcomed back with open arms,” and then yesterday by German chancellor Angela Merkel, who said in front of the German Bundestag

We'll ensure that negotiations don't take place according to the principle of cherry-picking ... It must and will make a noticeable difference whether a country wants to be a member of the family of the European Union or not. Whoever wants to leave this family can't expect to do away with all of its responsibilities while keeping the privileges.

Is leaving the European Union with its plans for ever-greater harmonisation leading to a political, fiscal, and social union really “desertion”? Is the desire to be an independent, sovereign country, yet still participate in free trade with some of the world's largest economies, “cherry-picking”? As Murray Rothbard has pointed out, “genuine free trade doesn’t require a treaty,”  and if it does not even require a treaty, it is quite clear that it certainly does not require a political union that harmonises away the competition responsible for many of the benefits of free trade.

This, however, seems lost on many politicians and bureaucrats in the EU, as well as many of its intellectual supporters at universities and newspapers across Europe, even when they did make the effort to mention the common market as a major benefit of remaining a member of the union.

A friend noted with regard to these post-Brexit days that “divorce is so emotional.” And indeed, politicians like Mr Juncker and Mrs Merkel speak of the European Union as if it were a marriage or a “family,” to which one is bound by some transcendental duty.* Perhaps it would be better to again return to the notion of federations as voluntary (and reversible) associations between friends, pursuing a (specified) common goal, and not as codependent marriages that get abusive as soon as one party wants to get a divorce.

Sascha Klocke is a PhD candidate in Economic History at Lund University in Sweden and a member of the Austrian Economics Meeting Europe. Sascha holds an MA in African Studies from Copenhagen University and a BS in economics from Goethe University in Frankfurt, and he is a 2016 Mises Institute Fellow.


* According to nineteenth-century German philosopher GWF Hegel, “Political order has its origins in family life, in which the basic needs of all individuals are served by mutual feeling, without any formal principle of organisation. The antithesis to this is civil life, in which the incorporation of so many more individual units often leads to a system of purely formal regulation of conduct, demanded by law without any emotional bond. The synthesis of the two, then, is the State, which Hegel believed to unite society into a sort of civil family, organised in legal fashion but bound together by a profound emotional sense of devotion.”
    According to Hegel, then, the modern nation must serve as an actualisation of a “national Spirit” embodied in the State to which all individuals owe their duty—individuals being subsumed in the collective, “TDerVölk.” Rather than Perpetual Peace, this view of the state underpinned the rise of modern nationalism in Europe during the nineteenth century, with all the ills that followed.


Wednesday, 29 June 2016

Don’t believe the Brexit prophecies of economic doom


There are plenty of reasons to reject the consensus that Brexit will be costly to the UK’s economy, says Isaac Tabner.

The shock and horror at the Brexit vote has been loud and vociferous. Some seem to be revelling in the uncertainty that the referendum result has provoked. The pound falling in value, a downturn in markets – it lends credence to the establishment’s claims before the referendum that a Leave vote would lead to economic Armageddon.

Clip1But there are plenty of reasons to reject the consensus that Brexit itself will be costly to the UK’s economy. Even though markets appear stormy in the immediate aftermath of the vote, the financial market reaction to date has more characteristics of a seasonal storm than of a major catastrophe.

We were told that the consensus of economic experts were overwhelmingly opposed to a Brexit. Lauded institutions – from the IMF, OECD to the Treasury and London School of Economics – produced damning forecasts that ranged from economic hardship to total disaster if the UK leaves the EU. Yet 52% percent of the British electorate clearly rejected their warnings.

Something that my professional experience has taught me is that when an “accepted consensus” is presented as overwhelming, it is a good time to consider the opposite. Prime examples of this are the millennium bug, the internet stock frenzy, the housing bubble, Britain exiting the European exchange rate mechanism (ERM) and Britain not joining the euro. In each of these examples, the overwhelming establishment consensus of the time turned out to be wrong. I believe Brexit is a similar situation.

Downright Dangerous

The economic models used to predict the harsh consequences of a Brexit are the tools of my profession’s trade. Used properly, they can help us to better understand how systems work. In the wrong hands they are always downright dangerous. The collapse of the hedge fund Long-Term Capital Management in 1998 and the mispricing of mortgage-backed securities leading up to the 2008 financial crisis are just two of many examples of harmful consequences arising from the abuse of such models.

The output of these often highly sophisticated models depends entirely upon the competence and integrity of the user. With miniscule adjustment, they can be tweaked to support or contradict more or less any argument that you want.

The barrage of dire economic forecasts that were delivered before the referendum were flawed for two main reasons. First, they failed to acknowledge the risks of remaining in the EU. And second, the independence of the forecasters is open to question.

Let’s start with the supposed independence of the forecasting institutions. While economists should in theory strive to be independent and objective, Luigi Zingales from the University of Chicago provides a compelling argument that, in reality, economists are just as susceptible to the influence of the institutions paying for their services as in other industries such as financial regulators.

Peer Pressure

Another challenge faced by economists is presented by the nature of the subject matter. Economics is a social science which, at its heart, is about the psychology of human social interactions. Many models try to resolve the difficulties that human subjectivity causes by imposing assumptions of formal rationality on their models. But what is and is not rational is subjective. In further recognition of this difficulty the sub-discipline of behavioural economics has evolved.

When you put the current level of volatility in context of other shocks, market conditions are not as bad as they might seem.

Herding is a concept that has been used to rationalise financial market bubbles and various other behaviour. It describes situations in which it seems rational for individuals to follow the perceived consensus. Anyone who has found themselves in a position where the majority of their company has a radically different view to their own will have experienced the difficulty of standing out from the crowd.

In 2005-06, various people (including myself) presented the view that UK house prices would crash. While some audiences were sympathetic, the majority view at the time was both hostile and derisory. Challenging the received wisdom exposes you to feelings of isolation.

Received wisdom among academia has been that the EU is a force for good that should be defended at all costs. Respected colleagues are incredulous that anyone with their education and professional insights could think otherwise and remain part of the academic “in” crowd. In such an environment, it is very difficult to challenge this orthodoxy.

I – and the bulk of the UK population – might have been convinced by the pro-Remain economists if they had been a little more honest about the limitations of their models, and the risks of remaining inside the EU.


Market Reactions

Despite reports of markets crashing following the Brexit result, when you put the current level of volatility in the context of a wider time period (above) and of other shocks, market conditions are not as bad as they might seem. The FTSE 100 is still higher than it was barely two weeks ago and the more UK-focused FTSE 250 is currently higher than it was in late 2014. This is the kind of volatility that markets see two or three times a year.

The volatility index for the US S&P, known as the VIX or the “fear gauge”, is what is widely used to measure how uncertain global financial market participants are about the outlook for stocks. When the Brexit result was first announced, the VIX moved sharply, but has since settled in the mid-20s. To put this in context, the all-time average is 20.7, the all-time closing low is 8.5 and the all-time closing high on Black Monday in 1987 was 150. More recently during the financial crisis, it reached a closing high of 87.2 in November 2008.

VIX volatility chart. CBOE

Other financial indicators also moved rapidly as the referendum results came through. On the face of it, the Japanese market suffered a severe shock falling almost 8%. However, the 8% fall in the Japanese stock market is almost exactly matched by an 8% gain of the Japanese yen relative to the pound. Therefore, the net effect for UK-based investors in Japanese equities is close to zero.

The fall in the value of the pound following the Brexit result is also not as bad as it may first appear, not when seen in a wider context. The size of the fall was exacerbated especially by the previous day’s assumption that Remain would win, by the scare-mongering that was put about by the Remain team before the vote – and by the six-month high the pound hit in the week before the vote…


There is also precedent for a dramatic fall – after the ERM crisis – which proved beneficial for many British exporting companies and arguably helped sustain the economic recovery of the 1990s.

A lower pound benefits companies that add most of the value to their products inside the UK, and companies that sell their produce on international markets. This includes exporters like pharmaceutical company GlaxoSmithKline, drinks company Diageo and technology company ARM – all of which saw stock price gains on the morning after the vote. Companies that rely on imports or who add little value within the UK will be hardest hit in the short term as they adapt to the exchange-rate volatility.

There will undoubtedly be winners and losers from the UK’s decision to leave the EU. [Winners and losers who would not be so in a system of fixed-exchange rates* – Ed.] But indexes for volatility are already lower than they were in February this year, suggesting that (unlike those who comment upon it) these markets are not abnormally worried about the outlook, and UK government borrowing costs are at an all time low. This is further reason to reject the pre-referendum consensus that Brexit would bring economic doom.

Isaac Tabner is a Senior Lecturer in Finance at the University of Stirling.
This post previously appeared at FEE, where it was reprinted from The Conversation.

* F.A. Hayek: “[F]lexible exchange rates preclude an efficient allocation of resources on an international level, as they immediately hinder and distort real flows of consumption and investment. Moreover, they make it inevitable that the necessary real downward adjustments in costs take place…in a chaotic environment of competitive devaluations, credit expansion, and inflation…
    “I do not believe we shall regain a system of international stability without returning to a system of fixed exchange rates, which imposes on the national central banks the restraint essential for successfully resisting the pressure of the advocates of inflation in their countries — usually including ministers of finance.”


  • "The political and financial establishments of Europe and the United States were taken by almost total surprise and sent into apparent shock when 52 percent of the voters in the United Kingdom chose for their country to leave the European Union (EU). But it is not the end of the world as we know it, and can be a positive sign and example of opposition to unrepresentative and centralized bureaucratic control over people’s lives."
    The Future of the UK After Leaving The EU: Capitalism or Socialism? – CAPITALISM MAGAZINE
  • “The EU grew out of attempts that began in the 1950s to establish a free-trade zone among a number of western European countries.  But soon the free-trade idea was superseded by various interventionist programs for intergovernmental planning of agriculture and industry, and for a welfare-state social safety net.”
    The European Union and the Interventionist State – Richard Ebeling, FEE
  • “Rather than engaging with those who voted to leave the ‎EU‬, young people, and their sad cheerleaders among middle-aged Remai‬n journalists, have sought to demean and degrade a large section of the voting public not just for disagreeing with them, but also for being old.”
    After the referendum, the ugly scourge of ageism – Ella Whelan, SPIKED
  • “The Brexit vote was not ‘anti-immigrant,’ racist, or xenophobic, the Brexit vote was all about: ‘an internationalist, global Britain, a more deregulated Britain, a freer Britain, and a more Democratic Britain, one that is interested and engaged with the affairs every continent, including Europe.’”
    Brexit: Prelude to A Freer, More Democratic, More Internationalist Britain – Roger KImball, PJ MEDIA
  • “So the debate is between a cuddly "soft exit" and a bracing "hard exit" from the EU. I'm hoping for the former. It's entirely doable given the will. In the meantime, I'd like the UK to adopt unilateral free trade and get deals in place with the likes of Canada, Australia, NZ, US, etc. Time to crack on, be confident. Also, the divisions are opening between those (like me) who want the UK to adjust its relationship for genuinely liberal, pro-enterprise reasons, and those who did so for nationanlistic, protectionist ("keep out those foreigners and save `our NHS'" types). This is arguably the fault-line in UK politics that will be the main one to watch in the years ahead. We may even see new political coalitions and parties. It reminds of when the Corn Laws were abolished in the 1840s, paving the way for the eventual rise of the Liberal Party under Gladstone.”
    ~ Tom Burrroughes
  • “"The first is the press’s peculiar belief that the “Leave” side won because its voters are stupid and impetuous, and because they don’t know what’s good for themselves – an attitude that has been well illustrated by the insistence that British voters took “frantically” to googling “what is the EU?” once the results had become clear. From the start, the implication of the coverage has been that, devastated by the news that they had actually prevailed, the moronic advocates of Brexit elected finally to do some reading.
        "In truth, this whole line is nonsense. As 538’s Ben Casselman has pointed out, people also googled “who is Mitt Romney” after he lost to Barack Obama in 2012. Should that be taken as a sign of regret? Hardly, no. Not only do we not know who is doing the googling (it could be Remain voters, it could be Leave voters, it could be non-voters; nobody knows), but, as Gedalyah Reback of Geektime notes, this is what voters do in the wake of momentous political events. Moreover, it turns out that the supposed “frantic” “spike” in interest was caused by just 1,000 people.”
    The Media’s Disgraceful Brexit Meltdown – NRO
  • "To people who think that the sky is falling for Britain, consider this from George Friedman of Geopolitical Futures:
    "The EU, Not Britain, Is the Weaker Player.’
        “Obviously, nothing will happen in the immediate future. But it is not clear to me that there will be any real economic blowback. The UK is not Greece. Attempting to shun the British carries heavy potential consequences. Anything imposed on the British will resonate on the Continent. And Germany—which gets almost 50% of its GDP from exports—is not likely to let anyone hinder that trade."
    This week in geopolitics – MAULDIN ECONOMICS
  • “The message is that the EU promise of a unified collection of states, under one market and one currency, has morphed into a failed centralized bureaucratic political system, mired in red tape and red ink. If Britain goes, the power base of the EU might follow.”
    Don’t be bamboozled, Brexit creates huge opportunities for the U.K. – Terence Corcoran, FINANCIAL POST
  • “The BBC’s desperate shilling for Remain will come under increasing scrutiny as we exclusively reveal that the supposed ‘popular petition’ for a second referendum – wholly illegal and unworkable, and unprecedented in British history – is a prank by notorious sh*tposters 4 Chan.”
    Brexit ‘2nd Referendum Petition’ A 4 Chan Prank: BBC Report It As Real – HEATSTREET
  • “The leftist media (which is 95% of the so-called mainstream media), and their crony politicians and intellectuals are whining that Britain’s decision to leave EU is a massive disaster for the entire human race. These supercilious know-alls are completely wrong.
        “On the day of ‪#‎Brexit‬ news, I had predicted in a comment in this group that Britain leaving the EU is actually very good development for the markets, and that the markets will recover in less than 15 days.
        “Well, the markets seem to have recovered already from the so-called #Brexit results. So my prediction was spot-on. :-)
    #Brexit is not a disaster. How can freedom from a socialist organisation like EU, which is full of climate change charlatans and is being led by an expansionist Germany, be a disaster?
        “The ‘real’ investors understand that Brexit is a good thing for the markets, because now that Britain is free from EU, it has better chances of reforming its economy. Hopefully Britain’s exit will inspire other EU countries to set themselves free, and the final unravelling of the EU will put an end to the proposal for creation of such entities in other parts of the world.
        “Stock markets can fall again, but they will never fall due to #Brexit.”
    ~ Anoop Verma, post to FOR NEW INTELLECTUALS

Immigration: The four arguments


The four biggest arguments I hear regularly here from commenters opposed to the right of free association as it applies to immigration (always the same  non-reading, unthinking zealots commenting I might add) are

  1. …but welfare!
  2. …but Muslims!
  3. …but assimilation!
  4. …but low wages!

1. The welfare argument is as quicky dismissed as it is raised, as it was yesterday: “Let’s fight to shrink the welfare state and to liberalise labor laws, not to prevent people from exercising a basic right.” Let’s recognise nonetheless that even in today’s context, the evidence shows that in New World countries like ours, immigrants of all persuasions don’t migrate for welfare and generally use less welfare than locals. And in the meantime, call for both the “Australia Solution” – i.e., restrict migrants’ eligibility for benefits, as Australia does with NZers – and the “Canada Solution” – i.e., allow folk to sponsor and take full responsibility for other folk coming as migrants and refugees.

2. The “Muslim argument” is hardly as complex as the zealots might think either. The right to free association is a right pertaining to peaceful people only – so we those meaning harm have no moral right of entry. But nor do they try: nearly without exception, those who carry out atrocities are young, deluded and homegrown (going against their own parents teachings, as Maajid Nawaz frequently points out, and making you wonder what is in the west’s water when the wish to destroy it is what they imbibe here.)
    And as Steve Chapman points out, the overwhelming majority of immigrants who come to the west, by both legally and illegal means, are not criminals (they are even less likely than the native-born population to commit crimes) and nor are they terrorists (Muslim Americans for example are more likely to reject violence than many othergroups). They emigrate to create a better life for themselves and their families, not to make yours worse. Your enemies are also theirs: keep them onside and they will and do point out the bad bastards. ("American Muslims are responsible for identifying and turning in over 90% of the lone wolves who would have committed terrorist attacks on this beautiful land of ours over the course of the past 15 years,” points out American Muslim Oz Sultan. “We love this country and in order for us to show our love we need to start being looked at as the last line of defense and not the enemy.”)
    In fact, as US attorney James Valliant argues, the only way to actually prevent terrorists from slipping in is to legalise as much "illegal immigration" as possible. “If one is looking for a needle in a haystack, as the saying goes, one has a hell of job. Finding that needle on a relatively clean floor, however, presents an achievable goal.  If every person who wanted into America in order to find work was legally permitted into America, I'll bet they'd be happy to stop by the front gate, show some ID,get checked against a terrorist watch-list, etc. Only those with criminal records, or reasons to flee justice, those with contagious diseases, and, well... terrorists would have any reason to "jump the gate" at all.”
    As he points, this would concentrate resources on those who actually do pose a threat to the country, while giving the residents of the country all the real benefits that immigration does bring.
    “Sure, some might slip through,” recognises Benjamin Powell, “but right now terrorists could sneak into the country illegally while hiding among more than a million other illegal immigrants crossing the border in the desert. If a more open immigration policy were established, the legitimate workers could come through check points, freeing existing border-control enforcement to focus on finding the terrorists”—while keeping onside your genuine allies

3. And while there are many things to be said about assimilation, perhaps the simplest is to point out that all the demographic arguments raised by American anti-immigration zealots, to take just one example, are best represented by one single state of the US: their favourite: Texas! (The Alt-Right's "Demographic Nightmare" Is... Texas 2016).

4. So, what about the argument that too many arrivals from too many low-wage countries simply lowers our own wages? This can only be held or argued by someone who has never read the data, and never understood Say’s Law (i.e., that it is production that pays for demand.)
    A survey of the economics literature on immigration concludes that “[d]espite the popular belief that immigrants have a large adverse impact on the wages and employment opportunities of the native-born population, the literature on this question does not provide much support for the conclusion.” This is the way academics tell you gently you’re talking out of your arse.
    How is this possible when the laws of supply and demand seem to suggest the opposite? asks Benjamin Powell.  Answer: because those laws operate within the context of Say’s Law and the expanded division of labour created by the new immigrants. You see, new immigrants are not just mouths to feed; they are productive.  “Those immigrants who increase the supply of labor also demand goods and services, causing the demand for labour to increase.” That demand is bought of their own increased production, by virtue of which the whole scale of production increases, lowering marginal costs, and real wages are increased (i.e., there is more to buy with the same wage packet).

Second, immigrants don't simply shift the supply of labour. Labor is heterogeneous. When the immigrants have different skills than the native-born population, they complement the native-born labour rather than substitute for them. Many of the immigrants … are either extremely highly-skilled or very low-skilled. Yet most native-born labour falls somewhere in between… To the extent that immigrants are complementing native-born labour, they increase, rather than decrease, the wages of the native-born.
    Third, even for the unskilled, there is the issue of price sensitivity. If demand for workers is perfectly elastic in the relevant range, then there also need not be any effect on wages.
    Finally, as
Adam Smith pointed out centuries ago, specialisation and the division of labour are “limited by the extent of the market.” Bringing more immigrants into [our given geographical area] expands our market and allows for greater specialisation. That makes each of us more productive and able to earn higher wages.   

In short, then:  

If you are looking for a threat to [the west]'s long-term prosperity and tranquillity, do not look toward immigrants. Look into the mirror instead.

I’ll add some further reading below. But I guarantee the zealots won’t read a word of of it, any more than they’ll read any more than two of the words above.

They remind me of Gary Larson’s famous dog:


[Cartoon by Gary Larson]



Funding your own lobbyists


The biggest beneficiaries aren’t just those who suck off the taxpayer’s tit with their benefit – which, frighteningly, now describes nearly 1 in 2 NZ households.

Some of the biggest beneficiaries in the country inhabit the Beehive and places around it, sucking furiously for both power and money.

And shockingly, some of the other big beneificiaries are loobyists – not just cronies seeking favour but (which amounts to dishonesty in a democracy) activists and advocacy organisations paid by government the taxpayer to promote their own chosen causes.

This is not just wrong, it is utterly dishonest. “There should be no funding for advocacy.” 

The good news is that Anti-Smoking Hysterics (ASH) and their fellow busybodies faces closure as “total funding for national advocacy has been cut from $1.7 million to $450,000.”

The bad news is that funding lobbyists continues.


Daniel Hannan: EFTA 4 UK


MEP Daniel Hannan has just worked hard to get himself fired. Here he explains that Europe needs free trade, not the EU – and Britain can join with those states who already agree.


NB:And this morning he clarifies:

Three times now I have had it put to me by TV interviewers that I have changed my position on immigration or somehow backtracked. For the record, I said the same thing throughout the campaign, reiterating the position set out in my book Why Vote Leave: Taking back control of our borders does't mean ending all immigration. Outside Remainers' imagination, it never did.


“You’re not laughing now” - Farage


NB: No, this blog does not endorse everything he says. But he’s entitled to gloat just for a few minutes. And they’re entitled to be heckled, and to heckle back themselves.




Tuesday, 28 June 2016

Immigration Is a fundamental human right


Imigration is a hot topic. Again. [And it’s arguably even more important post-Brexit – Ed.]

In 1927 the great Austrian economist and classical liberal, Ludwig von Mises, had this to say about it:

The liberal demands that every person have the right to live wherever he wants. This is not a "negative" demand. It belongs to the very essence of a society based on private ownership of the means of production that every man may work and dispose of his earnings where he thinks best. [...] When liberalism arose in the eighteenth and nineteenth centuries, it had to struggle for freedom of emigration. Today, the struggle is over freedom of immigration. [Emphasis added]

That’s from his book, Liberalism, which should be required reading for all freedom-loving people. Here, Mises uses the term “liberal” in its earlier, non-interventionist or “classical” meaning. This is how I’m using the term “liberal” in this essay.

A basic tenet of liberalism is that every person, regardless of what country she happens to live in, has the same basic human rights. If it doesn’t apply to everyone, everywhere then it can’t be a basic human right. And among those rights is the right of free association.

Cap3Free association simply means that Jack is free to peacefully associate with Jill, as long as Jill wishes to peacefully associate with Jack. Indeed, Jack can’t exercise that right unless Jill can also, which is another characteristic of a basic human right. It applies broadly to all forms of association, related but not limited to political activity, religious observance, and commerce.

It does not imply that others are obliged to pay Jack’s and Jill’s costs of associating with each other and it does not imply that we are obliged to associate with others if we don’t want to.

If the government dictates that I may live and work only in the North Island, for example, that’s a clear violation of my right of free association and my right to property. It’s merely a difference in degree, but still a violation of my basic rights, if the government dictates that I can live and work anywhere except in the North Island.

It’s makes no fundamental difference if, instead of the North Island and the rest of Australasia, the restriction applies to North Dakota, Northern Ireland or North Korea.

Again, the difference between keeping people from entering these islands and keeping people from leaving North Korea is one of degree and not in the principle involved. Moreover, excluding immigration violates the right of free association of those who already live here people who wish to associate those who wish to immigrate here. If you want to hire or rent an apartment to a person who lives outside the borders, and government prevents you from doing so, your rights have been violated.

Arbitrary political borders

Let’s suppose that a street divides the city you live and work in along its central north-south axis. You reside on the west side of that street while your job lies on the east side. One day the government passes a law that forbids anyone living on the west side from crossing over to the east side, and builds a wall (at your expense) along the central street to strictly enforce that law.

There are at least two important consequences of this policy, one economic the other moral. In economic terms, it would tend to make everyone materially worse off. Under the circumstances, you would be worse off, since an option for employment, presumably the best you could find, is no longer available. Your employer is worse off because you were presumably the best worker she could find.

CaptureAnd consumers are worse off because your employment on the east side was presumably the most productive there compared to anything on the west side. But as bad as these economic implications are, the moral implications are far worse.

That’s because such a law would clearly violate the basic human right of free association. As long as your employer is able and willing to pay you a wage that you are able and willing to accept, you should be free to work for her regardless of where that is, as long as you do not violate anyone else’s basic rights by doing so.

The same goes for every other personal transaction involving homes, businesses, friendships, personal relationships, education, recreation, and so on.

But welfare!

There are many issues of varying complexity surrounding the debate over liberalizing immigration. Many other writers have ably addressed the false claim that immigrants, legal and illegal, take jobs away from incumbent Americans, for example, or concerns over changes that might occur to “American culture.” There are also labour laws – as in France where legislation has made it extremely difficult to hire and fire workers that greatly exacerbate the situation.

There’s a very popular argument, made by some libertarians, against liberalising immigration that I’d briefly like to address here. It’s that doing so would add tremendously to government spending and taxes, as ever more immigrants means having to provide them with ever more government goods and services, especially welfare transfers.

To this, economist Bryan Caplan offers one surprisingly straight-forward response:

Countries with lavish welfare states have more to worry about [from liberalizing immigration], but there is a cheap, humane alternative to exclusion: restrict migrants’ eligibility for benefits. Creative approaches abound: For example, immigrants could be ineligible for government transfers for their first 10 years of residence, or until they’ve paid $100,000 in taxes.

While for a time this would privilege incumbent residents over new immigrants, from the liberal perspective, it’s much less of a rights violation than forbidding people their right of free association. It may not be the best way to handle the problem, but it’s at least a way of doing so that avoids a infringing on a basic human right. [And look – this has been precisely the way Australia treats NZ immigrants! – Ed.]

Is it delusional?

Conservatives and even some “libertarians” have characterised this as delusional, arguing that the left-progressives in government would do everything in their considerable power to resist excluding immigrants from any redistributive programs. But is this idea any more delusional than the liberal position that it’s a worthy goal to shrink the overall scope of government authority – a belief on which FEE and organizations like it were founded?

CaptureCaplan’s proposal denies privileges to only a subset of the entire population – immigrants, legal and even illegal – that the current law already (whether you agree with it or not) excludes from certain government privileges, such as voting.

But if that’s what’s really behind their reluctance to liberalise immigration, then what hope could they possibly hold out for shrinking the redistributive state at all?  How delusional must it seem to such opponents of liberalising immigration that we could think of limiting or even rolling back welfare privileges for everyone?

The state did not create the freedom of association; free association is prior to the state and prior to the state’s artificial boundaries. As liberals, that’s something to remember and celebrate.

Let’s fight to shrink the welfare state and to liberalise labor laws, not to prevent people from exercising a basic right.


sandy-ikeda-pictureSandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

A version of this article first appeared at FEE.