Monday, 2 July 2012

ECONOMICS FOR REAL PEOPLE: “It will be interesting”

I just received “a quick note” from our friends at the Auckland Uni Economics Group to say that, although they are now on holiday (when are students not on holidays?) there is still a meeting tonight.
Where: Room 215, Level 2, Business School Building
Date: Tonight - July 2, 2012
Time: 6pm
The topic, they say, is yet to be decided, “but it will be interesting.”
Look forward to seeing you there.

PS: Next week’s meeting is an evening of Ten-Minute Talks—an opportunity for students, non-students and regular, run-of-the-mill enthusiasts for economics and/or economic history to deliver and then host discussion on a ten-minute presentation on an area of their choice within economics and/or economic history.  (Contact Riko Stevens at if you’d like to present a Ten-Minute Talk yourself.)

The Grass Is Always Greener on the Other Side

Guest post by Jan Gindrup

Jan Gindrup spent 21 years serving as a police officer in Denmark. After retiring from the police force, Jan served as a security consultant to a large Danish energy company. He is currently in construction and real estate. 

While a small country overloaded with government, Danes pride themselves as being “the envy of the world.”   Just like New Zealand.  Yet most of

the world barely knows where they are. Just like New Zealand. 
It is a place in which it’s wrong to stand out from the crowd. Just like in New Zealand.

And Danes truly believe that no harm can ever come to or change Denmark. And just like in New Zealand, it’s not true. 

As you read Jan’s piece, you will think he is talking about us—another small, insular place cut off in many ways from the rest of the world, a place in which rigid conformity and ever-growing government is both all powerful and yet barely noticed.  There is much to learn from his story, including his account of the disastrous "land tax" which Danes now endure--the same sort of "land tax" morons from Bernard Hickey to Davids Farrar and Parker promote--the sort of tax that amounts to paying rent to the state for living in your own home.

Have you ever thought of life being better somewhere else?

It is often said that the grass is greener on the other side. Could it be that sometimes one's own grass just has grown so high that one can't judge the conditions over there?

…Most people, especially Americans, know that Denmark is home to the happiest people in the world and that it is a wonderful fairy-tale country with peace and the best social welfare system ever. The movie Hans Christian Andersen with Danny Kaye probably reinforced that impression. Never mind that no one knows where Denmark is.

Well, here's a chance to hear from the happiest people on earth and their wonderful little country.

First, let's look at parts of Danish history that we Danes gladly share with pride:

Denmark used to be a warrior nation. During the Viking Age (approx. 800-1200 AD), we beat the living daylights out of everybody and ruled from Moscow to America and from the North Pole to Constantinople. In the 16th century, after fighting mostly each other for a while, we built larger ships, acquired cannons and beat
everybody again.
We fought the Swedes, the Brits and the Germans. We colonized parts of India and Africa, and owned Iceland, Greenland and the Virgin Islands. We had plantations, freed the slaves, and made and sold a lot of rum.

Now some parts of Danish history that we are less proud of:

We caught and transported many slaves – slaves that served as the backbone of the plantations in the Caribbean. In 1801 and 1807, the British attacked Copenhagen, sank and stole our navy, and burned down
most of the city.
In 1864 we fought the Germans, were beaten yet again, lost a part of our territory, and since then we have been very tame and have developed a habit of being very faithful to authority and compliant to bullies. This was sadly the case with the German invasion during World War II, where the Danish government tacitly cooperated with the Nazis and condemned partisan freedom fighters, who were labeled "terrorists."
In 1917, we sold the Virgin Islands to the United States for $25 million; in the '70s, our government gave the oil-drilling rights to Maersk Shipping, a trade that made the firm and family very wealthy. Many left-wing politicians cooperated with the Warsaw Pact without consequence, and in 1972 the politicians got us into the European Union, which has bureaucratically evolved into the United States of Europe.

Back in the '50s and '60s, Denmark was still a sleepy little farm country. Mothers were housewives, and everybody was slim and fit. Frogs, lizards, storks and grasshoppers were abundant, and generally life was pastoral and idyllic. The king would wave from his balcony, everybody knew everybody, and the policeman even stopped the traffic for passing ducks.

The sun was always shining and all was good… or at least, that is what we remember.

As Danes, we have always believed in our hearts that we are better than the rest of the world. We know that there is no other country like Denmark. A funny Danish song says, "In all other countries, they live in caves and fight all day. Darn, we have never been like that!" We trust our politicians, believing that they are honest and represent the people. We have a democracy and a Constitution. We have many political parties; heck, even the communists are Danes.

We are all friends.

Danes truly believe that no harm can ever come to or change Denmark. We know that everybody in the whole wide world loves us and that that, among other things, is due to us helping the Jews escape from Denmark during WW II.

Many Danes don't want to go on vacation – even to Poland, a southern neighbour, or many other countries – because they know that the people there are of a lower social standing and will steal their money and cars.

Until the Berlin Wall came down, the Soviet Union was "the beast in the East," and we were scared to death of the threat of a nuclear war. Later, during travels to the Baltic countries, I learned that they had exactly the same fear of us coming to "take them."

Before my travels to Eastern Europe, many Danes told me that I would face former communist mafia everywhere and that I would be kidnapped and robbed. Stunningly, I managed to visit the Baltics without incident. I have never felt so safe as I did in the Baltic states. As an interesting aside, I also later learned that they have a far superior fleet of cars.

The United States is, in the mind of many Danes, also a dangerous place to go. America's ills range from rampant daily shootings in the streets to a superficial, consumer-driven culture devoid of any redeeming traits.

Danes skiing in Austria or France have chosen to fly home with injuries, operating under the belief that "down there," they don't have the knowledge or education to provide proper medical treatment. This is despite the fact that they are used to dealing with plenty of snow, big mountains and therefore thousands of ski injuries. Denmark, on the other hand, has neither mountains nor significant snowfall. Though it can get quite cold in the winter, we rarely see snow for long, and when we do, it is mostly brown, sloppy mush.

Many Danes wouldn't dream of emigrating, because they know that no country has an educational system like Denmark, and we don't want our kids growing up ignorant and brainwashed, like they do in other places. A professor at the Danish Polytechnic University was quoted as saying, "Well, maybe they educate one million engineers in India, but they are nowhere near our level!"

Whenever we hear of a successful endeavour from abroad, we are always ready to look knowingly at each other and say, "Yes, but it's not like the Danish (fill in the blank)!"

And that's the image we like to portray.

How Do You Keep People Happy?

How do you keep a population happy? You do it the same way that you keep a dog happy. You provide basic necessities, education, a justice system and entertainment to keep people from spending too much time thinking, in order to keep them from looking outside the fence for new masters. In time, people will start telling each other that they are happy. The North Koreans are probably told the same story.

I guess it all comes down to how you define happiness; if happiness means not starving and not wanting to worry about anything besides the weather, then Danes can be considered happy. But so could many cultures – at much lower costs, I suspect.

What we can readily do without shame is happily brag about being the most taxed and perhaps also most regulated country in the world.

It has jokingly been said that North Korea and Cuba envy Denmark for being the only place where socialism has been successfully implanted without anybody noticing. Let me correct that to mean implementing a form of "fascist, socialistic, bureaucratic capitalism," defined as a society controlled by technocrats where almost all wealth is collected and distributed by the state from the regulated "free" market. In all fairness, this is accomplished without the boots and guns. After all, you don't need guns when you have groomed a compliant population and implemented rules, laws and punishments for everything that is a conceivable part of daily life – all implemented "for your own good."

Compared to the Third World, Denmark seems rich, but no more than any other Western country. In my childhood in the '60s and '70s, it was a luxury for people to own a TV or a car – and by car I mean a small one, like a Ford Cortina or a VW Beetle. We got dishwashers in the '70s, and electric car windows were not common before the late '90s. Today it is still only luxury cars and cabs that have automatic transmission. In other words, not much progress there. Today I know that the USA was far ahead of Europe in all these matters, as some of these items were already on the market in the '40s.

Danes my age were taught, growing up, that they are the freest people on earth. Our school, health care, political, tax and social systems were second to none. All envied us, and therefore we viewed other nations as third-world countries, a prevailing belief to this very day. Some of these beliefs might have been fairly accurate in the past when our parents – the "grasshopper generation," so called because they took everything and left nothing – enjoyed full employment and ample tax deductions, making it a great time to expand consumption and lifestyle. Furthermore, the double-digit inflation made it an ideal time to buy houses as one's debt burden in real terms was shrinking every year.

We became accustomed to a plethora of state benefits ranging from Medicare to art. Social welfare has been a boon for a large segment of the population. In fact, a few years ago it was normal that after ten years on welfare, people were automatically transferred to a permanent disabled pension at a young age. We have experienced massive immigration by people from the Middle East during the last thirty years, something that has dramatically changed the fabric of our society.

Then there is the "Jante Law," the perfect tool to keep people in line. In Denmark we have been raised with a perverse Danish mentality, brilliantly captured by the writer Aksel Sandemose in his 1933 book A Fugitive Crosses His Tracks. In the book, the lead character is mistreated by the citizens of Jante, a fictional yet representative town in Denmark.

From this book came the 10 commandments, known as the Jante Law, which was meant to serve as a sarcastic constitution emblematic of the Danish culture:

The Jante Law says:

1. Don't think you are anything special.
2. Don't think you are as good as us.
3. Don't think you are smarter than us.
4. Don't convince yourself that you are better than us.
5. Don't think you know more than us.
6. Don't think you are more important than us.
7. Don't think you are good at anything.
8. Don't laugh at us.
9. Don't think anyone cares about you.
10. Don't think you can teach us anything.

The last law:

11. Don't think that there aren't a few things we know about you.

Hans Christian Andersen captured the same sentiment in his novel The Water Drop, in which small amoebas would tear the arms off anyone being different from the rest (a reflection of the Danish society).

The message is basically, "Don't stand out!"

A very famous and popular Danish song says, "Don't fly higher than your wings can carry, it serves you better to stay on the ground." So much for supporting and developing the individual spirit.

Sad to say, despite the sarcasm, it holds some truth. In Denmark, you get along easiest if you avoid making waves. Don't try to be smaller, bigger, smarter, prettier, richer, poorer, have a bigger car or house, discuss anything controversial, etc. If you do, you need to have very special social skills, meaning that you'd better be quiet and humble about it. Americans are not; and that's why we view them with scepticism and call them superficial.

Aksel Sandemose, the author of the Jante Laws, later "fled" to Norway, where he joined the Norwegian resistance.

By the way, I have no idea how researchers reached the conclusion that Danes are the "happiest people in the world" – neither I nor anyone I know was asked. But since it is published in a major scientific survey carried out by Leicester University in England, it must be true.

There Ain't No Such Thing as a Free Lunch

Yes, it true: all Danes enjoy six weeks of paid vacation and, for the time being, paid retirement pension. But these benefits are slowly vanishing.

Today we are paying the price, but like the frog in the boiling water, we haven't noticed, and we love to tell everybody else that it's just a nice warm bath.

I spoke with a young Danish welfare recipient who was very angry at the government because it hadn't given him a job. I felt a bit offended and went into a diatribe about personal responsibility, taking self-ownership, etc.

He listened and then stated, "The system we have in Denmark is a totally socialistic system. The state takes everything we earn and decides everything. So, as I see it, the state has also taken over the responsibility to find me a job!" Perversely, it was hard to disagree with his argument.

The Danish system is very expensive. It has turned into a juggernaut and taken on a life of its own. It has grown like a cancer. Every little office, school, education and sport facility, every public department, military, police department or agency fights to get its piece of the cake and to make its budget grow bigger every year.

To finance this overwhelming and still growing public sector, the Danish government keeps inventing new taxes with more and more creative names, like "amenity value tax." The creative Danish tax system – or "how to tax the same service more than once without people noticing" – is big business. It all started with Medicare.

While taxes have been raised time and again, wages have not changed much, except for management salaries. Politicians are very eager to work in Brussels (in the EU), partly because they know the member states are dying and the real power is in the EU, and partly because the salary is tax-free. Our schools and hospitals are old and worn down, our senior care is terrible and money is draining out of every hole in the state.

We have roughly 5.5 million inhabitants, including citizens and noncitizen residents. The Danish workforce consists of 3 million people, of which 1 million are public employees. That means that 2 million people in the private sector support 3.5 million other people with their taxes, plus their own use of the public sector.

We have been hammered with the "fact" that the only way forward is education, education, education; the higher, the better. It is a brilliant plan, keeping people in school where they can be told "the truth." Later, most of the graduates of higher education go to work in the public sector. Even a job as a police officer requires a bachelor's degree. It's not normal thinking to become an entrepreneur and start up your own business. If you do, a lot of the time is spent trying to find loopholes in the tax laws or fighting your way through both Danish and EU regulations. In typical Danish manner, the state is now fighting this by creating a full university degree in entrepreneurship! What a great way to start tunnel vision.

Around 1900, we had 200,000 small farms (76 % of Denmark's area), so everybody could, if they so wished, buy fresh eggs and potatoes from the farmers. Now we have around 10,000 left due to the EU, because the biggest farms get the most subsidies, which in turn buy out the smaller ones.

(I would encourage interested readers to follow Nigel Farage, a Euro-skeptic from the United Kingdom. His brave work in exposing the failures of the European Union, both monetary and otherwise, has made him the lone light in a very dark place.)

One example of how the state gets money is by raising taxes on real estate lots. I own an empty half-acre lot in the middle of nowhere, for which I used to pay $180 a year in "dirt tax" (tax for owning the land). I then had the lot subdivided into three lots, each about one-sixth of an acre – still empty land, no rights, utilities nor other improvements. For this, I am now paying $1,250 per lot, or $3,750 per year. This amounts to a tax hike of approximately 2,100 %! When I complained, I received a letter informing me that I could expect an answer in eighteen months. I am still waiting.

The state decides every year what your house and lot is worth. It's usually not far from the market value. First we pay "lot-due tax." In our case, it runs around $7,000 a year. On top of that, we pay something called "rental-value tax of your own property." The state thinks that as a homeowner, you are better off than a person who rents his home. Therefore, it decided that homeowners should pay rent to the state for living in their own home. This also goes if you own a home outside of Denmark. As the name was too obvious, it was changed to "real-estate value tax." It is 1% of the assessed value of the house below $542,850, plus 3% of what's above. Based on home prices in Denmark, this adds up to a significant sum in short order. Every year we get a valuation on our house, which the government uses to tax the owner.

Almost every rule implemented, almost all due to climate, safety or similar odds and ends, costs extra in some form.

Contrary to common belief worldwide, our hospitals are not impressive… In "the best country in the world," 5,000 people die and 100,000 are injured from medical malpractice every year. One out of four hospitalized in Denmark picks up a new disease during hospitalization.

We are the world's top user of "happy pills" and alcohol. Our youth are among the heaviest drinkers. We have 500,000 (10 % of the population) alcoholics, and we are seeing more kids developing ADHD and eating disorders.

Couples in old-age homes risk separation to different retirement homes after 50 years of marriage. It is considered normal to offer old people a bath every seven to ten days, and it is right now being discussed to take away their daily lemonade from them.

We hardly ever see a police car in the streets anymore, except for the many speed traps that bring more money to the state. This is hardly efficient use of our workforce, considering it takes four years of education to become a police officer. Police officers have become a de facto collection muscle for the IRS. I just received a $270 fine for talking on a cellphone while driving.

While we have virtually no corruption in the police force – something that we should be grateful for and proud of – we also have a force blindly loyal to any orders from the system.

We have both public and private parking attendants everywhere, writing tickets for US$125, which is a lot of money, considering that you pay 50% tax first. The town hall of Copenhagen alone writes $18 million worth of parking tickets every year.

We never see our paycheck, as it goes through a public account called "Easy-ID." This means that anything you owe the public is automatically withheld from your account before you get it.

If you pull out more than $1,780 from your own bank account, the teller may ask you why, and if not satisfied, the bank clerk will report you to the Danish IRS; the same goes for any "suspicious" activities in your account. Should you get the stupid notion of opening a bank account outside Denmark, don't use a credit card. If a person residing in Denmark takes out money from a foreign account, it is reported to the IRS.

In one way or another, more than 90% of our wages goes back to the state in some form, but it is never enough. As our politicians are keen to say, "Either lose your standard of living or pay more tax." As elsewhere, never is a word uttered on saving. Predictably, there seems to be no end to public extravagance. The latest news is that local municipalities over the last five years have built 54 cultural centers. Not one cost below $8.9 million, and one of them ended up running $125 million. These boondoggles end up running in the billions of dollars. These "prestige" projects invariably experience significant cost overruns and end up costing a fortune to maintain.

For over two hundred years a "cooperative association," similar to a credit union or a mutual insurance firm, issued loans to homeowners so that everybody could afford a home. About ten years ago, the association's board turned the association into a company and sold it to the largest bank in Denmark without asking the "shareholders," which are also the mortgage holders. The proceeds, which should have been issued as dividends to the owners, were placed in a trust, which is now run by "friends of friends in high places," distributing money to various cultural events and programs. It's called the biggest fraud in Denmark. Nobody knows or cares.

So while we may not have obvious corruption in the traditional sense in Denmark, job perks and benefits from "good old boy" network access are the standard.

Steaks cost up to US$70 per kilo, a bottle of liquor runs over $26, plus there's a 25% VAT on everything. There is a 180% tax on cars, which of course also is reflected in equally expensive insurance rates. We have a graduated registration tax scheme on cars. Normal vehicles have white plates and are subject to a 180% sales tax; yellow plates are two-seated, company-cargo cars, where the backseats are permanently removed and which are in turn subject to less tax; and yellow/white for cargo cars with VAT paid and thus allowed to be used privately. If you drive a white-plated company car, you are heavily taxed if using it privately. This does not apply for cars driven by chauffeurs, as they are tax-free. All ministers have chauffeurs.

Almost all transactions in Denmark have numerous hidden taxes. To give an example, let me try to analyze an electricity bill for you. We pay around $0.35 per kilowatt-hour (kWh), which is about $1,400 a year for a normal home. The basic price is roughly $0.078 per kWh, but after adding energy tax, appendix tax, distribution tax, energy saving (CO2) tax, public duties, transport of electricity, actual consumption and subscription, and 25% VAT, we end up with $0.35!

Gasoline is now at US$9.60 per gallon and still rising. By far the largest part of that price is tax.

And it's like that with almost everything in Denmark.

A Toyota Hilux pickup, which is similar to a Tacoma but has only four cylinders, is a two-seated car on yellow plates. You have the option not to pay VAT, but then you can't drive it privately. If you do and get caught, you have to pay full (white-plate) registration and a fine of the same amount. This Hilux, incidentally, costs $1,600 a year in road taxes.

A guy just got caught in a Ferrari on temporary plates. He was charged for private driving and got a combined ticket and registration tax for $1,070,000 PLUS six months in jail. It's considered tax evasion, and tax evasion is punished more severely here than violence. In normal law, the police have to prove you guilty. With the IRS, you have to prove your innocence. The IRS can conduct a search on your private property without a warrant.

A recent legislative proposal is that the buyer of a service from a craftsman can be held responsible if the craftsman fails to pay tax. That means that the buyer has to make sure that the service provider pays the tax!

For the sake of illustration, the latest survey of estimated prices for craftsmen in Denmark shows that companies charge the following hourly rates:



Carpenters and bricklayers

Floor Sander

To compare, a policeman or nurse makes roughly $33 an hour – before taxes.

It will be illegal to pay a craftsman in cash on transactions exceeding US$1,780. Transactions exceeding that have to be done through bank transfer, so the Revenue Ministry can track in detail what you do with your money.

You are not allowed to carry more than $13,600 on you (included valuables) anywhere in Europe, unless you have declared them to the authorities.

By now you get the picture of what it takes to run a "paradise."

This paradise I have described isn't that peaceful, by the way. The Danish Hells Angels is the most violent chapter, punished for the most serious crimes. We have stabbings, robberies and shootings in the streets like all other cities. But like you, we don't notice it.

Danish people think they are free capitalists, but the truth is that we are a heavily regulated, bureaucratic, technocratic, fascist, socialist society. Sadly, the United States is rapidly joining us in the global group of nanny states.

But don't worry if you feel like your country is heading the same way, your personal freedom slipping away, your rights disappearing and your money being taken. You hardly notice it, and slowly, day by day, you will become accustomed to it.

Perhaps I am wrong, but since we never protest, we must like being kept.

Did I forget to mention laws regarding weapons in Denmark? You are not allowed to buy guns unless you are a registered hunter or member of a shooting club. No mace, spray, Tasers, etc. Only folding knives are permitted, and the blade can be no longer than three inches.

You want to defend yourself? Fill in a form and get in line at the nearest police station!

Jan Gindrup received his bachelor's degree in trade and shipping. He spent the next 21 years serving as a police officer in Denmark. After retiring from the police force, Jan served as a security consultant to a large Danish energy company. He is currently in construction and real estate.

This post first appeared at the Casey Daily Dispatch, and is reposted here by permission.

Friday, 29 June 2012

R.I.P. America—and It Serves You Right!

In case you weren’t already aware, with the decision overnight by the US Supreme Court to not strike down ObamaCare as unconstitutional—despite even its own own advocates being unable to show how it could be—it’s now clearly evident that, as a Constitutional Republic, the United States of America is now extinct.

Lindsay Perigo has more…

America, qua Land of the Free and Home of the Brave, just died. Qua travesty thereof, good riddance. Cowards and cretins—now a majority of Americans—don't deserve the liberty that has just been definitively removed from them. They don't deserve the freedom they won't miss.
    Even without the Supreme Court's thoroughly anti-American decision on Obamacare today, the Founding Fathers would scarcely recognize the semi-police state that their republic has become…

Read on here.

Thursday, 28 June 2012

Pictures of the Queen


This is the first and probably only time a picture of the Queen will appear on this blog. It appears here because she’s shaking hands with a murderer.

Despite well-argued protestations to the contrary, it is symbolic—a symbol of the long-awaited and much-appreciated peace northern Ireland has enjoyed for a nearly a decade, and which everyone involved wants to continue.

A sign that the English Lion can lie down long term with today’s Irish Republican lamb.


But let’s not get too carried away with it.

Is it as symbolic on its own scale as, say, the day Ulysses S. Grant shook hands with Robert E. Lee on the steps of Appomattox Courthouse after Lee had fought for five years in defence of black slavery? No, because the issue of right and wrong is much cloudier with McGuinness and Elizabeth.

Is it as symbolic on its own scale as the day ending the Second World War when the surrender of the Japanese was taken on board the battleship Missouri ?  Not really. The peacetime attack on Pearl Harbour was far more murderous than anything McGuinness’s boys ever attempted, fortunately, and the picture of peace breaking out after three years of slaughter was much more widely welcomed.

But it is symbolic. Irish Republicans have still never forgiven the British for Ireland’s brutal seven-hundred year occupation; for the Potato Famine; for partition and the oppression of the Catholic minority in the Six Counties; for the murder of civilians in Derry and elsewhere during the Troubles. These are  reasons enough to bear ill will. But the former commander of the IRA is shaking hands with the figurehead of everything British.

There are just as many well-rehearsed reasons for that figurehead to bear ill will towards McGuinness—the murder organised by McGuinness of her husband’s uncle Louis Mountbatten being just one of many of which you will all be aware. Yet she still shook hands—even if her husband couldn’t.

What the handshake symbolises then is that those things are in the past. There’s no likelihood of then happening again. That the peace begun when the IRA laid down their arms after the atrocity of 9/11—laid them down in part in the realisation they would never have the stomach for that scale of atrocity themselves—that peace has continued, its benefits are recognised, and the participants wish it to continue.

And being people of honour that desire for harmony is best symbolised with a handshake.

It’s true that one reason they can shake hands is because both the causes of Irish Republicanism and British Imperialism look somewhat quaint today. This is not the age of Parnell and Palmerston. The world has moved on, passing by what seemed issues of great moment generations ago. So in truth  it’s a rather moth-eaten English Lion preparing to lie down with an emasculated Irish lamb.

Still, whatever they think themselves these two can only shake hands because their constituents support it. Perhaps their supporters too have come to understand that it matters less what colour flag you have flying over your head than what that flag stands for—and these days both the Union and Irish flags stand for much the same brand of failing mixed-economy morass.

In the end I think it is a good picture.  It’s one of the better things the English Queen has done. I’d like to think it represents that same understanding that occurs at the end of wars like the two cited above; that animated the desire for peaceful coexistence in Chile after the fall of Pinochet rather than bloody retribution; that impelled Nelson Mandela’s Truth Commission after the ousting of South African apartheid; that we can only hope one day inspires those nursing grievances in Palestine –that as long as right is recognised and both sides can agree then in the long term peace is far better for everyone than war—and then even shaking hands with murderers might be worth it for the sake of the peace achieved.

It’s a shame the Queen’s husband couldn’t see his way clear to understanding that.

Wednesday, 27 June 2012

Lindsay Perigo on "The Dunce-ification of Everythink"

Guest post by Lindsay Perigo

A shock-horror headline emblazoned on the front page of The Dominion Post's June 23-24 weekend edition asked, “Are we raising a nation of dunces?”

“Some kids are starting school unable to name a colour or even string a sentence together,” the article began, as though this were news. It isn't.

It's also not news that some kids still can't string a sentence together when they leave school.
An article in the Sunday Star-Times of June 25 then reported, “Hopes of an economic boom driven by a highly-skilled Kiwi workforce could be dashed by the number of illiterate and innumerate adults. One in five students is leaving school without qualifications. Some struggle so badly they cannot fill out the unemployment benefit form.”

Plus ça change .

In 1996, the Adult Literacy in New Zealand survey of adults aged 16-65 found 66% of Maori and 41% of non-Maori were below the minimum level of literacy required to “meet the complex demands of everyday life and work.”

A 2006 survey's results were no better: it found 43 per cent of adults with some sort of literacy issue, and half the population with numeracy difficulties.

Here's the Dominion Post of February 15, 2011:
“Some teachers are so lacking in literacy and numeracy skills that they cannot write adequate reports or do primary-level maths, secondary principals say. … Anecdotal evidence from principals included teachers being unable to write reports, having poor reading comprehension, making basic punctuation, spelling and grammar errors, and being unable to help pupils’ reading.”
The country is now caught up in a vicious circle arising from decades of state-mandated dumbing down in the education system. This process has been faithfully replicated on state (and now private) television—as I've written in my article, The Rice for the Putts, linguistic cretins are being hired for on-air jobs not just in spite of being unable to speak but because they're unable to speak.

Masterton Primary School principal Sue Walters says, "We get a lot of kids who come to school who just can't form proper sentences. They have very limited vocabulary and some are operating at a 3-year-old's level. You can't teach kids to read and write if they can't speak." Well, TV reporters in their 20s are speaking like 5-year-olds—with the active connivance of their bosses!

Massey University senior lecturer in speech and language therapy Elizabeth Doell says at the age of 5, a child should be able to construct a reasonably complex sentence, and have a certain level of vocabulary. But this is often not the case, she observes, and an urgent inquiry is needed to get to the bottom of the problem. "I don't think we truly know the extent of it."

Here's the bottom of the problem: the deliberate inculcation of mediocrity by the state over generations, manifest in the Look-Say method of the teaching of reading and an egalitarian hostility to speech standards rooted in the belief that polished, clear speech is unacceptably “posh.” The resultant oral and written ineptitude have fed upon and reinforced each other.

Given this part of a letter I received last year from then-Education Minister Anne Tolley, I'm not hopeful of an imminent reversal of the current collapse into cretinism:
Although there may be variation from school to school in the approaches they take to the teaching of reading, the majority of New Zealand schools follow the Ministry of Education guidance outlined in the key reference texts Effective Literacy Practice in Years 1 to 4 and Effective Literacy Practice in Years 5 to 8. In these publications teachers are urged to use a range of instructional strategies as they help students engage with meaningful texts. Such a balanced programme would include some phonics work, some use of known words and many other ways for readers to unlock and make sense of texts. [Translation: Look-Say and politically correct BS rule.]

I am interested in your observations about the speech of some of our young people. As you will know, language use, including oral language is not static. Our parents may well have mourned the decline they perceived in our speech patterns and pronunciation. In this age of technology, young people now hear a wide range of spoken language. Sometimes they may even deliberately use patterns different from those of their parents as a mark of their identity and individuality. Such is the nature of fluid and flexible language use as we all strive to make ourselves understood in the global world of today. [Translation: kids indeed speak as though they were morons. That's the way we want it: everyone sounding equally uneducated. For good Orwellian measure we'll call it “identity” and “individuality” precisely because it's the opposite of those things.]
Normally I'd advocate simply retrieving the thing from the clutches of the state and letting market forces generate a drive for remedial excellence. But all of society is now so steeped in barbarism that the private sector too is zombified. The state must act urgently to stop and reverse the rot it started and sponsored to such devastating effect. Hand in hand with the overdue revival of grammar, spelling and punctuation that is already supposed to be happening, the state must restore to phonics its former hegemony, and it must introduce speech-training into the curriculum, both for pupils and teachers.

What stake do I as a libertarian have in this matter? To quote Ms Walters again, “You can't teach kids to read and write if they can't speak.” And in a nation of inarticulate illiterates, liberty doesn't stand a chance. In the domain of dunces, demagogues dictate.

Lindsay Perigo is a former television newsreader and interviewer, blogging at SOLO (Sense of Life Objectivists).

Allison: ‘The Causes of the Financial Crisis’

Last night in London the former head of BB&T Bank John Allison spoke to the Adam Smith Institute about banks, bankruptcy and the problem with our monetary standards being based on bureaucrats. Here he is talking to CNBC after his lecture:

Given that under Allison BB&T grew to become one of America’s most successful banks—and in the financial crisis one of the very few neither needing nor asking for bailouts—there’s lots there for everyone.  (Maybe send a link to newly appointed Reserve Bank Governor Graeme Wheeler, who still has much to learn.) Here’s the lecture, on the financial crisis and the philosophy of Ayn Rand:

If you like it, why not pre-order Allison’s new book, The Financial Crisis and the Free Market Cure.


2012’s best tall buildings?

We’re only halfway through 2012, but these below have been named as some of the best tall buildings erected this year.*

"The Absolute Towers in Mississauga, Canada, a fast-growing suburb of Toronto, were named the best tall buildings in the Americas. The residential towers, which are set to be completed in August 2012, will reach a height of 179.5 meters  and 158 meters."
"The towers earned the nickname "Marilyn Monroe" for their sexy, curvaceous figures--just like the late legendary actress. "We see the entire building twisting to achieve the organic form, creating a beautiful new landmark for a developing urban area," engineer David Scott said in a statement."
"Sydney's 1 Bligh Street was named the best tall building in Asia & Australasia. This 28-story elliptical tower stands out from the boxy structures nearby," said the jurors.
"The centerpiece of 1 Bligh Street is the glass- and aluminum-lined atrium, Australia’s tallest naturally ventilated sky lit atrium. It carries through the full height of the building--up to 135 meters (443 ft.). “The dramatic, naturally-ventilated central atrium connects the office workers with nature at the inner depths of the plan, giving a sense of openness for the entire building," juror Werner Sobek said in a statement."
"Qatar 's 46-storey Doha Tower in  was named the best tall building in the Middle East and Africa."
" Designed by Ateliers Jean Nouvel, the Doha Tower was completed in March 2012 
There is no central core, maximizing the interior space available for tenants."
"Al Bahar Towers in Abu Dhabi was named the most innovative tall building in the world."
"The 29-story office building was given the innovation award for its dynamic façade, opening and closing in response to the sun, reducing solar gain by more than 50 percent. The façade design also, evokes a wooden lattice screen traditionally found in Islamic architecture."

* According to the Chicago-based Council on Tall Buildings and Urban Habitat (CTBUH), a group of architects, structural engineers, and builders of tall buildings that monitors tall building projects around the world.
(Images and captions from Business Insider)

Tuesday, 26 June 2012

It’s John Key’s “John Major” moment

If folk wondered/hoped/were frightened that John Key’s second term would see him unleash the hounds of radical reform, with yesterday’s  announcement of a ten-point five-year plan—one complete with “Key Performance Indicators” ranging from the fantastic to the fatuous—we all now have our answer: He’s not Margaret Thatcher, he’s her wet-bus-ticket successor John Major.

Major defined dullness and lack of imagination. Comparing him to Mrs Thatcher, one wag pointed out that at least with her there was a character to assassinate. To call him grey, said another, would be an insult to porridge.

Ask Major “what’s your big idea,” and like Key his answer would be “ I haven’t got one.” After Major found the Prime Ministership thrust upon him however, this grey shell of a man struggled to find something, anything, with which to define the  premiership he’d found himself in. And in 1992 he found it: in the depths of recession with millions unemployed, his “big idea” was a so-called “Citizen’s Charter”—complete with “Key Performance Indicators” ranging from the fantastic to the fatuous.  Things like a formal public promise to signpost toilets. Performance targets for late trains. And a “cones hotline” complete with quotas for road-cone reduction on highways.

Much like John Key’s bold promises of yesterday, really, and just as easy to fudge.

So we could say yesterday was John Key’s “cones hotline” moment—the defining moment of his premiership.

Which is not intended as a compliment.

FREE Decline & Fall [updated]

If you’ve been enjoying the Guest Posts that have appeared here from Dale Halling  on Intellectual Property, then you’re going to love this special offer, a FREE  Kindle version of his book explaining how the US has lost its innovation engine – The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.  

This offer is valid for one week only.  Sadly, this offer has just expired—but you can still pick up the Kindle version for the giveaway price of just USD4.99!  At that price it’s still a snip.

The book provides simple, inexpensive suggestions for how to rev up the innovation engine, along with explanations of the little-known laws passed within the last decade that have crippled America’s innovation, resulting in the stagnation in median family income that was a major contributor to the housing crisis. 

What reviewers are saying about The Decline and Fall of the American Entrepreneur:

“Dale Halling’s Decline and Fall of the American Entrepreneur makes a compelling case for the need to reform regulatory and other policies that hamstring entrepreneurial innovation in our country. Everyone concerned about the decline in American innovation should read this book.”
David Kline, co-author of Rembrandts in the Attic and Burning the Ships

I do not review books on the ‘net unless I find them well-written and especially informative, which certainly applies to Dale B. Halling’s The Decline and Fall of the American EntrepreneurMr. Halling is a physicist, lawyer and an expert on patents and entrepreneurship, all of which comes through in his book. This author delivers the goods…
He demonstrates in clear terms the linkages between economic growth, productivity, and income. And he lays out how technological advancement has always been the American advantage in global competition, an advantage that the U.S. is squandering…
In sum, this is well-written, jargon-free, 137-page book that is a quick read. It evidences smart and practical thinking by an author with real world experience. I highly recommend it.
Dr. Pat Choate, economist, former Vice Presidential running mate of Ross Perot 1996, Director of the Manufacturing Policy Institute, PhD. Economics University of Oklahoma.

The Decline and Fall of the American Entrepreneur presents the issues facing technology start-up companies in today’s environment.  The book sheds light on the underpinnings of these issues and is enthralling.  Halling’s tight, accessible and personal style make this a fast and compelling read.  His book is a political clarion call that should be heard now.
Greg Jones, former President Ramtron International (RMTR) and CEO Symetrix Corporation. 

This book conclusively establishes the link between innovation and per capita income, and shows that we have recently entered into a time in which innovation is under assault.  This assault has resulted in a predictable loss of income and contributed significantly to the economic woes we are experiencing right now.  The book’s sound policy recommendations suggest a way to turn the economic ship around to set a course for a return to prosperity.
Peter Meza, Patent Attorney – Counsel Hogan & Hartson, Attorney for Alappat –  In re Alappat

I am familiar with some of the sharp criticisms that have been made of patents by the likes of Stephan Kinsella, Tom G Palmer, and Timothy Sandefur… But I had a nagging worry about how, exactly, would a world without IP operate? Despite the claims from Kinsella and others that innovations would proceed happily without IP and have done so, the facts that I can see don't quite back this up. Consider, that during the 1980s and 1990s, we have seen the rise of biotechnology, the Internet, nanotechnology, and commercial space flight (developing as I write these words). I just don't see how patents and copyrights have stymied any of these industries. Of course, we'll never know for sure whether innovation would have been faster or slower in the absence of IP. However, if we look at parts of the world without secure legal systems and property rights, the evidence is that innovation tends to be less, or non-existent.
What is effective about the book is how Halling shows that the combination of developments such as attacks on IP, stock options and IPOs (Sarbanes Oxley) have been so ruinous. And there are powerful lessons here not just for the United States, but for Europeans and others as well.
Thomas H. Burroughes

The history of world production, in three graphs

Yes, GDP is a very imperfect measure, but look at this graph showing GDP (as a proxy for production) over the last two millennia:


You should read this in the context of the graph below showing how the world changed for the better around two-hundred years ago—from being a flat line for most of world history, production all of a sudden shot up out of nowhere to support a rapidly growing population.  What a great thing. At least this is what happened in the parts of the world where the Age of Enlightenment happened—that remarkable period in human affairs when human beings began applying reason to understand the world around them, and in the ensuing Industrial Revolution to transform it.

But as we can see above, China and India, were excluded from this happy state of affairs, at least until very recently (being a logarithmic graph the last few decades are as prominent as the first few centuries). And in Africa and the Middle East, have still yet to enjoy it.

And just ignore the big grey slug that is Russia. They were lying about their production figures long before the Bolsheviks came along.


Practice Good Theory has more thoughts.

And in case you don’t think production and wealth is such a good thing, Stephen Hicks has a neat graph showing the relationship between wealth and life expectancy.   If you’re over 45 or so, you should take it seriously.


Young Martyn

Reading the blogs this morning I stumbled across someone describing Martyn Bradbury. Yes, it’s true. Answering a question at the Laissez Faire blog, Don Watkins quotes the perfect description:

Q: Taran asks, “Socialists continue to espouse socialism in the face of all evidence that it simply does not work. How do we explain their continual support for a system that is responsible for the deaths of tens of millions? And by extension, their hatred of a system that is responsible for lifting people out of subsistence living?”
A: Few people espouse socialism today (although many in Europe continue to call themselves socialists). Those who do are typically either young and ignorant, or [think[ they are intellectuals, [or both]. Ayn Rand has a definite view of what motivates socialist intellectuals. As she writes in the essay “The Monument Builders” in
The Virtue of Selfishness, “What, then, is the motive of such intellectuals [those who support socialism]? Power-lust. Power-lust—as a manifestation of helplessness, of self-loathing and of the desire for the unearned.”

Ignorant, self-loathing and oozing with a desire for the unearned. Yep, that’s “Bomber” Bradbury to a tee.

But not young.

Monday, 25 June 2012

Cunliffe recycles Norman

Martyn Bradbury has taken time out from his new career to talk up David Cunliffe’s weekend speech to a lingering band of those who can stomach his company. Say’s Bradbury to his own dwindling band of readers:

Cunliffe's third True Labour speech has gone far further than the Greens have in highlighting the looming environmental crises of living beyond our biosphere’s ability blah, blah, blah…

Actually, it does nothing of the sort. In fact, it reads like nothing so much as Russel Norman’s own conference speech from a couple of weeks ago—in short: what about the dolphins; we’re all going to die; population growth is a curse; capitalism is to blame; government must pick winners; “green technology” is the way of thee future etc.., et., etc.

So rather than fisking Cunliffe’s doppelganger of a speech, another pig-ignorant cry for attention--another example of recycling masquerading as original thinking—let me just direct you to my reviews of Norman’s original.

I’ve changed my mind about the Euro

imageShould the southern Europeans and Ireland withdraw from the European Monetary Union and go back to their drachmas and punts? Should Germany and the northern Europeans quit paying the southerners’ bills and coalesce around either a new mark or a revival of the thaler, the currency of the late Holy Roman Empire and old Hanseatic League?

Until the weekend, I thought reviving the mark or the thaler was the best approach. But I read an article over the weekend that changed my mind.  I think.

By Spanish economist Jesus Huerta de Soto, author of the excellent book  Money, Bank Credit, and Economic Cycles  , the article is called “An Austrian Defense of the Euro.” Something I hadn’t thought was possible.

De Soto argues, first of all, that all good Austrians should be in favour of fixed, not floating, exchange rates.  This might come as a shock. He argues however that the fiscal discipline required by fixed exchange rates is at least something like the fiscal discipline required by the classical gold standard, which puts a check on governmental plans for easy money.  He quotes Hayek from 1975:

It is, I believe, undeniable that the demand for flexible rates of exchange originated wholly from countries such as Great Britain, some of whose economists wanted a wider margin for inflationary expansion (called "full employment policy"). They later received support, unfortunately, from other economists[4] who were not inspired by the desire for inflation, but who seem to have overlooked the strongest argument in favour of fixed rates of exchange, that they constitute the practically irreplaceable curb we need to compel the politicians, and the monetary authorities responsible to them, to maintain a stable currency
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.

So supporters of fiscal discipline should be in favour of fixed exchange rates-on the understanding that the self-correcting mechanisms for within this system are similar to those of the classical gold standard, and the resulting restraints on government therefrom are a feature, not a bug.

And as he points out, the EuroZone is nothing if not a a zone within exchange rates are fixed—the consequence now being that those economies and those governments who displayed insufficient rectitude are now seeing their fiscal chickens come home to roost.

This, he argues is not a bad thing. It’s not even a good thing. It is, he says, a great thing.  Because, like a mirror, the discipline of the EuroZone reflects back to players the consequences of their own actions.

The arrival of the Great Recession of 2008 has even further revealed to everyone the disciplinary nature of the euro: for the first time, the countries of the monetary union have had to face a deep economic recession without monetary-policy autonomy. Up until the adoption of the euro, when a crisis hit, governments and central banks invariably acted in the same way: they injected all the necessary liquidity, allowed the local currency to float downward and depreciated it, and indefinitely postponed the painful structural reforms that where needed and that involve economic liberalization, deregulation, increased flexibility in prices and markets (especially the labour market), a reduction in public spending, and the withdrawal and dismantling of union power and the welfare state. With the euro, despite all the errors, weaknesses, and concessions we will discuss later, this type of irresponsible behaviour and forward escape has no longer been possible.

For instance, in Spain, in just one year, two consecutive governments have been forced to take a series of measures that, though still quite insufficient, up to now would have been labelled as politically impossible and utopian, even by the most optimistic observers:

  1. article 135 of the Spanish Constitution has been amended to include the anti-Keynesian principle of budget stability and equilibrium for the central government, the autonomous communities, and the municipalities;

  2. all of the projects that imply increases in public spending, vote purchasing, and subsidies, projects on which politicians regularly based their action and popularity, have been suddenly suspended;

  3. the salaries of all public servants have been reduced by 5 percent and then frozen, while their work schedule has been expanded;

  4. social-security pensions have been frozen de facto;

  5. the standard retirement age has been raised across the board from 65 to 67;

  6. the total budgeted public expenditure has decreased by over 15 percent; and

  7. significant liberalization has occurred in the labor market, business hours, and in general, the tangle of economic regulation.[7]

Furthermore, what has happened in Spain is also taking place in Ireland, Portugal, Italy, and even in countries which, like Greece, until now represented the paradigm of social laxity, the lack of budget rigor, and political demagoguery.[8] What is more, the political leaders of these five countries, now no longer able to manipulate monetary policy to keep citizens in the dark about the true cost of their policies, have been summarily thrown out of their respective governments. And states that, like Belgium and especially France and Holland, until now have appeared unaffected by the drive to reform are also starting to be forced to reconsider the very grounds for the volume of their public spending and for the structure of their bloated welfare state. This is all undeniably due to the new monetary framework introduced with the euro, and thus it should be viewed with excited and hopeful rejoicing by all champions of the free-enterprise economy and the limitation of government powers.

There is more, much more, and all of it worth thinking through—especially the motivations of those who both oppose and support the  present set-up, and its collapse: on one side the Europeans who purposely set up a system in which more profligate countries got to use the money and the credit rating of Germany—and on this side too those Americans who realised that as long as it was set up that way the Euro would never take over Reserve Currency status from the US dollar.

And opposing the Euro are the Keynesians who complain about the Euro’s straitjacket, not allowing within the EuroZone to push monetary stimulus at a time (like now) of economic crisis.

As Margaret Thatcher famously pointed out, one primary problem with socialism is you eventually run out of other people’s money. De Soto argues the European Monetary Union makes the running out crystal clear, and requires honest means by which to repair the situation—and as such advocates of freedom and sound money should support it.

It’s worth thinking about: “An Austrian Defense of the Euro.”

Friday, 22 June 2012

FRIDAY MORNING RAMBLE: The Montessori edition

Sorry I’m late.  I spent the morning observing at a Montessori school—something everyone should try to do themselves at least once in their life.  Anyway…

Overseas this week there’s been murmurings about mutterings in Rio, more Euro-calamities, and the future becoming steadily less bright throughout the Middle East. So at least some folk have enjoyed had some soccer to watch.
Locally we’ve been hearing legerdemain about league tables, sop on superannuation, mixed messages around mixed ownership, and about the full-on FUBAR that is ACC—surely the least responsive health insurance monopoly anywhere on the planet.
Oh, and Anne Tolley crushed a car.

On with the show:

Cactus Kate points out a few home truths about National’s mixed ownership models, partial privatisations and the dogs and dogs’ breakfasts to which any money from the partial privatisations will be directed.
Asset Sales Bogey Needs Picking – CACTUS KATE

David Farrar disagrees. But David Farrar blogs for the National Party.
Fisking Cactus – KIWIBLOG

State super “is a six-generational Ponzi scheme” says visiting academic.
Larry Kotlikoff talks to about The Clash of Generations, a six-decade generational Ponzi scheme, and why John Key should take notice – INTEREST.CO.NZ

In central Christchurch what you own is threatened by government confiscation. And in outer Christchurch what you own is barred from being developed at all by government bans. No wonder it’s becoming the worst Christchurch winter in living memory.
But it’s not hard to fix…
Whoa.....are these guys slow learners ! - Hugh Pavletich, CANTABRIANS UNITE

The need for real RMA reform? Desperate. The chances of it ever happening under the Blue Team? Remote.
Maimai reflections – RMA reform remote – STEPHEN FRANKS

So if Kiwisaver is such a gosh-darned success, how come nearly half are not actually contributing to their accounts?
KiwiSaver membership approaches 2 million mark; Close to half aren't contributing. – INTEREST.CO.NZ

Once youngsters realise they’ll be paying for their elders’ debts for the rest of their lives, you’d think they’d be embracing austerity, no?
Young should embrace austerity now – WHALE OIL

Oh, the difference that an S makes!
I Love Hores Too – NOODLE FOOD


Two most likely outcomes in Egypt? Either sharia or civil war. Certainly not the Arab Spring many were hoping for.
Egypt: Generals say they'll "hand over power to the elected president at end of month" – Robert Spencer, JIHAD WATCH

Journalists have been interviewing their typewriters about how new Fairfax owner Gina Rinehart is going to “destroy” the business. Message from Planet Earth: only in the fevered imagination of journalists do businessmen and women buy businesses to destroy them.
Why Would Rinehart Do Any Worse Than Fairfax? – DAILY RECKONING

Waiting for QE3? Turns out the Federal Reserve may never stop monetizing!
As Part Of Its NEW QE Q&A, Goldman Warns Of Possibility For $50-$75 Billion "Flow" Program 

Yes, it’s true. We’ve witnessed twenty years of phony growth.
The Disconnect Between Household Wealth and GDP Growth – Bill Bonner, DAILY RECKONING

Before George Carlin, there was Lenny Bruce:

I really don’t think you can credibly argue that feudalism was good for property right, could you?
When are ‘secure’ property rights bad for growth?MARGINAL REVOLUTION

Pete Boettke calls it "the best blog post ever written." And apart from some ethical confusion [WARNING: Contains Kant] it's, well, it's not bad.
Factual Free-Market Fairness – Deirdre McCloskey, BLEEDING HEART LIBERTARIANS

James Lovelock isn’t worried about sea-level rises. So why should you be?
I’m not worried about sea levels, says climate change expertJUNK SCIENCE

A lot of people say they can’t succeed because they face impossible barriers. You know what? That’s bollocks.
Whether You Fail Or Succeed, It’s Your Fault: An Interview With Brian Tracy 
– Don Watkins, LAISSEZ FAIRE

Why does McDonalds food always looks less visually attractive on your plate than it does in photographs? Because it is, that’s why.
Behind the scenes at a McDonald's food photo shoot – KOTTKE.ORG

Here’s something else I bet you didn’t know: NASA took Playboy Playmates to the moon!
NASA Astronauts Took Playmates to the Moon – DISCOVERY NEWS

This is what I tell my clients: “Nature has a myriad of incredible positive effects demonstrated by research”:
6 reasons why a better life is just a few steps away – BARKING UP THE WRONG TREE

Christian charity in action here from the US: Atheists should get the hell out, says friendly local pastor.

But isn’t America a Xtian nation? Um, no. It’s not.
Is the United States a Christian nation? – Diana Hsieh, PHILOSOPHY IN ACTION RADIO [AUDIO]

Grammar gaffes invade the office in the age of e-mail, texting and Twitter…
This Embarrasses You and I* – WALL STREET JOURNAL


That picture above by Georgia O’Keefe? It’s an orchid, isn’t it. Yes, of course it is.
Erotic Symbolism in 21st Century Painting – Michael Newberry, NEWBERRY’S BLOG

“A research study has concluded that contrary to the belief that great art is often born from intolerable mental suffering, deliberately torturing an artist can actually lead to a marked deterioration in the quality of their output.”
Tortured artist ‘didn’t produce any better art’, reveals torturer – NEWS BISCUIT

So what exactly is craft beer anyway?
Of rooms and the elephants who dwell therein – Greig McGill, BREWRACRACY

You know what it’s like when you have a song in your head for weeks … like this one, Born Again Idiot, The Verlaines:

If you missed NZ Opera’s Rigoletto recently, you only have yourself to blame. Here’s a lesser performance from Siena of the famous Quartet, in which young Gilda realises she’s been betrayed:

Bugger. Deborah Voigt has cancelled her Australasian shows in July, to be replaced by Christine Brewer. Who? Christine Brewer, that’s who:

It’s Jumping at the Woodside, with Count Basie and Oscar Peterson!

[Hat tips and thank yous to Diana Hsieh, Geek Press, Home Paddock, Robert Wenzel, Lyndon Hood]

Thanks or reading,
Peter Cresswell

Thursday, 21 June 2012

The “Great Moderation” has been robbing us blind

Recently a slew of commentators and Reserve Bank governors have been heard praising the Reserve Bank arrangement in place since 1992, put in place to moderate things on the basis of “a little bit of inflation does you good.”  Over those last twenty years, our Reserve Bank and every other central bank in the developed world praised each other for “conquering inflation” and producing “price stability”—a conquest overcome by the simplistic stratagem of encouraging a certain amount of inflation every year.  (Not so much these days however about how they conquered the business cycleI wonder why.)

Anyway, even if we don’t talk about the malinvestments caused by the deluge of counterfeit capital with which the developed world’s central banks flooded the place over most of the 2000s, the “gentle inflation” they unleashed has been destructive enough.

It’s been a killer. A silent killer.

The Silent Killer
Guest post by Jeffrey Tucker

I WAS JUST READING about how the median American wage is lower today than it was a decade ago, and the median net worth no more than two decades ago. Ouch. The cause, says the US Federal Reserve itself, is inflation.

Inflation? That's interesting. Hardly anyone talks about that anymore. I can't remember the last time I read a mainstream article that so much as mentioned it as a problem. There is public consciousness about rising prices in specific sectors like education and health care. But is there really a general problem with inflation?

The central bank spokesmen all speak about a different thing: the great fear of deflation. So long as that monster is kept at bay, we are all supposed to sleep soundly at night.

Yet the data are in: Inflation is killing wages, one grueling step at a time.

So let me ask you the following: How much is the US dollar worth today compared with the year 2000? These are years in which inflation has been supposedly crushed. What's your best guess?

The answer is 75 cents. Imagine that. For every four quarters you owned, one was stolen in secret over the course of the last 12 years. Keep in mind that this is a period in which the price of many things we love like computers and software have dramatically fallen in price.

Falling prices for things mean that the value of the dollar has increased. We see this in only a few sectors. Rising prices for things mean that the value of the dollar (its purchasing power) has fallen, and we see this in most sectors. A total inflation rate averages out both trends.

Yes, this is methodologically suspect. What can it mean to average the falling price of one good and the rising price of another good? Well, the method does illustrate the big picture trend: toward a relentless decline of the dollar.

Let's extend it further back in time, to, say, 1980. Today, the dollar is worth one-third of what it was then. Going back further by another 20 years, we find that the dollar today is worth only 13 cents today compared with 1960.

Inflation is adding to the growing despair in the American workforce. Wages are falling. College has become unaffordable; forget working your way through school. Net worth of households is falling in real terms. There is no relief in the terrible employment situation, and there is plenty of misery aside from what the numbers reveal.

People are experiencing a job lock, unable to exercise their basic human right to leave a bad job for a good one, simply because they fear the effects of losing health care and losing whatever financial security they have.

This is why we are seeing ever fewer people quit their jobs, no matter how bad they may be and no matter how despotic their bosses become or how dreary their work lives. This is not a functioning, competitive market. This is a major source of human misery, and one brought on by bad monetary policy.

The money people do have earns next to nothing at the bank, and the value is being stolen bit by bit every day. It's become nearly impossible for people to stay ahead, which is why half of Americans today believe that the future is going to be worse than the present.

In the 1970s, there was near panic about 4% per year inflation. I don't get why extending the effects of that rate over 18 or 24 months somehow means that the problem has gone away. It hasn't. It's just been slowed, like a knife that goes in slowly, instead of all at once. It is still a disaster and nothing that a real free enterprise system can really tolerate. Sound money is as much a pillar of freedom as private property.

And money is not sound. It is nationalized and wrecked by the central bank and its money creation powers. 

The relationship between higher prices and money creation is not difficult to understand. Murray Rothbard liked to use the analogy of a tooth fairy who tried to help the world by doubling the money stock and putting the new money under everyone's pillow. It seems like a wonderful idea, until you realize that every existing unit of money would become worth half of what it used to be. The people would be no better off than they were before.

Analogies like this are useful. Think of a children's party in which there is only enough lemonade for 10 kids. Thirty kids show up, so the host waters down the juice. Have you really made more lemonade? No, you have just divided the lemonade among more people, giving each kid more water and less flavor.

I would like to make a book recommendation that addresses this very point. Hans Sennholz's Age of Inflation is the first book I read on this topic. It blew me away. If you haven't read this book, I urge you to do so.

SO IF A FALLING dollar kills the economy, why does the Fed do it?

It's not rocket science. The money enters into the economy through a circuitous route, starting with the government's favored bond dealers and then through the banking system. The main beneficiaries are the government's friends, while the rest of the population pays the price.

And rising prices are not the only consequence of bad monetary policy. There are other effects, such as booms and busts, massive government debt, the leviathan out of control and the enslavement of the working class to debt and economic cycles.

There was a time following the great double-digit inflation of the late 1970s that there was a new awareness of the inflation threat and its cause. All throughout the 1980s, traders watched money supply data to assess the risk going forward.

This often happens after inflationary disasters. In Germany after Weimar and the war, an ethos of sound money was everywhere alive in Germany. Even today, Germany maintains a more sound policy than other European states, for fear of ever repeating that mistake.

But today in the U.S., it is widely believed that new money creation is the solution to all problems. This is Ben Bernanke's religion. He believes that the whole of the Great Depression was caused by tight money, and he is determined not to repeat that supposed experience (actually, he is wrong even about the policies of the 1930s, but that's another subject).

The worse the economic data, the more the prospect of even more reckless Fed policy. Retail sales are falling again, and rather than reassess the whole "stimulus" idea, the Fed is expected to unleash even more hell and try to convince us that this is good for us.

Inflation is the silent killer of economic recovery, the quiet source of death for the American middle class. Yet what do the market watchers recommend? More of the same.

You know this quote: "Insanity is repeating the same mistakes and expecting different results." It is wrongly attributed to Albert Einstein. It is actually from the 1981 basic manual for Narcotics Anonymous. That's fitting: Inflation is nothing if not a failed form of economic narcotic.


Jeffrey Tucker
Executive editor
Laissez Faire Books
Primus inter pares, Laissez Faire Club

P.S Future generations will be amazed, observing that while inflation ate away our currency, our elites worried about stopping deflation! It's nuts and a diversion.