Tuesday, October 31, 2006

Peikoff Might Get Kind of Lonely

As I've recently stated, I have somewhat mixed feelings about the likely Republican loss in next week's Congressional elections. The Republicans have been really bad and certainly deserve to lose, but all the Democrats offer are on most issues even worse ideas, such as raising taxes, raising spending even more, trade protectionism and higher minimum wages. But then again , divided government have often proven to beneficial as Congress and the President have for partisan reasons blocked each other's harmful actions.

In any event, regardless of whether my prediction that Republicans will lose turns out to be correct, I won't be either celebrating or get depressed. Because either way, liberty will lose.

One argument against the Republicans that are invalid are the ones offered by Ayn Rand's official "intellectual heir" Leonard Peikoff.

In it, he argued that the Democrats stand for socialism and that the Republicans stand for theocracy, both of which are of course unacceptable for an Objectivist. But since socialism is more or less dying according to Peikoff while theocracy is rising, it would be immoral not to support a socialist (Democrat) over a theocrat (Republican).

Anyone who doesn't understand this doesn't understand the philosophy of Objectivism,according to Peikoff.

But Peikoff's argument rests on a extremely ambigous and misleading use of the terms "socialism" and "theocracy". He never defines them, which I would have thought someone claiming to be dedicated to reason and objectivity would do since it is highly relevant. First, what does "socialism" mean? Socialism comes in 3 basic varities (there are of course further sud-divisions within each, but in this context they aren't relevant): Communism, Anarcho-Socialism/Left-Anarchism and Social Democracy.

Since Anarcho-Socialism/Left-Anarchism have never really been a powerful force, so they can for this context be disregarded. Which leaves us with two relevant varities: Communism and Social Democracy.

Peikoff's description of socialism as a dying force is only true with regards to communism. Communism in its traditional form now really exist only in Cuba and North Korea and it probably won't last very long even there. And they are not likely to be a significant force elsewhere ever again given the failed track racord of communism.

However, Social Democracy is anything but dying. It have become the established social system in just about every Western country, and that looks unlikely to change as even the "right-wing" parties have adopted it. And the socialism that the Democrats stand for is not communism but social democracy. And even more of it than today.

What about the "theocracy" of the Republicans? By invoking the "theocracy" he tries to imply that the Republicans are like the Taliban. But just what kind of theocratic measures are Republicans proposing? Of this, Peikoff says nothing, absolutely nothing. Sure, the Republicans are the party of the Christian Right. But first of all, even their agenda, while being deplorable, are far preferable to the one offered by the jihadists. Having moral equivalance between the Christian Coalition and the Taliban is like having moral equivalance between the Swedish Social Democrats and Pol Pot's Khmer Rouge movement . And secondly, while most Christian fundamentalists are Republicans, it is not the case that the most Republicans are Christian fundamentalists or that they control the Republican party. The Republicans have after all controlled all three branches of the American government for years now, and have America become a theocracy or even moved more closely to it? No.

As I've now shown, Peikoff's arguments make no sense at all, yet he claims that anyone who don't agree with them don't understand a philosophy that supposedly is based on reason.

Which takes us to another interesting aspect of this. As Stephan Kinsella pointed out on the LRC blog, there are at least two leading Ayn Rand Institute associates which have advocated support of the Republicans-Harry Binswanger and Robert Tracinski.

Indeed, Tracinski in his recent column about the election seemed almost as passionate about his rejection of the Democrats as Peikoff was about his support of them.

So, is the ARI going to keep as leading fellows two persons who according to Peikoff
don't understand Objectivism? Or are they to be added to an ever growing list of "ex-communicated" people (people thus offically classified as "anti-life, anti-reason etc. ) including David Kelley, George Reisman, Per-Olof Samuelsson and others?

Rate of Yuan Apprection Increasing-But Only Slightly

After the initial move from the more than decade old peg of the yuan to the dollar at an exchange rate of 8.28, when the yuan was revalued by 2.1% to 8.11, the yuan have continued to increase in value, but only very slowly. One year after the revaluation, the yuan had increased just another 1.5% in value, to 7.99.

Today (October 30), a little more than 3 months later, the yuan have increased another 1.5%, to 7.8728. So, the rate of appreciation is increasing, but it is still far too slow for China's own good.

Interestingly, China does however seems to have reduced , if not halted, the inflow of "hot money" trying to profit from the revaluation, further increasing the need for increased foreign exchange reserves. During the third quarter, China's goods trade surplus was $50 billion. And usually the current account surplus is an additional $15 billion. Yet the foreign exchange reserves rose "just" $50 billion. This indicates a net capital outflow of $15 billion. Brad Setser and Richard McGregor thinks this reflects that state owned Chinese banks are accumulating dollar assets instead of selling them to the central bank. This would imply that the accumulation of foreign assets by state owned entities in China is growing faster than the official reserve number indicates.

They may be partially right, but it also seems likely that net private capital inflow was sharply reduced, if not halted or partially reversed.

Monday, October 30, 2006

The Perils of Writing Articles in Advance of the Facts

Cesar Conda have written a supply-side/Republican spin on the weak third quarter growth number. I'll return for a more indepth analysis of the arguments over the U.S. economy between Republicans and Democrats, but meanwhile I can't resist pointing out one embarrasing detail of Conda's article.

It seems obvious that Conda had anticipated a weak number and so in advance written a article with the supply-side spin on it, and that he also had the article approved in advance by NRO editors. The only thing added after the release of the numbers was the precise aggregate growth number of 1.6%

Why is that obvious? First of all because it appeared so rapidly after the release, less than an hour.

Secondly because it contains this line:
"Another one-time factor slowing economic growth was a significant drop in the production of motor vehicles in the third quarter."

Only trouble is, motor vehicle production did not drag down the number. In fact, to the surprise of most economists, it actually soared during that quarter according to the statistics. This was likely a statistical fluke which will be reversed during the fourth quarter, helping to make Nouriel Roubini's 1% or less forecast for the fourth quarter more realistic.

And it also illustrated the perils of writing articles in advance on reports not yet available. I don't think doing so is in any way immoral or anything like that, but as we can see with Conda's article, it opens for embarrasing factual errors.

Saturday, October 28, 2006

Charles Krauthammer Just as Racist as KKK Members

I have discussed Illinois Senator Barack Obama before. And as I wrote then, I have no particular problem with him. Or more correctly, I do have a problem with him since he is a liberal Democrat, but I've got no more problem with him than other liberal Democrats, like say John Kerry, Ted Kennedy or Hillary Clinton.

But while I've seen no evidence that he is a worse politician than John Kerry, Ted Kennedy or Hillary Clinton, nor have I seen any evidence that he is somehow better. Yet
he is mysterously hyped up and treated as the rising star of the Democratic party.

What quality have qualified him for that status? Nothing really, it seems, other than the fact that his father came from Kenya, which qualifies him for the privilege-associated status of "African-american", despite the fact that his mother was white.

Usually, his boosters are not as honest of the racist basis of their support for Barack Obama as Charles Krauthammer was in his latest column, but Krauthammer is likely very representative of the true feelings and motives of the Barack Obama boosting crowd.

In it he wrote:
" Third, the country hungers for a black president. Not all the country, but enough that, on balance, race would be an asset. It is no accident that when, a decade ago, another attractive, articulate African-American with no experience in electoral office went on a book tour, he was met not just with rock star adulation but with a loud national chorus urging him to run for the presidency.

The object of affection then was Colin Powell. Today it is Obama. Race is only one element in their popularity, but an important one. A historic one. Like many Americans, I long to see an African-American ascend to the presidency. It would be an event of profound significance, a great milestone in the unfolding story of African-Americans achieving their rightful, long-delayed place in American life.

Of course there is racism in America. Call me naive, but I believe that just as Joe Lieberman was a net positive for the Democrats in 2000 -- more people were attracted to him as a man of faith than were turned away because of anti-Semitism -- there are more Americans who would take special pride in a black president than are those who would reject one because of racism."

Regardless of whether Krauthammer is right or wrong in his view that there are more Americans who would vote for him because of his race than the number of Americans who would vote against him because of his race, it is nevertheless the case that it is just as racist to prefer him because of his race as it is to oppose him because of his race. To the extent that the word "racist" has any meaning at all,it is the view that the legendary Martin Luther King words that people should be judged "by the content of character, not color of skin" was incorrect.

When Krauthammer writes that he long to see an "African-American" become president, he is thus just as racist as neo-Nazi David Duke or others associated with the Ku Klux Klan. He is judging Barack Obama by the color of his skin. That he has a positive rather than negative judgement does not change the fact that it is a racist judgement.

Oil Price Decline Gives Misleading Picture of Commodity Trends

After its July peak of $78 per barrel, oil prices fell by more than 25% to a low of $58 per barrel. After that it has recovered slightly to $61, but that still means it is 22% below the peak. This have lead some people to conclude that the commodity price boom have ended and been partially reversed.

However, the fact is that the oil price decline is not reflective of a broader bear market in commodities. Indeed, the fact is that the bull market in non-energy commodities have continued. The Economist's
commodity price index (which include most commodities except energy and precious metals) have continued rising rapidly. In the latest issue, the index fell back slightly from last week, from 184.7 to 183.8. Yet it is still near its record high, up 6.7% the latest month, and a full 36% the latest year.

Another index measuring non-energy commodities, the CRB Spot Index, have increased somewhat more slowly than The Economist's commodity price index, yet it is at record high levels and is up 2.5% in the latest month and up 18% the latest year.

We can thus see that the decline in oil prices reflect oil specific factors (such as a declining fear of a U.S.-Iranian military confrontation) and is unrepresentative of the broader commodity price trend. This means that the much hyped "core" price inflation measures is not likely to decelerate, despite the slowdown in U.S. economic growth.

Friday, October 27, 2006

Significant Slowdown in U.S. Growth

Just as I predicted two weeks ago, U.S. GDP growth in the third quarter slowed down to less than 2% but more than 1.5%, or 1.6% to be more precise. It was perhaps a bit on the low side of my range, but within it nevertheless.This was of course only the "advance" number. There will be a lot of revisions of that number. In my experience though, advance numbers are mostly correct. While they are usually upwardly revised in the preliminary and the "final" estimate, they are usually downwardly revised in the annual revision a few years later. So it is reasonable to assume this will indeed be the final number-or more correctly, that the final number is about as likely to be lower as higher.

Nouriel Roubini thinks the number is going to decelerate further in Q4, to less than 1%. While I basically share his bearish outlook on the U.S. economy, I find it less likely that it will be really that low in Q4. I am hesitant about making precise forecasts with so little data available, but the falling oil prices will probably boost consumer purchasing power enough to keep it above 1%. However, it will probably be closer to 1% than the 3.5% Morgan Stanley is forecasting.

And the boost from falling oil prices will be a one-time event, whereas problems coming from the imbalances created by Alan Greenspan will continue to pull down the U.S. economy-and do so with increasing intensity. The imbalances created by Greenspan have not disappearing or even been reduced, they have in fact been aggravated. Meaning that Roubini might very well be right in forecasting a recession by Q1 or Q2 2007.

Wednesday, October 25, 2006

Skräpet "TV-licensen" finansierar

Syftet med "public service" ska ju vara (sägs det) att ge en kvalitetsbevakning som de fruktansvärda "kommersiella krafterna" inte sägs kunna ge. Men kvaliteten på samhällsbevakningen i "public service" är ofta av ytterst tvivelaktig kvalitet.

Ett bra exempel på det är denna artikel i Sveriges Radios nyhetsida på webben. Visst förekommer förvisso dåliga artiklar även i privatfinansierade medier, men poängen med "public service" är väl ändå att den ska vara bättre. Och till skillnad från i privatfinansierade medier så tvingas folk här betala för denna desinformation om sakers förhållande.

I artikeln som har titeln "Sänkt a-kassa gav inte fler tyska jobb" så hävdar reportern Kristian Åström alltså att den tyska a-kassesänkningen inte gav fler jobb. På vilka grunder då? Jo, han frågar en ekonom vid namn Karl Brenke och någon fackföreträdare vid namn Markus Franz.

De hävdar helt enkelt, utan att komma med någon antydan till siffror för att bevisa sina påståenden att det inte gett några nya jobb. På vilka grunder de gör detta påstående är oklart. Arbetslösheten har ju faktiskt fallit och sysselsättningen ökat efter det att sänkningen infördes .

Det blir faktiskt närmast komiskt när den där så kallade ekonomen (eller reportern, det är oklart i vilken grad det citeras eller om det är reportern som försöker sig på den för honom uppenbart ovana uppgiften att tänka) ska komma med något som liknar en förklaring till varför han inte kan se att det skapats några nya jobb. Först konstaterar han att syftet med sänkningen förutom den direkta utgiftsbesparingen för statskassan är att få arbetslösa att acceptera jobb med lägre lön. Sen påstås det helt enkelt att det misslyckats, varpå det i nästa stycke sägs "I till exempel forna Östtyskland arbetar miljoner redan i en växande låglönesektor".

Alltså: först säger ekonomen/reportern att reformen ej visat sig ge fler låglönejobb, sen sägs att låglönesektorn är växande.

Och sådant förvirrat och självmotsägande resonemang betecknar den "TV-licens" finansierade statsradion som seriös samhällsrapportering!

Japanese Trade Surplus Increases

Despite the fact that oil imports in September this year were still based on the previous higher oil prices, the Japanese goods trade surplus increased that month, as exports to both China and America boomed. When the lower oil prices soon lowers the oil import bill, the goods trade surplus will likely rise even faster.

And the overall current account surplus probably rose much faster as the service trade deficit have been declining and the investment income surplus have been soaring so far this year.

All of this again illustrates that the yen is greatly undervalued.

Tuesday, October 24, 2006

Förnuftsbefriad "kulturdebatt"

Jag visste ärligt talat fram tills idag knappt något alls om Lena Adelsohn Liljeroth annat än att hon var (och fortfarande är) gift med förre moderatledaren Ulf Adelsohn. Men det som framkommer idag om hennes politiska inställning är minst sagt oroväckande.

Enligt Per Bylund så ska hon i Radions P1 ha deklarerat "jag är inte nyliberal, jag är kulturkonservativ" och vidare ha sagt hon tycker absolut att staten ska finansiera "den kulturella infrastrukturen".

Reaktionerna från "kultur-Sverige" är följdaktigen lyriska.

Detta innebär sorgligt nog att ösandet av pengar in i den så kallade kultursektorn ska fortsätta och att "public service" TV och Radiotjänst lär bli kvar. "Kulturkonservativ" innebär ju i det här sammanhanget i klartext "konserverande av den socialdemokratiska kulturpolitiken"

DN:s Maria Schottenius välkomnar detta och fasar över hur vi nyliberaler vill låta de kommersiella krafterna styra. Hon skriver att detta skulle leda till att

"Sveriges kulturskatt och kulturliv snabbt skulle åka ut till försäljning, och för evigt vara borta.Kulturens ställning i ett land är ett mått på landets civilisation."

Nu stannar vi upp och analyserar lite. Detta är ju ett argument som man i varierande formuleringar ofta hör från "kulturarbetare" och de politiker som vill subventionera dem: hur ovärderlig kulturskatt/kulturliv osv. skulle gå förlorad utan subventionerna och hur detta i princip då skulle innebära världens eller ja åtminstonde Sveriges undergång eller förvandling till primitivt barbarland.

Men det som slår en är hur de aldrig definerar vad de menar med begrepp som "kommersialisering" och "kulturliv" eller varför det skulle vara värdefullt och isåfall för vilka och på vilket sätt.

Vad är egentligen "kommersialisering"? Jo, det är att de så kallade kulturarbetarna ska fås att producera något som faktiskt folk uppskattar, något som de är beredda att betala för. Kommersialisering innebär med andra ord att kulturarbetare ska tvingas producera något som folk faktiskt värdesätter.

Vad är då egentligen "kulturskatt" och "kulturliv"? Detta kan ju betyda många saker, men det de så kallade kulturarbetarna tycks mena med det är ju helt enkelt de kulturaktiviteter som idag subventioneras av staten. Frågan är då för vilka och på vilket sätt denna "kulturskatt" och det "kulturliv" som staten subventionerar har något värde. Det har aldrig någon av anhängarna av statlig kulturpolitik förklarat. På vilket sätt hjälper t.ex. operor oss i våra vardagliga liv? Vilka insikter kan de förmedla som inte vanliga texter kan förmedla? Sanningen är att de inte alls förmedlar någon sådan hjälp alls och på intet vis hjälper någon (annat än då de så kallade kulturarbetarna som ju får ut löneinkomster från det) i deras vardagliga liv , de fyller ingen roll i att förbättra samhällsmoralen och de skapar på intet vis några visdomar som gör samhällsdebatten eller forskningen bättre.

För de som nu ser ett visst underhållningsvärde i det hela så kan ju förstås operor och liknande ändå vara meningsfullt av det skälet. Hade de som gillade det varit beredda att betala för det själva hade jag inte haft något alls emot dem. Men vilket samhällsintresse ligger det i att en liten minoritets underhållningsaktiviteter subventioneras? Svaret är inget alls. Och att som Maria Schottenius tala om civilisationens undergång för att en liten snobbminoritets inte får sina underhållningsaktiviteter subventionerade är ju häpnadsväckande absurt. Granskar man det sakligt så fyller som sagt de så kallade kulturarbetarna ingen roll alls i att i något avseende göra samhäller mer civiliserat.

Det finns inga sakliga skäl för en statlig kulturpolitik, med andra ord. Men häpnadsväckande nog tycks nästan alla etablerade debattörer låta sig skrämmas av intetsägande floskler om påstått ovärderligt "kulturliv" och om den påstådda onskan i att kulturen ska skapa faktiska värden istället för de mytiska odefinierade värden som dagens "kulturarbetare" skapar.

Arnold Terminates Fiscal Sanity

Continuing on the no too uplifting subject of California politics, it seems more likely than not that Republican Arnold Schwarzenegger, who rose to power in 2003 after a total recall of his predecessor Gray Davis, will win over his Democratic opponent Phil Angelides. The latest polls show Arnold being ahead 7%:points.

But his likely victory in the overwhelmingly Democratic state of California will come at the price of adopting Democratic policies. First he agreed to terminate jobs by raising the state minimum wage from $6.75 per hour to $8 per hour. He has also terminated his committment to small government and limiting spending.

In this report card from the Cato Institute, Arnold received the second lowest grade, a "D". The report points out that real (inflation adjusted) per capita spending is up 12% in just two years.

Even if Phil Angelides loses, it will be a true lie to claim that this will be a loss for Democratic policies, as they will instead be implemented by Arnold.

Cuba's Commie Economy in Crisis-How Shocking

Cuba's communist economy is in crisis. Inefficiency, corruption and theft is rife in it. Cuban officials "ponder on how to fix it" and ask European diplomats "why doesn't it work?".

Maybe it has something to do with, you know, communism . All communist economies have had these problems so that seems like a likely explanation.

The obvious solution is thus free market reforms like the one implemented in former communist countries in Eastern Europe, China and Vietnam.

But according to the article, Cuban officials rule out China's example of putting into place a capitalist economy while retaining the polical power of the nominally Communist Party. So Cuba looks stuck with poverty and ineffeciency, at least until the Castro brothers finally die.

Monday, October 23, 2006

California's Proposition 87: Tax California Oil to Reduce Consumption of Foreign Oil

Yesterday I discussed the upcoming Congressional election in America. But on that day, there will not just be an election to the House and the Senate, there will also be a number of referendums. Republicans have in a few states pushed their favorite issue -banning gay marriage- on the ballot while Democrats have in other states put their favorite issue -raising the minimum wage- on the ballot. In addition to this there will also be a number of state specific referendums. The arguably most stupid referendum will be the one in California, proposition 87, raising the tax on oil extracted in California from 1.5% to 6%.

If you go the web site of the yes-campaign how their most important argument for raising the tax on oil extraction in California is to have "less foreign oil" and increase "energy independence". That's right: the idea is to discourage oil extraction in California so as to induce Californian's to use less foreign oil. Normal people would realize that if there is less California oil, then the result will be that people in California will demand more foreign oil as a substitute and certainly not less, but these people apparently don't mind embarrasing themselves by campaigning using the absurd assumption that less California oil will mean less foreign oil.

But perhaps they think this tax will raise oil prices and so lower overall consumption? No, on their web page they also come up with another absurd claim, that this will cost consumers nothing, which rule out the idea that this is the mechanism they imagine.

So what they believe is that if you reduce the supply of something by taxing it, it will not lead to a higher price and it will at the same time lead to a lower supply of untaxed foreign substitutes.

These people just must be competing for the "stupidest people alive" award. What else could motivate people to embarrass themselves with such stupid reasoning is beyond me.

Why High Taxes Makes Black Market Nannies Necessary

New article by me on LRC about the controversy over the morality of black market economic activities after several ministers (two of whom have resigned) in the new centre-right government in Sweden was revealed to have hired black market nannies.

Sunday, October 22, 2006

Why the Republicans Will Lose

In little more than two weeks America have congressional elections. I have somewhat mixed feelings about whom I want to win. On the one hand, the Republicans are bad and deserve to lose. On the other hand, that the Republicans are bad doesn't necessarily imply that the Democrats will be any better. Indeed there are reasons to believe they will be even worse on a number of key issues.

But regardless of whom we want to win, it should be clear that the Democrats will win and the Republicans will lose. Making exact forecasts as to how many seats they will gain in the House of representatives and in the Senate is impossible to do with certainty, but I view it as more likely than not that they will capture both the House and the Senate.

There are several reasons for this.


Iraq is a big mess, something which even an increasing number of former supporters of the war admit, like National Review editor Jonah Goldberg proclaiming that the Iraq war was a mistake.

While the northern Kurdish parts of Iraq is doing fairly well, the Arab parts is mired in what really amounts to civil war. A civil war being fought between on the one hand a Shia fundamentalist dominated government allied with Iran and U.S. troops and on the other hand Sunni insurgents composed of a mix of Baathists and al-Quaeda affiliated Sunni fundamentalists. Add to that various Shia militias whose basic loyalty is with the government but prefer more bloody tactics, including mass slaughterings of Sunni civilians to retaliate against the slaughtering of Shia civilians by Sunni insurgents.

In other words, it is one group of repulsive fundamentalists pitted against another. And an increasing number of Americans ask themselves why Americans should sacrifice themselves to support one of these repulsive fundamentalist groups. Especially since the side they're supporting is allied with the regime which is in other context depicted as America's foremost threat: Iran.

And since the Republicans out of prestige and loyalty towards Bush refuse to consider withdrawal, this will greatly benefit the Democrats.

2. Economic discontent.

While the economy have not yet suffered a recession, most Americans still don't feel like they're benefiting from the economic recovery. Whether this is due to liberal news media giving a misleading negative interpretation of the economy or whether increasing inequality means that the gains are concentrated to the rich, it is nevertheless a fact that most American's disapprove of the President's handling of the economy.

3. Lack of Gay Marriage referendums.

In recent elections, the Republicans have relied on putting the issue of banning gay marriage in state referendums to increase voter turnout in their Christian conservative base. But the problem is that you can only amend the state constitution with a gay marriage ban once. While there will be referendums on gay marriage in a few states this year too, it will only be small and medium-sized states like South Dakota and Colorado.

Meanwhile, the Democrats are using their own "gay marriage" issue, minimum wages, to increase turnout among their core supporters, a moblizing factors they lacked in previous elections and will now be on the ballot in six states, including the key state of Missouri.

4. Mark Foley and pork-barrel spending will lower Republican turn-out

Another factor which will lower Christian conservative turnout is the Mark Foley scandal. A Republican congressman sending dirty e-mails to teenage boys- a behavior most definetly inconsistent with the Christian Right moral views for more than one reason. This will not only likely mean that the Republicans will lose Foley's seat despite the fact that his district is considered a Republican stronghold, but it will also likely lower Christian conservative turnout across the contry.

Moreover, many libertarian-leaning Republicans will likely stay home to protest the Republican betrayal of the principle of limited government.

A-kassehöjning leder till flykt från facket?

Jag är i och för sig inte så entusiastisk inför regeringens förslag att betala delar av sina skattesäkningar genom att höja a-kasseavgiften och göra den obligatorisk. I och med att den blir obligatorisk innebär det ju att den del av skattesänkningen som finansieras med höjd a-kasseavgift bara blir en ren bokföringsillusion-folk betalar då lika mycket i skatt men har fått denna omdöpt till "a-kasseavgift" i stället för det mer ärliga gamla namnet inkomstskatt. Det innebär i och för sig inte någon försämring men det innebär ingen förbättring heller.

Nåväl, nu rasar dock sossarna och facken mot detta förslag och säger att den höjda a-kasseavgiften kommer leda till att folk inte kommer att ha råd att vara med i facket och kommer att gå ut.

Men poängen är ju att denna på papperet höjda avgift som sagt går till att finansiera en på papperet sänkt inkomstskatt. Vilket innebär att dessa fackmedlemmars ekonomi inte alls kommer att försämras. Och då det dessutom kommer att vara en verklig skattesänkning utöver den bokföringsillussion som omdöpandet av delar av inkomstskatten till a-kasseavgift så kommer ju faktiskt dessa fackmedlemmar att få förbättrad ekonomi.

Dessutom är det lite besynnerligt att facken har så låg tilltro till deras medlemmars vilja att vara med att de tror att det första de kommer att göra vid en liten ekonomisk försämring är att lämna facket.

En annan finansieringskälla till det så kallade jobbavdraget, slopandet av avdragsrätten för fackavgifter, kommer ju förstås däremot att minska viljan att vara med i facket eftersom den ökar marginalkostnaden för fackmedlemskap. Men att påstå att regeringens omdöpande av delar av inkomstskatten till "a-kasseavgift" kommer att leda till medlemsflykt är ju rent nonsens (Många av oss skulle ju för övrigt inte tycka att det vore så dåligt om de till socialdemokratin knutna facken försvagades, men oavsett om det är bra eller dåligt är det ändå ett faktum att så inte sker).

Wednesday, October 18, 2006

Norway Swings to the Right

Former leader of the youth group of the communist Left Party in Sweden, Ali Esbati is happy about Norway's left-wing government. But voter's aren't.

In the latest poll, the officially libertarian but in practical politics right-wing populist Progress Party have risen to 29.5%, up 7.4%:points from the election. The second most free market oriented Norwegan Party, the Conservative Party, increases to 16.6%, up 2.5% from the election. This means that the Progress Party and the Conservative Party have together 46.1% and are thus within striking distance of achieving a majority on their own.

By contrast, the 3 parties of the government, the Labor Party, the Centre Party (who are much more left-wing than their Swedish counterparts) and the Socialist Left only get a total of 40%, down from 47.8% in the latest election, and much lower than the total for the Progress Party and the Conservative Party.

Interestingly, the two other opposition parties, the Christian Democrats and the Liberal Party, who are both less free market oriented than the Progress Party and the Conservative Party, are also losing support.

It seems in other words that most Norwegans don't share Esbati's positive view of the achievements of Norway's left-wing government.

Anders Borg på den gamla goda tiden

Då han var nyliberal, vill säga. Här är en länk (tack Dennis Johansson för länken) till bokförlaget Ratios beskrivning av en bok skriven av honom i ett aktuellt ämne:

"Den statskontrollerade radion är ett uttryck som förekommer i media när det gäller t ex diktaturer i tredje världen. Men är inte även Sveriges Radio och Sveriges Television egentligen uttryck för samma idé: att viktiga etermedia skall styras av en elit och finansieras genom lagfästa, obligatoriska avgifter? Varför tas det för givet att allmänna radio- och TV-kanaler skall finnas, medan tanken på allmänna tidningar, böcker och tidskrifter eller filmer samtidigt anses bryta mot kravet på mångfald i ett fritt samhälle? Anders E Borg diskuterar i Förmynderiets teori framväxten av de politiska regleringarna inom etermedierna, främst radion, och försöker förklara hur de uppkommit."

Louise P. påminner oss också om ett citat av gamle Thomas Jefferson i frågan:

"To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical."

U.K. Minimum Wage And Unemployment Increases

Britain is widely considered to have a flexible labor market. And that is still true when it comes to "hire and fire" laws which is relatively free compared to continental (Western) Europe, just as in the U.S. and Denmark. But in another crucial aspect, the U.K. labor market is increasingly unfree.

While the U.S. debates over whether to raise the minimum wage from its current level of $5.15 on the federal level,the U.K. have already raised it to 5.35. £5.35, that is. At current exchange rates this means that the U.K. minimum wage is nearly $10 per hour, only slightly lower than in France, where it is set at €8.27.

After it was first imposed by Tony Blair's "New" Labour in 1999 at £3.60 per hour, it have been steadily increased. This year it was raised another 6%, from £5.05 to £5.35. This is not only a higher rate of increase than inflation, but also a higher rate of increase than average hourly earnings. That means that the U.K. minimum wage should be expected to destroy an increasing number of jobs.

Not coincidentally, we now see how unemployment is increasing in Britain, despite the fact that Britain is not undergoing any cyclical downturn. The fact that unemployment increases despite a (albeit only a mild one) cyclical upswing indicates that the entire increase is structural. Indeed, the structural unemployment rate may even arguably be rising even more than the actual rate considering the cyclical upswing.

Decline in Inflation Only Temporary

12-month inflation rates declined dramatically in September in most countries. The decline was particularly dramatic in America, which had the highest inflation rate before. The year over year increase fell from 3.8% to 2.1%. Other countries also saw their inflation rates decline, albeit less dramatically than in the U.S.

Euro-zone inflation fell from 2.3% to 1.7% and Sweden's fell from 1.6% to 1.2%. Britain had the smallest decline in inflation, from 2.5% to 2.4%.

The reason for the universal fall in inflation, and why inflation fell particularly much in America, was the fact that oil prices reached the at the time unprecedented nominal peak of $70 per barrel, as a result of Hurricane Katrina. Because gasoline prices in Europe to a much greater extent is made up of taxes, the effect on gas prices was greatest in America. Now that oil prices are falling, the effect on retail gas prices are for the same reason much more dramatic in America.

However, the inflation rate seems likely to pick up soon even if oil prices remain low, particularly in America when the correction from the peak in energy prices that followed in the months after Katrina is no longer included in the 12 month comparison. This is reflected by the fact that the annualized increase since December last year is 3.4% in America.

Finally, an additional point about "core" inflation: markets apparently rallied because core prices increased only 0.2%. But if you look closer at the details, you see how close it was for the number to rise 0.3%-a number which would have caused the markets to tumble. The index for core prices rose from 206.7 to 207.2, in other words, a 0.242% increase, dangerously close to the 0.25% that would have meant a rounding up to 0.3%. Moreover, the reason why it stayed slightly below 0.25% was that "owner's equivalent rent" only rose 0.3% whereas actual rents rose 0.4%. This being the result of an natural gas prices (higher natural gas prices means lower owner's equivalent rent in the fuzzy math of the Bureau of Labor Statistics). As "owner's equivalent rent" is more than 30% of the core index, an upward adjustment of it with the same amount as actual rent would have put the core increase above 0.25% and would therefore have been rounded up to 0.3%.

Tuesday, October 17, 2006

Jeffrey Sachs On Nordic Countries

First I received an e-mail from an American Physics Professor asking me to reply to a recent article in Scientific American by Jeffrey Sachs on the Nordic countries, and then I saw Jeffrey Tucker also bringing attention to the article on the Mises blog.

My mises.org article on Sweden answers much of Sach's arguments, including the deceptiveness of official unemployment statistics in Sweden (a deceptiveness that to only a slightly lesser extent exist in the other Nordic countries). But there are a few additional points in his article that needs further comments, although there are a lot of question marks as I have been unable to find the background paper that the article refers to, on Sach's web site.

Anyway here is just a few of the shortcomings of Sach's article:

First, his use of the Nordic countries and English speaking countries as comparisons of the effects of welfare statism is highly questionable as it is not the case that the Nordic countries are the most welfare statist and the English speaking the least welfare statist. Particularly if you adjust for differences in the extent to which government transfer payments are taxed, there are a lot of continental European countries which have higher spending than Norway and Finland, and in the case of France also Denmark and Sweden.

Second, his use of budget surpluses and R&D spending as measures of economic success are misleading. Regarding budget surpluses, decisions on whether to run surpluses or deficits are run independently on the issue of whether to have high taxes for high spending or not. And it is hardly self-evident that running massive budget surpluses, i.e. having massive forced saving is really a good thing. As for R&D spending, since when did that become a self-end. It isn't, at most it is a means to achieving prosperity and not a self-end. And not even that is BTW really clear. As I pointed out in a previous post on this blog, there is no evidence to support that R&D spending have more positive effects than other investments.

Third, including Norway in the Nordic sample is highly misleading as its per capita income is artificially boosted (and its poverty rate suppressed) by its massive oil wealth.

Fourth, Sachs completely neglects a key scientific requirement: holding other relevant factors constant when testing the effects of something. One of the key reasons why the U.S. has a higher poverty rate is the immigration of low-skilled Latin Americans. These immigrants have it far better in the U.S. than in their countries of origin, but as their incomes are relatively low by American standards, they push up the official poverty rate. Had the U.S. instead pursued Swedish immigration policies, i.e. made immigrants unemployed and dependent on lavish welfare benefits or Danish and Finnish policy of accepting almost no immigrants then the official domestic poverty rate would have been lower but world poverty higher. And regardless of which immigration policy you prefer on other grounds, it has nothing to do with the issue of the effects of an extensive welfare state.

About Swedish Government Budget

Yesterday the new Swedish finance minister Anders Borg presented his first government budget. I had some trouble getting to the relevant information. Press releases are as usual just filled with high-sounding empty phrases and the selected parts which they think will maximize public sympathy. The pdf-file with the full budget is written in a way which is anything but easy to read and pedagogic. Instead of first summarizing the relevant parts (i.e. economic forecasts, total income and spending with specification in general factors and a summary of all of the changes they propose) they mix them with detailed specifications of various posts. But after some trouble I did finally manage to find what I was looking for.

The good news is that Swedish government spending is projected to continue to fall, from 52.8% in 2006 to 51.3% in 2007 and then to 49.8% in 2009. Other good news include a SEK 40 billion income tax cuts, a cancellation of a planned airline tax planned by the former government and spending cuts in a few areas most notably unemployment insurance. The combination of the reduction in unemployment insurance benefits and lower income taxes will increase incentives for work and therefore increase the structural growth rate of the Swedish economy.

The bad news is that the reduction in government spending to GDP is only to a small extent expected to come through active net spending cuts by the new government. For 2007, projected total spending will only be SEK 7 billion lower (or 0.23% of GDP) than what the previous government had proposed. Also contributing to this will be spending restraint in municipalities increasingly controlled, particularly in the Stockholm area, by the centre-right parties (and particularly in Stockholm, the local Moderates are more radical than the national party dares to be) . But the biggest factor will be a projected continued cyclical upswing, as Sweden's government budget are extremely cyclical in its nature. Even if this comes true, which it indeed might until 2009 considering the cyclical effects of the gradual reformation of the property tax, it is dangerous to rely on it permanently, considering the fact that this means that government spending could then rise rapidly relative to GDP in the event of a cyclical downturn. So there should clearly be far bigger cuts than just 7 billion.

The reason why the net cuts are so small is that most of the savings from the cuts in unemployment- and sick leave payments will go to increasing government consumption and other areas where the centre-right parties propose higher spending than the Social Democrats.

And so since the net spending cut is a mere 7 billion, this means that most of the 40 billion income tax cut will be payed for by raising other taxes as well as reducing the budget surplus. The centre-right government for example proposes to raise the tax on snus and they also propose doing away with a number of tax deductions, do away with a rebate in payroll taxes for small businesses and raise the "fee" for traffic insurance, which since it is mandatory is a tax. Moreover, they propose to raise the "fee" for unemployment insurance. While it is currently correct to call it a fee, it will soon become a tax since the centre-right government plan to make unemployment insurance mandatory.

One curious fact is that they for next year only propose to cut the wealth tax in half, rather than abolish it completely. Given how they themselves argue that it is so harmful that doing away with it would probably be self-financing given how the boost to the economy would increase revenues from other taxes, it is puzzling that they do not propose a complete abolition.

One saddening fact is that I turned out to be right when I predicted that the Moderates would cave in and let the Liberal Party, the Centre Party and the Christian Democrats have their way with regards to foreign aid which will be raised to 1% of GNP, which is the arbitrary target that all parties except the Moderates for some reason have decided should be wasted on foreign aid.

In short, the budget is slightly better than what it would have been had the Social Democrats stayed in power, but only slightly .

Saturday, October 14, 2006

Schyman igen på Expressens debattsida

En sak tycks vara klar: Expressens debattredaktör är radikalfeminist. Hur kommer det sig annars att Gudrun Schyman på bara lite mer än en vecka fått två debattinlägg publicerade, först här och sen här. Gudrun Schyman är ju trots allt en patetisk föredetting och ledare för ett stolligt extremistparti som trots mycket positiv mediauppmärksamhet (mycket mer än alla andra i riksdagen ej representerade partier) gjorde ett fiaskoval.

Nåja, intressant i hennes senaste debattinlägg var att hon till skillnad från en annan ledande radikalfeminist i Sverige, Aftonbladets ledarskribent Åsa Petersen, lagt på ett genusperspektiv på kontroversen kring Maria Borelius och Cecilia Stegö-Chilo.

Hon hävdar, med basis på att det är kvinnor som hamnat i blåsväder , att kvinnor granskas hårdare än män. Nu är det för det första inte sant att bara kvinnor drabbas av mediadrev. Jan O. Karlssons och Björn Rosengrens problem är ju exempel på det. Ssen även om det varit så att bra kvinnor drabbats av det så hade det inte bevisat något i sig eftersom det ju kan ha slumpat sig så att bara dem haft ett beteende som upprört omgivningen.

Komiskt nog så gör Schyman då sitt bästa för att understryka att hon anser att Borelius och Stegö-Chilo:s "synder" dvs anlitande av "svart" städhjälp och underlåtande att betala av TV-licensen är förkastligt.

Men hon skriver sedan att kvinnor med höga karriärambitioner är mer troliga att anlita "svart" städhjälp. Nu stannar vi upp och reflekterar: Gudrun Schyman säger alltså att anlitandet av "svart" städhjälp bör förkastas trots att hon själv konstaterar att den är mest troligt använd av kvinnor med höga karriärambitioner. Hon, som radikalfeministisk ledare, förespråkar alltså ett regelverk som motarbetar kvinnor med höga karriärambitioner!

En annan lustig sak med Schymans artikel var att hon i sitt senaste debattinlägg talar om jämn könsfördelning som ett "anständighetskrav". Men en vecka tidigare kom hon med en ministerlista som hade en extremt ojämn könsfördelning, dvs förkrossande kvinnlig majoritet. Tydligen är då Schyman enligt sina egna kriterier anhängdare av en oanständig regeringssammansättning.

Some Implications of the $70 billion U.S. Trade Deficit

The U.S. trade deficit reached a record $69.9 billion in August 2006, higher than most analysts had expected. What are the implications of this:

1) I always thought Nouriel Roubini's forecast of 1-1.5% third quarter growth in the U.S. economy was too low, but with this number it appears possible. I still think it will come closer to 2% than 1.5%, but after this number it certainly appears more likely to be below than above 2%.

2) The trade deficit will probably fall in September because of the sharp drop in the price of imported oil. But it will probably still be comfortably above the pre-July 2006 peak of $65 billion, because of the drop in export prices and increase in non-oil import prices. Moreover, U.S. consumers will likely use some of the savings from falling gas prices to buy other imported goods, reducing the deficit reducing effect of falling oil prices.

3) This is another indication that the dollar is overvalued, particularly against the yen. Meanwhile, the Japanese current account surplus continued its rapid increase, driven by both a rising trade surplus and a rising investment income surplus.

4) This is also another indicator that the imbalances of the U.S. economy is continuing to grow despite the weaker housing market. As Doug Noland of Prudent Bear points out in his latest Credit Bubble Bulletin, the relatively weak M2 growth (4-4.5%) underestimates just how loose monetary conditions are. M3, who gives a more accurate picture of monetary conditions have of course been "discontinued" by the Fed because it showed too rapid increases.

Friday, October 13, 2006

Peace Price For Banking?

So the Norwegan Jury for the Nobel Price in Peace was awarded to Muhammad Yunus, a founder of the Micro credit movement.

There are different views among libertarians on this issue. Johan Norberg cheers the decision, while Jeffrey Tucker is more skeptical of the "micro credit" movement ( see here and here).

Anyway, though, regardless of whether or not "micro-credit" is good or bad in terms of impact on the economy and the social structure, what does it have to do with peace? It's like that famous "Chewbacca defence": it has nothing to with it at all. It does not make sense.

Even if we for the sake of the argument assume that "micro-credit" does relieve poverty it has nothing to do with the issue of peace. As The Economist points out, if the committee can't find any worthy participants, than it should abstain from awarding the price to anyone.

TV-licensen-en ovanligt irrationell skatt

Som fortsättning på föregående post så ska jag nu utveckla varför "TV-licens" är en orättfärdig och i alla avseenden idiotisk skatt.

Först och främst är idén med "public service" TV orättfärdig. Ingen borde bli tvingad att betala för program som de kanske inte uppskattar och kanske till och med tycker är avskyvärda.

Det argument som förs fram för "public service" är att hade TV bara varit privatfinansierat hade det bara blivit såpoperor, dokusåpor och liknande underhållningsprogram. Detta är ju nonsens. Då det ju finns en efterfrågan på seriös samhällsbevakning så skulle privatfinansierade TV-bolag naturligtvis komma med det och det är ju just det de gör i TV4 och i länder där privatfinansierade TV-företag dominerar.

Vissa "smala" program som särskilda program på jiddish, samiska eller finska skulle förmodligen inte sändas, men jag ser inte nyttan med sådana program. Att staten ska uppmuntra ökat etniskt medvetande (vilket skulle kallas rasism om det var för svenskar) bland minoritetsgrupper är knappast önskvärt ur ett liberalt perspektiv och nyttan med några smala kulturprogram för några kultursnobbar är ytterst tvivelaktig. Och om det nu vore så otroligt viktigt med dessa program så vore det enormt mycket billigare att subventionera sådana sändningar i privata TV-bolag med det belopp som krävs för att de ska sända programmen.

Istället borde SVT bli helt privatfinansierat: endera genom reklamfinansiering eller genom frivilliga avgifter likt de som TV1000 och Canal+ tar ut. Jag som inte har något emot reklam skulle helt klart föredra reklamfinansiering.

Den andra viktiga saken att tänka på här är att även om vi nu för diskussionens skull antar rättfärdigheten i "public service" TV är "TV-licens" ett korkat sätt att finansiera det.

Först låt oss ha på det klara att "TV-licens" är en skatt och inte en "licensavgift". Alla avgifter som är obligatoriska är och kan inte vara något annat än en skatt. "TV-licensen" fungerar exakt som en skatt på TV-apparater.

Att man låtsas att den är något annat än en skatt beror förmodligen på den bild SVT vill ha av sig själv som en "fri television". Men den är allt annat än "fri" från staten. Det är staten som gett den exklusiv rätt till intäkterna från en viss skatt, det är staten som beslutar om skattens storlek, det är den statliga myndigheten Radiotjänst som driver in skatten, det är staten som beslutar om ramarna för programutbudet, det är staten som utser styrelsen för SVT och SR och denna styrlese består huvudsakligen av gamla avdankade politiker.

Kort sagt: SVT är ingen "fri television" utan en ren statstelevision.

Vad som är riktigt absurt med skatten är att man upprättat en särskild myndighet ,Radiotjänst, som är skiljd från staten. Detta innebär ett okänt antal miljoner i onödiga omkostnader (Av det faktum att de har 200 anställda kan man gissa sig till att det är sisådär 50 till 100 miljoner som "slängs i sjön").Om man nu ska ha den så hade det varit mycket vettigare att låta Skatteverket driva in den, vilket då inneburit en direkt samhällsekonomisk vinst på 50 till 100 miljoner.

Det är således totalt vettlöst, även om vi nu för diskussionens skull antar legitimiteten i "public service" TV, att ha en särskild TV-licens. Varför lever då en så uppenbart irrationell ordning kvar?

Dels handlar det om att lura vissa lättlurade personer (vilket det finns skrämmande många av) om att SVT är "fri televison" snarare än vad det egentligen är, statstelevision. Vissa tror ju besynnerligt nog att om skatten indrivs av den statliga myndigheten Radiotjänst snarare än en annan statlig myndighet, Skatteverket då visar det att SVT inte är statligt.

Det andra skälet stavas regionalpolitik. Radiotjänst är som sagt för Sverige en parasitär, skadlig institution, men för Kiruna ger den inkomster. Så på grund av strävan att gynna Kiruna på andras bekostnad så inrättas därför en institution som för Sverige som helhet är negativt.

Detta är ytterligare ett exempel på hur den politiska processen leder till mindre rationella lösningar än marknadsprocessen.

Thursday, October 12, 2006

Vad Stegö-Chilo borde ha sagt

Så nyblivna kulturministern, förra Timbrochefen Cecilia Stegö-Chilo har inte betalat den orättfärdiga TV-licensen. Först skyllde hon på att hon bott utomlands tidvis, men det var en rätt så uppenbar lögn eftersom hon inte betalade de 5 åren före hon 1995 flyttade och sedan hon 1997 flyttade tillbaka har hon haft hela 9 år på sig att betala. Eftersom hon uppenbarligen insett hur genomskinlig den lögnen är har hon nu valt att helt enkelt säga att det finns ingen förklaring.

Det är klart att det finns en förklaring. Det är bara det att hon är alldeles för feg, för att säga det. Det hon borde säga är det som troligen är sanningen: nämligen att hon är ideologisk motståndare till den orättfärdiga skatt som går under eufemismen "TV-licens" och att hon så att säga ägnade sig åt civil olydnad genom att vägra betala denna orättfärdiga skatt.

Hon borde vidare ha sagt att hon nu som minister visserligen finner det lämpligt att nu lyda det existerande regelverket och betala "TV-licens", men att hon som minister kommer att verka för att denna orättfärdiga skatt ska avskaffas så snart som möjligt.
Detta kan kanske dröja något år eftersom Kd och det parti vissa liberaler märkligt nog valde, c, är för den, men att hon kommer att verka för att övertyga dem.

Då hade hon vunnit min respekt iaf. Men istället så kommer hon bara med patetiskt genomskinliga lögner och vägrar stå upp för sin åsikt.

Jag noterar för övrigt att Aftonbladets ultrafeministiska ledarskribent Åsa Petersen (ÅP) kräver Stegö-Chilos och Maria Borelius avgång. Men lilla gumman (lite manlig härskarteknik passar bra här :-)) då! Har du glömt genusperspektivet? Förespråkar du att två kvinnliga ministrar ska avskedas och därmed förskuta könsfördelningen i regeringen i patriarkal riktning?

Var det inte du som skrev "Moderaternas Fredrik Reinfeldt, den blivande statsministern, låter riktigt gubbig när han säger att ”vi ska utgå från att personer som är lämpade för jobbet får uppdrag”. Goddag yxskaft. Det är när kvinnor INTE kvoteras som ”personer lämpade för jobbet” förbises. "

Här har ju Reinfeldt plockat in två kvinnor till två onödiga ministerposter av det troliga skälet att nå en nästan jämn könsfördelning och så klagar du på resultatet. Skulle inte kvoteringen säkerställa att de mest lämpade fick jobbet?

Tuesday, October 10, 2006

Greenspan's Intellectual Dishonesty Have No Limit It Seems

Alan Greenspan is out of office now, having left quite a mess to Bernanke. Greenspan is one of the biggest frauds the world have ever seen, and his intellectual dishonesty haven't ceased just because he has retired.

He now claims that he had nothing to do with either the tech stock bubble or the housing bubble. His argument are really pathetic.

He argues that the real source was "the collapse of Communism in eastern Europe and the shift towards more market-based economies in China and other parts of the developing world brought “billions of cheap labourers onto the scene”.

This, he said, “brought disinflation and lowered inflation risk premiums and long-term interest rates, creating a decline in real interest rates and equity-risk premiums.”"

But downward pressure on goods prices from the introduction of cheap laborers won't lower real interest rates, only nominal interest rates. What lowered real interest rates was Fed inflating in response to the price lowering effects of globalization.

Greenspan further argues that the experience of the Fed tightenings in 1994 shows that the Fed can't "stop"(i.e. abstain from creating) a bubble:

“We learned that the Fed could not incrementally diffuse a bubble,”

“We didn’t diffuse the bubble, we made it worse,” he said. “The stock market was flat during the tightening period and when the tightening ended in 1995 the stock market took off.”

Come again? Because the bubble took off after the end of tightenings ended this proves that tightenings are powerless against bubbles? The argument that A prevents B is disproven because after A is removed B appears?

Given Greenspan's proven mastery of economic logic we can only conclude that this fuzzy backward logic again illustrates that he is so desperate to save his reputation that he'll use whatever lie and fraudulent argument he can find.

Slippery Slope

For some time now, it have been a crime to deny the Nazi Holocaust of Jews during World War II in a number of European countries, including Germany, Austria and France.

Since I don't have any doubts in the truth of the official version of the Nazi Holocaust , these laws aren't anything which is a direct problem for me, but I still regard it as an indirect interest for me to oppose them, because they violate the principle of free speech. Once that principle is undermined we enter a slippery slopw where beliefs that I share might get supressed some day too.

The reality of the slippery slope can be seen in how these laws are now used to justify a new law in France to ban denial of the Turkish mass murder of Armenians during World War I. While I have no interest in that issue either, it illustrates how one violation of the principle leads to another.

EU enlargement commissioner Olli Rehn attacks the law, pointing out that "it may mean that people could end up in prison in an EU member state for expressing their views.".

But to this French politicians countered that they already do it to deniers of the Nazi Holocaust, so why not do it with the Ottoman Turkish Holocaust too?

Bistånd till Nordkorea?

Nog för att jag visste att svensk biståndspolitik i fler än ett avseende var och är totalt omoraliskt. Det bygger på tvångsvis stöld av hederligt folks pengar och är i bästa fall meningslöst men alltför ofta direkt skadligt som när det används för att subventionera palestinierna.

Och nu via Johan Norberg ser jag att Sverige ger bistånd till.....Nordkorea! Nordkorea! Det är ju så otroligt dumt att hade det funnits utrymme för det hade jag tagit mig för pannan med båda händerna.

Och som om själva idiotin i att skicka en massa pengar för att upprätthålla en stalinistisk kommandoekonomi inte vore illa nog så kommer nyblivna biståndsministern Gunilla Carlsson med en av de mer idiotiska uttalanderna hittills i år (vilket säger en hel del med tanke på den hårda konkurrensen):

"Jag vill inte i dag säga att vi omedelbart stoppar det här. Det är relativt lite pengar och har ingen koppling till regimen, men däremot till delar av det officiella Nordkorea."

Officiellt Nordkorea utan koppling till regimen? Är det möjligt att uttrycka sig mer korkat än så? Nåja, nu har vi iaf fått ytterligare en illustration av farorna med könskvotering.

Monday, October 09, 2006

Edmund Phelps Won Nobel Price in Economics

So Edmund Phelps won the Nobel Price in Economics. He was not one of the most deserving candidates in my view, but they could have done a lot worse. Indeed, among those with a realistic chance of winning he was one of the better.

His main theory was that inflation will lower unemployment only if it is unexpected. If workers on the other hand expect prices to rise faster they will demand higher nominal wage increases, meaning that the infusion of new money will not lower real wages (and therefore unemployment), only raise price inflation.

Although Phelps describes it in a non-Austrian way, the basic theory is not anything that Austrians would object to.

Sunday, October 08, 2006

Bush With Jedi Powers

A really funny video about what would happen if George W. Bush were to get Jedi powers.

Saturday, October 07, 2006

Yuan Rises Above 15 Yen

Regular readers of my blog and other writings from me know that I have long called for China to allow the yuan to rise in value faster. This is in China's own best self-interest for two reasons: first because as long as the yuan's foreign exchange rate aren't allowed to rise, the effectiveness of measures designed to reduce overinvestent will be reduced and to the extent it have an effect it will increase China's hugh current account surplus and therefore contribute to further swelling the unhealthily large foreign exchange reserves, which are approaching a trillion dollars.

And second because China needs to reduce its dependence on U.S. exports, and thus make it less vulnerable to protectionist legislation in America. The result will in any case be reduced export revenues, with the difference being that with a currency appreciation they get their imports, including their imports of oil and other commodities, much cheaper.

There are downsides to this plan and I am really in principle negative to this kind of currency manipulation, but in this case the aforementioned two reasons are so compelling that it clearly outweighs the negative aspects.

But even though I agree , sort of, with Charles Schumer and other China-bashers in Congress that the yuan should rise, I don't agree with their assertion that China's currency policy is more manipulative than currency systems based on the Friedmanite floating exchange rate system. Governments can and do manipulate the exchange rate then too, through the use of interest rates.

A case in point is is how the currency of the other economic gigant in Asia, Japan, have moved versus the Chinese yuan. Yesterday (October 6, 2006), the yuan rose above the 15 yen barrier. While the yuan have slowly but steadily strengthened versus the dollar, the yen have weakened is by some measures record weak. As late as in early 2005, a yuan cost just 12.5 yen, but now it has risen 20% against the Japanese currency.

This is the not the result of free markets, but the direct result of the low interest rate policy of the Bank of Japan. Given this, Senator Schumer and others "should" (No, I don't think they should, but given their premise of acting against countries which makes their currencies artificially cheap it would be logical to do so)really bash Japan more than China for their currency policy.

Friday, October 06, 2006

So Now It's Collective Cognition

When someone starts using the Chewbacca defence (I recommend you to watch the linked video to understand the true meaning of the term "Chewbacca defence", but in short it means completely irrelevant nonsense designed to take away attention from the real issue) you know they lack any real arguments.

This is clearly the case for the defenders of the fact that the European Parliament doesn't just have one but two seats-one in Brussells and one in Strasbourg. First of all, it doesn't make sense to even have a European Parliament since it doesn't have any power so the whole Parliament is itself just one giant waste of money. And it becomes even more wasteful because it is in two buildings in two cities in two countries. It really should be nowhere but if we for the sake of the argument accept the need for a "European Parliament" then no rational reason exist for having it located in two buildings in two cities in two countries, causing massive unnecessary cost for travel etc.

Given the obvious irrationality of the current state of affairs, how are its defenders going to defend it. Well, since it cannot be defended by rational arguments they have no other choice but to use irrational Chewbacca defences. So we see here European parliament president Josep Borrell defending the situation by saying 'some Nordic country' did not suffer enough during World War II to understand the true meaning of the parliament's Strasbourg seat.

Some Finns objected to this by saying that Finland did suffer, whereupon Borell specified and said he only meant Sweden. The response from the Swedish supporters of the campaign have been unsatisfactory, to say the least, as their response is that most supporters of the initiative aren't Swedes or that suffering in World War II is not a criteria for speaking out on EU matters.

Both of these objections are true, but the more important objection is that first of all, World War II have absolutely nothing to do with the issue of where some completely unnecessary and harmful EU bureacracy should be located more than 60 years after the end of the war and secondly, and even more importantly, there is no such thing as collective cognition. The ability to understand something have absolutely nothing to do with whether or not a few decades ago, other people in your country were engaged in a war or not. Facts and the laws of logic are universal regardless of whether other people in your country historically participated in some war or not.

Borell seems to have tried to apply the completely invalid and reprehensive collectivist notion of "collective guilt" and applied it to epistemology, in which it takes the form of what one might refer to as "collective cognition". It is just as invalid when applied to epistemology as it was in ethics.

Påminnelse Till Medierna: Feministiskt Initiativ förlorade

What the f*ck? Varför är Gudrun Schyman i både DN och Expressen? Ska det vara så svårt att fatta att hon och FI förlorade valet. Hon var ju inte ens i närheten av att ens vara största parti utanför Riksdagen, än mindre att komma in dit. Men ändå får hon och därmed också FI ett mediautrymme som vida överstiger andra småpartiers (inklusive de mångdubbelt större Sverigedemokraterna.). Detta illustrerar återigen hur Sveriges journalistkår är hopplöst vänstervridna och oproportionerligt radikalfeministiska.

Is This What You Reward With a Nobel Price?

On monday, we will know who will receive the nobel price in Economics. Unfortunately I don't think any of the more worthy candidates (aside from me of course, that would mean George Reisman or Mark Skousen or Israel Kirzner) will win. Instead, someone with less sensible theories is likely to win. Just look at this stupid article from one of the previous winners, Joseph Stiglitz.

Stiglitz proposes to fix global imbalances by cutting government spending in America. That would reduce the budget deficit and therefore by extension the current account deficit. So far, so good, but he then proposes a tax reform where you raise taxes for people with high income and lowers them for people with low income. This he says must be done to reduce the impact on the economy from the spending cut by redistributing from the rich to low income earners as the latter have a higher propensity to spend. But the thing is that if it is really true that they have a higher propensity to spend, then this will mean that the effects of the spending cuts on the current account deficit will also be offset, making the whole scheme useless, as Greg Mankiw have also noted.

If a man with such confused thinking is rewarded with the Nobel price in economics, then I am afraid we won't get a particularly worthy recipient this year either.

Nouriel Roubini On Why the U.S. Is Different From U.K., Australia

Nouriel Roubini have a good blog post answering the bullish argument that the U.K. and Australia (allegedly) went through housing busts without a recession, so therefore the U.S. will be able to do that too.

Roubini points out that there several important differences, most notably that the U.K. and Australia have had a more symmetrical monetary policy, raising rates with the intended effect of containing the housing bubble, a policy which both Greenspan and Bernanke have opposed. Greenspan and Bernanke have instead favored and practiced the assymetrical policy of not raising rates when bubbles are created while cutting them when the bubbles are bursted, something which have allowed the bubble to get worse in America.

Moreover, particularly Australia had the luck of benefiting from a positive terms of trade shock just when the Aussie housing bubble bursted.

It could be added that the U.K. actually never saw its housing market slump, it was only a case of a temporary deceleration of the rate of price increases, not really comparable to the actual slump we saw in Australia and which now appears to be coming to America, so the U.K. is hardly an example of an economy with a bursted housing bubble.

About the New Swedish Government

Today, the names in the new Swedish government were announced (until today we only knew that Fredrik Reinfeldt would be Prime Minister). The appointment that received most international attention was that former Prime Minister Carl Bildt was named Foreign Minister.

It seems that ex-libertarian turned technocratic centrist economist Anders Borg will be Finance Minister. That was the most likely choice and given the alternatives, it was a relatively good choice. While I strongly disagree with many of his current views, the other possible choices wouldn't have been any better and compared to the others, he understands economics better.

One of the most surprising choices was to appoint Cecilia Stego-Chilo, until now the leader of free market think tank Timbro as culture minister. Let's hope that this is not a sign that Timbro is league with the centre-right government, as Timbro needs to be a independent group that pushes public opinion in the direction of free markets and smaller government, even if this means defying the current government.

The two worst are Nyamko Sabuni as Minister of Integration and Gender Equality and Andreas Carlgren as Enivironmental Minister. Sabuni have proposed a number of antilibertarian authoritarian ideas such as banning religous schools and a mandatory government examination of all young girls vaginas to the deal with the small problem of female genital mutilation that only exist in some immigrant groups from East Africa . Andreas Carlgren lost all credibility when he as chief of the Agency of Integration tried to have everyone believe that the Social Democrats had pursued a successfull integration policy.

A mixed bag, in other words, just as the government's policies are a mixed bag of good and bad.

Thursday, October 05, 2006

About Time They Figured That Out

Sorry for the lack of posts for the last few days, but I've been unusually busy and there have anyway been relatively few important news items (And no, I do not consider a few pervert e-mails from some pervert Congressman to some teen age boys to be "important").

One thing interesting I did find was that two "bullish" commentators, John Tamny and Alan Reynolds, finally figured out that there is a downside to rising prices and an upside of falling prices: namely that rising prices makes would-be home buyers poorer and falling prices makes them richer, all other things being equal.

How convenient that they just so happened to figure it out when prices seems to be declining.

"But", some of my readers may think, aren't bearish commentators like me making the opposite mistake of now highlighting the downside to falling prices now that prices are falling.

No, there is a difference actually. It is not the case that if prices first rise sharply and then fall back that it's the same as if prices had stayed flat all the time. The reason for this is that during the period of rising prices debt is created as home buyers need to borrow more to buy a home and as existing home owners borrow more using the "home equity" created by rising prices. When prices then fall back, the "home equity" disappears, but not the loans they spawned.

Sunday, October 01, 2006

Who Will Take Up the Slack If the U.S. Goes Into a Recession?

Recent indicators have fairly consistently (with the Chicago PMI being the only real anomaly) showed that the U.S. economy is slowing, and there is a strong case for believing that a recession is underway soon.

The question now is, if that happens, how will this affect the world economy? The rest of the world have become increasingly dependent on exports to America, but a recession there would end the trend of increased net exports to America from the rest of the world and indeed see it partially reversed for three reasons: 1) The direct effect of a recession will be a decline in demand, including a decline in demand for imported goods 2) A recession will mean that interest rates in America will fall compared to the rest of the world, something which in turn will mean a weaker dollar which in turn means that the decline in demand will disproportionally hit imports 3) A recession increases the likelyhood of protectionist legislation in Congress, which will have a similar effect as the weaker dollar.

This will undoubtedly mean that growth in the rest of the world will be lower than it otherwise would have been, but this does not necessarily mean that growth will be lower than today as other factors could compensate for these negative effects.

However, looking at other mayor economic regions, it does not appear promising.

Europe is currently undergoing a cyclical recovery and as this upswing is in its early stage it could have potentially continued for a few years more. But Europe's structural weakness will mean that growth in absolute terms will not be strong. Moreover, the planned German VAT hike will have a strongly negative effect and will at best mean that growth will slow. In the worst case scenario, it could in combination with the U.S. recession send Germany into a recession, which would have greatly negative effects for the rest of Europe too.

The centre-right electoral victory in Sweden will for reasons explained here
lower the Swedish current account surplus and thus help global re-balancing, but ultimately Sweden is too small to make a really significant difference.

Japan is in an ideal position in the business cycle and could therefore see some cyclical upswing, but Japan's structural weaknesses (mainly related to its demographics) and its mercantilist economic strategy means that growth will in absolute terms not be particularly and that it will not be able to contribute much to global re-balancing.

China is extremely strong when it comes to its structural growth rate. But its reluctance to allow the undervalued yuan to significantly rise in value have left it overly dependent on exports to America and have sabotaged the needed shift to domestic demand. The U.S. recession will likely mean that the Chinese trade surplus will fall, but this will unfortunately not translate into a higher growth in domestic demand, but rather in a cyclical slowdown.

All of the above mentioned economic powers will be helped somewhat by the likely fall in commodity prices caused by falling demand from America, but this will be of only a limited significance.

Commodity exporters will suffer as their export earnings fall. However this will only be of limited significance to domestic demand there as most commodity exporters (particularly oil exporters) have had a deliberate strategy to use the windfall profits to buy foreign equities rather than to allow it to translate into increased domestic demand. This should mean that they fairly painlessly could contribute to global re-balancing.

The conclusion however remains that the negative effects for the rest of the world from a U.S. recession will not be counteracted by other positive factors. The small positive effects from lower commodity prices and the Swedish centre-right victory will likely be cancelled by the negative effects of the German VAT hike, meaning that economic growth in the rest of the world will fall if the U.S. recession.

Vissa har mer tur än andra

En sån där lärare hade jag velat ha under min högstadietid....