Election Time!

Today, Sweden elect its new masters, and as the Economist gladly pointed out they're looking to overturn what made it comparatively less worse-off than other European countries.

My point: There's no difference, sweethearts.

The Number of Numbers

Since the Centre-Right government Reinfeldt was elected in 2006, 140bn SEK (~£12 bn) of tax-reductions have been made. (Roughly about 10% of then yearly public revenue - and because of economic growth, total public receipts have since then increased by some 29%, while inflation is up only 10% essentially making the tax-reductions irrelevant, but who's counting?)

In 2006 the total Tax Revenue out of GDP was 48,3%. That means, out of a total economy of £100, 48,3p was payed in taxes to the government.

In 2013 the total Tax Revenue out of GDP was 44,5%. That means, out of a total economy of £100, 44,5p was payed in taxes to the government.

Sweden used to be World Champion in taxing its economy; we've now been demoted a few steps, which is causing the Socialist-/Feminist wave ("WE WANT FIRST PLACE!"). Nonetheless, The opposition accepts most of these tax-reductions, saying "you can't keep changing entire tax systems every 4-years". That is, in the oppositions' suggestions of what to do, Tax Revenue would likely be somewhere around tops 46% of GDP. Election is between 44,5% or 46%.

HUGE difference, obviously... (*insert Ironic laugh*).

My Point Again: There is negligible differences between political parties in Sweden. 

The ruling class loots your income, regulates your life and steals your property nontheless.

More reading here: Sagan om Inflytandet. ENJOY Election Day.

Review: 'The Tyranny of Experts' by William Easterly

William Easterly, a NYU Economist, is a major player in development economics and perhaps the biggest critics to how development agencies squander aid and ignore the rights of the poor. The subheading of his newest book, The Tyranny of Experts - Economists, Dictators and the Forgotten Rights of the Poor, indicates the particular interest his book deals with; The pervasiveness of the idea that a Benevolent Dictator could put their populations' rights and freedoms on hold in order for economic growth and prosperity to arise.

He praises the Enlightenment and its protection of individual rights, a statement that initially seems unrelated to his field ("what has rights got to do with feeding my starving family?", implicitly attacking critics that play such a position: "What good is freedom of speech, if you're starving?").
He then consistantly shows how Authoritarian approaches that ignore rights are counter-productive in producing development. How the authoritarian top-down view lost in the West, but remained dominant in Development Agencies (=World Bank, USAID, DFID), effectively preventing the Rest from growing richer.

He mentions outrageous examples that superficially seem well-intended (Gates Foundation or the Tony Blair Africa Governance Initiative), but result in horrendous persecution of poor people. Human Rights Watch showed how donor-funded food relief was used to blackmail opposition. International Development Agencies supporting a regime that jailed opponents and shot demonstrators. The Ethiopian government abused any imaginable right on part of their poorest by forcingly displace them, took villagers' land and leased to foreign investors.Tony Blair praised the alleged Ethiopian Government's rapid reduction of child mortality. Bill Gates mourned the death of Ethiopia's dictator Meles Zenawi, saying it "was a great loss for Ethiopia". Right. Not very benevolent.

I want to point out three topics that particularly spawned my interest: The Blank Slate, Spontaneous Solutions and the Probability Confusion.

Blank Slate.

The Blank Slate, Easterly describes, is the

mindset [that] tends to ignore history and to see each poor society as infinately malleable for the development expert to apply his technical solutions. The alternative would be to learn from history why each poor society is poor, to learn from history why other societies became rich, and to draw lessons accordingly for how to escape poverty.

The Blank Slate is the pervasive attitude in the field of Development to see poor countries as one unit, regardless of differences between them. It fosters the potential to give "One-Size-Fits-All" solutions that disregard history and disregard whatever circumstances lead to the current situation. It's the belief that one can simply erase anything previously occured and start over, forming societies or human beings into whatever you're currently trying to achieve.

Easterly says:

Blank Slate thinking thus opened the door for development experts to reject the utility of the West's history of individual rights and development as a precedent. If the Rest had nothing to learn from its own history, it also had nothing to learn from the West's history. 

Essentially, the Blank Slate, is the excuse development "Experts" can use for disregarding History. For disregarding the reasons for this:

Honestly, it's a very useful concept, applicable to many more areas than Easterly believed, I think.

Concious Directions vs Spontaneous Solution. 

Roughly translated into "Top-Down versus Bottom-Up" approaches. Initially a Hayekian point about dispursed knowledge, Easterly adds reasoning over innovations. Since Innovation means doing things differently, in a way previously unknown or undiscovered, you can't plan innovation as you simply don't know what the results of doing things differently (innovating) will be - so you can't plan for certain results to happen. There's no top-down planning involved in discovering anti-biotics, inventing steam-engines or cellphones.

The point is the same as that made repeatedly throughout this book. The top-down leaders and experts in technology do not have enough knowledge or incentives to get it right for the reality of what is happening at the bottom. 

He goes on, describing how ideas multiply exponentially, and how technological development feeds on itself into a snowball effect consisting of a) previous innovations/non-rivalrous ideas and b) population. Also, the amount of technology had in year 1500 is found to be a pretty good determinant of how much technology that area has today:

We confirmed that technology in 1500 predicts technology (and thus per capita income) today. In fact, 78% of the income difference today between Europe and sub-Saharan Africa can be explained by technology that was already in place by 1500. [...] So we find that a very simple theory of bottom-up innovation can explain many of the big facts about tehcnology around the world today. 

Here, Easterly also draws on Joel Mokyr's work on the British Industrial Revolution: "Intellectual innovation could only occur in the kind of tolerant societies in which sometimes outrageous ideas proposed by highly eccentric men would not entail a violent response against 'heresy'".

Argument simplified:
- Innovation fuels income/wealth
- Individuals with unalianable rights make innovation happen
= Top-Down approach to innovation and lack of individual rights are bad ideas if you're looking for higher incomes.

Probability Confusion.

This area deals with the _ONE_ objection I had while reading; What about the Asian Tigers (South Korea, Taiwan, Singapore, Hong Kong) and their miraculous growth over the last few decades? They were all run by "Benevolent Autocrats". The very existence of these countries seem to throw Easterly's great contribution out the window.

No, he says. We seem to think that autocrats create growth because of a psychological mistake where we confuse two opposite probabilities.

In his outstanding Chapter Thirteen "Leaders: How We Are Seduced by Benevolent Autocrats" he deals with that question as well as with the psychological biases that give credit to leaders while underlying causes might've been more obscure. He concludes:

It is because growth miracles are rare that the true statement 'most growth miracles are autocrats' is so very different from the false statement 'most autocrats are growth miracles'. This same psychological mistake contributes to stereotyping of certain unpopular minority groups. It could be true that 'most terrorists are Muslims', but it is definately not true that 'most Muslims are terrorists'. Prison statistics could indicate that 'most violent felons are black', but it is definately not true that 'most blacks are violent felons'. Racism has many toxic causes, but one of them is just the racists' incompetence at probability. The same incompetence makes us believe autocrats produce high growth."

The above passage is surely what most affected me in his 350-page masterpiece. He also explains the "Myth of the Hot Hand", a phenomenon in basket where you'd want to pass the ball to a player who has scored a lot, believing he'll score again. Over large series of probabilities, it simple isn't true. But if you point your finger at a few selected examples, then sure you could find players scoring over and over - just like you can find autocrats being in power while a country experienced miracolous growth.

His explanation for China, South Korea or Taiwan?
- Levels produce levels, changes produce changes. It's not the level of freedom that produces a certain growth miracle. It's the change in freedom that creates growth. China had massive changes in economic freedom following the reforms in late 1970s. Economic growth is about a percentage change in development, he says. Not about the absolute level of development. This would explain the rapid success of the tigers, although I realize the debate is far from settled just from this. Nevertheless, an amazing insight.

He finishes the books as splendidly as he started it, summing up its main points. Development is a bottom-up thing. Ignore individual rights in order to plan development is a double-failure. Not to mention that freedom is a value in and of itself. Beyond that, there are more fascinating chapters: his examination of development in China, Africa and Colombia; his local history of the Greene neighbourhood in New York, accidently binding some New York history into it. He describes the value of institutions by comparing the Maghrib traders in the Mediterranean to the Genoese. He compares the debates that never happend between Nobel Laureates Gunnar Myrdal and Friedrich Hayek as well as tracing the origin of development experts.

This is simply an amazing book.

The global double standard of rights for the rich and not for the poor is very much alive in the technocratic worldview of development. But this, too, could be a casualty of the Rise of the Rest and the spread of freedom. The disrespect for poor people shown by agencies such as the World Bank and the Gates Foundation, with their stereotypes of wise technocrats from the West and helpless victims from the Rest, may become increasingly untenable. Development may have to give up its authoritarian mind-set to survive. 

The Benevolent Agenda - Case study: Kenya

Today I had a big hectic discussion at one of our great family dinners. We're all quite decent idealistic people, who care about the poor and generally try to be as good and decent people we can, improving our lives and the lives of others.

What originated largely as a generational dispute over disciplinary rules in schools ended in a state-versus-markets and economic development debate. This, however, tells us very interesting things about the Benelovent Agenda.

Now, what do I mean by this?
What I'd like to call the Benevolent Agenda, is the notion that if there exists a problem, the solution is the immediate alleviation of that problem. If people are starving - send them food. If we have poor people - give them money. If these poor people lack education - tax others to provide education-free-of-charge for them.
If rich people have "too much money" - tax the hell out of them. And so on.

This all has a superficial appeal to it. I mean, if people are starving, they obviously need food - let's just give it to them! Problem here is the lack of an adequate answer to the question why? (This critique can be applied to a lot of things, from financial crisis 2008 to the Welfare State).

This brings me to the case study of Kenya. My mother recently visited Kenya and among other things were witness to the immense poverty of Kibera, a big slum area of Nairobi. This, she gently pointed out, was reason enough to introduce a welfare state, state-funded education and jobs for these poor people so that they can advance from their poverty. Again, superficial appeal to such arguments.

After a deeper scrutiny, however, it falls apart. I'm gonna show three things that hinder these poor from advancing, improving their lives and making enough money to sustain themselves and their family. And more importantly how these three things are State-generated. State Failures as opposed to market failures.

#1)  Inflation
Inflation, contrary to common knowledge, is created by state interventions in the market place by artificially increasing the amount of money in the economy. Secondly, the poor are the peple most harmed by this. Why? Because in an inflationary environment, the purchasing power (=what you can actually buy for that £10 note) of your salary is steadily reduced. So, if there's inflation, you'd rather spend your money today than save some of it for tomorrow (because tomorrow it'll buy me less stuff). Conclusion: you can't save.

(Note on this: wealthier people, however, can save in such environments because they have access to financial products or investments that gives them above-inflation-rate returns. This opportunity is generally not there for the poor. Inflation rates in Kenya over the last decade have bounced between 5%-35%).

#2) Property rights to their dwellings or things
Hernando de Soto vividly explained to us how large parts of the world's poorest people live their lives predominantly in the Informal Economy. That is, they have houses and property and businesses (he calls them 'Dead Capital') but these items are not registered or accepted as Valid Claims to property largely because of #3 below. This has the effect that expanding your business, taking out loans on your house or having sufficient safety to plan over larger periods of time become essentially impossible. Conclusion: you can't raise funds to expand business, plan ahead or take advantage of the property you actually own. 

Just a quick note here. Notice how the two BIGGEST ways to acquire funds (#1 + #2) so that you can expand your cloth-weaving or production of recycled glass (as are the examples from Kenya my mother brings to the table), are closed off for these poor people. They can't take out mortgages and invest in new, bigger machines for your weaving and they can't save money on their own to buy such machines later on.

#3) Red Tape
Red tape is usually explained as bureacracy, regulations, riddiculous and difficult rules that make life hard for people. This is generally pointed out as a growing ground for corruption. It inclused restrictions on what you can lawfully do, processes to get property rights to housing, creating a business, legal protection and so on. Starting a business in Kenya takes around 32 days (not that bad, actually), but carries a charge equal to 38% of income/capita (even harder, because poor people earn even less than average income/capita).  Conclusion: regulation, bureaucracy creates obstacles for everyone, but especially the poor. It's expensive, and creates a third obstacle to the poor's prosperity.

The Benevolent Agenda

What my friends and family around the table claims is that such problems as Kenyan poverty needs to be alliviated by State Interventions; education so the poor can get better-payed jobs, Health Care so that they'll live better, and redistribution so that they won't be poor. Their intentions are good (=help the poor), but their solutions to do this are horrifically unsuited for alleviation of such problems. 

As I pointed out above, the REASON these people are poor have nothing to do with these measures my family would like to include. They are addressing symptoms rather than causes. The reason they remain poor are largely covered by what I've stated above. But all that gets lost within the solutions provided by The Benevolent Agenda. 

Subsidies for EU agricultue - a critique of CAP

Today I'm in the mood of attacking state-financed industry. Actually not subsidies in general, but a particularly harmful subsidy; agricultural subsidies.

Financially supporting farmers has been a key part of policies for many countries, but moreso the European Union. Since the time of ECC the framework know as Common Agricultural Policy has been in placed, disrupting markets and increasing prices for normal people. It consists of a few different components, such as encouraging overproduction, EU promise to buy at a guaranteed price and to increase general production of crops. (Here's a brief comparison over pros and con for CAP)

As this chart shows, increased European prices is not a very new phenomenon. It's been around for a while.

"The averege person in sub-Saharan Africa earns less than $1 a day. The average cow in Europe - thanks to government subsidies - earns about $2 a day. And therein lies a tale of the power of European farm interests and the weakness of African economies". Kevin Hassett & Robert Shapiro (Quote's from an article about 10 years back, so the numbers are probably not entirely accurate)

What impact does this have then? 

Not only does the CAP artificially increase food prices for European Consumers, it also harms non-european producers (predominantly African and Asian farmers, i.e the poorest of the poor) that otherwise would have supplied the European market with crops. As if that were not enough, the EU also dumps surpluses on the international markets, surpressing prices further and in another strike hurts farmers in developing countries. It's almost as if the CAP was designed to hurt African farmers as much as possible. I mean, is there anything it can do to do FURTHER harm to African farmers?

Strike 1) Block them from our Markets by Huge tariffs on Agricultural products
Strike 2) Pay our own farmers to overproduce, and sell below production costs
Strike 3) Dump the surplusses on the international markets, surpressing the price African farmers would have sold their crops for otherwise

That's amazing. Together with kickbacks and general inefficiencies with development aid and Remittances outweighting Western Development aid, the CAP is just another measure to harm poor people in other parts of the world.

Disgusting.

Response to Josh:

Hi, Josh and everyone else!

Finally I've time enough to get through a bunch of questions Josh asked me about a week ago, in my post on libertarian ethics. He made several claims and had a few relevant questions I'd like to address. So, here's an overview and a brief elaboration on each topic.


On Moral
Josh claimed that 'moral' was misplaced as far as philosophical terms are concerned, on the grounds that "sense deep down" does not form a logically coherent argument. I am inclined to agree, but then again, what is moral if not a deeply rooted sense or conviction of what is virtuous/desireable etc? Put into context, what's stopping me from robbing my neighbour's house is not only the cost and consequence I might have to pay if the police catches me; there's something else, there's a conviction within me that stealing is inherantly wrong, and that I want to live my life according to different standards. Perhaps that's not the exact definition of 'moral' from a philosofical perspective, but that's my understanding. Feel free to correct me.

Distinction between 'force' and 'violence' 
In Josh's comment, he includes into the concept of 'force' other types of influence over people, such as persuasive, economic or intellectual. My answer is simple: such concepts are catagorically differt influences. The three of them involve a use of the agent's mind, letting him ponder advantages or disadvantages with, ultimatly leaving the choice down to rational considerations; that is, the way everything in humankind works, when we buy, consume or take up a work. When violence (or threat of violence) is introduced, that natural process in human brain is put on hold. Under the assumption that a human being prefer any scenario where he/she lives to any scenario where he/she dies, there's no barganing, there's no reasoning involved when violence is introduced. That's the essential difference between the two catagories of "force".

Now, I know whole bunch of socialist that will object that the very same conditions apply for people choosing to take up a job (that is, some kind of economical force) because if they don't, they starve and ultimatly also die. This, altough being a close alegory, carries a vital difference; that force/limit/condition is set by nature, inherent in our existence and something we cannot overlook or remove. Violence, on the other hand, is introduced by human action and is by no means a necessity for human survival.

If you'd want to walk the other concepts, persuasive and intellectual 'force', you'll end up in a confusing debate where everything eventually turns into a persuasive force (your parents, religion, legal system, cultural traditions etc), thus refraining from personal choice or freedom to form your own life. I fundamentally refrain from such a claim, but that's beside the point. Simply, the only way Josh can be accurate in his reasoning regarding this point is to refrain from all personal choice.


On the topic of Best Interest
As part of the above mentioned argument, Josh involved the concept of 'best interest'. How are such interests to be determined, especially if not by the agent himself, as Josh's reasoning requires him to? Is there any kind of divine, omniscient creature/body that could inform us about such interests? Not really. Unless you make what economists call "interpersonal utility comparisons", you cannot determine the "best interest" of other people. I'd argue that such comparisons are impossible, thus reaching the point where the best agent for your own interest always is your personal being.


Property Rights
Somehow it seems that at the bottom of whatever libertarian approach I take on a particular issue, I find property rights. I believe that's because property rights are the most essential - and arguably the only - feature we come into this world with, involved in every transaction between people. Unless you want to argue that the purpose of humankind as a whole is to be decided by some kind of divine authority who controls everything, you'd have to admit property right over our own self; the blood flowing in the body I call mine, is rightfully mine, the bodyparts connected to it aswell. Hence, the mind I use for every simple or hard task is mine to control, use, advance and enter agreement with others with.

Josh's argument here is that property right "have forced someone else not to have access to it". That's a fallacy for several reasons. First, as seen above, what my blood, mind or body is does not limit the property rights of other people's minds, bodies or blood. Secondly, when inventors invent object x, have they done so at the expense of other people who didn't invent x? If I carve a bow out of a tree, make some arrows and this invention renders me a better hunter (thus allowing me to survive to a larger extent), was this made at the expense of all those who didn't invent such an instrument? No, not at all. Hence we conclude that because my mind is my property, whatever my mind creates is also my property, free to trade with whomever I want for whatever end I find worthwhile. From that, property rights for most things can be established. That moves us to the next issue; enforcing them:


Property Rights, Enforcement and Thrid party 

"And how are private property laws to be enforced without the use or threat of force? Also, how do they resolve the conflict of two people's rights (where the two cannot come to agreement) without the initiation of violence, if not through a third party who has been designated as arbitrator?"

To resolve the conflict of property rights and costs involved in whatever transaction, you wouldn't have to go further than the simplest insurance disagreement on, say a car crash, or even regular disagreement between corporations. Because legal actions are costly in terms of money, time and effort, both parties prefer solutions that can be reached without such measures. Especially in contacts between insurance companies; they are very well aware that such conflicts will arise in the future, and court costs for every single transactions simply does not make sense. What's the bottom line here? Parties involved have strong incentives to solve issues of property rights without the involvement of courts. Thus, there's no need for external force to resolve most conflicts.

I'm currantly reading an interesting piece on just this issue, The Not So Wild Wild West, about property rights among whites and Indians in the Great Plains during the 19th century (You can find it at the Uni Library). Before reading it, I had the view that some kind of third party external force was required to maintain order. The author argues that this was not the case in the first 50 years of contact between Indians on the Great Plains and white settlers; property rights evolved on its own, they were respected by both sides and within groups, and trade flourished where Indians for example traded pieces of land for exotic good carried by the Whites. On the contrary, wars and violent conflicts between whites and Indians didn't occur until basically after the American Civil War, when the US had a standing army performing the role of a "third party". Why was this? Essentially because violence is always a negative zero-sum game, not in the interest of either party, while trade creates benefits for both parties. When the US standing army was present, however, the cost of warfare was moved from individual settles to the US government, thus reducing the transaction cost for such measure on behalf of the individual settler, making violence a viable option.

Also, property rights were upheld by mutual respects and voluntary cooperation between and within associations/tribes.

My bottom line with this is that external third party might very well be the cause of violence rather then a protector from it.


Libertarian, Minarchist and Anarcho-Capitalist Approach

This a bit of a grey zone, and I suppose Josh has a point that I perhaps mixed the concepts in my initial post. Originally, the libertarian approach involves a small state for certain ends (such as courts, police or Military; a minarchist argues the minimal state concievable (normally State involves some element of Nightwatch State, but generally not all of them) while Anarcho-Capitalist approach refrains from any kind of state. I've also heard people arguing that Libertarianism would be some kind of category including minarchist and anarcism approaches. Tricky.

I have to admit that my understanding and reasoning between these concepts varies. They all have valid points and I'm not entirly sure which one I prefer. In this sense, I'd agree with Josh, when he argues that my initial post is more inclined towards anarcho-capitalism than towards libertarianism.


The Idea of a Social Contract

Josh argues that since I'm part of a society, I implicitly agreed to the rules set up by such society. If I'm not mistaking, that idea comes originally from Rousseau, though I'd argue to refute it entirely on the follow grounds:
For contracts to be of any value, there has to be internal and external elements; that is, someone/-thing is included in the contract, and if not applying to some conditions, they are excluded. This normally involves a choice on the part of the individual. A contract (may it be letting, selling goods, taking up employment etc) may be broken, and I can choose to walk away from such a contract. That's the core of it. For such a contract to exist within a society, there must be the option of opting out of it, that is leave and not live under the conditions such a contract puts forward. Does that exist?
Simply, no. The moment I leave the domains of UK State, I enter some other State. While within those states there are no options for me to leave the conditions, refrain from state benefit and not paying taxes etc. There simply is not a choice, thus you cannot argue the case of a social contract. 

_________

I probably forgot some elements of these questions, but I'm fairly certain this is long enough for most people to opt out of reading it, anyways. Further questions will hence have to be dealt with in other posts. 

An Austrian Economist reads the news

As fellow students are very well aware of, waking up is not the hardest part of starting day; getting out of that bed actually is. This unfortunate morning I spend little over an hour reading the news. Not snapchatting like my flatmates would do, not mindless facebooking. Doesn't seem too bad, right?

Turned out, reading the news from an Austrian's perspective (here's a quick overview to how we approach Economics) could be detrimental to your mental health. Gosh. Here's a brief review of today's catch. Apologies for Sweden-biased.

ECB Considers Negative Interest rate

A Swedish article regarding a piece of news from last week. (Eng:Bloomberg, Swe: SvD).

Right. The Keynesian conviction of controlling and governing the economy through the almighty power of injecting/extracting money from the economy with by means of Interest Rate doesn't seem to be enough. Negative interest rate essentially means that someone is paying you to take up a loan; not only would the European Central Bank be giving away loans for free, now they're supposed to pay others for taking up loan. The Keynesians are becomming restless. Their front figure Paul Krugman occationally calls for extended measures, such as negative interest rates etc. Essentially, the Keynesians believe in AGGREGATE SPENDING, and during recessions everything needs to be done in order to increase such spending. Whatever that might be. 

Problem for an Austrian Economist is that we use the theory of Business Cycle , that is up- and downturns in the economy are NOT an inherent feature of the free market; they're created by central banks through increased money supply. Low interest rates makes investments (predominately those in a far off future) seem profitable while they weren't at a higher interest rate. This creates a whole lot of additional investments right now, which is exactly what the Keynesians are looking for. Problem is, once interest rates are stabilised or normalised, one after another investors will realized that investments made actually don't pay off. All they've done is destroying resources in what we like to call malinvestments. 

So, when I read "Negative Interest Rates", that is BELOW 0 interest rates, this is how I feel:

Prominent Swedish Journalist: "Are European Politicians Stupid?"
That's a claim I'm not going to dispute, but for completely opposite reasons. Andreas Cervenka accusted the EU politicians in favor of austerity measures stupid yet again referring to Krugman. Why? They reduce spending while in a recession, because of too high national debts. 

Yet again the Austrian asks themselves, WHY have these countries run up such debt? In the case of Greece, Spain and Italy yet again it comes back to the Business Cycle; way too low interest rates gave birth to completely brainless investments, that eventually unfolded themselves (and banks, governments etc took over such debts, spend taxpayers money to save bad investments, not solving any problems, and additionally multiply government debt). 

*sigh*

Politics should be STATE-FUNDED!

Steve Richards in The Guardian says political campaigns are threatened unless they're state-funded. 

Really. 

Everytime I see "X should be State-funded", "Taxpayer should pay for Y", I slowly want to strangle myself. A simple 'no' would suffice; If any state at all is justified, its tasks involve upholding private property rights, possibly a military force or court system. Except for that, there's no justifcation.

But from an Austrian perspective, this is quite useless on the ground that taxes raised for whatever purpose takes away resources that could and would have been employed elsewhere. That is, such mearues restricts the investments that could have been made by those individuals, thus moving resources from private to public. Not exactly beneficial for an economic system, moving money from productive to unproductive sectors such as political campaigns.   

Housing Market!

Le Grand Finalé!

Swedish socialist got media attention with their article of "how to solve the housing crisis" in one of the largest nespapers. Just like the debates had throughout the UK, Rent Control, Collective Measures and State Intervention are the natural solutions at the core of such reasoning. Let's all blame the market and those filthy capitalists for what they've done!

Problem is, blame is to be put elsewhere. As always, the socialists forget a lot of things, particularly what is causing a housing shortage/crisis. 2 major lines of answers here; 

1) by restricting rent levels, profits gained from letting your property is reduced, necessarily resulting in less capital willing to construct such houses/less amount of people willing to let some of their properties. They can simply find better use for those resources than let them for housing. So, by restricting rent levels you'll have LESS homes available for letting.

2) state interventions, building permits, restrictions and bureuaucracy involves costs in terms of money, time and opportunity costs. The process of actually constructing a house, not to mention an entire complex of apartments, is ridiculous. This is mainly in regards to the Swedish situation, but from what I've learned it applies fairly well in the UK too.

So, calling for more State Interventions to solve the problems caused by the State's last Interventions?   I've heard that before...   Brilliant reasoning.

________

Sometimes I think I should watch a cartoon, draw a painting or simply ignore these awful ideas put forward in the media or everyday life. They never cease to surprice me. 

Seminar Time - And the tendency of intervention

As I take the introductory course of Public Policy here at University of Glasgow, I also attend the weekly 1-hour long tutorials in the course. To be fair, put aside all the obvious objections I have towards this subject, its lecturers and the ways in which  it is taught, the Tutor of my neat seminar group is great. She openly displays her opinions and always let us discuss freely our own ones. Shame time is such a scarce resource.

Naturally, as most of the group consists of sociologists or students of other social sciencie, the tendency is very much towards an intervetionist "The State Will Fix Everything" kind of idea. And, yet as natural, whatever comment I make disrups the status quo of allowable opinion, at times producing a war in that little room of ours.

Todays subject; Health Inequality. Appearantly, the percieved and measures "Inequalities" in health related areas in Glasgow are particularly interesting to sociologists due to the fact that they are heavily correlated to geography within the city. It even has given name to the international phenomenon of WHO.

Our tutor gave us the task of suggesting Policies to Solve this Problem (a future post will be dedicated to explain why it isn't even a problem to begin with). What types of policies did my wonderful group come up with?

1) Regulations
2) Tax on unhealthy food
3) redistribution of income

It's gotta be a good life these keen supporters of public policy have. The answer to EVERY question is STATE INTERVENTION or STATE REGULATION. It's a bit like listening to Keynesian Economists, their magic trick being INCREASED SPENDING.

It's a funny world we live in.

________
Oh, btw!

During this mornings lecture (Time of first Thatcher critique: 22 minutes) we were fed the faulty socialists' concepts of transforming correlations to causality; Health in Glasgow, we were told, are appearantly determined by 1) Race, 2) Gender, 3) Social Class 4) Geography and OF COURSE the almighty Income (and Income inequality). Funny that, I had the impression determinism was long ago considered a bit out of fashion, if you'd like. That individuals make choices, preferes DIFFERENT THINGS was of course readily discarded as some black magic Mumbo Jumbo. Funny.