A quote from P.J. O’Rourke (has to be Irish!) in the WSJ:-
“The free market is not an ideology or a creed or something we’re supposed to take on faith, it’s a measurement. It’s a bathroom scale. I may hate what I see when I step on the bathroom scale, but I can’t pass a law saying I weigh 160 pounds. Authoritarian governments think they can pass that law—a law to change the measurement of things.”
Thanks to Mark Perry and Art Carden for highlighting this quote.
According to a Eurobarometer poll published two days ago 77% of Irish people want “stronger European measures and coordination to combat the economic crisis”. This of course is highly discouraging information for free-market advocates such as the Austrian School, but let it be a rallying cry to redouble the efforts of those who are trying to bring sound economic thinking back into the mainstream.
I was reminded of the Robert Higgs “Ratchet Effect” upon reading that story. The brief explanation on Wikipedia is as good as any:
Austrian school economist Robert Higgs used the term to describe the seemingly irreversible expansion of government in times of crisis in his book Crisis and Leviathan. Similarly, governments have difficulty in rolling back huge bureaucratic organizations created initially for temporary needs, e.g., at times of war, natural or economic crisis. The effect may likewise afflict large business corporations with myriad layers of bureaucracy which resist reform or dismantling.
Forgive me for using a Fianna Fail campaign slogan, but it seems appropriate: “A Lot Done, More to Do”.
Source: Most Irish people want more economic governance from EU
Reading over Ludwig von Mises’ classic ‘Theory of Money and Credit’ I came across the following quote:-
Those who disputed the eminence of the gold standard were dismissed as cranks by the representatives of the official doctrine – professors, bankers, statesmen, editors of the great newspapers and magazines.
It was a serious blunder of the supporters of sound money to adopt such tactics. There is no use in dealing in a summary way with any ideology however foolish and contradictory it may appear. Even a manifestly erroneous doctrine should be refuted by careful analysis and the unmasking of the fallacies implied. A sound doctrine can win only by exploding the delusions of its adversaries.
The emboldened text is what got me thinking, if only Friedrich Hayek had of heeded Mises words and written a refutation at the time to Keynes ‘General Theory’ we could have been spared decades of daft Keynesian policies. Henry Hazlitt did (many years later) author a chapter-by-chapter refutation of Keynes famous work in his book The Failure of the New Economics, I just wish as I said that Hayek had of done the same years beforehand, before things got so out of hand!
BreakingNews.ie ran a story yesterday evening about the SIPTU special-interest group attempting to apply pressure on the government to regulate (create layers and layers of red-tape and bureacracy) the waste-disposal market. Essentially what they’re looking for is jobs for their members to be excluded from competition against unemployed workers and other rival companies, and to keep their wages above their market levels. According to the story “..it follows the decision..to offer a waste collection contract in Dun Laoghaire to a private company.” Heaven forbid our broke councils and country attempt to save money to the benefit of the taxpayers. Heaven forbid people have a choice in who they deal with in the waste disposal market.
“Protectionism is simply a plea that consumers, as well as general prosperity, be hurt so as to confer permanent special privilege upon groups of less efficient producers, at the expense of more competent firms and of consumers” – Murray Rothbard.
Source: click here
In an effort to “promote diversity in education” (sigh) it is reported the government has drawn up plans to take control of a number of Catholic schools around the country.
Source: read here
There is a fantastic article in todays Sunday Independent by Ronald Quinlan, interviewing one of Ireland’s most successful businessmen ever, Ryanair boss Michael O’Leary.
Here are some choice quotes from the article:
Asked..what advice he has for those in business who are finding their difficulties compounded by reams of red tape from the State, O’Leary said simply: “Fight the bastards..”
. . .
Asked how Ryanair had managed to succeed in the face of..bureaucracy, he said: “We’ve..prospered, despite the Government.”
. . .
Asked for his view on the Government’s efforts to support employment and the creation of employment, the Ryanair chief said: “They’re driving jobs out of the country by their actions. They talk about competitiveness but every action they take reduces Ireland’s competitiveness.”
The best comment from the lot is left to the end, one I wholeheartedly agree with and in fact had suggested not to long ago to a friend:
Commenting further on the matter of our politicians doing nothing, Mr O’Leary expressed the hope that the Dail might extend its 12-week summer recess indefinitely. “The politicians always bugger off for three months’ holidays, and the civil service, and in many cases the country functions far better when they’re away. I wish they’d take a permanent holiday.
“They’re all useless, anyway,” he said.
The article is a great read, link is here: O’Leary: State never has, never will help business
It is being reported in todays Sunday Business Post that the government are to set lending targets for our banks. It is reported that the Bank of Ireland and A.I.B. will be set targets of €3bn per annum. Finance minister Brian Lenihan is expected to release details of this new plan later in the week. It is dangerous folly for political interests to determine credit expansion, this is one of the chief causes of business cycles. Such moves by the government are simply postponing the inevitable next and worse recession. Rather than pursuing this “recovery” policy of credit expansion and consumption, the government should be doing its utmost to encourage savings and investment, the bedrock of economic growth.
Labour MEP Nessa Childers published a press release yesterday via her website calling on the EU to introduce legislation to curb the use and growth of “addictive” (popular) websites (Childers herself admits to having a Facebook account).
“With the passing into force of the Lisbon Treaty, the EU now has increased powers to legislate when there is a threat to public health in Europe. I am today calling on the European Commission to submit proposals to the European Parliament to tackle this clear and present threat to the mental health of millions of European citizens.
Unfortunately what Libertarians had argued during the campaign for the Lisbon Treaty, that the EU would use its newfound powers to control and regulate more and more aspects of peoples lives, as well as business operations, is coming to pass.
Source: Action needed to curb addication to sites like Facebook
There have been increasing calls in the past few weeks for households to be bailed out of their mortgage repayments. Suspiciously enough, it is banks who have been the main cheerleaders for these bailouts. The latest, being reported in todays Independent are investment bank Citi.
It’s no wonder of course that banks are in such unanimous agreement over these proposals – the taxpayers money used to fund them will be going straight into their very own vaults! Government has no moral authority in declining such requests of course after the NAMA debacle, yet due to our current fiscal situation they will probably have no choice, further disillusioning the electorate with their inconsistent, unprincipled, one-rule-for-them-another-for-us policies.
The biggest losers of course are the people who saved during the property bubble, who did not borrow more than they could afford to repay, who didn’t take out a 100% mortgage at 8 times their annual salary for that 1-bedroom terraced house in a commuter town, and who have been screwed three times over for their prudence – (1) by not being able to afford a home over the past few years due to the policies of the Government, (2) by either being out of a job due to the recession or having to pay higher taxes to get our fiscal house back in order, and (3) by being made to bail out the people who did the opposite to them during the boom-times.
The Irish Independent has a story this morning reporting Dominic Monaghan (of ‘Lord of the Rings’ and ‘Lost’ fame) as saying the IRA bombing of Manchester in 1996 did the city a “favour” due to the redevelopment and renovation carried out afterwards.
The bombing did a reported €810m worth of damage to the city, with repairs and redevelopment costing upwards of €1.4bn. This “long-standing joke” amongst Mancunians that the IRA did the city a favour is yet another example of the Broken Window Fallacy in public economic thinking.
The parable highlights the absurdity of believing that by destroying goods we can make ourselves richer, and that public works or “stimulus package” production makes us better off than before. This is also an important lesson for those who would make the claim that war is good for an economy, or that government spending after the second world war got America out of depression!
Henry Hazlitt brought Frederic Bastiats famous essay “That Which Is Seen, and That Which is Unseen” to a new audience in 1946 in his classic book “Economics in One Lesson“. It can be read online here.
