Main – Page 16 – Anomaly UK

Organisational Dynamics II

Bloody Shovel writes some complementary things about my Employment Policy post.

The comments run off into the direction of the pathologies of organisations, Nydwracu citing Robert Anton Wilson.

The SNAFU principle is real enough, but the central issue Shovel is emphasizing is not that; organisations like the education system fail at their nominal purpose not primarily because they are uninformed or incompetent (though they generally are), but because their real purpose is not their nominal purpose. Their real purpose is to survive and grow. C. Northcote Parkinson is more to the point than RAW.

(That’s not a complete opposition; the reason that RAW says that communication is only possible between equals is because otherwise the interests of the subordinate are not the interests of the superior. Whichever way you put it, the root problem is the agency problem.)

In the modern world, we have two treatments for Parkinson’s Law: one which sometimes works and one which never does.

The one that sometimes works is market competition. An organisation which has to fund itself in the market must succeed in satisfying its market or go out of business and be replaced. Big, powerful organisations have crumbled in the face of competition, and many others have reformed themselves effectively to avoid that fate.

But not every organisation has to compete. Government power exists and will always exist, and is a far more reliable nourishment. Not only do the inevitable organisations of power —- the parties, the security forces, the tax-collectors —- feed on it, but organisations which would otherwise have to compete in a market seek to secure government lifelines. Bankruptcy, Carlyle wrote, will bring down all falsehoods, but in the case of governments, rather too late for most of us.

To restrict government-fed organisations to their proper purpose, therefore, another treatment must be used. The one we rely on is to create a second organisation to regulate the first. This never works, for reasons too obvious to labour. First you create (or take over) a school. Then you create a board to control the school. Then an education authority to control the board. Then an inspectorate to control the education authority. The end result is you have four organisations pursuing their own agendas instead of one.

I can suggest possible better solutions to the problem, but not without a context. The normal context of any policy suggestion is the framework of organisations that make up modern government. The policy suggestion is then aimed at some organisation in that framework to carry out. In this case, that is obviously nonsensical. Appointing a single absolute ruler is not in itself a solution to the problem of organisations, but it is at least a context in which solutions can be meaningfully suggested. That, then, is the context I assume in making suggestions. As far as what “we” do now, in the current context, my answer is passivism: we merely remark that the problems are not treatable in this context.

The alternative I suggest, in the context of absolute rule, is to do, as far as possible, without organisations.

Tim Worstall made a revealing little post about the GSM cellular communications standard. An Observer article remarked that the group of European telecommunication companies which established the standard was “the kind of intergovernmental initiative that drives Ukip nuts”. Worstall, a (former, I think) UKIP press officer, is baffled by the suggestion that opponents of the EU, a permanent transnational government, would be opposed to an ad-hoc agreement (including non-EU members such as Norway and 1993 Finland) to carry out a single task. It should not be baffling; the institution-centric worldview of the political mainstream simply does not allow it to see the vital difference. That is a sufficient explanation for the state we are now in.

A wise ruler would not delegate permanent power or independence to any organisation. The principle should be that any organisation can be abolished by one person, and most should have a defined life. Obviously, an organisation can be abolished in theory and in reality just reconstituted under another name: the important principle is not to be dependent on an organisation so that it is able to do that. It is not likely that a ruler can avoid depending on anything, but it is better to depend on a person than on an organisation. Let the depended-on person build and destroy ad-hoc organisations the way the ruler does; the responsibility stays with him. It is better to depend on a lieutenant you know (and ideally have chosen) rather than on bureaucrats you cannot even name.

That sounds almost impossible, but we are conditioned by a world of large organisations dedicated to surviving and growing. It obviously entails a sacrifice to not have large permanent organisations, but the benefits could be still larger. After all, in commerce, there is an enormous sacrifice of efficiency involved in the duplication of functions by competing firms, and more sacrifice of efficiency in the destruction caused by bankruptcy of failed competitors. But in commercial fields the benefits of limiting the growth of cancerous dysfunctional organisations seem to consistently outweigh the very significant costs. The same may be true of government by temporary ad-hoc organisation.

The Breivik Trial

Have I written about Breivik at all? I don’t think so. Whenever I try I end up with something so wide-ranging and rambling that I can’t finish or satisfactorily edit it. His story touches on my themes in so many different ways.

He’s also something of an embarrassment. In claiming the “neoreactionary” label, I am in a sense grouping myself with whoever else puts a return to traditional forms of government on a modern theoretical basis. I would argue that fascism doesn’t count as a neoreactionary theory, but it’s not easy to exclude Breivik.

I’ve read his “compendium”; well, read quite a lot of it and skimmed all the rest. There’s some sense there, along with the major error I originally started this blog to oppose: a huge overestimate of the actual and potential power of Islam in the West. (And along with an inordinate fascination with medals.) I answered the question Is Europe Becoming Islamicised with a “no” in 2004 and I stand by that.

The reason I haven’t posted before to make this point is that, after all, I know very little about Norway. Maybe it really is as bad there as Breivik claims: what standing do I have to claim otherwise?

However, my self-restraint from describing conditions in Oslo has not been reciprocated by Breivik, who in his defence speech described my home town of Luton as a “war zone” containing “no go areas”.

Now I am not here to sing the praises of Luton in all its glorious multicultural harmony. It’s a rough old place, not without conflict between Muslims and non-Muslims. I have reported on the Begum case, the violent demonstrations, the odd leaflets, and the (thin) connections with islamist terrorism. But there are not no-go areas. I walk through the back streets of Bury Park after dark with less trepidation than past the nightclubs of the town centre. It was a rough town long before the Muslims got here, and the police constable who was murdered a few years ago was knifed by a schizophrenic Nigerian, not by some jihadist.

As I said all those years ago, Islam is used as a proxy by the universalist ruling elite with which to attack those aspects of traditional culture which native Europeans cannot be simply persuaded to abandon. Breivik obviously understands this to some extent: it is the reason he directed his attacks at white politicians rather than Muslims.

(Incidentally, the same immigration strategy can, and on occasion has, been used by conservatives to manipulate the culture: immigrants could be used to encourage patriarchy and disciplined child-rearing. But we are ordered to accommodate some aspects of immigrant culture, while others are hidden or treated as a problem, and it is clear who is giving the orders).

Indeed, Brevik’s own operational competence is an indication of where the balance of power between Westerners and Islam lies: by himself, with no funding, he did more damage than the eight Al-Quaeda trained and funded operatives who attacked London in July 2005. If we ever really have to fight Islam on our own ground, it will be easy. But I don’t think we will.

Rather, I suspect that at some point when the elite have no more use for the Muslims they will turn on them as they habitually do to their allies. At that point the immigrants will be driven out or forced to conform to the new culture, their free pass to to retain outmoded privileges like freedom of religion and independent exclusive institutions withdrawn.

So while Breivik is right about the existence of a universalist attack on European culture, he is mistaken in making Islam such a central aspect of it.

Since I am in part defending Breivik’s position, I must address the violence question —- could action such as his ever be justifiable?

All serious politicans are willing to kill people in a good cause: that is why all governments have armies and armed police. Most are willing to kill innocent people in a good cause: that is how we get policies like the bombing of Libya.

Of course, Breivik was not acting on behalf of a state —- does that make his violence automatically wrong? The mainstream of thought idolises the armed rebels whose causes it agrees with. So it can’t oppose Breivik on that basis. Rather, it probably relies on the fact that the state Breivik opposes is democratic as a reason why his violence cannot be acceptable.

However, as he himself pointed out during his trial testimony, the democratic states will always take steps to ensure that views like his will not be able to advance through democracy.

So, working on widely-accepted principles, it all comes down to his views — violence against the innocent in order to overcome a state which does not allow a legitimate method to remedy its failings is, apparently, justifiable, but is Breivik actually on the path to remedy the Norwegian state’s failings?

Er, no. I don’t think he has any realistic idea of what would be a better state, and I’m sure his one-man war is not going to help create it even if he has.

But that is my judgement of his political position — one based, unlike those of most journalists who have written on the matter, on actually reading what he wrote. And, for that matter, since this shit is difficult™, a judgement that might still be wrong.

In any case, while fighting an unjust state is right according to modern mainstream principles, it is not right according to reactionary principles. Reactionaries do not believe in a right to choose one’s government, by vote or by terrorism.

As to Breivik’s vision, while he said that he “gave up on democracy”, he has not given up on democracy in the way I have given up on democracy. He meant that he had given up on being able to solve what he sees as the immediate problems through Norway’s existing democratic processes. He doesn’t, as I do, see democracy as the problem in itself, the thing that must be got rid of. Like so many others, he has fallen into the trap of believing that democracy can be “fixed”.

But my real problem with him goes further than that. He wants to build an organisation —- the PCCTS —- to fight for power on behalf of European culture. I think that cannot work. It is the fight for power itself that is the root of the problem, and by joining it you are chasing the enemy into the abyss. That is as true of fighting with carbombs and shooting sprees as it is of fighting with demonstrations and election campaigns. By being an organisation that fights for power, you become a certain kind of organisation —- you succumb to the vicious logic of propaganda and coalition-building. You also, if you succeed, come to compromise with the system and in return become implicated in its inevitable failure. No good can come of it.

What on earth can we do, if we cannot fight for power? I do like to be original, but all of this is pure Moldbug. It is the Steel Rule. We become worthy of power, and wait for it to be given to us. Or we raise children and grandchildren who will be worthy of power, and wait for it to be given to them. This is not a short-term project, but neither is Anders “2083” Breivik’s. It’s a long shot, but so is his and as Moldbug wrote, if we fail, we have done no harm, which cannot be said of a terrorist campaign.

When a system collapses, power is given away. Everyone who is fighting for power with any success is already part of the current system. When the system fails, power will be given to someone else.

Looking at it another way, there are two narratives describing what has happened to European civilisation. One is that there is a somewhat conscious movement, which Moldbug first dubbed “Crypto-Calvinism”, then “Ultra-Calvinism”, and finally “Universalism”, which has continuously dominated English-speaking society for centuries, and utterly conquered Europe in 1945, and which has some ideological principles that have been consistent throughout (such as that humans are all fundamentally the same), and others that have become ever more extreme (such as Limited Monarchy to Constitutional Monarchy to Republic to Democracy to Universal Suffrage). The elite holding these beliefs have steadily pulled the resisting masses behind them.

The other narrative, also due to Moldbug, is the cold mechanical one. Since the end of divine-right Monarchy, the logic of the struggle for power pushes an ever-wider splintering of power, as people and groups seize what fragments of influence they can, and hold on to them. Responsible decision-makers are replaced by committees, working groups become institutions and own little bits of power, and all this fragmented power is directed by factions in the unending struggle, not for any external public or even private benefit.

Breivik describes the first narrative, though he doesn’t recognise how far back the universalists go. And the narrative is real: the infamous former Labour speechwriter who said that the British government of which he was a part deliberately and surreptitiously multiplied immigration “to rub the Right’s nose in diversity” was making as blatant a declaration of culture war as it is possible to imagine.

But the second narrative is real too, and that is what Breivik does not understand. That is why he thinks that universalism can be defeated by shooting a sufficient number of universalists in the head. But universalism hasn’t won for all these years because of divine providence, or by Dawkins’ “mysterious movement of the zeitgeist”, but because the logic of competing for power favours it over reactionaries.

Breivik is obviously sane*, and obviously right that a Norwegian state that was sane and honest would execute him without blinking. The Norwegian state is not sane or honest. It is incapable of sustaining or defending itself in the very long term. That is a fact to be deplored, not, as Breivik sees it, one to be taken advantage of. When the collapse comes, the duty of replacing the old order will fall not to those who accelerated its demise, but to those who expected and explained it without accepting any responsibility for it.

* What about the probably-fictional organisation of which he claims to be a member? I am not sure whether it exists, but I am sure Breivik knows. If it doesn’t, then it is not a delusion, rather it is a deliberate lie for the sake of propaganda: it is easier to recruit followers to an already-established organisation than to one which is yet to practically exist.

Employment Policy

I’ve been thinking quite a lot about the question of employment.

It’s an unfamiliar line of thought for me — I’ve always held to the libertarian line on unemployment: it’s a result of an obstructed market, let the market clear and unemployment will not exist by definition. Subsidise unemployment through the welfare system and you’ll get more of it.

That isn’t wrong — within the libertarian framework it’s completely true. But I’ve left the framework behind. Political power will be gained and held by people who believe that gaining and holding power are always a first-order consideration. I hope for a government whose hold on power is so solid that it does not depend on interfering in the market for labour, but that is not relevant to any present government or any feasible near-future one. Welfare is here to stay (even if based on private charity rather than the state, it would still have market-distorting effects), and unemployment will therefore always need to be addressed.

In the meantime, we’re faced with questions like the one a commenter asked back when I was kicking around AI possibilities:

Don’t you think we’re already way past the point where diminishing returns of replacing human activity with automated activity kicked in? Most people are just not that smart, they can’t all be designers and scientists (or can’t be made smart quickly, it is not important which is true as practical results are similar in both cases), and it appears to me that we, the societies of the developed countries, don’t know how to employ these people.

Yes, in a free market these people would have jobs, even if at a wage below what is generally seen as the poverty line. But, if I’m going to be more serious than simply advocating that, I need to face the question: is the combination of politically necessary price control in the labour market with technological advance making high unemployment unavoidable?

I don’t think it has to. There are other causes to high unemployment, some of which can be treated rapidly, and some which are more long-term projects.

High taxation is one of the biggest. Doing work yourself instead of employing someone is by far the greatest area of tax avoidance. I’ve spelled out the arithmetic before: I can do an hour’s work for myself, or I can do more of my normal job and use the income to pay someone to do it. The former is tax free, the latter, at minimum, involves 40% tax on my extra income, then 20% tax on what I pay out. I have to earn £1.68 to put a pound in someone else’s pocket, without taking into account NI or VAT, which may or may not come into it as well, pushing the effective tax on the extra activity up towards 100% of the real cost. That applies to jobs around the house (leading to the dreaded DIY); it also applies, less obviously but probably more significantly, to any good or service I buy where the supplier could, by employing extra labour, provide a better or more complete service. It applies to having the supermarket deliver my goods rather than make me carry them, or even to them having someone work on a checkout rather than wave me to a self-service.

Lower taxes would directly lead to lower unemployment. Also, lower taxes on economic activity would directly lead to lower unemployment — I’ve never written about the question, but I’m pretty sure the Land Value Tax crowd are basically right. Land Value Tax is still a tax, and is still bad, but it’s less economically destructive than the taxes we currently have.

That’s one area then for attacking unemployment: reduce tax, and shift what’s left from income, sales & profit taxes to land.

Next? Well, the education system. It’s not that it’s failing to teach people “what they need to get jobs”. Rather, the purposeless and ineffective attempts to control unacademic children are actively teaching them not to work. Being forced to do schoolwork is a fairly crappy training for doing real work, but today the bottom stratum aren’t even getting that training. The result is they’re unemployable, not for lack of skill so much as lack of socialisation. It may be only a few percent, but the risk to the employer of getting one of them, and the costs if you do, push a large swathe of the lower classes out of employability.

A demonstration of what I mean came to my mind a couple of weeks ago: a hundred years ago, some huge proportion of the population worked in domestic service. I’ve been meaning to look it up: Tim said yesterday it was 25%.

That dropped sharply from the First World War to about zero by the 1960s, in large part due to the high demand for unskilled labour from mass manufacturing industry. Now that demand has subsided (for good, and inevitably — as also pointed out yesterday by Tim, busy chap). What is the reason why we can’t have domestic service back? We’re always hearing about how ridiculously stinking rich the the rich are getting, so it can’t possibly be that they can’t afford what the moderately rich of a century ago were happy to pay for. The answer is all too obvious — the equivalent today of the people who were domestic servants a hundred years ago are people that no sane rich person would allow into his house under any circumstance. The late twentieth-century education system prepares normal people for the easily-supervised assembly line jobs that no longer exist, but not for any role requiring any degree of trust or self-discipline. (Having said that, the mass of civilised but somewhat dim people doing largely pointless make-work in the bureaucracy would possibly be capable of roles as butlers or housekeepers supervising the helots… worth thinking about).

The education system doesn’t need to be improved, it just needs to be in large part abolished. Actually doing useful work, for the family or for someone else, is not only a better preparation for being a useful adult than our schools are, it’s probably a good deal more personally satisfying and rewarding as well. The norm should be for people to be in full-time employment by the age of 16, and 13 or 14 is probably a good idea in a lot of cases. The wealthy can do what the hell they want as long as they pay for it themselves, and a sane education system not lumbered with uneducable teenagers should be able to grab anyone from any background with the right talent into a more academic channel, as was routine in this country up until the introduction of comprehensive education in the 60s-70s.

This is a tricky change to introduce, not least because if you already have high unemployment, throwing the bulk of the 16-21 age group into the job market is going to make things worse in the short term. But in the longer term, I think it would improve the situation. Unemployment is not simply the result of lack of work available, but due to the unfitness of a chunk of the population for what work could be available, due to artificially created and prolonged adolescence. The problems raised by Robert Epstein and Lenore Skenazy are relevant here.

Other options? Well, there’s the immigration question. Again, the libertarian reasoning is entirely correct: if an immigrant is making a living, that means he is producing more value than he is consuming; in aggregate he is making all of us better off. But if immigrants are overwhelmingly competing with poor people in providing services to rich people, on top of that aggregate benefit there is a transfer effect from poor to rich. If it is politically necessary to compensate the poor for this transfer, and if the mechanisms for doing so are unavoidably clumsy and inefficient, then the aggregate benefit can be entirely eaten up. I’m not convinced that that is practically the case, but all the steps in the argument are plausible, and so I am not convinced that it isn’t.

The same form of argument could be made for other forms of protectionism: after all, foreigners compete with natives whether they actually come here or not. But I draw the line at that with moderate confidence. There are so many different ways in which overseas trade affects the domestic economy, all of them beneficial in the aggregate, and while some of them may harm some particular interest or other, the wide distribution of harms means that for almost everyone, the net effect of free trade is positive, and for the aggregate, the effect is so enormously positive that it should not be rejected.

And the same even more strongly for technological development — it is so hugely beneficial that restraining it in order to protect a politically influential constituency from competition is always a bad policy. The reason for paying attention to unemployment and being realistic about the necessity of reducing it is to make it politically easier to hold onto the huge benefits of technology and trade, which it is disastrous to give up.

(The effect of current tax and industrial policies is mainly to encourage more investment in capital goods rather than employing low-skill labour. There is no need for that. But neither is there a need for opposite policies).

How to Kill Democracy

Tweetable link: https://t.co/aArQQv8QQj?amp=1

I’ve heard quite a few times that we can’t get rid of democracy, because we can’t get the votes.

Now, I’m not in any great hurry to get rid of democracy. It’s not ideal, but it sort of works, and when it goes things could get messy.

However, if you wanted to do away with democracy, it wouldn’t be all that difficult. I identified the method back before it was my aim.

The introduction of postal and electronic voting makes elections enormously easy to sabotage. I ranted about the danger, back in 2005, and then gradually lost interest in the subject once I ceased to care who actually won any given election. And the main safety margin is that nobody really cares who wins enough to cheat.

But cheating and getting away with it is hard — messing things up enough that nobody knows for sure who ought to have won is much easier, just as it is easier to take down a website than to take control of it.

And what would happen, if you did successfully DOS an election? It would be pretty spectacular. The nearest we’ve seen was the 2000 US presidential election. That stirred up a lot of trouble, but it eventually more or less settled down. That was not what I have in mind though — there was no obvious large-scale fraud then, rather the problem was that the election was so close that the ordinary minor deceptions and inaccuracies made the difference.

In a near dead-heat like that, it will be accepted that you just can’t be sure. But experts have identified a number of local elections in various counties in the US where it can’t be determined who should have won, because of problems with the voting machines. Still, those involve cases where there is no evidence of determined large-scale deliberate fraud.

If we had a general election in Britain, and it emerged that, because of fraud, it wasn’t clear who won, or that it was very close, I don’t know what would happen. We don’t have the same extreme respect for the judiciary, or even the clear formal rules, that allowed the US Supreme Court to settle Florida 2000.

I suspect that in the event, the parties and the civil service would sew it up as best they could, and the business of government would go on. But in the process it would have lost the legitimacy of democracy.

That is why it was a mistake for me to stop paying attention to voting when I stopped caring who won. Because, the way I look at democracy now, it is the impression that the government represents a popular choice that is important: the actual influence of popular will on government is both minor and mostly harmful. But it is the impression that is endangered by unreliable voting systems, so they constitute a bigger risk to the system as I see it than as a democrat would look at it.

Britain is still on paper votes, so it is only through postal votes that the system is vulnerable at the moment, and that only to a quite large-scale attack. But if the system is changed in the direction of networked or electronic voting, then we know what we have to do if we decide to get rid of democracy.

Putin

I’ve been meaning to write about Putin. A newspaper turned up at the weekend: Saturday’s Telegraph, with two multi-page features attacking him, built on a new book by a lesbian journalist with strong links to America. I also owe commenter candide3 a reply on the question of just how secure Putin’s power base is.

So, I need to write something. This isn’t it though – for now I’m going to hide behind Peter Hitchens.

I like Vladimir Putin. I wish I did not. But I cannot help it… Mr Putin is without doubt a sinister tyrant at the head of a corrupt government. His private life and wealth are a mystery. His personality cult – bare-chested tough-guy, horseman, diver, jet pilot – is creepy and would be laughable if it were not a serious method of keeping power… Vladimir Putin, alone of all the major national leaders of our times, refuses to be pushed around by supranational bodies.

What he said.

Blame the devil

Neutrino Cannon posted a link to a comment dialogue between Clio and Vladimir, on monarchy, with Vladimir taking the reactionary position.

The discussion includes the question: Why did Europe’s monarchies fall?

Neither participant gives any attention to a theory I quite like, which is that the devil did it.

When there was only one religion, loyalty to the monarch was an moral absolute.

After the reformation, religious loyalty took a higher place than any other.

Edward, Mary, Elizabeth and James managed to navigate the new waters, though not without difficulty or incident. Charles ran aground, and while the Commonwealth failed and was rejected, enough of the theory it established survived to poison history ever since.

In France, anti-clericalism became a more important force than protestantism, but undermined monarchy also. That’s secondary though: I think it’s easy to underestimate the influence of the English revolutions of 1688 and 1776 on the French. It’s true that England never got on with the revolutionary French regime, but isn’t that often the way of things when a democracy thoughtlessly stirs up revolution in other countries? Writers in England and America were writing retrospective justifications for their seizures of power, and those were used by the Jacobins and later the 19th century European revolutionaries. Most of Europe was still monarchical until WWI, and Woodrow Wilson wiped the rest out in 1919.

There really was a total change in the dominant political ideology of Christendom, from Divine Providence to Nationalism and the Rights of Man. I personally don’t actually believe “the Devil did it”, but if I had to pick one point to represent Satanic interference in history, that would be it. Marx and Hitler were just products of history, aftershocks of that cataclysm.

As the power of religion to justify kingship waned, there were attempts to put monarchical centralism on a firmer theoretical footing than Divine Providence. Perhaps Hobbes is the first Neoreactionary. But the Whigs won out.

Update: don’t miss Devin Finbarr’s contribution: the unexpected richness of North America gave defeated radicals a springboard to return with power

Basic climate question

While I’m on the subject of climate, is there anyone with background in system modelling who can tell me what’s wrong with the following. It seems obvious to me, but I’m probably missing something important.

Take a global climate model, without human GHG emissions.

There should be no long-term climate trend, or at least none on the scale of what GHG emissions are supposed to cause.

Perturb the climate model in some way: maybe a major volcano, or a temporary solar variation, or something.

That perturbation, if it is big enough, will detectably affect the climate, including the global average temperature.

The perturbation is a one-off, so it will end. After the perturbation ends, does the global average temperature stay around its new value, or does it move back towards its old value?

My understanding is that the best current models of the climate exhibit positive feedback. That would mean that there are no forces that would cause the climate to move back to its old value. Block out the sun for a bit, the climate will get colder, and when the dust has settled (literally), it will still be colder than it was before.

For the temperature to return to “normal” after a perturbation, there would have to be net negative feedback: because the temperature is higher, something happens that removes the excess heat.

Therefore, without negative feedback, the climate would be a complete “random walk”. It could be pushed up or down by solar changes, vulcanism, vegetation changes, even freak weather, and every such perturbation would affect the future climate forever.

That just doesn’t seem remotely plausible to me. Surely such random events wouldn’t balance so well as to keep the climate roughly stable for so long as paleoclimate data indicates?

I feel I must be missing something. Is there some way that the climate can exhibit positive feedback in response to anthropogenic CO2 emissions, as we are told it does, and yet recover from other random effects?

Peter Gleick

Ha ha ha ha ha ha ha ha ha ha ha

Just the other day I wrote in a comment at Samizdata:

It’s a bit cheap, given that there’s no evidence or even likelihood, that actual climate scientists are responsible for this hoax, to say that jumping to very firm conclusions on very little evidence, and indeed fraudulently improving the evidence that doesn’t quite show what you want it to, are characteristic of one side of this debate rather than the other. But there is a pattern here, at least in the political realm, of sceptics being, well, sceptical, and the warmists not.

This is me, eating those words. And let me tell you, they’re yummy.

Look at what the Heartland story tells us about the person behind it:

He believes it is justifiable to lie in order to advance the cause
He is not able to seriously consider the arguments of his opponents, even when trying to pretend to be one of them
He has no instinctive perception of scale — he thinks a couple of million spent by Heartland is significant compared to the hundreds of millions spent by Greenpeace, WWF, FoE, Oxfam, CAP, and the world’s governments.
He doesn’t think the morals he applies to others should apply to him. The major climate-related expense in the Heartland accounts is paying scientists to prepare papers and attend conferences — something his own institute does at the same time, with the same sort of funding from the same sort of people.
His evidence doesn’t prove what he thinks it proves. If a piece of essentially information-free data fails to clearly contradict a piece of probably-bogus data, he says the former proves the latter. (That is essentially the story of the Hockey Stick condensed to a sentence).

Now, of course, if the leak was done by some dim environmentalist activist, it would still be unfair to smear actual climate scientists by attributing those same qualities to them.

Ha ha ha ha ha ha ha.

Peter Gleick. Macarthur fund. Leading climate scientist.

Of course, that’s just one rogue scientist. They’re not all like that. I mean, they have ethics task forces and stuff.

Ha ha ha ha ha ha ha.

The predictable damage of the Euro

The previous post is something I just found in my sent mail folder. I sent it to a discussion mailing list on the 5th of August 2000, and I think it is interesting enough to look at now. I posted it unedited to prevent confusion between what I wrote over a decade ago and my present commentary.

I don’t claim the piece is strikingly insightful: I had, and indeed still have, no formal training in economics, and the post is effectively a somewhat pompous and verbose narration of something really very basic.

To put it in historical context: though Euro notes and coins entered circulation on 1st January 2002,the Euro existed from 1st January 1999, in that the exchange rates of the member national currencies were fixed irrevocably at that point. Gordon Brown had been Chancellor of the Exchequer for three years, in Tony Blair’s first prime ministerial term.

The last paragraph makes a prediction:

Ireland, though independent for decades, only had an independent currency from the 1970s. Since that time, and with the help of EU subsidies, the Republic has become a modern and prosperous economy. It seems to be at a similar stage in the economic cycle to the UK. However, unlike the UK, the Republic of Ireland joined the Euro. Therefore, at present, where the UK economy is being restrained by relatively high interest rates, Ireland has the same cheap borrowing as the other Euro countries. This puts them in the same position described for Britain during the Lawson boom. Building projects are everywhere (remember Loadsamoney?), property prices are spiralling upwards. Under prevailing economic theories, these are effects of incorrect monetary policy. However, European monetary policy is not set for Ireland, which is a small economy compared with the stagnating economies of mainland Europe. The prediction is that within a few years, the Republic of Ireland will face a sudden and traumatic deflation, while any simultaneous change in Britain will start earlier, be more gradual and of less magnitude.

Does that qualify me as a prophet? Not really. “Within a few years” is clearly wrong: the “Great Moderation” meant the economic state in 2000 persisted much longer than I expected it to. Further, there is no prediction of the actual form that “sudden and traumatic deflation” was to take in Ireland: insolvency of first the banks, then the government that had unwisely guaranteed their debt.

The point is not that I am a genius. The point is that the problems caused by the Euro were extremely predictable. It is always going to be easy to dig through archives and find someone who predicted what would happen, and I’m sure we could find someone who predicted it more accurately than I did. But, since that is always possible, it proves nothing. The fact that I predicted the problems that the Euro would cause (and I remember nothing of actually writing that email) eliminates, at least from my point of view, the statistical error of pulling a single example from an unlimited search space. (If you’ve found this post by googling for Euro predictions, I’m afraid it proves very little).

Repost: 5th August 2000

Some notes on the controversy regarding Britain’s potential membership of the European Single Currency.

The main argument of those currently in favour of Britain joining the Euro group is that it would have prevented the difficulties caused to many British businesses by the recent fall in value of the Euro against Sterling. (Some seem to claim that joining now would remove these difficulties, but it is difficult to see how they expect this to happen)

This was not an argument put forward in advance of the Euro being launched – in fact the opposite was widely claimed, that Sterling would fall in value against the Euro with consequent damage to those importing raw materials or finished goods, or servicing foreign-currency debts.

This is in itself a partial answer to critics of the policy of remaining out of the Euro zone. A high or a low exchange rate is not a good thing in itself, but helps some and disadvantages others within the national economy.

The common reply to this is that the unpredictability of exchange rates makes commercial planning difficult, and is thus a bad thing for everyone, even if fluctuations give temporary advantage to some. A fixed exchange rate removes uncertainty and allows all businesses to make investments with greater confidence.

This argument has more merit, but I believe it to be flawed. Movement in exchange rates is not random, nor are the markets independent of the companies and consumers that make up the world economy. Exchange rate variations reflect real changes in economic conditions between currency areas. If these changes cannot feed through exchange rates, they will exhibit themselves in different ways, and the real arguments over currency integration centre on the different effects and costs of these different chains of events.

More concretely, the recent fall in value of the Euro against other major currencies is the result of a recession in mainland Europe. High unemployment in the largest Euro-zone countries has led to low interest rates, so finance has moved out of the Euro into currencies that give higher returns, including the Pound, the US Dollar and the Yen. This has produced the fall in the Euro’s value, with the effects of making costs lower in Euroland in international terms, making exports from Euroland cheaper and imports into Euroland more expensive. This should have the longer-term effect of helping the economies of the Euro members recover from the present recession. It also has the effect of making the workers of these countries poorer, in that prices increase in Euro terms, reducing the standard of living.

If Britain was inside the Euro zone, interest rates would be lower in Britain than they now are. This would encourage borrowing and investment in industry, driving up wages and prices. Imports of goods from outside the EU would become more expensive, driving up prices further. Overall, this inflation would cause an increase in the standard of living (just as has happened as a result of the strong pound), and would make British labour and goods more expensive relative to the rest of Europe (just as has happened as a result of the strong pound). Businesses that export to Europe would therefore be hurt (as is happening now), while businesses that buy from Europe to sell outside the EU or in the booming domestic economy would do well (as they are doing now).

In other words, the real economic effects of the Mainland European recession on Britain would be fundamentally the same whether they are felt through a high pound or domestic price and wage inflation. It is a real-world fact that Germany, France, Italy and the Netherlands are having to cut their prices to stimulate sluggish demand, and that this will divert industrial investment into those countries from countries like the UK where economic growth is making standards of living higher and business more expensive.

That is not to say that the results are entirely identical, and that there is nothing at all to choose between being in the Euro and being outside. There is one obvious advantage of being in, which is the simplicity of being able to spend the same money in a dozen countries instead of one, without the overhead of currency trading.

The disadvantage of being in is more subtle. It is that exchange rates can and do change extremely quickly, based on the judgement of those dealing in the currencies concerning the economic situation and the likely future economic situation. Prices and wages, however, change much more slowly, as it is awkward and expensive for businesses to alter them. Wages increases are delayed until it is clear that staff cannot be recruited or retained without them, and decreases are strongly resisted.

To see the effects of this, look back fifteen years to the Britain of the mid-eighties. In a similar economic situation to that of the last few years (European recession, British growth), the government adopted the policy of keeping the exchange rate between the Pound and the Deutschmark approximately constant by decreasing interest rates. The result of this has become known as the “Lawson Boom”, as cheap borrowing stimulated an already buoyant economy into a spiral of industrial growth and inflation, notably of property prices. This is the only policy that at that time would have prevented the prevailing economic conditions from causing problems for those sectors of the economy that were dependent on European markets, or vulnerable to European competition. The result, however, was the spectacular crash of 1987 once it became clear that inflation would have to be controlled. It is widely recognised that this would not have happened if the economy had not been artificially stimulated by low interest rates over a long period under the policy of “shadowing the Deutschmark”.

This is the real advantage of not being in the Euro. The flexibility of an independent currency means that businesses will face economic pressures to adapt to changing conditions instantly, and are forced to take appropriate measures, rather than being insulated from outside developments until the dam bursts.

Even those who instigated and set up the Economic and Monetary Union project recognised this. That is why the Maastricht Treaty made one of the preconditions of the Single Currency coming into effect a certain degree of “convergence” between the member nations. The theory underlying this was that the free movement of goods and capital between EU member states would, after a period, put an end to the variations of economic conditions between countries that independent currencies are needed to deal with.

Whether this can happen is arguable, but so far it certainly has not. Within Britain, for example, if one region becomes economically depressed relative to another, workers tend to move from the poorer regions to the richer ones, thus easing the differences. Whether this is really a good thing is another discussion entirely, but obviously there comes a point where adding more different currencies produces costs and inconveniences out of proportion to the benefits. I might argue for an independent currency for Scotland, but not for Durham.

However, despite being given the legal rights, people are much less keen to move from Belgium to England to find work than to move from Scotland to England. The long term aim of the European Union project is for the attitudes behind this to change, but that I would contend is a distant goal.

The other mechanism intended to produce the neccessary economic convergence is the so-called “cohesion fund”. This is a cross-subsidy intended to stimulate depressed regions at the expense of prosperous ones, thereby decreasing the regional differences that cause problems in a single-currency area. It, however, suffers the same kind of barrier that the idea of migration faces, that taxpayers are much less willing to subsidise the economies of other countries than depressed areas of their own country. Pumping funds into the North-East or South Wales is one thing, but supporting Greece or Portugal is quite another.

It should be clear that I am not attempting to argue that Britain should stay out of the Euro simply on the grounds that Britain’s economy is doing well and Euroland’s badly. I have dwelt on current conditions, but they obviously are not set in stone. In fact, my argument is that an independent Pound is as much in France or Germany’s interest as Britain’s (as those in Britain suffering from competition from Euro-priced imports are only too keen to point out). Similarly, if conditions were reversed (as they were, for instance, for most of the 1970s), the argument regarding the advantages of currency flexibility would be equally strong. In fact, the only events that would really indicate that Britain ought to join the Euro would be if the exchange rate remained roughly constant for a long period, and looked like continuing to do so. Under such circumstances, an independent Pound would contribute nothing to economic flexibility, and be merely a pointless and expensive administative overhead. If Gordon Brown is waiting for this to happen, however, he may be in for a long wait.

Real evidence is hard to come by, but the above can be used to make predictions. A useful “guinea pig” is the Republic of Ireland. Ireland, though independent for decades, only had an independent currency from the 1970s. Since that time, and with the help of EU subsidies, the Republic has become a modern and prosperous economy. It seems to be at a similar stage in the economic cycle to the UK. However, unlike the UK, the Republic of Ireland joined the Euro. Therefore, at present, where the UK economy is being restrained by relatively high interest rates, Ireland has the same cheap borrowing as the other Euro countries. This puts them in the same position described for Britain during the Lawson boom. Building projects are everywhere (remember Loadsamoney?), property prices are spiralling upwards. Under prevailing economic theories, these are effects of incorrect monetary policy. However, European monetary policy is not set for Ireland, which is a small economy compared with the stagnating economies of mainland Europe. The prediction is that within a few years, the Republic of Ireland will face a sudden and traumatic deflation, while any simultaneous change in Britain will start earlier, be more gradual and of less magnitude.