10 August 2011

London's Day of Reckoning, or who is in charge?

After three nights of looting, arson, vandalism, home invasions and assaults, one must start to wonder as the "thin blue line" between law and order, and anarchical violence and destruction, has been broken.

If I hadn’t been watching TV or being online, I would have noticed no difference in London, except that the two men who hand out the free papers at the entrance to my local underground station were absent – the papers still in plastic wrapped piles unopened. A sign that perhaps they had something more important to do, like protect their families. I can afford to live in a part of London where the local population has few who are feral, but even then middle class areas like Ealing have been ransacked. Indeed, there are now dozens upon dozens of people who are now homeless and jobless, because of those who celebrated destruction. Those that if they were let loose would send us all back into the stone age, for they take and destroy, but produce and create absolutely nothing.

Only the wilfully blind, or geographically remote, will think these riots have anything to do with the death of a man in the weekend. They have nothing to do with so-called “spending cuts” or being “disenfranchised”.

The enormous live TV coverage seen here in the UK has shown pretty much what has been going on:
- Criminal gangs have been organising themselves to steal electrical goods, clothes, shoes, watches and the like. They have been using the net and mobile phones to identify where there are no police and going around in groups by car, to ransack;
- Teenagers (and younger) are roaming their local streets, and some are deciding to copycat the criminal gangs. Either to throw items at Police, break windows, start fires, steal or generally cause mayhem. It’s the school holidays, so many see it as a lot fun;
- A significant number (if not proportion) of the young people involved in this are largely amoral about the property of others, so much coverage has shown boys and girls laughing, giggling, saying “let’s get us some watches man” or the like. Shamelessly taking off with the property of others;
- The extensive and ubiquitous nature of modern communications means that it is easy for groups to identify where they can go and get away with it all. The TV coverage of looting, rioting and arson, without any police in sight tells many that they can get away with whatever they like.

In short, law and order is not being kept on the streets of London. The London Metropolitan (and City of London) Police forces are more than overstretched, having called upon forces from outside London to try to control, but they have largely failed.

The core function of the state is to protect citizens from the violence of criminals, but this Conservative led coalition government has preferred to increase its foreign aid budget and keep Labour’s NHS profligacy intact, to keep giving free bus passes and cheap energy to wealthy pensioners, and then cut police spending. It wont be a surprise that morale in the police is not high.

So if the state can’t protect citizens and their businesses, the responses from citizens are going to be mixed, such as Turkish and Kurdish shop owners and their formidable sons wielding baseball bats to chase feral youths away. Far too many online forums are now full of nasty racist remarks about the fact that many of the youths seen as black. These events are perfect recruiting occasions for the BNP and National Front. Muslim business owners in the East End are being protected by their own families wielding weapons. In short, it becomes vigilante justice.

However, why should anyone be surprised? If law abiding citizens had the right to bear arms it might make for a very different scene, because property owners could fight back. Of course there would be the risk that more of the thugs would also have weapons, given that firearms have only been implicated in one incident the last few nights.

Today both the PM and Mayor of London have returned from their summer vacations, to rescue their respective political careers. If a Conservative PM and a Conservative Mayor cannot be tough on law and order, then they are finished. The PM must ensure the Police have all the necessary resources to lock down the looted areas tonight, and the option of a curfew must be considered. For if London is NOT brought under some order tonight, it will get much much worse. If this is blamed on spending cuts in the Police (which is unfair as there has been virtually no impact from that as of yet), then the government will have handed Labour an issue on a plate. Ed Milliband will be chasing the ambulances with glee at this news, even though his political philosophy has contributed to this problem.

There must be an organised effort to establish order on the streets by the Police. A curfew for young people between certain hours should be considered, with the simple point that anyone on the streets at those times under a certain age face being arrested and spending a night in a cell. Shopkeepers and others who are protecting themselves should be supported by the Police, not treated like criminals.

Yet what we have witnessed overnight, the past three nights, has been the result of what happens when solipsistic whim worshippers discover there is anarchy and they can get away with taking what they like and destroying, like the culture they embrace celebrates. That is the vacuum that has been created by cultural relativism, the empty void of amorality presented by so-called liberals who threw away the religious based morality of past generations, and instead of replacing it with a humanist secular commitment to individual rights and property rights, embraced “group rights”, “victimology” and structural theories of power and rights.

The young people who have rioted have been told that if they don’t have what they want, it isn’t “their fault”. That if they haven’t got a job they want and like, then it is someone else’s responsibility to fix that. That if someone has something they want, then they have a “right” to that as well. That the reason their parent or family do not have the wealth of others is because of racism, or because they aren’t part of some special inner circle, not because they didn’t pay attention at school, didn’t read books and preferred the parasitical culture of gangsters and crime.

The failed social engineers, like chardonnay socialist Polly Toynbee of the Guardian are still claiming the riots are because of “benefit cuts” (see removing child benefit from people earning over £38,000 a year will do that). However, their time is past. They have celebrated pouring money into ghettoised state housing schemes that have hothoused criminal gangs and the poverty of aspiration that does promote this. Most of all, they have embraced the philosophy of cultural and moral relativism that says “anything is ok as long as you express yourself”, the idea that “everyone is the same” regardless of whether you actually work hard, achieve and become a success, or if you laze about, barely articulate yourself and resist any advice or attempts to help you change. They will call for more money to be taken from the law abiding and productive, to bribe the feckless, breeding, whim worshipping thugs into being submissive. They will say they aren’t excusing it “but”, which of course means they are explaining the crimes as not the actions of people wishing to do evil, but as reactions to government policies.  They would be the first to complain about business owners taking justice into their own hands, after paying their taxes and finding it subsidises those who steal from them.

Today the state has to focus on the single thing it must do and do well – re-establish law and order in London. If it fails, then David Cameron’s much touted promotion of volunteering, called (appallingly) the “Big Society” will come to pass, in the form of vigilantes and localised justice. People will enforce the law as they see fit, because if the state wont protect them, what else can they do?

Tonight either London is secured, or it is anarchy – in either case, most Londoners will be at home, concerned, some frightened. My concern is that I’ve seen little evidence that this government has any real idea of how important this really is. 

09 August 2011

Want some free stuff?

That's what's driving the hoards of youths rioting in various parts of London the last few nights (and today as I write).  

It is not because of the protest of the shooting of Mark Duggan, in a case that is now under investigation.   One can't remotely claim that those rioting in Tottenham, Hackney, Wood Green, Enfield and now Lewisham are some response to the Police.  Petrol bombing shops, flats and buses, is not about some sort of protest.  There was a peaceful protest on Saturday about it, and Duggan's family long called for an end to any violence.

Even less credible is the opportunistic claim by Marxist dictatorship-felching ex. Mayor (and Labour candidate for Mayor) Ken Livingstone that it is a response to the coalition government's spending cuts (which despite the Labour propaganda, have seen a net increase in state spending).  It is a stark contrast from local Labour MP, David Lammy who said:

This is an attack on Tottenham, on people, ordinary people, shopkeepers, women, children who are now standing on the streets homeless as a consequence..

These are looters, they are amoral, impulsive young men and women who have no conception of the rights of others, who have no respect for the property of others, who couldn't care less if people lose their livelihoods, businesses or homes.   They are the output of a culture of entitlement that says if you want something you should have it, you don't need to work or save for it, for either the state will pay for it, or someone will give it to you - or you just take it when you can.  A culture of hedonistic whim worshipping, that says if it feels good it's ok and it doesn't matter who or what you destroy or harm in the process - might is right.
They are, of course, engaging in socialism - without the middle man of the state.   The likes of Ken Livingstone,  residing in pleasantly middle class Cricklewood, would steal from the businesses and the residents and the employees, just with the gloved fist of the state doing it in a far more ordered and determined way, to give a living, homes, food, clothes, TVs, mobile phones, transport and healthcare to those who steal.  Indeed, the state has been doing that for decades, and the moral vacuousness is obvious.

Note that the Metropolitan Police cannot use tear gas to deal to these thugs, it cannot even contemplate rubber bullets, because you see to protect people with more force would be against the rights of the criminals.  Neither could those whose businesses and homes were attacked could ever have a firearm to respond.

However, just wait to see who politically around the word spreads the empty nonsense that the riots are about the death of Mark Duggan (who did not exactly appear to be unfamiliar with the gang culture that infests Tottenham), or about the cruel Tory government that has cut government spending to a heartless 51% of GDP, or that its about racism (given the majority of rioters have appeared to be Afro-Caribbean), and how the way to fix it is to borrow more money we don't have to spend money on more regeneration, state housing ghettos, welfare and pseudo "jobs" with local authorities.

Whilst, of course, the people whose businesses are wrecked, who are unemployed as a result of their employers' businesses being wrecked, who are now without homes, are ignored - for they are the "collateral damage" of "disenchantment", rather than a victim of decades of failed welfarism and state housing ghettoisation, producing hot houses of feckless dependency and criminal cultures of violence, misogyny, gangster worship and aspiration less traps for the children raised in that culture.

UPDATE:  Oh and remember more than a few of the parents and relatives of these thugs DO want better.  Read Katherine Birbalsingh's column about how SHE talked to an event about young black men in London, she's an inner city teacher, who has riled more than a few because she spoke at a Conservative Party conference.

08 August 2011

End of cloud cuckoo land economics

So says City AM editor, Allister Heath.  In an extended editorial this morning he wrote an elegant piece that summarises where we all are at:

The post-Bretton Woods era is coming to an end. Asia and the emerging nations are on the rise – and the world’s increasingly vocal creditors. As economic power shifts, so will geopolitical and cultural influence. The US, which for decades enjoyed massive inflows of cheap financing, and huge benefits from owning the world’s reserve currency, needs to start to live within its means. The same is true of Europe, which faces two additional challenges: the Eurozone, which cannot survive in its present form and which has become the most urgent threat to global prosperity; and (even more than America) bloated welfare states and a generalised failure to grasp that weak education systems, high taxes and crippling regulations are a no-no in a globalised world.

He has no time for the endless budget deficits and the abuse of fiat currencies as ways to evade reason...

“stimulus” packages of the fiscal or monetary variety have become counter-productive, with every extra pound in economic output created coming at a much greater cost. Ultimately, one needs real, sustainable growth – and that must mean deferring consumption to allow the savings required to finance productive investment; a sound, non-manipulated currency; interest rates that reflect reality; and lots of hard work, creativity, skill and innovation, suitably incentivised. The pseudo-Keynesian micro-management that dominates policy-making is not only intellectually bankrupt but has been proved to fail in practice. Politics and wishful thinking has been defeated by economic reality. In a world of scarce resources, we need to produce before we can consume – all the borrowing and money-printing in the world cannot refute this simple truth. 

His big predictions are that the US can prevaricate for some time, and be in long term relative decline as it does, but the European Union has an immediate crisis, that now threatens to spread beyond the CPIIGS (Cyprus, Portugal, Ireland, Italy, Greece and Spain) into Belgium and France.  

But while the US’s decline could run for decades, and will involve further downgrades, the Eurozone’s crisis is urgent. The only question is how much debt the authorities will want or be able to federalise – how many toxic government bonds will the European Central Bank and the European Financial Stability Facility buy, in exchange for creating money or issuing Eurobonds backed by all Eurozone countries. Prudent taxpayers in Germany and elsewhere will pick up the bill left by profligate nations; but given its huge, multi-trillion euro size, this could destroy yet more credit ratings. France could be next for a downgrade. Even more importantly, a sovereign bailout will destroy any remaining popular support for the euro project, especially in Germany, understandably so given that the population was lied to when it was told that countries would retain their fiscal independence despite giving up monetary sovereignty.
 
The implications of this for Europe, could be positive if it unshackled itself from the socialist part of the EU project, and helped set its economies free, but it is unlikely that will happen.
 
The more serious concern ought to be about the decline of the United States, what is means not so much for the global economy, but for the international order.  For decades many in the West have rallied against Pax Americana, more than a few will cheer a New World Order that does not resemble what George Bush (Sr.) declared at the end of the Cold War.   
However, bear in mind what it represents.  It means Asia being dominated militarily as well as economically by China, and India, both nuclear powers.  It means the Middle East being dominated by Saudi Arabia and Israel, it means Europe being dominated by NATO and Russia, and it means the United States doing what Obama has royally done, opting out of the world by withdrawing.

The so-called "peace movement" will proclaim the world is a safer place as a result, although if it is a place where the United States no longer carries a banner, and sword, for freedom, one wonders how true that will be (not that the "peace movement" ever believed in freedom).   Some US libertarians welcome this, not wanting the US to be "World Police" (not that it ever really was), but what it leaves is a philosophical vacuum - one that is increasingly filled with "make money wherever you can regardless of individual or property rights" as the Russia and Middle Eastern kleptocracies move forward and China seeks a 21st century imperialism over African natural resources to replicate the 19th century Western equivalent.   Islam may fill part of it, corporatist state capitalism will fill some more, as will knuckle-dragging nationalism based on ethnicity. 

However, consider this.  If you were in Poland, with a relatively chilly authoritarian neighbour to the east, and you saw the US withdraw its presence in Europe - given the past 70 years of history - would you be feeler safer as a result?

02 August 2011

What spending cuts? (UPDATED)

Given some of the news coverage you might think the US houses of Congress have reached agreement to cut spending in the US Federal Government.

The Daily Telegraph says there are US$1 trillion in spending cuts over 10 years.
The Washington Post called them "severe cuts".
Spendaholic Paul Krugman in the New York Times says it is "slashing government spending" and even says it calls the whole system of government into question!
The New York Times editorial calls it "nearly complete capitulation to the hostage-taking demands of Republican extremists"

You'd think I'd support it, but really it isn't what it seems.  Chris Edwards at the Cato Institute points this out in the following graph.   The US$917 billion "cut" over 10 years is not a cut in real or nominal terms, but a cut from a baseline of even faster increases.

So what does it actually mean? Well Edwards says:

"The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent."

That's what is provoking a hysterical reaction among the left in the Democrat Party.  Spending isn't being cut in real terms, spending is being cut by part of the amount they wanted it to grow.

As I've mentioned before, a relatively unambitious plan from the Cato Institute would cut spending by US$1 trillion annually through to 2021, it would balance the budget by that year.  It would cut government spending as a proportion of GDP from a projected 24% to 18% (the same it was in 2000).  It would look like the graph below.   You can figure out the current plan is closer to Obama's plan than to the Cato plan.

However, because it plays with so much pork (everything from agricultural subsidies to Amtrak to public broadcasting to the Department of Education (don't worry the states do most of that anyway) to Medicaid, it would be difficult for many Republicans (who are frankly half responsible for the current mess) and virtually all Democrats to accept.

Yet it should be the bare minimum to get the USA back on track to growth, by pulling back from the crowding out of the private sector, by keeping taxes at their current level and eliminating vast amounts of distorting and damaging subsidies and government programmes.

Oh, by the way, Obama once opposed raising the debt ceiling as well:


"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

That is Senator Obama, 20 March 2006.

Thanks to Allister Heath at City AM for tweeting this and National Review for publishing it.

Just another politician isn't he?

01 August 2011

Watch Syria, for that's the future

It shouldn't surprise anyone that Bashar el-Assad has turned the army on protestors and has shown little hesitation to create rivers of blood among his subjects.  Tanks firing on civilians, sniper taking out protestors, blocking hospitals to stop protestors entering according to a report from The Independent.   With reports of heavy machine gun fire, tanks shelling buildings and electricity and water being cut off from the city of Hama (where Assad's bloodthirsty father had massacred reportedly over 10,000 in 1982), it appears the regime will stop at nothing to remain in power.  Another report talks of tanks running over people.   Some claim over 1,600 have been killed by the regime since protests started in March, whilst this is likely to be somewhat exagerrated there can be little doubt the regime has been engaging on a spree of oppression.

It did try in recent years to put on a more moderate face.  Some thought that as Bashar Assad had been trained as an opthamologist and had not originally been seen as the successor to his father (his far more ruthless and "Uday Hussein" like brother Basil had been, before he died in a car crash), he would be more moderate, and there had been signs of a loosening of the totalitarian state his father Hafez had instituted, but it would be more like moving from Stalin to Khrushchev.   It didn't stop Vogue writing a gushing piece about Bashar's wife late last year (which it wisely has removed from its website). 

However, the truth is out.  Bashar wants to retain absolute authority and power, like his father.  He has the support of the armed forces, and the brutal Ba'athist socialist legacy of the ruling party continues.

President Obama has rightly condemned what has been going on, as have other Western leaders.  The regime's response has been to sponsor attacks against the US and French embassies.   Meanwhile you'll notice two major differences between the foreign reaction to Syria and the reactions to Libya, Serbia and other examples of what is typically referred to as "humanitarian intervention".

Firstly, the Western world is financially and politically exhausted as regards "saving the world" from the brutality of dictatorships.  Barack Obama has no appetite or inclination to do anything to intervene in Syria, not least because of the cost, but also because he firmly believes that it is for the UN Security Council to authorise any such action.  Is he pushing for this?  Well no, because he knows it wont be politically popular, he knows he'd struggle to pay for it and as he didn't support the overthrow of Saddam Hussein (and was subdued on Libya) he doesn't believe the US should project itself militarily, in order to save the lives of others.  Meanwhile, as the UK and France effectively lead the continued presence over Libya, they are not so inclined to go into Syria either, because of money.  Germany opposed intervention in Libya at all.   Of course neither Russia nor China are in any way inclined to support intervention against a government that turns on its own people, given that both are quite adept murderers of their own domestic populations.

So the post-Cold War age of humanitarian intervention, which has had mixed results including the former Yugoslavia, Somalia, Liberia and Libya (I count Afghanistan as being action against those that harboured an aggressor and Iraq as action against a proven threat to international peace and security), is now over.

You'll have to get used to watching TV coverage or hearing/reading reports of governments massacring their own people.  For the US and European powers are no longer willing to save them.  That is, in part, because they have nearly bankrupted their own economies through many years of overspending on bribing voters and interest groups with future taxpayers' money. It is also because the cost in lives and money of such interventions (and the organised forces against them from the left) have made it politically more difficult to support.   The UK was embarrassed about its previous sycophancy for the proven mass murderer Muammar Gaddafi, so could not stand by as he used helicopters to take out civilian protestors.  However, Syria has never been a friend of the West, so the guilt isn't there.

All of this should please the so-called peace movement and human rights advocates from the left who opposed the Allied invasion of Iraq and overthrow of that Ba'athist dictatorship, as well as the smaller group who thought the Taliban should have been left alone in Afghanistan, to keep harbouring Al Qaeda and enforce a dark ages Islamist year zero ultra-patriarchy.   The same people have been relatively quiet over Libya, except the usual tiresome claim that its only about oil.  

You see, the so-called peace movement have long held up Afghanistan, Iraq and even Libya as of late as being "the fault of the West".  This is a line whereby all NATO members and Western allies of military intervention in all these cases, must carry the blame for the actions of previous western governments in the Cold War.  Never ever is the finger pointed at Russia or the governments of the former Warsaw Pact countries and the like.

Afghanistan was the fault of the West supporting the Mujahideen against the brutal Soviet backed Najibullah regime.  The Soviet invasion of Afghanistan was, after all, supported by Keith Locke of all people.   It takes a peculiar contortion of one's belief in human rights, womens' rights and freedom of speech to oppose the overthrow of the Taliban, but that is what the far left did (it would have been ok had the Afghan people done it on their own efforts though - like how it would have been good if the Jews had overthrown the Nazis in Germany).  Support for the Islamists in Afghanistan was a mistake, but it doesn't mean one cannot rectify it when they not only have proven to be brutally sadistic, but harbouring those who attack you.

Iraq was also the fault of the West, for the support Saddam Hussein got against the Iranian Islamists.  That piece of realpolitik (your enemy's enemy is your friend) was an appalling miscalculation, which was eventually figured out in the late 1980s when the West stopped arming and supporting Hussein (though one shouldn't forget the French help for Hussein's first attempt at building a nuclear reactor, which Israel swiftly dealt to).   Of course, the USSR and Warsaw Pact countries also extensively armed and assisted Saddam, but Russia and its former allies are forgiven, somehow.  However, that doesn't matter now, for notwithstanding Saddam's use of chemical weapons against his own people, his invasion and occupation of a neighbouring state (for oil) and his extended oppression and brutality against anyone who opposed him, he was deemed protected by international law by the so-called peace movement.  Invasion against this dictatorship was "illegal" and "unjustified" as the borders of a dictatorship are considered inviolable.  The left considered Saddam's regime as having at least enough moral authority for the actions to overthrow him to be considered less justifiable than letting him be.  

This Ba'athist hereditory dictatorship in Syria has so many hallmarks of being abominable it should be more surprising that it didn't long ago raise anger and activism among the legions of self-styled human rights protestors in Western countries.  You know, the ones who will raise a flotilla for the Gaza Strip, or rally against apartheid, or protest against the Chinese one-party state.

However, Syria's past can't be easily blamed on the West.  It gained independence in 1946, but between then and 1956 was marked by multiple military coups.  In 1956 it became explicitly allied with the USSR, and merged with Egypt in the ill-fated "United Arab Republic" of Nasser in 1958, before withdrawing in 1961.  A 1963 coup led by the socialist Ba'ath Party set the stage for the future of the country.  With Hafez Assad staging his own coup within the regime in 1970, he held power for 30 years, with an iron fist and a personality cult to match, with Bashar taking on the legacy in 2000.  Throughout the entire period since 1956, Syria has been allied with the USSR, and subsequently maintained warm relationships with Russia, Iran, North Korea and other regimes with an overtly anti-Western stance.

So for now, you can watch Syria's regime massacring its own people.  In the knowledge that the Western advocates of peace and human rights are rather quiet on it all, expressing concern, but not at all supporting intervention (how could they).  They will be quiet about a regime they have ignored for decades, because it never had Western support and was always antagonistic towards Israel (although Israel has for some years sought a peace treaty based on progressively handing back the Golan Heights, but Syria wont make peace until the Palestinian situation has been resolved).  

Meanwhile, with Obama in the White House, and largely uninterested in international affairs.  With Western leadership dependent on a fairly wet British Prime Minister who is in coalition with anti-interventionists, it may be up the the French (given Syria was a French colony) to seek action.   Yet, as China and Russia have no inclination to support it (and since few dare to ignore the UN Security Council nowadays), expect to see more blood flowing in Syria with no intervention.

It is, after all, the consequence of a policy of non-intervention and what the so-called peace movement and human rights movements want as a response.

28 July 2011

The "radical" plan Obama is rejecting

The Cato Institute has reviewed the latest Republican plan to stop the US overspending slow down the growth in US government spending, it isn't impressed:

The plan is to cap discretionary spending over 10 years to achieve $1.2 trillion in savings; have (another) bipartisan group of policymakers come up with $1.8 trillion in “deficit reductions” over ten years; and get a vote on a balanced budget amendment. In exchange, the president would get to increase the deficit by $900 billion this year and by another $1.6 trillion next year.

That means:
  • Under the Congressional Budget Office’s optimistic spending baseline, the federal government will spend $46 trillion over the next ten years. Obviously, reducing spending by $1.2 trillion oven ten years is relatively small.
  • The same dysfunctional congress that treats entitlement programs like lit sticks of dynamite is supposed to come up with $1.6 trillion in “deficit reduction.” Note that we’re not even talking specifically about spending cuts here, so that figure would likely include tax increases assuming they’re able to even come up with something.
  • Under the Boehner plan, spending and debt will continue to rise. At the most, the plan would produce an average of $300 billion a year in cuts in exchange for increasing the debt ceiling by $2.5 trillion over the next two years.
  • Boehner’s bill includes language that tightens up the definition of what constitutes “emergency” spending. Congress regularly slaps the “emergency” designation on all sort of non-emergency spending bills.
  • Where are the immediate spending cuts? Once again, we have the promise of cuts but no specifics. Even if the discretionary caps hold the line on that portion of spending, total federal spending (and debt) will continue its unsustainable upward climb. Entitlement spending is the biggest driver of our long-term budgetary problems but entitlement spending isn’t capped under the Boehner plan.
Obama is rejecting this, because he wants more taxes and wants the issue resolved so it looks like he managed to chaperone a compromise that will outlast his Presidential term.  Of course, some Democrats want tax increases to be a major component of the deficit reduction strategy, because they want to entrench the growth in government that has been the legacy of Obama and Bush before him.   Tea Party aligned Republicans want deficit reduction to be entirely about spending cuts, and I agree.

Even the Cato Institute's own rather meek plan, by Chris Edwards, to cut spending would be a vast improvement, because a balanced budget would still be a decade away, but so much wasteful spending would be addressed.  It would cut the Federal budget to 18% of GDP, down from Obama's projected 24%.

It is about competing visions for the USA.  Some Democrats (and likely Obama himself) want the US to be more like Europe, and to have an activist state involved in health, education, welfare and economic development more than now.  Tea Party Republicans want to keep a sizeable gap between the European size of the state and the US, and want to balance the books by getting spending down, and then address the debt bubble.   However, I suspect most congressmen and women from both parties just want to get elected, be loved and popular, and to convince people that they are just the right ones to solve their problems.  The deficit being something most have spent little time thinking about.

For now, it is a game of chicken.  Obama does not want a deal that needs to be replicated next year during the election season, he wants to look like the honest broker who saved the country from bankruptcy (or at least convinces his core voters that he is in charge and competent).  The recently elected Republicans don't want a deal that includes any tax rises, because they campaigned against that, and they want a balanced budget constitutional amendment so that there is a legal requirement to eliminate the deficit over time (and avoid the risk of this ever happening again).   Both Obama and the Republicans fear being blamed for a default.  Obama bears the bigger risk, because he is President and more people think he is in charge than Congress.  All the Republicans can say is they reject any tax increases, and want to cut waste.  Yet, they also don't want to be seen as being incapable of compromise.

Two visions of the USA - will one win, or will a lily livered half arsed middle ground be found that does barely enough to get past this hurdle.

100% result in DPRK election

North Korea held its local, municipal and provincial elections.

It had 99.97% turnout (disgraceful yes, but it was noted that some were working on oceans or abroad - haven't they heard of absentee ballots?)

and 100% of those who turned out voted for the single candidate.

Even the ephebophile, megalomaniacal, pathological liar.

Meanwhile, there are still tens of thousands in gulags, including hundreds of children, and Amnesty International still has no campaign on the place, oh and Reverend Don Borrie of Porirua still remains Kim Jong Il's useful idiot in New Zealand.

26 July 2011

Debunking the "building roads causes congestion" myth

For some time now transport policy has been influenced (and in some countries dominated) by an ideological branch of the sector which could best be called "planning environmentalists".  This group has the following set of views, which are based more on philosophy and politics, and rather less on evidence:

- The problem with transport is people driving;
- Helping cars move is a negative because cars kill, cars pollute and cars take up a lot of space;
- Building new roads magically induces more car trips, so roads shouldn't be built, in fact in some cases they should be closed (the busiest ones);
- People are "dependent" on their cars, rather like drugs, but they would rather not be, they would rather use public transport if only the choice was there;
- Travel by public transport is good, the more the better;
- Travel by rail is almost nirvana, it is the safest, least pollution, can carry the most number of people, can be easily powered by electricity.  The more of this, the better we will be;
- Where railways can't even start to remotely seem sensible, light rail (trams) are the next best thing.  Cheap trains at street level.  People love them, the more the better;
- When even light rail is insanely expensive, buses are ok, but they are only ever a stopgap (after all they have diesel motors, use rubber tyres and um roads);
- Cyclists are important too, except when they disagree with light rail;
- Walking is important, but please don't talk about people who walk or bike who might be attracted to highly subsidised public transport - because that can't ever be a bad thing;
- Freight movement in cities is largely ignored because despite the best will in the world, it can't be moved by rail in any great volume.  Freight benefits from public transport though;
- Public transport relieves congestion, except it doesn't, but actually what we mean is it doesn't actually matter.  Congestion is a good thing, it is a tool to encourage people to use public transport (A Green Party policy advisor told me this himself);
- Road pricing is fabulous, but only to penalise cars.  All the money collected should go to subsidise public transport;
- Road users should pay the full costs of their infrastructure and externalities and pay for public transport subsidies, public transport users should pay a small fraction of the operating costs of their services, or even nothing at all, for they do us good by riding around on those trains;
- Public transport would be more viable if cities were higher density, like Prague, Moscow, Zurich, Barcelona, London.  People should live in high density housing more, less in suburbs.  Planning rules should enforce this, then people could live in tighter communities, travelling by rail, which of course, is what they really want, if only they knew better.

A key part of the dogma behind this, which is wholly embraced by the Green Party, is the notion that if a new road is built, it will become congested within a few years, making the whole construction futile.  It is the only sector where a claim is made that when something is popular, it is a bad thing.  It always ignores whether the road has been priced properly of course.

The Washington Examiner has an excellent article summarising the history behind the claim that building road causes congestion, and the countervailing evidence.  A good example is Phoenix, Arizona:

in the real world, adding highway capacity can prove quite helpful. The Texas Transportation Institute’s annual Mobility Report, for instance, demonstrates an uncanny correlation between capacity and traffic congestion: Areas that add capacity tend to have lower levels of congestion. And induced demand doesn’t always -materialize. Take, for example, the city of Phoenix, a town built with almost no freeway system.

As a result, the Phoenix metro area historically had some of the worst congestion in the nation. Between 1982 and 2007, Phoenix decided to build the highways it should have had in the first place.

They added so much asphalt that, according to the research firm Demographia, the city’s highway-lane-miles per capita grew by 205 percent. During that period, highway-vehicle-miles-traveled per capita increased by only 12 percent. And, like magic, traffic congestion plummeted.

Now what is true for Phoenix may not be true for Philadelphia. And building highways almost certainly induces some demand.

In New Zealand you can see the same, with plenty of examples to prove that building roads need not lead to congestion.  In Auckland, Te Irirangi Drive was built some years ago and has yet to be even close to capacity.  The south eastern highway from the Southern Motorway to the Pakuranga Motorway likewise (despite being built on the cheap).  In Tauranga, toll road Route K is now locally infamous for losing money because of lack of demand, and the related route J north isn't remotely congested.   Wellington's motorway bypassed Tawa  in the 1950s, and neither the motorway nor Tawa are congested.  Upper Hutt has also been bypassed with a sustained reduction in congestion through that city (and on the highway).  Lambton Quay used to be gridlocked at peak times with cars in the 1970s, until the motorway provided a bypass to south of the city.  Nelson's Stoke Bypass has not resulted in congestion in Stoke or on the highway.  

Now when a new road opens up a previously inaccessible, but desirable location, then it will have rapidly increased demand.  New crossings can do this, like the Auckland Harbour Bridge which needed a duplication of capacity within a couple of years of opening.  Tauranga Harbour Bridge was similar, but only when the toll was removed (which moderated demand).   In addition, piecemeal upgrades to a road that eliminates one bottleneck, but doesn't deal with one further along the route can exacerbate congestion at the further bottlenecks (but doesn't destroy the case for relieving congestion for those who do not go that far).

Modern cities throughout the world have used road building as part of their strategy to meet transport demand.  Where they have failed is in unfettered construction that means a subsidy from those who don't use the road for those who do.  In short, without using the market tool of pricing, building new roads can simply be just another subsidy.  

In New Zealand at the moment there isn't any appreciable use of pricing to manage demand to meet supply, but there is a major road building programme - one that does involve a considerable subsidy to road users in particular parts of the country (Auckland and Wellington mainly).    A more commercial approach may not build so much, and certainly not so fast.   Sadly, the main choices in policy offered to voters are to embark on grand Think Big road projects (e.g. Transmission Gully and the Puhoi-Wellsford motorway), or to embark on grand Think Big rail projects (e.g. Auckland underground rail loop and Auckland airport railway).   Actually letting users decide with their dollars seems something neither the Nats or the Greens can get to grips with.

22 July 2011

Don't believe the EU agitprop - the Euro crisis is not over

For all of the hype yesterday from the politically (not democratically) appointed European Council President, and the cheers and handshakes from Presidents Merkel and Sarkozy, you might think there is reason to breathe a sigh of relief.  The use of the term "Marshall Plan" to describe what has been done is so wildly far from the mark that it continues to confirm my view of how malignant the European Union, Commission and Council actually are.  It is an institution as addicted to lies as any politician could be.    The big driver for Merkel and Sarkozy can be seen on this graph on the BBC news website.  Both French and German banks and governments are by far Greece's biggest creditors.

The immediate reaction to the announcements was the usual lemming like attitude of the currency and sharemarkets as many suddenly had confidence where there was no confidence before.  Some of that will be the attempt to make some short term returns from the bubble of optimism, for that is all it would be.  All the Eurozone leaders have done is buy some time, by pilfering the bank accounts, wallets and purses of their children and grandchildren - fiscal child abusers like so many politicians.  

As I predicted yesterday, a bailout solution will involve a form of fiscal union.  It was confirmed that details of how Eurozone countries will integrate tax and spending policies will be forthcoming.  Nothing has been said as to whether taxpayers in Eurozone countries will be asked whether such a fundamental constitutional shift will be put to referenda, for that is not in the style of the European Union.  It wont let democracy or public opinion get in the way of "the project".  Even the Guardian admits it is the "democratic deficit".  

Yet that isn't my biggest concern, for whilst it is easy to assert that if asked, it is unlikely European voters would see sovereignty transferred wholesale to Brussels, it is more fundamental that it is quite simply immoral for people in one country to be forced to bail out the fiscal profligacy of those in another. 

The plan is as follows:

- A tranch of Greek public debt will be transferred to the European Financial Stability Facility, effectively "EUising" the debt, with the maturity extended to about double the current average period.  The interest rate will also be cut to 3.5%.  In short, Greek debt is being transferred to primarily German, but also Austrian, Dutch and French taxpayers.

- Greece will "temporarily default" as private lenders will be effectively blackmailed into accepting a 20% writedown on the loans.  In effect the loans will be transferred to the European Financial Stability Facility (EFSF), with extended maturity periods and lower levels of interest.  Greece will effectively be unable to borrow from private lenders in the foreseeable future.  Private lenders will take a hit of around 13.5 billion Euro as a result, but will contribute up to nearly 50 billion overall.

- New EU bonds (debt) will be issued with a AAA rating.  In effect, Germany will be borrowing on behalf of Greece.  German taxpayers will be forced to use their hard work and savings to prop up the profligate and spendthrift Greeks.

- The EFSF will have new powers allowing it to buy sovereign debt from countries held by private creditors and cutting the interest rates on that debt.  In short, German taxpayers subsidising lenders to profligate countries. 

Greek public debt will be cut by 12% of GDP, albeit from the current level of 140%.   This should make it easier to service.  The overall value is 159 billion Euro.  However, it doesn't deal with the fundamental problem.

Greece is still overspending, on a rampant scale.

If Greece cannot cut its state sector back and radically reform its economy, it wont meet the deficit reduction targets that have been conditional for this and the previous bailout.  All this is doing is buying time.   It was made clear that Greece is a "special case".  There is no capacity to do the same for any other of the countries known as the PIIGS (Italy being added to Ireland recently).  Although it was noted that Spain and Italy have both committed to major austerity programmes to cut their deficits, which may just save them from a similar crisis.

Moreover, the Eurozone countries have agreed to "legally binding national fiscal frameworks" by the end of 2012.  That means surrendering sovereignty over tax and spending policy to the EU.

What's next?

If Greece's announced austerity measures are actually implemented, it may well be the end, but it has failed to do enough to date.  Greece needs to drastically cut and eliminate its budget deficit in the next two to three years so that it need not borrow anymore - for it is about to default, and will be unable to do more than is provided for.  This really is the last chance, unless other Eurozone governments are willing to rob from their children and grandchildren some more.

If Greece fails to cut its deficit there may well be another bailout, but with the French Presidential elections in April 2012, and German Federal Parliamentary elections in September 2013, Sarkozy and Merkel will be keen to avoid being seen to sell their people out to the Greeks.

Ireland, Portugal, Spain and Italy are also on the horizon.  All have announced austerity plans, but of those Portugal looks the weakest.  The thing to watch is whether in the next tranch of borrowing (which all of these countries must do), is whether there is enough confidence in the markets to allow it, and at what interest rate.  This bailout will raise confidence somewhat, but for the likes of Spain and Italy, few will be convinced that the Eurozone countries could afford to duplicate the Greek deal.  Their budget deficits will need to be dramatically slashed in the next two years to avoid risk of default.

However, watch blood to be spilt in forthcoming months over fiscal policy.   Central to Ireland's economic fundamentals has been a low corporate tax policy, which has encouraged many firms to locate there in preference to the UK and other Eurozone countries.  If the forthcoming "fiscal framework" does away with this, then Ireland will face a choice of abandoning this tax policy - in order to remain in the Eurozone, or doing away with the Euro.  Ireland's debts are due to it foolishly promising to provide 100% guarantees for bank deposits and then bailing out banks that lent into its overheated property sector.  It is NOT due to rampant domestic overspending.  

Further out, Belgium and France face big fiscal bubbles.  France's public debt as a proportion of GDP is 84%, Belgium's is around 100%.  Governments all over the world are having to face up to reality that they can't overspend forever.

However, for now attention will shift to the United States, where the most limp wristed efforts at addressing rampant overspending are now being presented as a "solution".   As the Cato Institute says, the so called "Gang of Six" plan is lousy.  A detailed assessment is here, and while it does see some tax reform, it also increases taxes by US$1 trillion, does nothing to address the looming Medicare/Medicaid overspending and "cuts" by reducing the rate of increased spending to below the rate of estimated economic growth and doesn't see a balanced budget in the foreseeable future.   Obama likes it, which speaks volumes.  Cato has a far more ambitious, but still quite cautious plan here, which would balance the budget by 2021, without any tax increases.   It reduces government spending from 24% to 18% of GDP, to match tax revenues which will be at that level.  Don't expect Republicans to spend much time supporting that, for they are almost as bad as Democrats in their addiction to fiscal child abuse.

21 July 2011

And in real news today

The Greek government continues to try to borrow, yesterday its two year government bond rates were priced an at annual interest rate of just over 39%.

Great investment? No. It's the swansong before the funeral march.  Anyone lending the Greek government demanding such rates sees it as having a high risk of default.  A default that will reverberate loudest in Dublin, Lisbon, Madrid and Rome, but will buffet Brussels, Paris, Amsterdam, Vienna, Helsinki, Luxembourg, Nicosia, Valetta, Bratislava, Tallinn, Ljubljana and of course, Berlin directly.  However, the echos will go throughout Europe and be heard globally, for it will be the beginning of the end of the Euro as we know it. 

If journalism wasn't full of solipsistic onanists obsessed with News International, then there would be more than a smattering of well written articles hidden in papers about all of this. 

EU politicians are caught between two unpleasant facts:

1.  Politicians in the "south" of the EU have spent the past generation largely bribing voters with other people's money lent to them at preferential rates.  The other people have started giving up lending it, and the politicians haven't the courage or moral fibre to admit that the state largesse of recent years must end or that taxpayers will have to pay a lot more to get it.  The people in those countries are unwilling to accept either, and blame the lenders for the largesse, not the people they elected who borrowed it on their behalf.

2. Politicians in the "north" of the EU are concerned that if governments in the "south" default, it will be their lenders that lose out.  The banks, insurance companies, pension funds, private investors and businesses who saw lending to profligate socialist politicians in the south as being a "secure investment", risk losing billions.   However, voters and taxpayers in the "north" don't care.  They haven't elected politicians who have been quite so profligate in spending money that they had to borrow, and haven't had lifestyles and living standards substantively propped up by such blatant socialism as retirement ages in the 50.  They don't want to bail out the "south" nor do they care that investors in their countries will swallow the cost of it, as long as it doesn't affect their savings (it shouldn't) or their pensions (it might).

Politicians of the "south" have nothing left to offer, they are almost universally a disgrace, and their philosophy and attitude (and that of their predecessors) has produced a false golden age for their countries.

Politicians of the "north" want to bailout the governments of the south, to avoid bailing out the banks and investors who lent to them, but know that voters in their countries are not amused.   What they want is to control the spending and tax policies of the countries of the "south" in exchange for bailing them out - for otherwise, how can they be brought under control to behave better?

So Germany and France will seek to bring all Eurozone countries under central fiscal policy control, in other words, it wont be up to the Parliaments in Athens, Lisbon, Madrid, Rome, etc. as to levels of tax, or levels of spending, it will be up to either the one in Brussels/Strasbourg, or something new.   

Call it the Commonwealth of Eurozone States, or the United States of Europe, or the European Soviet Socialist Republics, or the Union of Eurozone States, but it will be a wholesale surrender of state sovereignty to a super-state.

Will the people of the countries of the "south" tolerate this?  They will be told they have no choice, it is either that or they are expelled from the Eurozone (which does not mean they cannot use Euros, but does mean they would have no role in formulating monetary policy). Ireland, in particular, will baulk at surrendering its highly competitive low company tax rate, which politicians in Paris and Vienna have been keen to attack, among others.

The bigger issue is not only will the countries of the "south" baulk at this, but also will others not in crisis.  Estonia, Slovakia and Slovenia may all wonder why they left the yoke of centrally planned economies to have joined a new ones.  Estonians and Slovaks will not want to have swapped control from Moscow (and for Slovenes, from Belgrade) for control from Brussels.  I suspect the Dutch too will be fed up.  France and Germany, and their virtual satellites Belgium and Austria, will happily go along with it as they will have the power in any central fiscal union.

Ultimately, it can only go one of three ways:
- A Eurozone bailout that creates a new fiscal union among Eurozone members, extracating sovereignty from national capitals to the EU and having to implement tax and spending policies in line with France and Germany;
- A Eurozone default, resulting in countries exiting the Eurozone, with dire consequences for their national banking systems, their creditors and needing to implement austerity policies on a grand scale because of the complete inability to borrow;
- Agreement to a massive austerity programme by the Greek government that cuts the budget deficit suddenly and dramatically, reducing the pressure on creditors.

All in all, the countries of the "south" face severe spending cuts and probable tax increases no matter how it goes.  

For countries outside the Eurozone, the biggest concern is managing the fallout from whatever happens, for it is likely to hurt.  As Allister Heath in City AM today says:

Osborne and his advisers ought to be working day and night on contingency plans in case the Eurozone collapses or the US defaults, not worrying about ex-tabloid journalists.

The British government should be ensuring it has no part in any bailout of the Eurozone, that it may be willing to re-accommodate Ireland seeking to abandon the Euro, in favour of the currency of its largest trading partner (if it so chooses) and to lead an effort to restructure and reform the European Union into a looser customs union, with a smaller central role, without grand vanity projects, without grandiose corporate welfare systems, without interference in national economic or social policies beyond basic rules on non-discrimination and freedom of trade and movement of citizens.  If some EU Member States want more control, let them have it, keep Britain out of it.  If the EU project is about to splinter, then let the UK lead efforts to recraft it into something worth salvaging, a basic treaty that keeps borders down and markets open, but does not demand that countries embark on grand unifying projects of statism.

In the meantime, can people simply remember that the Liberal Democrats, Tony Blair, the BBC and the Independent were all wrong on all of this?  (and yes, Gordon Brown was right, along with William Hague, Margaret Thatcher, Nigel Farage, the Daily Telegraph and the Daily Mail were right).

20 July 2011

What should be the main story

While the news media in the UK in particular continues to engage in a solipsistic frenzy over News International and the phone hacking allegations, a far more serious and far bigger issue is looming - make or break time for the Euro and the European Union.

Those who damned News International should take note, because it is the BBC that for many years treated Euroscepticism, those who wanted the UK to retain the Pound Sterling and those who disliked the European Union as crusty old fashioned nationalists, who hadn't stopped fighting the war and had bemoaned the loss of empire.  It was seen as a fringe activity by the BBC and ITN, as well as the serious leftwing newspapers such as the Guardian and the Independent.  

The problem being that it didn't distinguish between the racist, protectionist, far-left opponents to the European Union (see in the trade union movement and in the fascist BNP) and the free-market liberal opponents, who saw it as a project to create a federal super state that would enshrine a fortress Europe with generous welfare state, high taxes and high state involvement in the economy as a whole.

The broad consensus of the political classes for some decades has been to support the European project.  There was always something for everyone.  Those on the left loved enshrining trans-national regulations, floors on some taxes (e.g. fuel tax), the social charter and obligations on Member States to supply welfare, healthcare, education and housing to EU citizens across the board.  The EU forever expanded its remit on regulation and spending, with grandiose projects for infrastructure, or in duplicating the US GPS system at multi-billion Euro cost.  The EU became the negotiating body on international agreements on climate change and trade, and it generated a growing bureaucracy, with new directorates and functions to ensure consistency across Member States.  Most of all, it presided over a generous centralised economic welfare state, by facilitating massive transfers of money to poorer Member States, but also sustaining the grossly destructive and inefficient Common Agricultural Policy which primarily benefited France, Spain and Italy.

The right tolerated the EU because it did break down barriers to trade in goods, services and movements of people among Member States.  It also mandated some liberalisation in trade in different sectors, such as aviation, telecommunications and energy.   Most of all, the argument that it was better to be "in" the EU to help set the rules and be part of a trading bloc with a GDP as large as the US, sounded credible.

However, what it all hid was the fundamentally socialist nature of the project in seeking to create a federal European superstate.  The way this has all com to pass has been the abject failure of those countries that joined the Euro to manage the inevitable tensions when a single currency is across multiple economies with differing fiscal policies.

Greece, Ireland, Spain, Portugal and Italy have all "enjoyed" vast amounts of low interest rate credit for public and private sector investors (Greece had the state overspend, Ireland had private investors overspend on property).  It has all proven to be ultimately unsustainable.  You cannot keep borrowing to pay for consumption now in the hope you can borrow more in the future.  This has been the model adopted by all of those countries, and also those which do not currently have much focus, such as Belgium and France (both of which have been rabid overspenders for decades as well).

The risk is that one of the countries will default, which is unexpected by their creditors because banks always assume countries can tax their people to pay back debts with greater certainty than companies can persuade customers to buy their goods and services.  It has proven wrong.

Liberal democracy has meant that voters vote for the goodies that politicians promise them, most giving little attention for how it will be paid for.   The effect of a single vote is tiny, and no voter is accountable for such stupidity as voting for a politician who will creat future bankruptcy.   The politician him or herself is not accountable.   The worst that can ever happen is to lose an election, leaving potentially billions in debt for taxpayers (not politicians) to pay off.  The politician can retire in comfort, and even with some fanfare, as most voters and journalists wont dare blame them for years of profligacy and waste.

So the inevitable is now reached.  Politicians can either support many cutbacks or tax increases, inflicting "pain" on voters, or give up, and the country defaults.  The problem for this, is that it put the country effectively under the control of creditors, and in these cases, the IMF to provide emergency finance.  The IMF then dictates a programme of austerity and privatisation.

Of course, the Eurozone countries don't want this to happen, so they are likely to offer their own taxpayers up as sacrificial lambs to pay for a bailout, in exchange for what is, in effect, the implementation of EU wide fiscal control.  That means that Brussels, not the national capital, will decided on Euro member spending and tax, it fundamentally changes the constitutional relationship between the state and its people, and the EU.

I doubt that people in Greece, Ireland, Portugal, Spain or Italy want the EU to decided on government spending and tax - which will herald the departure of any country facing default from the Eurozone.   However, I also doubt that the people of Germany, France Austria or the Netherlands (to list Eurozone countries that will effectively fund a bailout) will support their taxes being used to prop up feckless socialist inclined Mediterranean countries.  

So the choice becomes simple:
-  Remain in the Eurozone and have your government fiscal policy centrally determined (removing a core part of state sovereignty); or
-  Leave the Eurozone, recreate the junk fiat currencies of the past and inflate/devalue ones way out of debt (whilst facing massive capital flight and loss of confidence).

Neither option is going to be popular, but they are the inevitable consequences of decades of profligacy and the distortions of cheap credit through the Euro.

The only other alternative is for those who lent money to take a hit, a big hit.  That means banks, insurance companies and pension funds.  In essence, a punishment for thinking that lending to governments is a sure thing, when there was never any record of those governments running budget surpluses to pay down debt.  Even if that does happen, it wont be enough.  Quite simply, the EU and its bureaucratic incarnation, the EC, have been willfully blind and fundamentally incompetent in their gross evasion of reality.  It continues with calls for increased budgets at a time when all Member States are struggling.  The EC, the EU Parliament and those who maintain this facade are utterly contemptible.  I've never been more satisfied in my vote for UKIP.

Allister Heath at wrote today's editorial at City AM on this very subject, and concludes:

There is nothing that will make a total EU takeover acceptable to Greeks and others, which is why they will soon want to quit the EU – and the German public will be deeply angry as it finally realises that everything it was ever told about the euro has turned out to be a lie. It will soon want out too. The EU has always worked on the basis that every crisis is good because it invariably provides an excuse to centralise powers. But the present nightmare could prove to be a bridge too far and herald the beginning of the end for the entire project. Fun and games are about to start.


18 July 2011

A chance to hack at free speech

It has been impossible for anyone in the UK, and indeed anyone following foreign news to avoid the rampant coverage over the phone hacking scandal arising from repulsive practices from scandal mongering "journalists" at the now defunct News of The World.

Let's be clear, the practice of phone hacking and illegally accessing people's voicemail accounts is immoral, it is an invasion of private property rights and rightfully should be condemned.  Indeed, there should be no surprise that those who accessed the voicemail of a murdered teenager girl should be considered to be scum.  Bottom feeders of the lowest order.   That this should occur doesn't wholly surprise me, because "journalism" and "news" have long been strongly driven by feeding the vapid, scandal seeking, short-term "infotainment" appetite of so many people.  The same people who complain about government failures in areas from economics, to education and healthcare, are completely disengaged at any intelligent level with public policy, because they soak up "crime porn".  In a free market, it is little surprise that people supply this.

In the UK, the market is served by multiple providers, News International continues to publish The Sun, but there is also the left-wing Daily Mirror, the even more sensationalist Daily Star and hoards of celebrity scuttlebutt magazines.   The US has similar scandal rags, and New Zealand supplies this market through magazines, and television.

There is little doubt to me that those who undertook and authorised the phone hacking at the News of the World should face criminal charges and appropriate sanctions.  However, it is also worthy for there to be a wider reflection of a culture that salivates at the details and scandals behind crimes and the lives of celebrities.   Whilst in a free society I don't believe there is ANY role for the state in restricting speech around this, there is very much a role to debate publicly why so many prefer to be entertained about the lurid details of the victims of brutal violent or sexual crimes.

Yet the phone hacking scandal has barely scratched the surface of that issue in the rest of the UK news media.  No, a bigger hobby horse has been rolled out - it is the venal hatred of much of the media for News International and Rupert Murdoch.

The hatred has driven Leader of the Opposition, (red) Ed Miliband to call, in the Observer,  for the "dismantling" of Murdoch's "Empire" with new regulations on media ownership.   Miliband claims Murdoch has "too much power" over UK public life, because his newspapers have more than 20% market share.  Yes, 20% is too much power.   Indeed, the leftwing news media (Daily Mirror, The Guardian, The Independent, the BBC, ITN and Channel 4) have all been joining the circus to demand change, along with the competing right wing media (Daily Express, Daily Mail and the Daily Telegraph) to cauterise News International.

Precious few journalists have pointed out that this is blatant self interest on behalf of the media outlets wanting less competition, and indeed no one has ever pointed out any issues with News International's other titles being The Times/Sunday Times or Sky News. 

The unadulterated lies spread by the left on News International are the heaving rabid frothing rants of the insane.  Let's look at this so-called "power".

The UK newspaper market can be split between serious, middle market and "tabloid" newspapers.

The papers owned by News International in the UK are:
- The Times/Sunday Times; and
- The Sun.

The Times/Sunday Times competes with the Daily Telegraph/Sunday Telegraph, The Independent,  The Guardian/Observer and the Financial Times at the serious end of the market.

News International doesn't have a presence in the middle market, which includes the Daily Mail/Mail on Sunday, Daily Express/Sunday Express.

In the tabloid market, it does lead with The Sun, but competes with Daily Mirror and the Daily Star.

Beyond newspapers, it is the largest shareholder of BSkyB, the first and most successful pay TV provider, but with vigorous competition from Virgin Media and BT Vision, which further limited competition from Tiscali TV and TopUp TV.    However, whilst owning a pay TV network (that supplies over 700 TV and radio stations to its subscribers) is significant, it only runs one TV news outlet - Sky News - which is also broadcast free to air on digital terrestrial TV (Freeview).  This is one of 15 news channels, and of course access to news on free to air TV which is carried by BSkyB.   Including Sky News, it owns four channels on digital Freeview.

News International has no ownership of the British radio market.

Dominance? Hardly.  The newspaper market is open and vigorously competitive, so much so that of the serious titles only the Telegraph and FT are profitable.  Pay TV has never been more competitive.   Indeed, nobody need consume anything of News International without choosing to pay for it.

However, one organisation DOES have dominance. 

It has six free to air TV networks in the UK (plus a global satellite network), two of which are in the top three rating of ALL TV networks, and one of which is the highest rating TV news network.  Two channels it runs are continuous programming for children.  It has ten continuous broadcasting nationwide radio networks (including the most popular radio network and the most popular news network) and a nationwide network of local radio stations.  It has the highest rating news website in the country.  However, unlike customers of the Sun, the Times or BSkyB, this organisation is funded by force.  If you fail to pay, you face criminal prosecution and a fine.   It has been positively salivating over this story - it is, of course, the BBC.

The left don't give a damn when it is the state dominating the media, because it almost inherently gives it a fairly easy ride.   For your political future is significantly affected by how the BBC portrays you, but for the likes of the Milibands, Poly Toynbee or others that is something they like, because the BBC has never been warm towards the free market, scepticism about the EU or concerns about the size of the state, but has always been warm towards more welfare, environmentalism and belief in government as a solution to problems.  As Janet Daley in the Sunday Telegraph explains:


It is worth asking in both the British and American contexts why people who regard themselves as believers in free speech and liberal democracy can be so openly eager to close off – silence, kill, extinguish – different political views from their own. This is the question that is at the heart of the matter and which will remain long after every News International executive who may possibly be incriminated in the current scandal has been purged. 

There is scarcely any outfit on the Right – be it political party, or media outlet – which demands the outright abolition of a Left-wing voice, as opposed to simply recommending restraint on its dominance (as I am with the BBC). That is because those of us on the Right are inclined to believe that our antagonists on the Left are simply wrong-headed – sometimes well-intentioned, sometimes malevolent but basically just mistaken. Whereas the Left believes that we are evil incarnate. Their demonic view of people who express even mildly Right-of-centre opinions (that lower taxes or less state control might be desirable, for example) would be risible if it were not so pernicious.

The Left does not want a debate or an open market in ideas. It wants to extirpate its opponents – to remove them from the field. It actually seems to believe that it is justified in snuffing out any possibility of our arguments reaching the impressionable masses – and bizarrely, it defends this stance in the name of fairness. 

News International brought immense choice in British broadcasting, beyond the means or the imagination of the encumbents.  It created a fourth US TV network at a time when the big three were looking  sclerotic (and there was much talk of one of them dropping network news entirely), it created a TV news network that competes with CNN and MSNBC by taking a different political stance from them.  One that has been immensely successful, which of course upsets those who were always given an easy ride by the media. 

News International has been successful because it has delivered options that millions have been willing to pay for or watch.  The behaviour of some at the News of the World has been disgraceful, and quite frequently I don't like how News International deals with some news stories, as I do with others.  However, I don't have to pay for it, I wont get a criminal record if I don't pay for it.   It doesn't stop others competing with it.  It is one of many in the broadcasting or online news markets, and is one of many in the newspaper market.   It has shaken up news broadcasting in the US, not always in ways I agree with, but it is better for it.

It should be time for the rest of the news media to realise that in joining in the leftwing wailing and moaning about News International, and calls for regulating the media, it is risking its own freedom and supporting a political motivated war against one media outlet, driven by many years of distress at not getting an easy ride from that company's news outlets.  

You either believe in a free press and free speech, or you don't, and as long as News International is accountable for the criminal actions of its employees, that should be the end of it.  You may disagree or hate the views expressed, but if you want them shut down by the state (while turning a blind eye to the media outlets that ARE dominant, particularly those state owned) then you are simply another petty fascist, who has no interest in free speech at all - and shouldn't start pretending that you're a friend of freedom or liberal democracy.

01 July 2011

Bravery extends to Pyongyang

The so-called "Arab Spring" has produced unexpected ripples.

One is in the world's most totalitarian state.

Graffiti was found in Pyongyang saying:

"Park Chung Hee and Kim Jong Il are both dictators; Park Chung Hee a dictator who developed his country’s economy, Kim Jong Il a dictator who starved people to death"

Graffiti in North Korea is so rare that known incidents of it since the Korean War are countable on one hand.  To criticise Kim Jong Il in this way is unheard of, and would get anyone associated with it a summary execution.

Read Daily NK to see how the regime is reacting, by closing universities over the summer.

The cracks are appearing, it's just a tragic and pathetic shame that most of the self-styled promoters of human rights in the West ignore it.

Meanwhile, when WILL New Zealand's brainless and inane news media hound North Korea's willing idiot in Porirua - Reverend Don Borrie - for his decades of sycophantic apologies to a regime that holds babies and small children as political prisoners to be enslaved, raped, beaten and starved?

About the same time as it will ask probing questions of Cuba-philes like Matt McCarten and Keith Locke about treatment of psychiatric patients in Cuba, or should I say people deemed by the regime to be mentally ill because they don't embrace the regime.

By the way, I'm heading to New Zealand today... it's been two years...

20 June 2011

Greek crisis is taste of things to come

So says City AM editor, Allister Heath in his latest column.

You see Greece is ultimately going to default. The alternative is for the hard-working taxpayers of Germany, France and other wealthy Eurozone countries (and possibly non-Eurozone) to be ransacked by their own politicians to prop up the profligacy of the Greek public aided and abetted by the politicians they voted for over decades.


The real problem is that the Greek public doesn’t really want to change and simply doesn’t accept economic reality – and that the EU has been too slow to learn the lessons of the crisis of 2008. One poll found that 47 per cent of Greeks reject the austerity plan and want new elections – and just 35 per cent back the measures. The Greek public is in denial: it doesn’t want to start living within its means – and yet ordinary hard-pressed taxpayers in other countries are being called upon to stave off Greece’s total collapse. There is no justice in that.

A default would be right, because not only are the Greek public unwilling to balance their budget, but the financial institutions who loaned money to the Greek government to continue its unsustainable way banked on Greece being bailed out.  That bet should fail.  The banks (mostly Greek, German and French) should bear losses as a result, but the inevitable will be more painful.

Is there an alternative? Well there was.  The Greek public could have voted for politicians who promised to balance the books, but they voted for politicians who promised Western European style socialist welfare, health and education systems paid for by borrowed money.   The fact that Greek politics is dominated by thieving socialists speaks volumes.  Of course ordinary Greek citizens think that they are not to blame, after all they couldn't have borrowed as the state did, or spend other people's money so flagrantly.  However, they did sit by and let it happen.   In a democracy (Greeks shouldn't need reminding of this), power is meant to reside in the people, and in this case they don't want the responsibility of their casual blindness to what the last few decades has been built on - borrowed money.

So Greece will default.  Its banks will collapse, it will leave the Eurozone, and the savings and incomes of its population will be wound back around 15-20 years.  There will be more riots on the street.  Foreign investment will flee and the Greek economy will be rebuilt on tourism and low value exports in a highly devalued currency.

Meanwhile, EU politicians will try to evade reality for a little longer, for fear their own banks will face collapse once more.  That shouldn't scare them, as long as depositors up to a certain level are protected, the banks should fail.  It will be an object lesson to the Europhiles that their federalist economic experiment is a failure.  Ironically, but unsurprisingly it will be under the watch of supposedly centre-right governments in Germany and France, though there should be no delusions that it would have been different had the left been in power in either country.

However, there is more to come.  Yet it is important to note how much of this crisis is NOT about the privately owned banking sector being profligate, but about government evading economic reality.

As Heath says:

the biggest error is the establishment’s inability to accept that increasingly, the biggest systemic risk will come from states, not private financial institutions. It is not just Greece, Portugal and Ireland – Belgium is in real trouble, while Spain and Italy are also in the frame. At some point, something will have to change in Japan, a country with an exploding national debt and a weak economy. America is also in terrible trouble, and not just because of short-term issues over debt ceilings.

During times of austerity and cutbacks the left thinks it has an advantage, as it typically promises to spend other people's money on the things that give comfort, like pensions, health, education and subsidised pseudo-employment.   Yet it is failing to capitalise on it, because enough of the public actually understand that governments cannot perpetually run budget deficits and accumulate debt.    Even 35% of Greeks support serious levels of austerity, not a majority, but a significant number are facing the truth.
The obvious biggest accumulation of problems is in the Eurozone, where even France has a longer term issue of sustainability with its finances.   The ramifications of a Greek default and break up of the Euro will be profound.  In the long run it will be good for Europe, but the casualties along the way will be high.  Those are casualties caused directly by the failure to face austerity and controls on government spending in the past.   The people who benefited from profligacy will, in many cases, not be facing the cost of it.

Yet Japan and the USA on top of this are more worrying.  Japan has been engaging rampant Keynesianism for well over a decade now, and failed miserably to restart its economy.  Given it is on the doorstep of China this is scandalous and shows just how featherbedded and corrupt the Japanese state became under the good years, with the Liberal Democratic Party so deeply entrenched with protectionist business (and indeed the Yakuza).   The USA at least has some facing reality, although that doesn't include the President.  Sadly the forthcoming Presidential election shows little sign that the Republican Party can lay old ghosts to rest in favour of a candidate who actually believes in the economy first.

No doubt some time will be bought for Greece with other people's money.  The bigger question is how long is the inevitable going to be delayed, for the longer it is, the more painful it will be - and very few politicians elected in liberal democracies like having to face up to spending less of other people's money.