Saturday, March 29, 2008

Digital Free Radical now online!

                              Click the pic to visit the Store!

The latest copy of the sharpest, funniest, most daring, most honest, clearest thinking libertarian/Objectivist magazine around is quite literally hot off the press, and subscribers should be receiving their copies in the post from today -- and should hit these shops from Monday, if not before.

And if you just can't wait, you can (any minute now) download a digital copy from the Free Radical store, and a FREE A3 poster of that cover.  Send one to your favourite political party leader.  :-)

Enjoy!
Peter Cresswell
EDITOR, THE FREE RADICAL
Politics, Economics & Life as if Freedom Mattered

Friday, March 28, 2008

Beer O’Clock: Further Frolics from the Beer Archives

On our regular Friday avo Beer O'Clock posts, Neil from Real Beer brings you another beer reminiscence...

Today we dip back into the orange folder of beer reviews clearly marked “reviews to write up” although the ink is beginning to fade with age. Sorting through the papers, it is amazing how many of the beers we reviewed have subsequently disappeared – Katipo in Wellington and Pilot Bay in Auckland have shut their doors to name just two. It is also clear when one of the review panel had returned from overseas with a satchel of exotic lager because there is sudden rush of very rare beers from France or Australia.

We start off cheap and cheerful with Stag Lager (4%). If you pay more than a dollar a can for this stuff someone saw you coming. It is a plain, easy drinking lager. There may be a hint of malt sweetness and the suggestion of hops but nothing genuinely flavourful to slow you down. Perhaps the fact it was reviewed over fish and chips while watching the Hurricanes win may have influenced the results but this was better than expected. The average mark was 4 out of 10.

Next up is an “ale which looks like a stout” – the very dark Harrington’s Big John Special Reserve (6.5%). It throws a delightful burnt toffee nose. The beer has a depth of well rounded sweet flavours before moving onto a light hop finish. A lot happens in a mouthful. Flash notes that he would not want to overdo this beer but a couple would be good. It certainly warms you up after a cold day’s cricket on Wellington’s windswept sports facilities. It averaged out at 6 out 10.

Perhaps unfairly, the last beer is Westmalle Tripel (9.5%). Traditionally served in the most beautiful beer glasses in the world, this straw coloured Trappist ale is a genuine world classic. Lurking under a pillowed head of foam is, in Flash’s words, a beer to be appreciated slowly. This complex beer has notes of honey, toffee, apples, hops and yeast. It is very full in the mouth though not overwhelming alcoholic. Shong says this beer reminds him for some reason of lunches at Leuven which don’t seem to end until it is dark. It scores an average of 8.5.

Cheers, Neil

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Biofuels boondoggle gaining attention

The biofuels boondoggle is gaining increasing attention, both here and overseas, and not before time.  Bread riots in the Twenty-First century?  That's something only governments and subsidy-seeking 'businessmen' could achieve.  Unconcerned that laws requiring so called 'sustainable' fuels will result in exorbitant fuel price rises of "just" fifteen percent or more?  That's something you'd think only a Green politician could be doing -- but no, they're all doing it -- all of them suggesting against the evidence that talking about alternative fuels and including the magic word "sustainability" in the biofuels bill will somehow, like magic, make everything alright.

It's dumb.

The boondoggle is getting attention, but its dangerous momentum seems almost inexorable.  Once again, the lesson of the law of unintended consequences will be demonstrated by the spectacle of politicians once again making the world worse, and voters blithely voting for more of the same.

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President Aurelius

There is one thing about which one can say that John McCain is principled.  "His politics," says the New York Times, "are best understood as a decade-long attack on the individual."  It's telling that this is recognised even in the pages of the New York Times -- no slouch when it comes to attacks on individualism.  Says Matt Welch, writing in the Times,

Mr. McCain’s stump speeches, as well as his five books, are chockablock with calls to elevate national greatness, collective duty and Washington rejuvenation over whatever individual roads we might be pursuing. In “Worth the Fighting For,” he wrote that “our greatness depends upon our patriotism, and our patriotism is hardly encouraged when we cannot take pride in the highest public institutions.” These institutions, Mr. McCain wrote, should “fortify the public’s allegiance to the national community.”

Like many country-first, party-second military officers who began second careers in Washington, Mr. McCain is often mischaracterized as a politician without any identifiable ideology. But all of his actions can be seen as an attempt to use the federal government to restore your faith in ... the federal government. Once we all put our shoulder on the same wheel, there’s nothing this country can’t do.

It can be a bracing approach when his issues line up with yours — I, for one, would welcome President McCain’s unilateral wars on pork-barrel spending and waterboarding — but it’s treacherous territory for those of us who consider “the pursuit of happiness” as something best defined by individuals, not crusading presidents-to-be.

emperor senator-john-mccain-thumb I don't know about you, but the more I see and hear of the future President McCain (left), the more I think of Roman Emperor Marcus Aurelius (right) and his paeans to "a government of service and duty."  Former German chancelllor Helmut Schmidt was once asked to name his favourite philosopher. "Marcus Aurelius," he shot back. "He taught that we must do our duty above all!"  I fear that same deaf and blind heel-clicking tone will soon be occupying the White House.

One fears that Robert Bidinotto might be right; that "regardless of the election outcome, I can't see how the 2008 election will have anything but the most dire repercussions for [America's] future. With McCain, Hillary, and Obama in the race, all we need is one more horseman and we've got the Apocalypse."

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A short note for students

When searching for guidance on making footnotes using the 'Harvard Referencing'  system (yes, footnotes, one of the delights of students and magazine editors), I was somewhat humbled to find one of my own more than humble posts used as an example for students wanting to reference a blog post in their doctoral thesis.

How 'bout that.

Help, help, we're being oppressed!

malcolm_x Californian columnist for 'The Free Radical' Michael Vardoulis sent me a reflection from afar on why Maori activists need to learn about independence and self-reliance from the likes of the late-career Malcolm X (right) ...

Yes, Maori individuals have a lot fewer historical claim to bitterness than Afro Americans, or especially Native Americans and Hawaiians!  Whatever their legitimate complaints, at least New Zealanders never suffered the stain of slavery while proclaiming the protection of individuals' rights.  These are individuals whose ancestors were never enslaved -- not at least in New Zealand after the British arrived.

Maori individuals need to shake off the great state fixation too many seem obsessed with.  There is a kind of philosophical 'judo' that Malcolm X represents, insofar as the pride of self-reliance he talked about is essential to survival as an individual, and it would apply to Maori as well.  His message of "why look to your former 'masters' and  the government which supported them, for anything?  The only thing a (insert arbitrary racial identity here) individual should seek from the government which supported their former master is to be left the hell alone!"

Maori-Anarchism04   The lesson that needs to be tattooed on the soul was expressed perfectly by Isabel Paterson: "A government big enough to give you everything you want is big enough to take everything you've got" -- including, if you let them, your pride in your self-reliance.  Self-reliance does not come from sucking nanny's tit, or from the marshmallow embrace of collectivism -- it comes from standing on one's own feet and beginning to take responsibility for one's own future as an individual.

And then we have the conclusions one can draw universally on the issue of 'race' from what Rand wrote so perfectly: the only genuine solution to racism is a color-blind government supporting the same rights for all individuals as individuals; anything *other* than that merely perpetuates the evil of racism, and (not incidentally) the careers of political figures who benefit from the perpetuation of the problem rather than achieving solutions. 

Liberty HAS been stolen from many different arbitrary groups (though compared to what others have suffered over history, including many Europeans it's much harder to find in the case of post-1840 Maori) and in any case it's ultimately irrelevant to the much more important issue of regaining that liberty, which can only be achieved in a society where only the rights of the individual are upheld regardless of any arbitrary 'group' status either placed upon them or with which they choose to identify

   Hell, the Brits stomped all over my mother's ancestors in Ireland, and the Turks all over my father's ancestors in Greece.  I don't go looking for handouts from Downing Street or Istanbul!  I just pursue a society in which the individual is protected from being interfered with, knowing as a result that no arbitrary group can be singled out either for persecution, or for restitution.  The people who stomped all over my ancestors are long dead and buried -- those alive now bear no guilt for what their great-great-great grandparents did to mine.

RichardBBoddie2 But, I fear I preach to the choir.  It's individuals of Maori, Afro-American or Native American backgrounds which need to 'get it'... as my mentor Richard Boddie (right), a former student of Malcolm X, is fond of saying, "People are deluded en masse and enlightened one at a time." 

The lesson of Malcolm's own growth and change over his life helps to show that lesson is true -- and dangerous to those who would hope the lesson is never learned.

The interested reader might appreciate PC's review of Spike Lee's film 'Malcolm X' that appeared in The Free Radical at the time of the film's release.  [NB: Some light editing of Michael's post has been done for sense and context.]

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Separated at birth?

                                         tax_cuts_bad_mmkay

'South Park' School counselor Mr Mackie at left, Finance Minister Michael Cullen at right. We think perhaps they are related?  [Thanks RG for the pic.]

UPDATE: When a picture is worth a thousand words; how politicians view their employers:

                                         Dunny

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'Storm on the Sea of Galilee' - Rembrandt

                                 475px-Rembrandt_Christ_In_The_Storm_On_The_Sea_Of_Galilee

Rembrandt's Storm on the Sea of Galilee (1633) is a genuine masterpiece, and a thrilling use of light and shade and the drama of the storm.  This is, or should be, the sort of standard against which tremendous art is judged.  It's interesting to compare it to Delacroix's painting of the same subject some 220 years later, and to speculate on the reasons for the differences.

Interesting too to see at least one New York art dealer who knows the difference between art like this and the con-art of the likes of Warhol and Koons.  “Our society now values a Warhol for three times as much money as a great Rembrandt,” thunders self-made art dealer Larry Salander [hat tip Stephen Hicks], referring to the latest auction reports. “That tells me that we’re f***ed...  That’s the difference between the Warhol and the Rembrandt,” Salander continues. “Being with Rembrandt is like making love. And being with Warhol is like f***ing.” 

Read all of Salander's contemplation on how he planned to "rescue the art world from bad taste, and how it ultimately destroyed him" -- and on which art is good for the soul, and which is good just for investment.

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Thursday, March 27, 2008

Shock news: Humans don't act as economists say they should! (update 2)

Austrian economists have known for a long time that people don't act the way mainstream economists say they do.  But mainstream economists and the New York Times are only just finding it out themselves [hat tip Brain Stab]. 

"Anomalies" is what one Nobel prize winner called behavioural departures from the rationalistic idea that people act as mainstream economists say they should, ie., with both 'perfect' knowledge and 'perfect' self-interest.  This wouldn't be important to the rest of us, except that when these 'anomalies' occur in ways that attract the attention of the business pages the more state-worshipping economists start to yell about "market failure" -- whining in other other words that people don't fit their "models," and calling for government agency to make them fit, ie., to"fix" a problem that doesn't actually exist.

But the way people behave is only anomalous to people who think other people should behave the way their equations say they should.  The fact is that economics is not a science of human choice, as mainstream economists insist it is; it is instead a science that studies the result of human action, however mistaken the graduates of business schools might think those actions to be.

Rather than devising and formulating abstract, arbitrary models predicting the choices people make, and then throwing up the hands in horror when people over-eat, over-spend and generally act in ways other than those predicted, Austrian economists base their system of thought on one very simple principle: Man acts.  Specifically, he acts in ways he think will move him from a less satisfactory to a more satisfactory state of affairs, whatever the hell that might actually be. He might be wrong in the way he acts to achieve his goals, and he might even be mistaken in the goals or choices themselves (and people might even act in ways they explicitly disown) but they act nonetheless, say Austrians, and in their actions they seek to further their own ends (whatever these might be) -- it is with this 'action axiom,' says economist Ludwig von Mises, that the science of economics begins.

A shame that mainstream economists and the New York Times's writers haven't read more Mises or observed more human activity before they burst into print calling what we do every day "anomalous."

UPDATE 1:  New Zealand's funniest bloke, John Clarke, has the testimony of an unusually truthful  "economics expert" appearing before a Royal Commission on What the Hell's Happening to the Australian Economy. The relevance to this post can be seen almost from the first exchange.  Here's a small sample:

BARRISTER: Mr Trouser, you've told us over a 3 month period you collect information and analyse it for trends...  So what's going to happen Mr Trouser? In the next few months?  What's a likely next development in the economy.
TROUSER: I've no idea.  I don't have the current information.
BARRISTER: I thought this [holds up telephone book sized sheaf] was the current information.
TROUSER: They are the current figures, but they're not based on the current information.
BARRISTER: The current figures are not based on current information?
TROUSER: No. The current information is coming in now.
BARRISTER: So what are the current figures based on?
TROUSER: They're based on the information available at the time the current figures were being prepared.
BARRISTER: Which was when?
TROUSER: 3 months ago.  The figures take 3 months to assemble.
BARRISTER: Is it possible for you to tell what's happening now?
TROUSER: Yes, of course it is.
BARRISTER: When could you do that?
TROUSER: In 3 months.

Read it all.  It's hilarious.  And then send the link to your nearest economist.

UPDATE 2: Clifford Thies draws parallels between the predictions of mathematical economics, and the equations and prediction of pro-warmist super computers.

The emerging discipline of climatology is an interesting one. It has no laboratory. Instead, various measurements are put into computer models to see the extent to which they are consistent with the hypothesis that human activity has contributed to the trend of global warming. Unable to conduct experiments, all climatologists can do is examine statistical correlations.

In my field of economics, we have generally dismissed inferences based on mere correlations. Such things as interest rates, inflation, the unemployment rate, and real GDP growth are highly trended. Almost necessarily, they are highly correlated over discrete periods of time. This correlation doesn't prove anything regarding cause and effect, and the still short history of econometrics is littered with theories such as the Phillips Curve that once enjoyed a consensus among economists, that are now understood to be little more than statistical illusions.

Today, the econometric standard for testing theories involves determining if changes in one variable tend to be followed by changes in another variable. Thus, the sequence of fluctuations in variables is seen as a key to discerning cause and effect. This new standard has been humbling in revealing just how complex are macroeconomic phenomena.

Commenters on this thread are recommended to read and digest.

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Merry widows happiest

Interesting.  A survey of 9000 New Zealanders has found that widows and widowers are happier than married people of either gender.

Since numbers themselves are silent as to causality, I'll allow you to make your own speculations as to the lessons to be drawn from the result.

Wednesday, March 26, 2008

Nakedly not news

Poneke explains in terms even local TV news producers might understand why local TV news is not.  Not news, that is.  If ALT TV want to serve it up naked, they certainly don't have much to compete with.

Privatise the power!

While every political party in parliament keeps reciting the mantra "state ownership good, private ownership bad" as if it were the key to nirvana -- every one of them refusing even to countenance the idea that the 'commanding heights' of the economy might be safer sold to private owners ASAP -- while they strut and posture the state's power generators have been busy generating too little power and hiking their prices for that power far too high, all the while pouring the 'dividends' from squeezing every power consumer in the country dry straight into the government's coffers.  As Bernard Hickey says on analysing this rort, "These higher power charges, higher profits and higher dividends have simply become another tax on every household."  A highly inflationary tax, as it happens.

If ever the statement were true that corporates rip off their customers, then it is true when the corporates are both phony and state-owned. 

Explain to me again why state ownership of either these de facto monopolies or any other is such a good idea?  Remove their coercive monopolies and privatise them forthwith -- it's the only way to make the power consumer king, instead of the state's serf.

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Anti-capitalist barbarianism

I've just been reading a magnificent speech on the nature and motivation of capitalism's enemies, delivered by Larry Sechrest at the recent Mises Institute conference.  He began by delivering this tribute to one of my heroes, one of capitalism's great defenders, Ludwig von Mises, given in the words of another of capitalism's great heroes:

Ayn Rand once made an observation that I think is germane to Mises... She exhorted her readers to "observe also the intensity, the austere, the unsmiling seriousness with which an infant watches the world around him. (If you ever find, in an adult, that degree of seriousness about reality, you will have found a great man)." In the course of his pursuit of truth, this great man unfailingly exhibited what I like to think of as a "dignified ruthlessness." To comprehend complex phenomena was what was important. To grasp reality was the objective that fueled Mises's life, not popularity, not winning debates, not currying political approval. Moreover, this quest was to be undertaken within an interpersonal context of civility and even elegance.

All that is so alien to our present world...

anticap And sometimes even, I confess, to this blog! But this reminder and Sechrest's tribute is not even the main part of why his speech is so magnificent.  Why it is essential reading is its masterly summary of the anti-capitalist mentality:

... how can anyone find capitalism objectionable at all once one recognizes that it has — even in its attenuated form — increased the standard of living so dramatically that an average person now daily enjoys "luxuries" which hereditary monarchs could not boast of a mere 200 years ago? Mises offers two basic answers to that question: envy and ignorance.

These are not mere words.  Sechrest analyses and dissects the two attributes of the anti-capitalist mentality, and adds another: malice.  "Consider what follows if one couples the repugnant urge toward envy with a broad misperception of reality."  The result can be seen in comments around the blogosphere, and in headlines and press releases in your daily news.

EnvyYou need to read his words, or see or listen to his speech to fully appreciate the analysis, and the importance of understanding is immense.  The stakes in the battle against the envious, the malicious and the ignorant are high, he says - as high as civilization itself. 

To his everlasting credit, Mises fully comprehended what some free-market advocates still have not: namely, that the debate over capitalism is not merely about which socioeconomic system will more efficiently produce goods and services, nor about which will accord more closely with consumers' individual preferences. He understood that the debate involved that and much more besides. He understood that to attack capitalism was to attack civilization itself, to attack the role of reason in man's life — and thus to undermine the value of life itself. As he put it with characteristic candor, present day collectivists "advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor and in a return to barbarism" ...

Where, then, do we stand? As we know, socialism is calculational chaos. Rational appraisement and allocation are eternally elusive. It is a gigantic negative-sum game in which each player quickly grabs a piece of the pie, and all the while the pie shrinks before the players' eyes. The welfare/warfare state, the interventionist state, is no improvement. Each intervention begets yet another. Bureaucracy is the only "industry" guaranteed to experience growth. Each new regulation taxes the private sector, relentlessly shifting resources out of the hands of the productive, and into the hands of the unproductive. Capitalism is the only positive-sum game in town.

In short, the case against capitalism is indefensible. It is smoke and mirrors. It is rooted in envy and malice. It is fueled by a stunning ignorance of sound economics, which is part and parcel of a broader rejection of reason itself. These anti-capitalists, these New Barbarians will — if they get their way — finally destroy not only capitalism, but also education, science, technology, literature, art, individual rights, prosperity, in fact, civilization itself...

The barbarians are at the gates, says Sechrest, and have been there now a'knocking for years.  If you're a defender of civilization, then you must set aside time to read and consider his speech to understand the nature of your enemy, and how once fully understood, the enemy is ripe for destruction. 

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Free Radical #79: 'Brown-Nosing Te Qaeda'

                                       TFR79-FrontCover

Yes, that's the cover of the latest Free Radical, which will be going out to shops and subscribers from the end of this week.  Subscribe now to make sure your letterbox is included in the first mailout, and you get the earliest possible briefing on the issues that matter:

  • What happened to One Law for All?  Why is John Boy cravenly brown-nosing a man who wanted to assassinate him?  What does that say about him? And what do a dead Italian Communist and a live Mexican gunman have to do with it all?  LINDSAY PERIGO, TREVOR LOUDON, PETER CRESSWELL, PHIL HOWISON & TIM WIKIRIWHI between them examine Waitangi collectivism, the objective threat and ideological links of Te Qaeda, and why this matters to youDON'T MISS OUT!  You'll be keeping this issue as a reference for a long time to come.
  • And who wrote the strategy for the left's long march through the culture?  LINDSAY PERIGO has the answer, and a solution.
  • How do you keep yourself afloat in the world's most recent financial crisis? The simple answer is understanding.  Recent articles in The Free Radical have warned about the economic downturn, explained how the counterfeit capital of the world's central banks are culpable, and pointed to real solutions. In this issue we have  all the literature that's fit to read to understand the mess, and keep yourself afloat.
  • And what about those dark greens, and their claims that the environment is endangered - that we're "running out of resources"?   "Rubbish," say our writers.  It's not climate that's endangered, says Czech president VACLAV KLAUS, it's freedom!  Progress is good, not destructive, says GEORGE REISMAN -- economic freedom is the solution, not the problem, he proves.  Reisman utterly demolishes environmentalists' claims that we're running out of resources and shows that as long as we pursue wealth we never will, and OWEN McSHANE &  VINCENT GRAY dissect the background of those who insist we must.  The historical links will surprise you, and the weight of argument will floor you!

All this and much, much more, including the Belgian who gave fuel to the Nanny State, the Canadian who became a hero of free speech, the architect who combines art and business, the educationalists who have a lot to say sorry for, and the American who's been proclaimed as a hero of conservatism and who is shown to be anything but  -- all this plus film reviews, book reviews and all our usual and controversial columnists.

The world is in a mess, the long march through the culture by anti-reason, anti-life state worshippers is the root cause – and like every ‘Free Radical’ since issue number one, this one has the solution: in a nutshell, it’s reason and the freedom to use it.

DON"T MISS OUT!  Subscribe now to get your copy in your mailbox ... and give the gift of Free Radicals to a friend or three who need the rocket-fuelled intellectual ammunition within. 

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'Atrium' - Vincent Korda


A multi-storey atrium model from the 1936 film 'Things to Come' -- an atrium prefigured by the likes of Frank Loyd Wright's Larkin Building and Rogers Lacy Hotel project, and brought to reality again four decades after Korda in the multi-storey atria of John Portman.

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Tuesday, March 25, 2008

Climate's tipping point?

News of a climatic, not to say a climactic, tipping point is reported by the newspaper The Australian:

CATASTROPHIC predictions of global warming usually conjure with the notion of a tipping point, a point of no return.

Last Monday - on ABC Radio National, of all places - there was a tipping point of a different kind in the debate on climate change. It was a remarkable interview involving the co-host of Counterpoint, Michael Duffy and Jennifer Marohasy, a biologist and senior fellow of Melbourne-based think tank the Institute of Public Affairs. Anyone in public life who takes a position on the greenhouse gas hypothesis will ignore it at their peril.

Duffy asked Marohasy: "Is the Earth still warming?"

She replied: "No, actually, there has been cooling, if you take 1998 as your point of reference. If you take 2002 as your point of reference, then temperatures have plateaued. This is certainly not what you'd expect if carbon dioxide is driving temperature because carbon dioxide levels have been increasing but temperatures have actually been coming down over the last 10 years."

Duffy: "Is this a matter of any controversy?"

Marohasy: "Actually, no..."

Read on here for the details, and the implications.  Politicians, town planners and other catastrophists might care to pay particular attention.

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Shane Jones: Building the slums of tomorrow

kahui_house Discussion of Shane Jones's proposed amendment to the Building Act to remove some hurdles for producers of sub-standard boxes [story here; video here] seems to have omitted more than a couple of important points.

The first thing to note is that it's only a pimple on the bottom of a very expensive problem: one created almost wholly by over-regulation.

The second is the issue of councils, and the power they have over designers and would-be home-builders.  Now for various reasons, councils themselves are up in arms at Jones's proposal, but it has to be asked why councils should be involved at all in the job of inspecting and approving new houses? Why should they?  Why on earth should productive people have to go cap in hand to the unproductive in order to seek permission to produce?

It's not only dead wrong, but there's no incentive under any building legislation either mooted or extant for councils to deal with the consent process in a timely manner (and they mostly don't) or with the inspection process in a rational manner (and it generally isn't); under the present legislation councils are keeping builder's and home-owners waiting often for months while they determine whether or not permission will be granted to go ahead, and when or if permission is granted, and building finally commences, the irrationality of much of what builders face from the inspections imposed on them would try the patience of Job. 

The level of frustration most people feel on the productive side of building -- that is, those who build houses -- might be measured by the number of people on the other side of the fence -- that is, those whose only job is to get in their way. At present there seems almost more people on the dark side getting in the way than there are actually building houses.  As can be seen from a perusal of the 'situations vacant' sections of most trade journals, the only thing keeping the number on the dark side down is the paucity of applicants to fill all the positions created by a nannying bureaucracy and by too overbearing building legislation.

If councils could increase the numbers on the dark side, they would.  But it needs to be asked again, why are councils involved at all? 

There's no particular expertise that councils' harbour that can't be found elsewhere, and no reason at all that the market for houses be treated in any way that's substantially different to the market for anything else.  You don't ask council inspectors to examine your car or your boat before you buy it; there's no more reason to ask them to look under your bonnet before you buy than to look under your house while you build. 

There's no reason that the insurance market can't do the job that's essentially being asked of councils, one that insurers have demonstrated beyond any doubt they're capable of, while all this time councils have demonstrated just the opposite.   Insurers can look after housing in a similar way to how insurance operates with cars:  If we choose to build the housing equivalent of a Toyota Corolla, then premiums would be low and inspections straightforward -- inspections based on a previously agreed standard laid down by the insurer, and carried out in the timely fashion we've come to expect when we ding our cars.  If we want to build something a bit different, then both the standard used and the premium levied would be different, just as it would be if we chose to build a hot rod.  All good common sense.

trabant And if we want to build the housing equivalent of a Trabant, which is what Shane Jones seems to think we should all do, then we might expect to be discouraged by our insurer rather than encouraged.

The motivation to deal with an insurer is the same as it is when we insure our cars -- to protect our investment -- and also, in the case of houses, to ensure that future buyers are comfortable with the standard of our house.  (They might, for example, be looking for the seal of their favourite insurer before being comfortable enough to buy, and if we want to make a sale, we're obliged to meet the buyers standard or else watch them go elsewhere.)

The difference to how things are presently done should be obvious, and the motivations to improve standards and reward innovation clear enough.  Under an insurance-based system, both builders and insurers would be keen to protect their standards and to lower their premiums -- and they'd both be highly motivated to see the speed of processing and construction improve, and to reduce their costs by continual and ongoing innovation.

This is not what happens now.

It's usually maintained that government needs to maintain building controls and local governments inspect local buildings in order to maintain standards.  The proposal to build Trabants as the only way to get anything out of the present system should demonstrate fairly well that we're at the dead end of a dead system.  If this is 'innovation,' then who needs it?

What sort of 'standard' is being laid down by removing the hurdles from building cheap prefabricated boxes, but retaining them (or even having them increase) for any house of any greater quality that tries to get a flower instead of a weed out of the system?  By insisting on building weeds we're doing what architect Claude Megson called "building the slums of tomorrow" -- we're ensuring that the overall standard of the country's housing stock is rapidly and progressively diminished, and innovation progressively and permanently discouraged.

And not just discouraged, but effectively prohibited.  As Frank Lloyd Wright pointed out,

The building codes of the democracies embody, of course, only what the previous generation knew or thought about building...

That's true.  There are two main legislative burdens imposed on every home-builder, designer and would-be home-owner:  the Resource Management Act imposes the nostrum of "sustainability," insisting that "future generations" somehow be taken care of, while the Building Act with all its myriad controls insists that the remedies and methods of previous generations be rigidly adhered to. 

Either way, the present generation gets it in the wallet.

Both impositions are insane -- the former tying us to a generation that never arrives, and the latter to a generation whose innovations we are not allowed to supersede --  and between them they ensure that the prosperity and wellbeing of this generation of potential home-owners is sacrificed to those of every other, which means in essence to the whims and machinations of housing ministers and housing inspectors.

It's time they were all cut off at the knees.

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How martinis refute basic economics

Dorothy Parker was no economist. She was a writer of quips, and an enthusiast for martinis -- admirable qualities in any human being, but insufficient to qualify her as any kind of economist -- but economists might note that in one of most loved quips she unwittingly refutes the marginal value revolution on which most of modern economics is based.

For years, you see, economists had been trying to solve what they called 'the problem of value,' or by some 'the water-diamond paradox.' Why, they wondered, was water so much more valuable to human life, but it is diamonds that are worth much more in money terms? (These are the sort of questions that still keep economists awake at night.) This was said by many economists to create an "irreconcilable contradiction" between use value and exchange value.

The problem wasn't left unreconciled for long, however. The idea of 'marginal value' was hit upon simultaneously by three different chaps, and in a flash it explained the conundrum. Put simply (well, as simply as an economist can) it states:
The ... importance or personal value that an individual attaches to a unit of any good diminishes as the quantity of the good in his possession increases.
 Put even more simply, however valuable something might be to our survival, then the more we have of it the value we place on each successive unit diminishes with each unit. Simple, yet profound. Since we generally have loads of glasses of water and very few diamonds to lay with -- however it might have been at Dorothy Parker's, that at least is the state of play around our house -- we find that your relatively rare professionally-cut precious stone is worth much more than our glass of water, even though it's the water and not the diamonds that it necessary to sustain life.

If we've just come out of the desert after losing our way, then our first glass of water will be worth our life itself -- and we'd be willing to pay whatever diamonds we've got to buy it. But by the time we're sipping our second or third glass we're starting to look around and wonder if we've paid too much, and by the third or fourth glass we're starting to wonder what we're going to tell the wife about where her diamonds went.

Here's another example. If we're stuck in a bush cabin with just five sacks of grain to last until the next harvest, then the most important sack is the one we've labelled "grain for survival," while the least important is the one further down the line that we've labelled "grain to feed the parrot." While grain itself is crucial for survival, you see, the value we place on our grain is contextual: the value is that of 'the last unit,' which in this case is equivalent to the value we place on feeding the parrot who keeps us entertained, rather than the value we place on eating to keep ourselves alive. (George Reisman draws more insights from this example here.)

All value comes from the margins, you see, with value diminishing with each successive unit. While this is a rule widely accepted by every school of economics since at least the fall of the Berlin Wall, Dorothy Parker's martinis pose a challenge to this. The value of martinis, she insists, increases with each subsequent unit. Here's her mantra:
I like a martini
Two at the most, after three
I'm under the table, after four
I'm under the host.
See, martinis actually get better with each drink! If our first martini is labelled "the martini I like" and the second "the martini I really like," then by the third we're up to "the martini that really likes me," and then -- depending on the value we put on our host -- by the last we might attach the label "a night of unrelieved pleasure." Let's just hope we can remember it afterwards, and to whom we need to send the diamonds to keep them quiet.

Economists are recommended to undertake the necessary empirical research forthwith to explain this particular paradox.

Tomorrow, the martini diet ...

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Still no April Sun in Cuba

Some food for thought here for fans of communist dictators -- and for opponents and supporters of free trade:

   In 1958, Cuba was almost as rich as Japan, one and half times as wealthy as Singapore, richer than Hong Kong, and three times as prosperous as South Korea.
   Fifty years later, Cuba is one of the poorest countries in Latin America.
   Meanwhile, jurisdictions such as Hong Kong, Singapore, South Korea and Taiwan (the latter two also had dictators and problems similar to Cuba in the 1950s) have long eclipsed Cuba. They've done so not only in per capita wealth, but in measurements Castro's defenders point to when they assert the Marxist revolution "worked," such as in health care and education...

As Paul Walker comments, "GDP per person isn't a perfect measure of well being, but it is a rough guide to average living standards. And by that standard Castro has much to answer for."

Yes, he does.  But here's something else to think about, too:  given all we know about the liberating effects of free trade (see even the nominally communist Vietnam, for instance) -- and as we consider the merits of free trade with China -- and I invite readers to speculate on the state of Cuba and Castro and the country's communism today if the US had gone for free trade instead of blockade.  How liberating would fifty decades of free trade with Cuba have been, and what would have happened to Busy Whiskers and his communism if such a policy had been applied by the US?

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