Pity the patriotic consumer
Financial Times 20/12/02
Any citizen who stands back from his or her Christmas shopping and wonders whether it is a patriotic duty to spend or to save will receive conflicting messages.
Immediately after the destruction of the Twin Towers in New York, President George W. Bush urged US citizens to carry on spending. The Bank of England has voiced loudly its concern that the bubble in the housing market may burst, leading to a sudden check to consumption, which would be bad for the economy.
These official pronouncements only reinforce the spending incitements on the hoardings. On the other hand, we are told that savings are required to finance more investment and to boost productivity...more
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The flaw in the UN
Financial Times 06/12/02
The UN is far from providing a satisfactory system of international law. There is a General Assembly consisting of nearly 200 countries, operating on the absurd system of one vote each for China and India, with about 1bn people each, and one vote also for Andorra, Antigua, Dominica, Grenada, Liechtenstein, the Marshall Islands, Monaco, Palau, St Kitts, San Marino, Seychelles and Vanuatu, all with fewer than 100,000 inhabitants. An idea of its quality can be gained from the nomination of Libya to take over the chair of the UN human rights commission...more |
Capitalism is the real issue
Review of The Eagle's Shadow Financial Times 01/12/02
Some in the New York financial community ask: "Why does everyone hate America?"
The Eagle's Shadow is an attempt by an American journalist to answer this question on the basis of a world tour. So long as he is reporting on his travels, Hertsgaard makes compelling reading.
Unfortunately, the greater part of the book is taken up with the author's account of why he himself hates US capitalist civilisation...more
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The signs of British repression
The Financial Times 22/11/02
Inflationary pressures are greater than suggested by the official index of retail prices excluding mortgage interest (RPIX). This assertion will seem bizarre to many in the financial or business communities where all the talk is of profit warnings, lack of confidence, redundancies and even deflation. But it is worth looking back at some of the analysis that appeared during the early postwar decades of "repressed inflation". Inflation was then repressed by a fixed exchange rate, spasmodic pay and price controls and by rigidities such as loan rationing...more
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Central bankers do it their way
The Financial Times 08/11/02
It is as well that central bank actions are not co-ordinated. The US Federal Reserve has a clear bias towards stimulus and preventive action, as its half-point cut in interest rates this week shows. The European Central Bank has a bias towards caution and delay. The Bank of England is in between. The averaging out of such biases is more likely to produce a beneficial result than any world secretariat...more |
The logic of not invading
The Financial Times 25/10/02
The US should avoid what James Rubin, the former State Department spokesman, called "gratuitous unilateralism", and try to build an international coalition to enforce Iraq disarmament, but not place too high hopes on it. The main alternative to a pre-emptive attack is deterrence. This involves accepting the probability that Mr Hussein will acquire nuclear weapons - between 2004 and 2008 - as well as chemical and biological ones, and that western policy will concentrate on deterring him from using them as it deterred the former Soviet Union. We shall then have to leave it to time, his own people and his neighbours to enforce a regime change...more
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Ignore the ghost of deflation
The Financial Times 11/10/02
Financial market crystal ball gazers are focusing on the danger of a double-dip world recession. One of the most eloquent warnings comes from Stephen King of HSBC. He notes that the German recovery has more or less stopped and Japan is still in the doldrums. In the US and the UK, the slump in equities and the overhang of excess capacity from the recent equity boom make for gloomy capital spending prospects. This leaves us with the Anglo-American consumer, who has heroically sustained the world economy. ..more |
Belgium did not invade Germany
Review of Truth and Truthfulness in The Spectator 10/10/02
In recent years have we seen a whole group of so-called post-modernist or deconstructionist writers who appear to deny that there is any such thing as truth. They go on to say that there are only rival texts or stories from which we can choose at will. The kindest explanation of their activities is that they take legitimate sceptical doubts about topics such as the existence of other minds or the existence of the external world and apply them at the wrong level of discourse. If you are going to talk about history or the social sciences, or for that matter everyday life, you have to suspend metaphysical doubt while doing so...more
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Humanitarianism without illusions
The Financial Times 27/09/02
Take two blindingly obvious propositions:- 1 There is such a thing as human nature and this needs to be taken into account in all attempts to reform society. Theologians call it Original Sin, but you do not have to be religious to take the point. 2 There are also innate differences between individuals which cannot be wiped out by education, income redistribution or anything else. You might think that these are hardly worth discussing. The American cognitive psychologist Steven Pinker met this reaction when he told colleagues that he was working on his just published book, The Blank Slate. That was also my own reaction. Yet I was soon disabused...more |
Variations on a familiar theme
The Financial Times 12/09/02
Does anyone still remember the "Misery Index" - the sum of the unemployment and inflation rates? It was invented just after the first oil price crisis when the Yom Kippur war of 1973 put an end to the golden age of postwar prosperity...The first oil price explosion sent the Misery Index to unprecedented peaks. It exploded again with the second oil price spike triggered by the fall of the Shah of Persia...It bumped up again at the time of the 1990 Gulf war...Could there be a further eruption associated with another war against Iraq? Karl Marx famously said that history repeats itself, initially as tragedy and then as farce. He did not say what would happen the fourth time round...more
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Taking asset prices seriously
The Financial Times 29/08/02
Inflation targets have now been in use for about 10 years in many countries. The pioneer was probably New Zealand, followed not long afterwards by the UK. They have had a greater success than many people expected in keeping the inflation rate low while also reducing fluctuations in real growth. But rules for monetary policy in a paper currency world are not cast in stone. What was sufficient for the last decade may not be enough in the future...more |
How economics can be seen as religion
The Financial Times 04/07/02
Is economics a form of religion? Alas, it depends on what
you mean by religion. According to the 1990 edition of The
Dictionary of Christianity in America: "If belief in a god is
necessary to define a religion, secular humanism does not
qualify. If on the other hand religion, or a god, is defined
as ones ultimate value, then secular humanism is a religion..."more |
US is more nearly right
The Financial Times 01/08/02
The view somewhat crudely expressed by the Bush administration since September 11 seems to me more nearly correct than the appeasing and temporising alternatives enunciated in European Union circles. One cannot choose one's allies. There are probably not many subjects on which I would agree with George W. Bush or Donald Rumsfeld - above all Mr Bush's self-confessed incomprehension that there are people who have no religion. But they come closer to the truth than European or east-coast American intellectuals whom it would be more convivial to meet at dinner...more
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Cures worse than the complaints
The Financial Times 18/07/02
The follow-up comments
and questions to this week's UK Spending Review pointed to economic follies worse
than any with which they charged the Chancellor. The widespread assumption was that if growth undershoots
the Treasury's projections then taxes would have to go up much
further than by the projected increases in National Insurance
contributions due to take place next year. Have these
commentators learned nothing and forgotten everything about
20th century economic history?...more |
The rules need fixing, but greed can be good
The Financial Times 04/07/02
The biggest obstacle faced by proponents of a competitive market economy is the belief that it is based on, or encourages, selfishness, materialism or acquisitiveness. This belief will have been powerfully reinforced by recent US corporate scandals...more |
Third way is a temptation
The Financial Times 20/06/02
If the state sector consists of professionally managed enterprises
such as the old National Health Service, at arm's length from both ministers
and private enterprise, the opportunities for corruption are limited
to purchasing policy. But when the distinction between the public and
private sector is said to represent outmoded ideology, and it is urged
that the two should interact as much as possible, the floodgates have
opened...more
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Inflation can be too low
The Financial Times 06/06/02
The last International Monetary Fund World Economic Outlook contained
a section entitled "Can inflation be too low?". The suggested
answer was "Yes". Coming from an organisation regularly attacked
as a pillar of western capitalist orthodoxy, the conclusion is pretty
remarkable. It is also highly topical when so many central banks are
pondering when to raise interest rates...more |
The key to Britain's
euro entry
The Financial Times 23/05/02
Faithful readers will sense that I have become increasingly sceptical
about early British membership of the eurozone - but not for any
of the common reasons. "Keeping the pound" is a pretty
pathetic form of patriotism. Nor is my scepticism due to the mess
that the core euro members, above all Germany, are making of their
economic policies. The greater the mess, the greater the opportunities
for British business. Nor is it even due to fears of an uncompetitive
entry rate for sterling, seeing how long the British economy has
managed to prosper at a supposedly overvalued rate...more |
Stop fretting about UK productivity
The Financial Times 09/05/02
Despite the obsession of UK governments of different persuasions
with productivity, its trend has shown almost no change over 30
years, veering on either side of 2 per cent per annum...more
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Will it work? Trust me, I am a Chancellor
The Financial Times 25/04/02
This year's Reith Lecturer is at her best when she lays into "the new accountability culture". Last week's British Budget could have been designed to exemplify her warnings. Gordon Brown, and Chancellors
before him, have said that more cash for the NHS depends on evidence of improved performance. And sure enough
that evidence is to take the form of even more tests and inspections. Two new "super regulators" are coming...more |
Liberal imperialism is a dangerous temptation
The Financial Times11/04/02
There is a highly fashionable diagnosis of the causes and cures of international
terrorism, which some of its exponents call "liberal imperialism".
It runs thus: 1. The root cause of terrorism is poverty. Or as it is
sometimes put, "Violence is the only weapon of those who have no
other way of making themselves heard." 2. The best chance of alleviating
world poverty is through a massive western aid effort - or "a new
Marshall Plan". 3. Aid, however, is not enough. The world is full
of "failed states". These will not use aid effectively without
a concerted western attempt at what is called nation-building...more |
Power and other basic instincts
Review of Margaret Thatcher's Statecraft - FT 06/04/02
Margaret Thatcher has been incautious in her remarks on 'mainland
Europe', argues Samuel Brittan, but we ignore her warnings about the
dangerous world we live in at our peril...more
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Keep floating, stop worrying
The Financial Times 28/02/02
The opponents of the UK joining the euro at an early date are in danger of shooting themselves in the foot by putting so much emphasis on generalised hostility to continental Europe. The case I wish to make is a positive one, not against the euro - still less against the European Union - but in favour of a floating exchange rate which the UK now enjoys and would not continue to have inside the euro...more |
A dedicated tax for health
The Financial Times 14/03/02
Should the spending priority of Tony Blair's government be "education, education and education", as proclaimed in the last parliament?
Or should it be "health, health and health" as it in fact has been since Mr Blair came to office in 1997? The correct answer is: none of the above...more |
Blair's mercantilist
fallacy
The Financial Times 28/02/02
All sides in the argument over the "Garbagegate" affair appear to agree that the main questions
at issue are whether Mittal Steel is a truly British company - which
clearly it is not - and whether Mr Mittal’s donation to Labour affected
the government's attitude. All sides are wrong. The true issue is
whether it is the government’s job to promote national businesses;
or whether it should adopt a more arms length approach. There are
always going to be alleged scandals and conflicts of interest so
long as the business promotion view prevails...more
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The best path to prosperity
The Financial Times 14/02/02
A new book by Brink Lindsey, Against the Dead Hand , is distinguished
from the proliferation of works on global capitalism in that it
refutes one key assumption held by both supporters and opponents.
This that it is an almost irresistible force, leading one side to
cheer and the other to gnash its teeth...more |
Get thee to an ivory tower
Review of Public Intellectuals by Richard A Posner
The Financial Times 02/02/02
Public intellectuals may be people like Milton Friedman, or Galbraith, or Posner himself, who try to popularise their own academic work but then branch out in more opinionated directions. More often, however, they are pontificating way outside their own expertise, but use their authority to pronounce on every subject under the sun. The archetypal example is Noam Chomsky...more |
Britain's delusion of prosperity
The Financial Times 31/01/02
A routine inspection of the UK Treasury's Pocket Data Bank reminded
me of the quotation from Hamlet: "There is something rotten in the state
of Denmark...more
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My enemy’s enemy is not always my friend
Hakluyt New Year 2002
The terrorist attack on the World Trade Centre on September 11
has brought renewed attention to a thesis by the political analyst
Samuel P. Huntingdon - that Western leaders were deluding
themselves if they thought that they had won the battle of ideas with the
collapse of the Soviet Union and that the world was now safe for liberal
democracy, free market capitalism and the rule of law...more |
Let the Pound and Euro compete
The Financial Times 17/01/02
For well over a decade there has been a ceaseless political
battle over whether Britain ought to join the Euro. The
introduction of Euro notes and coins at the beginning of this
year has raised the decibel level of the controversy, but has
not in the least helped to resolve it. The Euro has in fact
existed for three years, during which currencies such as the
franc or the mark or the lira have simply been local names for a
single European money...more |
Notes on globalisation
Evidence to House of Lords
Committee 15/01/02
Globalisation is usually used to refer to the free or freer movement of goods and services and also capital. It does not really mean anything different from an open integrated world economy. But such an economy ought also to involve the free movement of labour...more
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Economic possibilities for our grandchildren
The Financial Times 02/01/02
After the destruction of the New York Twin Towers last September 11 the immediate advice of the American administration to their US citizens to carry on spending. This was good emergency counsel. An economic depression in the West would have been a triumph too far for Moslem fundamentalism. But the official advice might not look so good from a longer term perspective...more |
The religion of equality
Prospect 01/02 Review of Political Philosophy: A Beginners Guide for Students and Politicians
Equality serves as an ersatz religion for much of
the academic left in Britain and the US Ivy League. The
egalitarian religion will never be answered by the political Right
who are far too concerned with the boundaries of national
jurisdictions and the allegiances which are supposed to follow from
them to go into any detail on what these national authorities ought
to be doing...more |