Thursday, August 21, 2014

Turkeys vote against Christmas

The Key Government proposes to pay higher salaries to leading educators –teachers and principals demonstrating proven success --  to oversee the work of lesser educators.  NZEI members however have today voted overwhelmingly against the proposal.

93 per cent of teachers and principals voted "no confidence" in the policy [which] could potentially scupper the … plans…. NZEI president Judith Nowotarski said 73 per cent of the more than 25,000 members that voted rejected the proposed new roles outright…

Without offering any opinion on the Key Government’s proposal, and given the stern resistance teachers always raise to their standards being reviewed, one could be forgiven for thinking the 73 percent voting “against” represented a large number of the lesser educators who realise their work is not up to scratch.


QUOTE OF THE DAY: On market research

image“Market research is what you do when your product isn’t any good.”
- Edwin Land, inventor of the polaroid camera, and business pioneer
[Hat tip Stephen Hicks and the Center for Ethics and Entrepreneurship]


Ever wonder why the prostitutes and bankers share the same neighbourhood?

Guest post from Europe by Simon Black from Sovereign Man

Sometimes I am convinced it was completely by design, and not a weird little coincidence, that one of Germany's most sprawling red light districts is just steps away from the European Central Bank.

This fact becomes comically obvious right around happy hour... as self-congratulatory ECB economists and their bureaucratic bank underlings crowd the bars and cafes after work which are simultaneously frequented by pimps, thugs, and other assorted low-lifes.

One would be forgiven for legitimately asking the question: which of these professions has done more damage to humanity?

My [fiat] money's on the bankers.

These are the same financial luminaries who, recently, crowded aboard the good idea bus and decided to take interest rates NEGATIVE.

Their logic was that prices aren't rising enough. This was actually the headline this morning that ran across the Rai (Italian news) ticker while I was consuming some egg-like substance at the hotel breakfast buffet this morning in Rome.

The newsman said something to the effect of "Low inflation makes economic problems worse in Europe."

Ah, yes. Precisely. The problem isn't an absurd level of over-regulation, massive unsustainable debt, insolvent banking systems, idiotic politicians, etc.

THE problem plaguing the entire continent... the problem behind sluggish growth for all these years... is that consumers aren't getting screwed fast enough.

It's hard to even know where to begin with such an epic level of stupidity. First of all, it's not even true.

Having just spent the last few months traveling across most of the continent, I was astounded to see the speed with which prices had risen in many places.

I just capped off a week-long vacation with my fellow teammates at Sovereign Man in Italy... same place as last year... and I was charged a whopping 50% increase over last year's rates.

But this sort of truth doesn't matter to an economist who actually believes in his 'science'. It is this 'science' of economics which tells us that outsized government debts are irrelevant. That awarding the power to conjure paper money out of thin air is a sound, credible system.

Yet it's not working. Much of Europe (like Italy) has fallen back into recession.

Even here in Germany, which is supposed to be some sort of econo-mythical superhero carrying the rest of Europe around on its shoulders, the government just announced that the economy contracted last quarter.

Whatever these economic policymakers are doing, it's obviously not working. So naturally the solution is to try more of the same. Much more.

They've already taken certain interest rates into negative territory. The expectation now is that they'll ratchet rates even further into negative territory.

In doing so, they are effectively screwing hundreds of millions of people. Every single person on the continent who is a responsible saver. Every pensioner. Every retired schoolteacher. Every student. Everyone who works hard for a living and can already barely make ends meet.

Their lives are all about to get a lot more difficult.

Even for the well-heeled, life has become quite stressful. Think about it-- there's almost no place left anymore to hold your savings.

Putting cash in a bank practically GUARANTEES that you will lose money on an inflation-adjusted basis. Stocks are at precarious all-time highs. Bonds are at all-time highs. Many real estate markets are back in bubble territory.

These people have destabilized nearly every major asset class in existence.

On the balance, I'd rather deal with the seedier characters in this neighbourhood rather than the suit-panted PhDs pretending to do honourable work.

Simon Black
Senior Editor,

The United Police States?

Whatever the rights and wrongs of what’s going on in Ferguson, Alabama – and I’m too far away to give you any special insight on that – one thing that’s now obvious is the militarisation of the American police.

This is not a healthy trend, says John Stossel.

Libertarians warned for years that government is force, that government always grows and that America's police have become too much like an occupying army.
    We get accused of being paranoid, but we look less paranoid after heavily armed police in Ferguson, Missouri, tear gassed peaceful protesters, arrested journalists and stopped some journalists from entering the town…
    [A] man identifying himself as a veteran from the Army's 82nd Airborne Division reacted to video of police in Ferguson by tweeting, "We rolled lighter than that in an actual war zone."
    If authorities arm cops like soldiers, they may begin to think like soldiers -- and see the public as the enemy.

Speaking at last year’s Casey Conference, Defence attorney Marc Victor argues the police state Americans see is the result of law routinely violating individual rights, of which people take no notice. Olivier Garret calls Victor’s speech (below) “a jaw-dropping overview of … how degraded the US has become.”

Never in my life have I seen a round of applause like this one… and at an event normally composed of conservative, introspective investors to boot. But most surprising of all – and I must admit in my bias here  they were applauding a lawyer. A defence lawyer at that.

“If you live here, know that you live in a police state.” If you don’t, maybe think yourself lucky, and swear to make sure it never happens here. Or, to be more accurate, to stop it accelerating.

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Planet Key

When Helen Clark’s Electoral Finance Act came into effect, many of us pointed out it represented censorship at worst, and a stifling of free expression at best.

When John Key amended the Act, many of us pointed out the biggest change was the name but the effect was still the same: a stifling of political protest.

Enter bluesman Darren Watson, whose innocuous song Planet Key will be rubbed out this afternoon by the Electoral Commission. Their job is interpreting and enforcing the ill-worded law that now permanently confines political expression, and in the opinion of these grey ones the law bans Darren from releasing this song to the net, on radio, or in any electronic form unless he attaches his name and address to it.

Because to release any political commentary in this form over the election period is, in the view of the grey ones, a political advertisement.

The Electoral Commission is also threatening that the sale of the song through iTunes without a promoter statement is "an apparent breach of section 204F of the Electoral Act", punishable by a fine of up to $10,000.
    Said Watson: "I object to the suggestion that I am some sort of political promoter. I am a musician and I feel very strongly about this kind of censorship. I believe in artistic freedom."

The boys and girls at the Electoral Commission do not.

The manner of their threat is pure bureaucratese:

Watson tweeted on Tuesday that he would be removing it from sale "by order of the Electoral Commission" - but the commission says it has made no such order.
    "We haven't ordered anything to be taken down, or removed," a spokesperson told 3 News. "The commission does not have any power to prosecute."
    Instead, the commission says it has advised the duo to add a promoter statement. The advice isn't legally binding, but if they don't comply, the Electoral Commission will have to consider whether to refer the matter to the police.

This is not an order. No. But if you don’t do it, we’ll “refer the matter to the police” – and with our warmest recommendation.

So, by this afternoon, this video will be a dead link:

Planet Key from Propeller Motion on Vimeo.


Wednesday, August 20, 2014

Quote of the day: On what can’t be given to you by politicians

“Remember ever the old words—as true today as when they were first spoken—'What shall it profit a man if he gain the whole world, and lose his own soul?' If you lose all respect for the rights of others, and with it your own self-respect, if you lose your own sense of right and fairness, if you lose your belief in liberty, and with it the sense of your own worth and true rank, if you lose your own will and self-guidance and control over your own lives and actions, what can all the buying and trafficking, what can all the gifts of politicians give you in return?”
- Auberon Herbert

[Hat tip The Objective Standard]


In the Hands of Economists, the More Precise the Number, the Bigger the Lie.

In this second-part of the excerpt we started yesterday, author of three best-selling books already, Bill Bonner eviscerates what passes for modern economics in this excerpt from ‘Hormageddon: How Too Much of a Good Thing Leads to Disaster.’

Excerpt #2 from Hormageddon: How Too Much of a Good Thing Leads to Disaster
By Bill Bonner

The Original Economists

There was a time when economists were not so conceited, not so bold and arrogant, not so ambitious… and not such dumbbells. The original practitioners of the trade saw themselves as natural or moral philosophers.

It was ‘moral’ in the sense that when you make a mistake you have to pay for it. You don’t watch where you’re going and you step on a rake, the handle comes up and hits you in the face. You go away on a trip and forget to pay the electric bill, you come home and the lights don’t work. There is no complex mathematics that will bring the lights back on. There are no abstract theories—such as countercyclical fiscal policies—that will do it either. The solution is simple: you have to pay the bill. You have to suffer the consequences of your own mistake to set it straight. That’s moral philosophy.

But when your washing machine breaks down, you turn it off and try to fix it. This is a mechanical—not moral—system, and not a particularly complex one at that. Sometimes even a few whacks with a hammer and some choice swear words can work wonders. Percussive maintenance works!

The trouble is, economies are not washing machines. They are complex, moral systems. An economic system requires a deft, nuanced touch. But economists come up with theories and ‘fixes’ that are as clumsy as a wrench and as blunt as a hammer. They almost always lead to trouble.

The Ur-economists of old knew better. They observed animals and nature and tried to draw out the laws and principles that helped understand them. Same thing for man and his natural economy. They watched. They reflected. They attempted to make sense of it in the same way a naturalist makes sense of a beehive or an ant colony. ‘How does it work?’ they asked themselves.

In the 18th and 19th century, they were able to formulate “laws” which they believed described the way a human economy functioned.

The Wealth of Nations was Adam Smith’s observation about how wealth was created. How did people know what to produce? How did they know what price to sell it at? How did they know when to shift to other things, or when to increase production? He saw individuals guided by an ‘invisible hand’ that led them to follow their own interests and thereby respond to the needs and desires of others.

Later, other economists focused on prices. Prices had an information content that was essential for everyone, that allowed producers and consumers to get on the same page. These economists understood that when you manipulate the numbers you confuse them both.

Among the other phenomena that these proto-economists discovered were Say’s Law and Gresham’s Law.

French businessman and economist, Jean-Baptiste Say, discovered that “products are paid for with products,” not merely with money. He meant that you needed to produce things to buy things; you could not just produce money… has anyone ever mentioned this to the Federal Reserve?

Long before Say, a 16th century English financier named Sir Thomas Gresham noticed that if people had good money and bad money of equal purchasing power, they’d spend the bad money and hoard the good money.

Economists were like astronomers. When they discovered something new they named it after themselves. They were just observers back then and they needed some reward. No one hired them to ‘run’ an economy or to ‘improve’ one. They would have thought the idea absurd. How could they know what people wanted? How could a single person, or a single generation, improve an infinitely complex system that had evolved over thousands of years?

Central planners can rig the economy to produce anything—tanks, education, bridges, bureaucrats, assassinations, you name it. But none of these things are priced in the open market, the way the original economists observed them at the birth of their discipline. These machinations are exceedingly annoying to the invisible hand. The reason is that it needs to see what things are really worth to us or it cannot properly allocate capital and guide consumers. Things that are not priced by willing buyers and sellers are like dark matter in the economic universe. They provide no light, no clarity, nothing that can help consumers, taxpayers, or investors decide what to do with their money. Many of the products and services commanded or provided by non-market entities are probably worthless; or worse, actually of negative value. That’s when the invisible hands starts drinking early.

By the Numbers

What is the meaning of life? In the Hitchhiker’s Guide to the Galaxy, Arthur Dent searches the interplanetary system for the answer. Finally, he finds a computer, Deep Thought, that tells him: “Forty-two.”

Wouldn’t it be nice if meaning could be digitized? Unfortunately for the deep thinkers in the economics profession, the important things in life involve qualitative judgments. Understanding them requires analogue thinking, not digital calculations.

Numbers are a good thing. Economics is full of numbers. It is perfectly natural to use numbers to count, to weigh, to study and compare. They make it easier and more precise to describe quantities. Instead of saying I drank a bucket of beer you say, I drank two 40s. Then instead of saying ‘I threw up all over the place,’ you say, I threw up on an area 4 feet square.

But in economics we reach the point of diminishing returns with numbers very quickly. They gradually become useless. Later, when they are used to disguise, pervert and manipulate, they become disastrous. Hormegeddon by the numbers. Ask Deep Thought the meaning of life then and the answer is likely to be “Negative Forty-Two.”

Exactly what point does the payoff from numbers in the economics trade become a nuisance? Probably as soon as you see a decimal point or a Greek symbol. I’m not above eponymous vanity either. So I give you Bonner’s Law:

In the hands of economists, the more precise the number, the bigger the lie.

For an economist, numbers are a gift from the heavens. They turn them, they twist them, they use them to lever up and screw down. They also use them to scam the public. Numbers help put nonsense on stilts.

Numbers appear precise, scientific, and accurate. By comparison, words are sloppy, vague, subject to misinterpretation. But words are much better suited to the economist’s trade. The original economists understood this. Just look at Wealth of Nations—there are a lot of words in that thing. After all, we understand the world by analogy, not by digits. Besides, the digits used by modern economists are most always fraudulent.

“Math makes a research paper look solid, but the real science lies not in math but in trying one’s utmost to understand the real workings of the world,” says Professor Kimmo Eriksson of Sweden’s Malardalen University.

He decided to find out what effect complicated math had on research papers. So, he handed out two abstracts of research papers to 200 people with graduate degrees in various fields. One of the abstracts contained a mathematical formula taken from an unrelated paper, with no relevance whatever to the matter being discussed. Nevertheless, the abstract with the absurd mathematics was judged most impressive by participants. Not surprisingly, the further from math or science the person’s own training, the more likely he was to find the math impressive.

This is from a research paper paid for by the Federal Reserve. It purports to tell us that when a house next door to you sells at an extremely low firesale price, your house gets marked down too:

This motivates estimation of the following linear probability model:

I attempted to put in another illustration, a model in which economists believe they calculate the effect of large-scale asset purchases by the Fed (aka Quantitative Easing), but my trusty laptop computer rebelled. It wouldn’t copy the formula. The ‘clipboard’ wasn’t big enough, or so it claimed at least. I suspect the real reason was moral and political indignation was; a laptop knows a digital fraud when it sees one.

Without coming to any conclusion about how good these formulae actually are, let us look at some of their components. Whereas the classical economist—before Keynes and econometrics—was a patient onlooker; the modern, post-Keynes economist has had ants in his pants. He has not the patience to watch his flock, like a preacher keeping an eye on a group of sinners, or a botanist watching plants. Instead, he comes to the jobsite like a construction foreman, hardhat in hand ready to open his tool chest immediately; to take out his numbers.

Measuring Quantity vs. Quality

If you are going to improve something you must be able to measure it. Otherwise how do you know that you have made an improvement? But that is the problem right there. How do you measure improvement? How do you know that something is ‘better?’ You can’t know. ‘Better’ is a feature of quality. It can be felt. It can be sensed. It can be appreciated or ignored. But it can’t actually be measured.

What can be measured is quantity. And for that, you need numbers. But when we look carefully at the basic numbers used by economists, we first find that they are fishy. Later, we realize that they are downright fraudulent. These numbers claim to have meaning. They claim to be specific and precise. They are the basis of weighty decisions and far-reaching policies that pretend to make things better. They are the evidence and the proof that led to thousands of Ph.D awards, thousands of grants, scholarships and academic tenure decisions. More than a few Nobel Prize winners also trace their success to the numbers arrived at on the right side of the equal sign.

1… 2… 3… 4… 5… 6… 7… 8… 9…

There are only 9 cardinal numbers. The rest are derivative or aggregates. These numbers are useful. In the hands of ordinary people they mean something. ‘Three tomatoes’ is different from ‘five tomatoes.’

In the hands of scientists and engineers, numbers are indispensable. Precise calculations allow them to send a spacecraft to Mars and then drive around on the Red Planet.

But a useful tool for one profession may be a danger in the hands of another. Put a hairdresser at the controls of a 747, or let a pilot cook your canard à l’orange, and you’re asking for trouble. So too, when an economist gets fancy with numbers, the results can be catastrophic.

On October 19, 1987, for example, the bottom dropped out of the stock market. The Dow went down 23%. “Black Monday,” as it came to be called, was the largest single-day drop in stock market history.

The cause of the collapse was quickly traced to an innovation in the investment world called “portfolio insurance.” The idea was that if quantitative analysts—called ‘quants’—could accurately calculate the odds of a stock market pullback, you could sell insurance—very profitably—to protect against it. This involved selling index futures short while buying the underlying equities. If the market fell, the index futures would make money, offsetting the losses on stock prices.

The dominant mathematical pricing guide at the time was the Black-Scholes model, named after Fischer Black and Myron Scholes, who described it in a 1973 paper, “The Pricing of Options and Corporate Liabilities.” Later, Robert C. Merton added some detail and he and Scholes won a Nobel Prize in 1997 for their work. (Black died in 1995.)

Was the model useful? It was certainly useful at getting investors to put money into the stock market and mathematically-driven hedge funds. Did it work? Not exactly. Not only did it fail to protect investors in the crash of ‘87, it held that such an equity collapse was impossible. According to the model, it wouldn’t happen in the life the universe. That it happened only a few years after the model became widely used on Wall Street was more than a coincidence. Analysts believe the hedging strategy of the funds who followed the model most closely—selling short index futures—actually caused the sharp sell-off.

“Beware of geeks bearing formulas,” said Warren Buffet in 2009.


Bill Bonner is an American author of books and articles on economic and financial subjects, the founder and president of Agora Publishing, co-founder and regular contributor to The Daily Reckoning, and author of a daily financial column, Diary of a Rogue Economist.

He is author and co-author of Financial Reckoning Day: Surviving The Soft Depression of The 21st Century, Empire of Debt and Mobs, Messiahs and Markets.

Click here to order Bill Bonner’s forthcoming book: Hormegeddon: How Too Much of a Good Thing Leads to Disaster.

This excerpt, and Part One that appeared yesterday, first appeared at the Casey Daily Despatch.


ECONOMICS FOR REAL PEOPLE: Why do Governments Regulate?

What’s happening tomorrow night at the Auckland Uni Economics Group? Here’s your update:

This week we are excited to be joined by Professor Robert MacCulloch who will answer the question: Why do Governments Regulate?

This question has been a controversial one among economists for several centuries. Do governments regulate for the public interest? Or rather to protect the interests of “big business” that have captured politicians?
Robert maintains neither of these views is consistent with the evidence, arguing instead that regulations are imposed as a form of punishment on capitalists when they are perceived to be undeserving.
    Date: Thursday, August 21
    Time: 6-7pm
    Location: Case Room Two, Level Zero, University of Auckland Business School

We look forward to seeing you all there!

PS: Check us out on the web at our Facebook group!


Judith: think it possible you may be mistaken [updated]

imageIt’s true that both a person’s and a politician’s emails should be private. But what might have been revealed by the reaction to the illegal @Whaledump was more than just some ill-considered repartee.

How Judith Collins has reacted to media pressure about her behaviour – leaving her Prime Minister to bat for her when she should be fronting herself – has been revealing. It turns out Entitleitis isn't just for corporate cronies and lowly-paid beneficiaries. Cabinet ministers get it too.

But then, they are the country’s highest-paid beneficiaries.

Irony, then, that Collins’s biggest crime according to this document dump was revealing the name of a former Helen Clark staffer she thought might have revealed Sir Double Dipton’s double dipping.

Nonetheless, Judith Collins is once again embarrassing her party, her cabinet and her Prime Minister – this time in the middle of what should be a campaign, when she is already on her third last warning.

And by refusing to front, she not only allows the story to continue until she does, she reveals again her overweening sense of Entitleitis.

Yes, she has Entitleitis, just like most ministers do in a second-term government: she thinks she is entitled to her ministerial position and baubles*, and anybody or any questions on any subject suggesting she might not deserve them should be ignored until they go away.

If it’s not Entitleitis, then it’s a severe case of cowardice. Not a good look for a woman who likes to revel in the name ill-named moniker ‘Crusher.’

In either case, she would do her colleagues, the campaign – and, let’s face it, the country -- a power of good by pissing off.

Now, would be good.

* Baubles? Not sure what she costs us now, but back in 2009 the pint-sized power luster was racking up $46,000 plus rorts for accomodation and $188,981 a year in flights and limos. And all we got in return for that was “asset confiscation; suspension of your right to silence; expanded search and surveillance powers for an extraordinary range of government departments.” You know, stuff she did right out in the open.

UPDATE 1: Nice to  hear Leighton thinks the same. (Although more politely.)

UPDATE 2:  Interesting to see that Cameron calls his “former Beehive contact” Jason Ede “gutless” for not fronting up. If he means it for his other mate, he obviously means it double for this one.

UPDATE 3: An emailer pointed out Collins was bearded at the airport wearing a carpet. Not a great looks, but she does answer questions.


Tuesday, August 19, 2014

How Too Much of a Good Thing Leads to Disaster

Author of three best-selling books, in this excerpt from his forthcoming, and fourth, our guest poster Bill Bonner eviscerates what passes for modern economics.

Excerpt from Hormegeddon: How Too Much of a Good Thing Leads to Disaster
By Bill Bonner

Prepare for Hormogeddon

This book has a modest ambition: to catch a faint glimmer of truth, perhaps out of the corner of our eye. What truth? It is a phenomenon I call Hormegeddon.

German pharmacologist Hugo Schulz first described its scientific antecedent in 1888. He put small doses of lethal poison onto yeast and found that it actually stimulated growth. Various researchers and bio-chemical tinkerers also experimented with it in subsequent years and came to similar findings.

Finally, in 1943, two scientists published a journal article about this phenomenon and gave it a name: “hormesis.” It is what happens when a small dose of something produces a favorable result, but if you increase the dosage, the results are a disaster. Giving credit where it is due, Nassim Taleb suggested applying the term beyond pharmacology in his 2012 book, Antifragile.

Disasters come in many forms. Epidemic disease is a disaster. A fire can be a disaster. A hurricane, an earthquake, a tornado. All these natural phenomena are the disastrous versions of normal, healthy environmental processes. But this book is about another kind of natural disaster. Public-policy disasters.

Generally speaking, public-policy disasters are what you get when you apply rational, small-scale problem-solving logic to an inappropriately broad situation. First, you get a declining rate of return on your investment (of time or resources). Then, if you keep going – and you always keep going – you get a disaster.

The problem is, these disasters cannot be stopped by well-informed, smart people with good intentions, because those exact people are the ones who cause these disasters in the first place.

“Hormegeddon” is my shorthand way of describing what happens when you have too much of a good thing in a public-policy context…

Chapter Two: Too Much Economics

“Can you by legislation add one farthing to the wealth of the country? You may, by legislation, in
one evening, destroy the fruits and accumulations of a century of labour; but I defy you to show
me how, by the legislation of this House, you can add one farthing to the wealth of the country.”
—Richard Cobden

Friedrich Hayek made the point on numerous occasions that the more a person has been educated, the greater the likelihood he is an idiot. That insight may or may not be true of those who spent their school years in engineering and science; it is certainly true for those who have studied economics. The more they have learned, the dumber they get. Like a cloud rising against a mountain, when a young person enters the economics department, the higher up the academic slope he goes, the more the common sense rains out of him.

The trouble with The Economist, The Financial Times, the US government and most mainstream economists is not that they don’t know what is going on, but that they don’t want to know. It would be counterproductive. Nobody gets elected by promising to do nothing. Nobody [since Friedrich Hayek] gets a Nobel Prize for letting the chips fall where they may. Nobody attracts readers or speaking fees by telling the world there is nothing that can be done. Instead, they meddle. They plan. They tinker. Usually, the economy is robust enough to thrive despite their efforts. But not always.

From 2007-2012, Nobel Prize winning economists Paul Krugman and Joseph Stiglitz, along with celebrity economist, Jeffrey Sachs, and practically all their colleagues, failed to notice the most important happening in their field. This in itself was not news. Not noticing things came easily to them, like second nature. In fact, you might say they built their careers on not noticing things.

Blindness was part of their professional training. It was what allowed them to win coveted prizes and key posts in a very competitive occupation. Had they been more reflective, or more observant, they would probably be teaching at a community college.

Their obstinate dedication to being unaware marks the culmination of a long trend in economics. By the late 20th century, leading economists preferred not to look. They closed their eyes to what an economy actually is (to how it works) and focused on their own world—a make-believe playground of numbers, theories and public information, with little connection to the world that most people lived in.

Irving Fisher, one of the greatest economists of the 20th century, on September 5, 1929: “There may be a recession in stock prices, but not anything in the nature of a crash.”

Julius Barnes, head of Hoover’s National Business Survey Conference, announced in 1930: “The spring of 1930 marks the end of a period of grave concern. American business is steadily coming back to a normal level of prosperity.”

And now, in the 21st century, more than 75 years later, economists are up to more mischief. And part of the mischief involves not noticing things that are under their noses, including the fact that their discipline is 90% claptrap.

Minutes of the Federal Reserve’s Open Market Committee meetings, released in 2013, showed that neither Ben Bernanke, the Fed chairman, nor other key decisions makers had any idea what was coming their way in 2007.

“My forecast for the most likely outcome over the next few years,” opined Fed governor, Donald Kohn, “is…growth a little below potential for a few quarters, held down by the housing correction, and the unemployment rate rising a little further.”

Ben Bernanke set the pace for his fellow Fed officials back in 2005, with a stunning display of arrogance and ignorance about the threat derivatives posed to the global financial system:

“they are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well managed and do not create excessive risk…”

Then, two years later, he was at it again:

“At this juncture…the impact on the broader economy and the financial markets of the problems in the subprime markets seems likely to be contained…”

Again, in 2008: Fannie Mae and Freddie Mac were “adequately capitalised,” he said. They were “in no danger of failing.”

In the financial pile-up of ‘08-’09, derivatives did, in fact, create so much risk that the system couldn’t handle it. Subprime crashed. Almost every financial school bus was dented. And practically all of Wall Street—Fannie and Freddie too—had to be towed away.

And then, in 2013, Ben Bernanke, as blind to the approaching financial disaster as a pick-up truck to a brick wall, was driving the whole world economy.

That economists are incompetent hardly needs additional evidence or argument. But they are far from being idiots. On the contrary, they are too clever by half. They are such able swindlers and accomplished charlatans that they convince themselves of things that couldn’t possibly be true. They do so for reasons of professional vanity…and for money.

Ben Bernanke’s ridiculousness was not the exception to the rule. It was the rule. He was following a hallowed tradition.

These economists made themselves into useful stooges by creating a simpleton’s model of the economy. For simplicity’s sake, I will refer to this model as the Simpleton’s Economic Model, or ‘SEM’ for short. So stripped down, shorn of all nuance and ambiguity, that it bears no relationship or resemblance to a real economy. It is like a stick figure that is meant to represent a real human being.

Still, SEM is something economists can work with. It brings them PhDs and Nobel prizes. It makes people think they know what they are talking about. It both justifies and permits naïve meddling—like a surgeon whose only training comes from studying stick-figure diagrams.

At its most basic level, SEM requires that complex economic transactions be reduced to numbers and statistics. This alone is fraudulent, as we will see. Then, based on these numbers economists are able to do math—the more complex the better—to arrive at results that are internally coherent but describe life in a parallel, artificial and unreal economic universe. The SEM begins with a statistical construct—the average man—who doesn’t exist (nor has ever existed) in reality. There is a simple example that illustrates how hollow this construct truly is:

Imagine Warren Buffett moves to a city with 50,000 starving, penniless beggars. This is what economists would say about that city: “Stop whining…the average person in the city is a millionaire.”

Statistically speaking, the economist would be correct, but ultimately be peddling a form of information with negative content. After you heard it you would actually know less than you knew before. This, by itself, is destructive enough, but it’s what happens next that is the real problem.

On the foundation of fraudulent numbers and empty statistics like these, economists build a whole, elaborate tower of hollow, meaningless facts and indicators: the unemployment rate, consumer price inflation, the GDP. None are ‘hard’ numbers, yet the economist uses them as a rogue policeman uses his billy club…to beat up on honest citizens.

Economists, with their scammy numbers and slimy theories, are an important element of central planning, an essential ingredient for hormegeddon.

Ain’t No Average Man

Unlike a real, hard science, you can never prove economic hypotheses wrong. There are too many variables, including the most varied variable of all—man. He will do one thing sometimes, another thing the next time, then something else the time after that. Sometimes he seems to respond to economic incentives. Sometimes he’s out to lunch. Why? Because every man is different. Unique. Infinitely complex. And thus, ultimately unknowable.

The problem with this is that you can’t do much central planning in an economy where all the key component parts are unique and unknowable. You’d have to strip them of their particularities, reducing them to a simpler figure that you can work with—the average man. This ‘average man’ bears no resemblance to a real man. But he is useful to the economics profession. He is predictable, whereas real men are not. He will do their bidding; real men will not. He is like an interchangeable part in a vast machine, a cog; again, real men are not that way.

You turn a man into a stick figure with numbers. You say that he has 2.2 children. Or that he earns $42,500. Or, that he is 7.8% unemployed. None of it is true. It is all a convenient fabrication.

If you could get man to do what you wanted, you could, in theory, operate a centrally planned economy successfully. It has never happened. Because man is an ornery fellow, prone to putting a stick in the economists’ wheels. Not that he is malicious or obstructionist. It’s just that he and only he really knows what he wants; and he changes his mind often.

The Economy of Stuff

Ultimately, economics is about material wealth. It’s about stuff. Economists’ conceit is that they can help people get more of it, that they can bring the average man more wealth, by improving the unemployment rate or boosting the GDP growth rate or increasing some other fraudulent number they created with one of their prize-winning theories. With more stuff, they contend, the average man will be better off.

But stuff doesn’t automatically have a fixed value. What is yesterday’s newspaper worth? How about a painting? Or an ounce of gold? Or a pound of frogs’ legs?

The value of Stuff is established by people. They declare their interest in stuff by bidding for it in the market. Thus do they set the price for a loaf of bread, a share of Google, or an hour of someone’s time. Markets are not perfect. They never “know” what the price should be. And they are subject to fits of panic, disgust, greed, and infatuation, just like the individuals who participate in them.

The market gods play tricks…they set traps…they toy with us…they seek to ruin us…and they discover exactly the right price—set by willing buyers and sellers—every day.

In financial terms, the market ‘clears’ when buyers and sellers figure out the price that will get the deal done. Then, they can regret it later.

The price is essential. It is what tells farmers they overplanted or homebuyers that they have waited too long. It’s what causes speculators to look for open windows and investors to postpone retirement. It is what tells the producer what he should have produced and the consumer what he wished he could consume. It’s what tells you what people really want.

Since real wealth can only be measured in terms of what people really want, any distortion of prices is misleading, vain, and potentially impoverishing. Bend prices and you send producers off in the wrong direction, making stuff that people don’t really want. Everyone is poorer as a result. Even the smallest amount of central planning, where it disturbs private, individual planning to the slightest effect, reduces the sum of human happiness.

Taxes, tariffs, import restrictions, quotas, subsidies, bailouts, product specifications—every meddle is a fat thumb on the market scales. The price data is corrupted. The producer doesn’t know what the consumer wants. The consumers’ choices are sub-optimal. The whole economy is hobbled. Everyone gets less of the stuff he really wants and more of the stuff he doesn’t.

If you agree with that, guess what…you’re going against an entire century of economic theory and practice. The modern economist believes he can improve the way people invest, save, spend and do business. In the United States he has been hard at it—manipulating, interfering, controlling—for a century, at least since the Federal Reserve system was founded in 1913. Is there any evidence that all this sweat and heavy breathing has actually worked? That it has actually improved the way economies function? None that we have seen. But now after 100 years of meddling, economics itself is sinking below the zero barrier, down into dark under world of hormegeddon, where the return on further effort will be starkly, catastrophically negative.

Bill Bonner is an American author of books and articles on economic and financial subjects, the founder and president of Agora Publishing, co-founder and regular contributor to The Daily Reckoning, and author of a daily financial column, Diary of a Rogue Economist. 

He is author and co-author of Financial Reckoning Day: Surviving The Soft Depression of The 21st Century, Empire of Debt and Mobs, Messiahs and Markets.

Click here to order Bill Bonner’s forthcoming book: Hormegeddon: How Too Much of a Good Thing Leads to Disaster.

This excerpt first appeared at the Casey Daily Despatch. Part Two will appear here tomorrow …


Monday, August 18, 2014

Property rights v development?

Guest post by Mark Tammett

Unfashionable I know, in this election period, but I’d like to talk about policy. Specifically, new policies affecting residents of Christchurch – possible precursors to policies in the rest of the country.

I’m talking about the council’s Christchurch Central Development Unit’s new "Liveable City" plan that, according to one objector, treats existing residents as expendable:

This proposal has the worthwhile aim of increasing the number of people living in the central city to between 12,000 and 24,000, but proposes using deeply unfair means… The sole mechanism the Liveable City Plan hopes will fix everything is to remove any obstacles in the way of developers - including those annoying neighbours… The main changes include … an attack on the rights of existing residents by:
- imposing a single taller maximum building height, and steeper set of recession planes…;
- enabling developers to exceed even the newly increased heights, by tightly limiting the matters which can be considered if a developer applies to exceed the limits…; and
- ensuring that affected neighbours cannot hinder proposals which violate the height limits, by specifically blocking neighbours from being consulted….
[T]he Liveable City Plan also favours developers by dropping any requirement for Urban Design consultation about the appearance of significant redevelopments, and greatly reducing the minimum permitted size of apartments… Clearly, the Liveable City Plan hopes that removing regulations will free "the market" to deliver a range of small and large dwellings built in attractive styles…

The whole thing's a mess, and as a defender of property rights I'm not sure what position I should take on the Christchurch Central Development Unit’s proposed  changes.

On the one hand, property rights are being infringed by an increasingly complex RMA regime which stops you developing your land as you should - often granting a say to third parties who should have nothing to do with it. This is the main reason we have so many empty spaces around the city - it's simply too hard.

To the extent this change removes some of the bureaucratic complexity, and stops third parties who have nothing to do with your property having a say over what you can do on it, then it's restoring property rights and that's a good thing.

On the other hand, the recession plane and shading requirements that affect your neighbours are one of the few aspects of our planning regime that aren't complete BS, as they do protect the property rights of your neighbours.

I’d suggest the best approach, if CCDU actually cared about property rights (which they don’t) and about development (which they claim to) would be to lock the existing rules in this area as a starting point, but then allow more flexibility to negotiate a change to these rules with your neighbours.

For instance if you're a developer who wants to infringe on your neighbour’s recession planes, you may offer a change to your design in some other area that is acceptable to them, or perhaps even a cash payment or easement if they agree to that departure - or a combination of both.

This approach would provide more flexibility and freedom to allow the city to redevelop, whilst still protecting property rights of existing residents.

In fact, I see no reason why this couldn’t happen elsewhere in the country.

After all, property rights when properly defined don’t conflict. The difficulty is finding law that establishes them correctly, if at all.

Mark Tammett is a Christchurch civil engineer.

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Taxes cost jobs

Labour wants jobs, and they want to raise taxes.

The Greens quite like jobs, but they really do want to raise taxes.

Internet/Mana don’t give a shit about jobs, and they really, really want to stiff you on taxes.

At least Laila Harre’s crew are honest.


Putin’s libertarians

Guest post from our Russian correspondent, Mikhail Svetov

u-genghis-khan-monumentI DECIDED TO WRITE THIS after I noticed that western libertarians have unaccountably developed a soft spot for Russian president Vladimir Putin.

The consensus among them seems to be that Putin is in the right in Ukraine. Even Ron Paul, whom I normally admire, has fallen for his charms. But as a Russian libertarian myself, it leaves me disappointed and terribly sad.

The biggest complaint from libertarians about the Ukraine seems to be that the government in Kyiv is somehow “fascist,” which in their eyes warrants Russian military intervention. I would like to start by outlining some facts about Russia and Ukraine, and hopefully dispel some myths about the war in the Donbass region of Ukraine (also known as the Donetsk Basin).

The simplest way is to focus on some of the most notable characteristics of fascism. The defining characteristic of Fascism is that the good of the State comes before the good of the individual, identified by Laurence Britt as being commonly manifested in the following ways

Click here to read more ... >>


Stability over insanity in Iraq...yeah, right

With New Zealand wanting a seat on the UN Security Council, it can't just stay quiet about ISIS, says Olivia Pierson in this Guest Post.

Before 2003, when Saddam Hussein tyrannised Iraq with his secret police, torture chambers and death squads, many, if not most in the west, claimed that he was still the best man for the job "because he kept stability in the region."

In fact, he was the brutal dictator of a psychopathic regime left to dehumanise Iraqi citizens, systematically breaking their hearts and minds over a thirty year time-line. That is until the coalition forces led by America and Britain finally deposed him, resulting in his long-overdue execution. Iraq never was, and will not be in the near future, anything close to stable, unless your idea of stable is tormented and tyrannised.

In the wake of the burgeoning cruelty dished out by the new Islamic State of Iraq and Syria, ISIS, NZ Prime Minister John Key said that he wouldn’t want to put NZ troops into Iraq, "because this is a civil war between two groups, Sunni and Shi’ite." He echoes the same sentiments as do his idols, Barack Obama and David Cameron.

The thing that John Key and the boys don’t get is that ISIS is a Sunni-led terrorist corporation, with 2 billion dollars at its disposal thanks to its backers in Saudi Arabia and Qatar, and its looting of Iraqi banks. They are Sunni Muslims hell-bent on becoming a full-blown medieval Islamic Caliphate, who are butchering members of all other sects, including other Sunni Muslims. This is not just a civil war between two Muslim enclaves; this is an attempt by jihadists to wipe out any form of Islam that doesn’t impose Sharia Law, along with all Jews, Christians and infidels worldwide.

ISIS seeks to remake the world in its own pathological image. Through clever branding, technological savvy, a single-minded purpose, overwhelming violence and the primal call for all true Muslims around the world to join their crusade of death, their numbers are swelling. They have already taken the North-East of Syria and a third of Iraq, including the Mosul dam, which itself can be used as a terror-tool to drown hundreds-of-thousands of Iraqis, if they so choose. They have set up terror-training camps where they are teaching young Muslims who have responded to their call, from all parts of the world including Europe, America and Australia, how to kill, rape, maim, crucify and behead civilians, including children. These radicals will return to their home countries to inflict their "holy cause" on western civilian life, otherwise known as infidels.

Welcome to the harsh reality that Islam is a political ideology, not merely a religion – and there's no reformation in sight!

John Key has brought New Zealand back into NATO and is seeking a seat on the UN Security Council. Former Prime Minister Helen Clark is in the running to hold the top UN position currently occupied by Ban Ki-Moon. That places NZ in an important position regarding its voice on geopolitical issues. John Key has stated that he supports the US air-strikes over Northern Iraq in order to aid the brutalized Yazidis and Kurdish forces on the frontline against ISIS. But this is not enough. As the Islamic State swells its ranks, they will be able to overwhelm resistance.

This is the moment jihadists have been anticipating for many years, if not decades. It is estimated that there are 1.6 billion Muslims worldwide, seven percent of whom are conservatively deemed "radical"; that’s 112 million. If only one percent of said radicals respond to the call of the new Caliphate, that is a fighting force of 1.12 million deadly terrorists.

With full knowledge of the idea being utterly unappealing, I submit that troops on the ground are inevitable – the alternative is the spreading of pure hell. Considering that all modern countries will be affected by the despicable tactics of the new Islamic State, it would be prudent, though not attractive, to step forward firmly on the offensive, in concert, to send a clear message to Islam around the world that their jihadist’s agenda will be vanquished.

John Key and Helen Clark ought to stay open to all options, no matter how unedifying, instead of making statements about not supporting intervention in the form of ground troops. The well-signposted withdrawal of American troops from Iraq helped bring about this alarmingly swift catastrophe. After an eleven-year campaign and a very wobbly government, such an act was a betrayal of the Iraqi people, barely able to stand after the spirit-crushing abuses of Saddam. And now this.

* * * *

Olivia Pierson is an Auckland screenwriter.


UPDATE: Kurdish soldiers launch ground offensive to free Mosul dam

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Friday, August 15, 2014

Friday Morning Ramble: Dirty Edition

Dirty politics? A whole book illustrates the thesis by its own methods. Folk comment.
NZ POLITICS DAILY: August 14 2014 – Bryce Edwards, NBR
I’ve either been hacked or spied on – David Farrar, KIWIBLOG
Dirty Politics – David Farrar, KIWIBLOG

Hell Pizza boss calls in police over stolen emails – HERALD
Slater, Greens plan complaints after Hager revelations – OTAGO DAILY TIMES

No, no other bloggers do it.
The Left blogosphere is as pure as the driven snow – LINDSAY MITCHELL
Prentice irritated by Labour links – YOUR NZ
Left wing bloggers defend their own work – RADIO NZ [Audio: 5:12]

Unfashionable, I know, but some folk are still studying policies.
Small party priorities post election – YOUR NZ

“Last Saturday I called the other leaders in the TV3 minor party leaders debate communistic. This might seem an exaggeration but it is not.”
Whose land is it anyway? – Jamie Whyte, SCOOP

“"The leaders of NZ First, the Greens, the Conservatives and Mana-Internet have all rejected the institution of private property in favour of the collectivist ideas that prevailed in 20th century fascist and communist countries. And, since Labour also supports a ban on the sale of privately owned land to foreigners, they seem to have rejected private property too.
"This should be the big story of this election.”
The political assault on private property gathers pace – Jamie Whyte, ACT

Ya think?
11 year permit process ‘too long’ – HOME PADDOCK

“It’s about the cultural brainwashing programme that has turned every New Zealand teacher into a propaganda parrot for primitivism.
Preparing the Parrots: A Training College Graduate on the Cultural Corruption of Teachers – John Ansell, TREATYGATE

No, not every New Zealand teacher …
Applications Now Open For Ami 3-6 Diploma Course, Auckland 2015-2017 – MARIA MONTESSORI EDUCATION FOUNDATION

Once upon a time, businesses trued to build a reputation, a brand, their name, over many years. These days, they drop them all at the drop of a hat.
Bright Spark - Telecom changes name – NZ HERALD
The Assault on Integrity – OBJECTIVIST NEWSLETTER, 1963

“Queens Wharf state house seems like revenge of the artocracy, but secrecy means we know nothing about it.”
Free us from danger of plonked art – Brian Rudman, NZ HERALD

“Are we getting killed by the virus we spread?”
Modern art was CIA 'weapon' – INDEPENDENT (UK)

An important - and revolting – truth.
What Happens When Libertarian Fantasies Become Reality? – Daniel Mitchell, TOWN HALL

Greenpeace founder speaks truth. “Dispute facts, if you can.”

“If so-called “global warming” — driven by rising levels of carbon dioxide — is truly the planetary menace that the warmists claim it is, it should not be so easy to find abundant evidence that things are going in totally the opposite direction.”
The Big Chill – Deroy Murdock, NATIONAL REVIEW

Nice people, environmentalists. “Mike “The Health Ranger” Adams, founder and director of the popular health news tabloid website Natural News, recently posted an article calling for the death of scientists, journalists anybody else who has written favourably about the technology of genetic engineering.”
Policy Digest: Environmental Issues – Amanda Maxham, VOICES FOR REASON
Ecoterrorists Call for Murder of Food Scientists and Their Supporters – RATIONAL BEACON

"The achievement of the electricity entrepreneurs is one of America’s greatest success stories.”
Property Rights and the Crisis of the Electric Grid – OBJECTIVE STANDARD

“A degree appears to raise earnings in the sex industry just as it does in the wider labour market.”
The education premium for prostitutes – Tyler Cowen, MARGINAL REVOLUTION

Land of the Free?
Ferguson Unrest Raises Concerns about Militarized Police – RATIONAL BEACON

Not a sentence I thought I’d ever read. “Egypt is pretty much a news oasis in the Middle East at the moment.”
Because You Need It: A Foreign Policy News Sandwich – Amy Peikoff, NEWS SANDWICH

What cease-fire means to Hamas:


“Inequality is dampening economic growth.” Discuss.
S&P’s Fundamentally Flawed Inequality Report – Scott Winship, E21
S&P economists and inequality – John Cochrane, THE GRUMPY ECONOMIST

McCloskey H264 from Institute of Economic Affairs on Vimeo.

“Monetary central planning is failing to achieve Keynesian “escape velocity” because it has deeply impaired the engines of capitalist enterprise.”
The Financialization Of American Business: How Cheap Debt Fuels The Bubble, Not Growth – David Stockman, ZERO HEDGE

“Abenomics–the “new economic policy” in Japan is failing badly. It is a policy of inflation targeting, quantitative easing, government spending and higher taxes. Initially, it seemed to work in that the Japanese stock market rose significantly. However more recent reports find the real economy still stagnating and shrinking."
Insanonomics Failing in Japan – Mark Thornton, CIRCLE BASTIAT

“Irving Fisher fell victim to what I've called "GDP fetishism."
Great Moments in Economic Estimation – David Henderson, ECON LOG

Isn’t it wrong to relocate company headquarters to countries with lower corporate taxes?
Professor Steven Pressman’s Moral Inversion on “Tax Inversion” – Michael LaFerrara, PRINCIPLED PERSPECTIVES

“Ancient-seeming ruins from Olympics past … Greece has struggled to generate revenue from the venues.”
Ten years on, Athens 2004 gives Greece little to cheer – ARCHINECT

More Evidence Undermines the "Out of Africa" Theory of Human Evolution – io9

The product is the best there is. And the dividend isn’t bad.
Renaissance Brewing - Back a Kiwi Business on Snowball Effect – SNOWBALL EFFECT

“Robin Williams was one of many comedians who made people laugh while simultaneously struggling with a personal darkness. Are comics more prone to depression - and if so, why?”
Robin Williams and the link between comedy and depression – BBC

The practical value of philosophy: Stephen Hicks discusses its role in the wars of the twentieth century:

Jaguar has released pics of their new lightweight E-Type project. Wipe up that dribble, readers.

[Hat tip Voices for Reason, Steve Wrathall, Mark Tammett, Hilton Wayne Holder, Anoop Verma, Architizer, Gena Davidovich, Stephen Hicks, Alex Epstein, Jeff Perren Novelist, ElderOfZiyon, Heartland Institute, Jamie Baywood]

Thanks for reading.
Have a great weekend.

PS: Make mine a Renaissance Stonecutter Scotch Ale, thanks.


DotCon Drivel

Guest post from our accidental Invercargill correspondent, Jim Cuttance, who inadvertently stumbled into an InternetMana revival meeting….

The principle message from the savvy new internet party that's going to change everything is: don't change anything.

That's what Auckland school teacher and list no. 3 Miriam Pierard insisted at the InternetMana party's Invercargill show this week.

She assured everybody that education in New Zealand was bureaucratic perfection and new-fangled charter schools would ruin things for young people.

Because, you know, overseas evidence and stuff.

Everybody should know by now that the education department always gets everything right and if they know it don't you should send them to remedial education camps and we've got the tax drones right where we want them, thank you.

Furthermore, only a vote for the savvy new Dotcon party that's going to change everything can make sure education won't change.

Pierard and teacher-cum-lawyer Angela Greensill are driven by the desperate need for more teachers, lawyers and unionists on New Zealand's political left. Because they're just aren’t enough already.

They set the platform for megalog-on jillionaire Kim Dotcom to decry New Zealand's slow internet.

He said it was caused by Telecom's undersea cable monopoly but A-lister and unionist Laila Harre wasn't there to explain why monopolies are bad.

And party no.1 Hone Harawira wasn't there to tell us whether he is still a global warming sceptic.

However, Pierard assured us changing climate is a key youth issue, and the savvy new Dotcom party that's going to change everything is going to stop the climate from changing too.


Plus, I think she's going to feed the kids.

All of them.

Because she's sick of kids dropping dead of starvation in the middle of her climate classes.

I forget why parents have some other priority rather than feeding their kids, but they do, and that’s fair, and it’s not right to ask. And anyway, it's the government's fault and stuff.

OK, I admit I was switching off quite a bit, but if you take anything away from this you know there is a savvy new Dotcom party that's going to change everything.

Or not.


Thursday, August 14, 2014

Seminar: Socialist Calculation Debate


What’s on the agenda at tonight’s Auckland Uni Economics Group seminar? Here’s their update:

One of the great economic controversies of the twentieth century was known as the Socialist Calculation Debate-drawing in thinkers and economists from Vienna to Moscow, and from Warsaw to Chicago—and included at its climax a joke whose punchline was new New Zealand.

Soviet leader Nikita Kruschev entered the debate in 1956 by banging his shoe on the podium at the U.N., telling the west: "History is on our side. We will bury you in fine [goods]. You hear that? Quality!"

In 1971, he repeated the tale in a “kitchen debate” with an American president, saying: "In 7 years we will reach the level of America. When we catch up and pass you by, we'll wave to you."

That never happened. What happened instead, in 1989, was the economic collapse of the entire creaking basket case that was the Soviet Bloc, whose economy and environment were exposed to the world as a complete and utter bust.

It was a defining moment in twentieth-century history. "Scientific socialism," which started in Utopia and was continued midst bloodshed and famine, was revealed not as a miracle of production (as many mainstream economists seemed to think) but as a complete and utter bust.

The reasons for the collapse were explained all the way back in 1920 by one Viennese hero. In a slim pamphlet that was to shake the economic world Ludwig Von Mises identified the flaw at the heart of the socialist economy, of *any*socialist economy: “The Utopians … invariably explain how, in the cloud-cuckoo lands of their fancy, cooked chickens will somehow fly into the mouths of the comrades, but they omit to show how this miracle is to take place."

In fact, he observed, despite all their rabid invective Karl Marx and his followers had written not one single word explaining how a socialist economy would actually function in the real world, let alone how the promised miracles of production were to take place. And nor could they. Because as Mises pointed out, there is one fundamental economic flaw in the socialist Utopia that means the system can never produce anything but misery--and after decades of debate in 1989 he was finally conclusively proved right.

No wonder Soviet economists eventually insisted a statue to Ludwig Von Mises be placed in a prominent place in Moscow.

Join us tomorrow night to discuss that flaw and some of that history, as we discuss the Socialist Calculation Debate--including several important lessons that debate has for us today.

        Date: Tonight, Thursday, 14 August 
        Time: 6pm-7pm
        Location: Case Room Two, Level Zero, University of Auckland Business School
(plenty of parking in the  Business School basement, entrance off Grafton Rd)

All welcome – economists, non-economists, and real people everywhere!
See you tonight.
And check us out on the web at
our Facebook page.

Hager, rhymes with macabre

Nicky Hager’s thesis appears to be that negative attack politics damages our political system. He makes the case in a book that is a negative political attack, the fourth in a series of attacks he has hoped each time will change an election.

Nicky Hager is a privacy campaigner utterly opposed to government intrusion into private data and communications. Nicky Hager has published four books based on data derived from stolen communications.

Nicky Hager is appalled that some bloggers (Cameron Slater, David Farrar) are National Party members, and are part of National Party campaigning. He is relaxed however about other blogs and bloggers (Martin Bradbury, The Double Standard ) being members of other parties and part of other parties’ campaigns.

Nicky Hager is an unreliable witness.

But so too are the dim bulbs in the mainstream media who allow themselves to be manipulated.

The mainstream media has failed, still, to come to terms with blogs and bloggers -- part of the reason Hager’s claims at this election get traction. The mainstream media and its commentariat section have been ignorant for years about what constitutes objective journalism. Failing to understand that objectivity does not mean neutrality – that even in selecting the facts to report, every journalist necessarily betrays their own position – since the birth of blogs the mainstream has risen up in horror at bloggers broadcasting their own opinions loud and proud in every word, sentence and paragraph they publish.

To bloggers and blog readers, this the pleasure of blogs.  To the mainstream finger-waggers, this is a crime. And not just do bloggers broadcast their own opinions – and none so loudly locally as Cameron Slater – they have the temerity to publish them without the imprimatur of the media’s gate-keepers. This crime, still unforgiveable in some circles, has the MSM ready to convict every time the words Slater and Cameron come up.

I say: note the facts, and beware of hyperbole.

Nicky Hager (rhymes with saga) makes a short story long.  But that is no excuse to make it wrong.

The always-wrong Armstrong for example has already decided Cameron’s openly-boasted-about downloading of documents from an insecure Labour Party website is akin to Watergate – ignoring that Watergate was an amateurish attempted theft that only brought down a president because he tried to cover it up, not a blogger publicly downloading documents the website had made open to the world.

The MSM has mostly accepted unquestioningly Hager’s claim that he is “letting people know about the government” (as he told ZB’s Hosking this morning), yet all he’s told us about, at best, is what some party hacks got up to.  Interesting, maybe; but devastating? Really?

The claims last night that secret SIS dirt on Phil Goff was dished to Cameron to serve up already looks like hogwash: being revealed now as as a claim Cameron was invited to file an Official Information Application to get details of Phil Goff’s briefing by the SIS – a claim some miles down the road of hyperbole broadcast last night, and another already denied by the Whale.

Perhaps the most pathetic of all the claims that have emerged so far (and at the time of writing this, Dim Post seems to have the most concise summary) is the whole chapter of the “explosive” tome devoted to Hager’s belated discovery that David Farrar is an active National Party member and pollster – something evident to most of us since at least 1996 when Farrar was on Usenet, and widely advertised since, not least on the very blog that Hager claims is a National Party front, yet repeated breathlessly this morning by every news broadcast it’s been impossible to avoid. [Farrar answers the hysterics here.]

This is not to totally discount any actual facts that might be found in the book – a book, remember, based on six years of stolen emails, amongst which you’d expect to find at least an interesting tale or two to tell, if you didn’t mind betraying someone’s privacy.

But perhaps the biggest message already from the results of Hager’s carefully-orchestrated document dump is that it’s not a dump at all -- that is, it’s not a dump in the Climategate/Wikileaks sense of dumping a ton of documents online so all the facts can be revealed. Instead, it’s a cherry-picking by Hager of what he considers to be the worst stories imaginable he can spin from the stolen documents.

And if this is the best he can do – if the worst he can say about a collusion between senior government ministers, party staff and high-profile bloggers is that they exchange emails and occasionally post anonymously, then it seems this little country at the bottom of the South Pacific has less to worry about than we might have thought. You know, compared to evidence from, say, the States that the Justice Department there was compiling data from journalists’ phones; that their IRS is actively targeting political opponents of the president; that an opposition film-maker has been jailed based on trumped-up charges …  in the cold light of day I can’t help thinking that by comparison it makes what Hager so breathlessly revealed all seem remarkably benign.

Which I hardly think was the conclusion Hager was inviting us to draw.