Monday Message Board

I’m on the road for a couple of weeks, first on a short visit to the Snowy Mountains, and then going to the Economists’ conference in Canberra. So postings may be infrequent and erratic (that is, more erratic than usual). I hope readers will fill the gap with their views on any topic (as always, civilised discussion and no coarse language please).

5 thoughts on “Monday Message Board

  1. “…going to the Economists’ conference in Canberra.”

    Remind me, what was it that Adam Smith said happened whenever members of a trade got together, even for the most innocent of purposes? (Stipulating for the sake of argument that these purposes actually are innocent.)

  2. Unfortunately, PM, there’s often a bit of a lack of “merriment and diversion” at EcoSoc conferences; economists as a breed tend to have acoountant-like levels of charisma and levitas (JQ, of course, is one of several fine exceptions that stops you sleeping through the sessions).

    IIRC a couple of conferences ago Alex Millnow did propose a contrivance to raise economists’ prices (by controlling supply in the same way medical specialist guilds do). There were too many publicly-minded free market purists there, though, for the proposal to fly. The strategy economists have pursued instead is to broaden the market by colonising other social sciences’ domains.

  3. I thought it would be worth repeating some stuff I put in against the investment issues in the trade talks collapse, so it would also reach a more specifically Australian audience:-

    There’s a mechanism that was once deliberately used very widely but seems to have been forgotten. It may be happening accidentally right here, in the investment issue.

    If you use sound money to achieve overseas investment, them other end gets more production in which you share – they are not losers, as there was real investment. This was approximately the Britain/Argentina case in the 19th century.

    If you just print money to do investment, this is subtly different from “exporting inflation”; your nominal investment is no real investment but it does get you a real wealth transfer, acquiring a revenue stream but only with existing assets that somebody else loses. Effectively, you become an absentee landlord – and then Nassau Senior’s analysis applies. He showed that this hurts primary producers who have absentee landlords more than it would manufacturers, because they don’t claw anything back from containing the value chain as a drip tray (my phrasing).

    This currency rigging was done deliberately by the French in North Africa (and by the Nazis as well, via Vichy who also lost out), and by the Dutch in the East Indies when they financed implementing their “culture system” with a depreciated copper currency. It happened accidentally in the Palestinian Mandate, with Zionist purchases not being free and fair after all; there was no net inflation, as reforms like the commutation of tithes had increased the transaction demand for cash (to pay the tithes).

    It does not seem to be being done deliberately now, even though the US$ is a fiat reserve currency with a chronic deficit. Instead, what is happening seems to match the analogue with New World monetary metal in the 16th and 17th centuries: the Spanish lost their industries when they paid for imports, but they didn’t notice much until they ran out of special status; the far end countries like Poland and Turkey suffered by effectively giving something for nothing; and the middlemen countries like England and Holland acquired enduring resource bases. This seems to be what is happening now, with the primary producer countries transferring resource bases to middlemen countries in the name of foreign investment, while the USA has an interest in pushing for this to prevent the music stopping for its own exporting of inflation. (There’s an analogue there with what Warren Hastings did to Rohilcund, to give a resource base to the princely ruler he really wanted cash from; and of course it was Zionist settlers who incidentally gained from the inadvertent changes in the Palestinian economy, not the British administrators.)

    Oh, and in truly developing countries export facilitation harms the truly poor, those not yet placed in a cash economy and still being squeezed out of subsistence resources. The “poor farmers” there are in fact not the group at the bottom of the heap. It’s only countries like Australia that would truly have an unmixed gain from such reforms.

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