Economics - General

Mont Pelerin in Iceland

John Quiggin220 Comments

A reader has pointed me to this fascinating site showing the impact of the Mont Pelerin Society on Iceland. According to the material prepared for its 2005 conference in Reykjavik, the Society’s intellectual influence directly guided those responsible for making Iceland what it is today.

220 thoughts on “Mont Pelerin in Iceland”

  1. #44 Tom, before replying let me observe, as I have done on quite a few occasions, that there were two distinct streams of thought among the advocates of reform in the 1980s and 1990s. One group saw reform as necessary to refurbish and sustain the social-democratic welfare state, and the other as a process that would lead to its replacement by a free-market alternative.

    The former group was dominant in the Hawke-Keating government, though there examples of both (Keating could be found in both groups at different times in his career).

    In the latter group, I would place:

    * Think tanks such as CIS (local offshoot of Mont Pelerin, BTW), IPA and the various WMC front groups such as HR Nicholls Society, Bennelong Group, Lavoisier Group and so on. Prominent individuals associated with these groups have included Peter Walsh, Gary Johns, Nick Greiner, Tony Abbott, Gerard Henderson, John Hyde, Nick Minchin, PP McGuinness and so on. I think you can add plenty more without my help.

    * The IAC/Industry Commission from the late 70s to the early 90s or so (before that, it was focused fairly tightly on industry policy, and from the early 90s onwards it became much less dogmatic than it had been in the past).

    * The Business Council for much of the period, notably when Hugh Morgan was a dominant force.

    * The Liberal party from the end of the Fraser government to Howard’s final recapture of the leadership (by which time he cared only about winning).

    Coming back to the phrase itself, it was of course coined by Paul Kelly, though the idea really belongs to Gerard Henderson who used the less appealing ‘Federation Trifecta’. I’d put Henderson in the second camp and Kelly as someone who fluctuated between the two.

    I hope this helps.

  2. Oldskeptic, nice analogy. Iceland’s pitbull appears to have chewed up everyone’s shoes and s**t on the carpet. I prefer my capitalism to be a bit more like a chihuahua – nasty tempered, but too small to do much damage.

  3. FREE MARKETEERS vs POLICY ECONOMISTS

    Thanks for your reply John. I am not sure that most of the people/groups you have nominated are in fact genuine free marketeers, but let me focus on the only policy economists you mentioned – namely those in the IAC/Industry Commission.

    The IAC started, as you know, with a focus on border protection and it is fair to say that its recommendations were largely for “free [international] trade”. But free trade is not the same as free markets, as you would be aware. We do not know what the IAC thought about labour market regulation, for instance, nor a raft of issues that have been addressed by its successors – such as gambling, housing, health, privatisation and so on. I thus do not know on what basis you believe that the IAC was a free market outfit. Similarly the Industry Commission.

    You say the Industry Commmission and now Productivity Commission has become ‘less dogmatic’ – reports such as gambling, R&D, housing, OHS, and infrastructure access, for instance? – but in fact I would argue that the Commission has applied exactly the same analytical framework to these issues as its predecessors did to the earlier border protection issues. Its just that the market failures in the latter cases are far greater than in the former.

    In any case, your claim – even if correct – was only for the period from the late 70s to the early 90s; that is, up to 15 years ago. Thus, even accepting it at face value, the implication is that your current attacks on free market policies do not relate to the views of the Australian economic policy community.

    Given the nature of the comments in the threads on this blog, that often assume that your attacks against free market reforms and neoliberalism are attacks on policy economists, I think that, at a minimum, it would be worth clarifing this point when you launch your next assault.

  4. Pr Q says:

    According to the material prepared for its 2005 conference in Reykjavik, the Society’s intellectual influence directly guided those responsible for making Iceland what it is today.

    Its not entirely fair to blame the Mont Perelinites for the ills of post-modern capitalism. The ills now besetting the worlds economic system are largely the product of the financialisation of industry. Particularly highly-leveraged fractional reserve banking and top-heavy disintermediated securitisation.

    If anything gold-bugged Libertarians (Eg Rothbard)are exceedingly critical of FR banking. Although they probably would have given securitisation a free-pass on deregulatory grounds.

    The MP Holy Trinity (Hayek, Friedman & Rand) were mainly concerned to criticise the deformities of modern statism ie antiquated nationalised industry, closed shop union featherbedding, unconditional welfare handouts, cripplingly high rates of marginal taxation and inflationary public financing.

    If you want a show-case for the Mont Pelerin society then why not Switzerland? It is definitely a neo-liberal state with relatively low-taxes and stingy welfare. Although it looks like it is about to reap its wages of financial sin it is not an economic basket case.

    But there is no doubt that Iceland drank the New Right’s financialisation, deregulation and securitisation Kool Aid with gusto. It was something of a Nordic poster child for Economic Freedom (EcoFree), improving its Cato EcoFree rating from 54th in 1980 to 10th in 2004. Heritage Foundation ranks it 14th most EcoFree in the world.

    Although EcoFree indices are not really a good predictor of financial crisis. For example Spain is the worst hit USE nation yet no one would name it as a beacon amongst freemarket nations. It is, like Nevada and Queensland, a sunshine sand state with a preponderance of get-rich quick artists.

    And lets not forget that the key factor in exacerbating the US’s housing asset price-bubble was the Clinton-Bush policy of “relaxing credit standards” to promote a big increase in minority home ownersip or the mass provision of cheap private rental accommodation for minorities. The NY Times does the post-mortem of another Bright Idea from President Nimrod:

    He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

    This was deregulatory neo-liberalism alright. But of a distinctly unconservative nature for traditional green-eyeshade bankers used to red-lining uncreditworthy applicants. The result was massive minority foreclosures especially in California, sending the Masters of the Universe securitisers into bankruptcy.

    This suicidal credit policy is not part of the Mont Perelin Society’s New Right manifesto. Instead it can be laid squarely at the door of the New Left, with all its “housing activists” and “community organizers” hustling to get a piece of the action.

    Realistically, the US financial crisis is the product of both wings of post-modern liberalism. This inconvenient fact has been air-brushed out of History by Left-liberals eager to shift all the blame onto their Right-liberal ideological con-freres.

  5. James Surowiecki of the New Yorker has an interesting take on Iceland’s woes:

    So how did Iceland get in so much trouble? That’s the odd part of the story: it isn’t because its banks gambled on the worthless subprime securities that helped undo Bear Stearns and so many others. Iceland’s banks prudently avoided the subprime market, even as they embarked on a lending boom at home and expanded abroad.

    In normal times, this might not have mattered, given the country’s solid economic fundamentals. But these aren’t normal times.

    The subprime crisis, in which investors realized that they had greatly underestimated the risks of lending to people with bad credit, has spawned a wider credit crunch: investors now suspect disaster behind every door, and even seemingly solid borrowers find credit much harder to come by.

    The subprime crisis was an earthquake that caused a tsunami: the quake has done plenty of damage on its own, but the tsunami looks set to do even more. Iceland has been swamped by that tsunami because it trusted in the availability of global credit in time for that credit to evaporate.

    What got Iceland in trouble was something more subtle: its banks got their money primarily from international investors, making the Icelandic miracle heavily dependent on foreign capital. And the fact that Iceland has been so dependent on foreign investors makes those investors even more skittish about investing there: in markets, weakness often begets weakness.

    Further, the country’s troubles have made it a potential target for speculators seeking to drive down the value of its currency and perhaps cause a run on the banks.

    Heavily dependent on foreign lending, housing price bubble, vulnerable to currency speculation…where have I heard of these problems before? Hey wait a minute, that sounds like AUS!

    This is the puzzle for critics of the neo-liberal financial policy: why has AUS so far escaped the worst of the GFC? I argue its our high immigration rate which has propped up the property market. High immigration is itself a neo-liberal policy.

    It would be nice if someone besides me chose to look at these anomalies.

  6. “Why has AUS so far escaped the worst of the GFC.”

    Well as His Bobness would say;

    “Don’t speak too soon for the wheel’s still in spin/ And there’s no tellin’ who that it’s namin'”

    Hmmmm, come to think of it, Dylan wrote some execrable cliche-ridden doggerel didn’t he?

  7. If you want a show-case for the Mont Pelerin society then why not Switzerland? It is definitely a neo-liberal state with relatively low-taxes and stingy welfare.

    switzerland is an anomaly and should not be used in this context,
    it is a secrecy and tax haven that has maintained its strange status by being absolutely amoral,

    i am sure even hayek would not have advocated an economy based on taking a cut from harbouring and transferring the proceeds of death, drugs, prostitution, blackmail and corruption

  8. I feel like I’m taking crazy pills here. How on earth can you blame the current crisis on free markets? How can you call the cozying up of big business to Washington in order to get guarantees so they can take stupid risks a free market?

    Lunacy!

  9. Ben, feel free to take up the offer in #20

    Jack, the MPS picked Iceland as a showcase, not me.

  12. John,

    Have you considered that the problem in Iceland was not in fact a problem with the free market going mad? The problem with the Krona seems to have started when the government of Iceland acted to take over Glitnir.

    Glitnir itself could have easily failed, the assets sorted from the liabilities, the wheat sorted from the chaff and the Icelandic economy could have chugged along happily. The act of the government buying out Glitnir seems to have shaken confidence in the Krona and lead to the collapse.

    Any thoughts on this?

  13. Tom, I don’t think I’ve written anything to suggest that I’m attacking the Australian economic policy community in the sense in which you define it (PC, Treasury, RBA etc). I don’t always agree with them, but I broadly accept your characterization of them as accepting the mixed economy and (RBA at least) aware of the risks in the bubble economy and open to the case for more intervention to stop asset price bubbles. The big changes we’ve seen were largely driven by the global financial sector, backed up by neoliberal ideologues like those I’ve listed.

    Looking at the IAC/IC/PC etc, the gambling report did mark a big shift from the dogmatism of earlier reports (not online unfortunately). But this is ancient intellectual history now, as you say.

  14. Surely the only true laissez-faire environment has to be complete anarchy. Anything less involves regulation. Then the issue is how far can one go with regulation before laissez-faire is impure? The answer is no regulation at all because that is the only way that there is pure and total freedom.

    Freedom to one person, however, can be a prison to another. For one person to gain, another has to loose and freedom is distorted. So the idea of total freedom is mythical.

    The catch with this is that freedom is totally unnatural. Nature, our very substance, is a complex of constraint, and the beauty of life is every thing that becomes possible within those constraints.

    Economies are a natural consequence of our being, and constraint within economies is as necessary as is constraint for our very existence.

  16. Ubiquity says

    “Meanwhile, Mont Pelerin Society dreams of the perfect capitalist world. Iceland has bottomed and the only way is up.”

    So by your logic Ubiquity, in order to get the perfect economy, first we destroy it, to watch it rise like a pheonix from the ashes.

    I dont think so.

  17. Ben S

    You started taking “crasy pills” when you thought free markets were a cure all.
    Ive heard enough nonsense on free markets to last me a lifetime and unfortunately they will last my kids and grandkids lifetimes too. Ive watched labour pushed into unconscionable contracts. Ive watched government services disintegrate because of privatisations (which do a worse job). Ive seen the financial sector grow bloated and heavy with excess. I watched share prices become so much hot air and spin that people have lost the confidence to invest in companies. Ive watched corporate CEOs claim their remuneration is a market based reward for their exceptional talents (for three years at this company and two years here – each time taking huge wads of company profits when they transfer). Ive watched tax havens grow so that it is acceptable and normal for companies who make profits and sell goods in one country to move those profits to a poor nation who is so desperate, even for their savings and the pttance it will bring them, to waive all taxes to accommodate them. Ive watched so called religious people like Tony Abbott suggest the poor or the unemployed shouldnt be assisted in our society. Ive watched single mothers and their children get treated like dirt and plunged into further poverty. I see great ills in society in the name of free markets and de-regulation and the like of those who support so called “monte pelerin” style remedies. These are not remedies at all. They are very destructive. They emanate from the same sort of people in Nazi Germany who thought the Aryans were a superior race and destined to lead. They think their policies will transform us all to their idea of Utopia where they get to be the leaders.o convinced are they of their own selfrighteousness.

    There are 21 million people in this country, not just those who think they are destined to “lead.” To JQ’s list of names I would like to add Rupert Murdoch, and his list of regular contributors. I would like to add Janet Albrechtsen, Id like to add Costello, Howard, Abbott, Devine, Piers Ackerman, Bishop (both), the entire core that supports the unhappy liberal party. Add Angus, the leader of the young liberal brat pack (and add all his unethical vote rigging machinations).

    The entire electorate voted trhem all out resoundingly.

    That is a rejection of them and their views but they and their lackey journalists and whoever they still have inside in plum public servants positions just dont get it. The electorate doesnt want or need Monte Pelerin or any other version of it.
    They want intelligence and common sense and practical skills and balance to lead our economy not any “no compromise” view.

  19. Ok – Bruce. I get your point but I am seriously approaching 1 in my distaste for neo liberalism in terms of what its doing to this country. Forgive me my patriotism, but I cant stand to see these policies actually undoing us. I really dont give a fig about the “grand plan for the globe.”

    Brancors was a heaps better plan but you only get one chance in a generation or two to listen to a very intelligent man – but they didnt listen.

    If only as Oldskeptic commented.

    I just abhor the fact that fools have been deciding important matters ever since.

    What can I say. Godwins law. What Godwins law failed to recognise is that nay time we see evil, we have a natural tendency to raise the subject of Hitler. I dont think thats so bad. Monte Pelerin are not much different. Fanaticism is still with us and wasnt Hitler the perfect eridite example (and fortunately for him, his economic problem just happened to have a perfect victim).

  21. Ok then lets hear what Keynes did have to say…on free markets…

    “I sympathise, therefore, with those who would minimise, rather than those who would maximise, economic entanglement between nations. Ideas, knowledge, science, hospitality, travel…these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and above all, let finance be primarily national.”

    “National Self sufficiency ” , 1933.

    Fools. GFC ? Fools.

  22. FORUM DWELLERS TAKE NOTE: Q ACQUITS POLICY ECONOMISTS

    Thank you John (#63) for confirming the point. I accept that you have not stated that the Australian policy economists have pushed neoliberalism and a free market ideology, but it is clear from many of the responses to your posts that many of your readers have not realised the distinction. Hence my crticisms on the unhinged, Puseyesque nature of much of the discussion in some of the comments threads.

    Regarding the PC’s Gambling report, I would point out that the framework used was essentially the same public economics framework that the Commission has used throughout its existence – chapter 4 sets up a standard markets/market failure/government failure framework, for instance.

    You may say that relaxing the simplifying rationality assumption was a change, but the Commission had gone down this “radical” route well before – for example, in its 1994 report on smoking regulation. These reports used the same broad public economics framework, as I have said, as the other reports undertaken by the Commmission on border protection issues. It is my contention that the Commission’s framework and approach did not change in any significant way; what changed was the subject matter that the Commission was asked to inquire into.

    The same framework also underpinned the National Competition Council’s approach, which, as I mentioned on Andrew Norton’s blog, I had a hand in formulating.

  23. Tom N # 72

    I never found Pusey as unhinged as a lot of so called “economic commentators” in our media as a matter of fact. I find Pusey’s writing refreshingly honest. What I have found more offputting is the attempt to disparage many academics, particularly over the past ten to fifteen years, for being just that.. honest.

    I see the same tone in your disparaging comment about Pusey located nicely next to the word “unhinged.”

    I think thats pretty defamatory actually.

  24. John Q,

    I don’t understand why you have linked to something you wrote in 2006 to disprove that the Krona collapsed in 2008 because of gov intervention.

    Can you explain what you mean by linking to it?

  25. Ben, the linked article notes that the run on the krona began in 2006, well before the nationalisation of Glitnir to which you attributed it (and only shortly after the triumphal MPS conference).

    As a general rule, an event that took place in 2008 (and wasn’t anticipated even a few weeks before it happened) can’t have caused another event that began in 2006. I’m finding it hard to understand how you are finding it hard to understand this.

  26. But John it (the Krona) just wasn’t tanking that hard until the takeover. It took a sharp and dramatic fall once the takeover was announced. The uncertainty seems to have caused the loss of confidence in the Krona.

    So an already somewhat weakened Krona was tipped into collapse by government intervention to fix a problem caused by bad debt that was created (and could only have been created) by government intervention.

    How is this a problem with free markets?

  27. Alice,

    Be wary of labels. They have a dehumanizing effect. Labeling something neoliberal has that effect and means you don’t have to think about where the ideas are coming from.

    A free market is advocated by an eclectic assortment of individuals. From standard issue conservatives right through to Individualist-Anarchists. At it’s core it’s a belief in freedom and equality. That people should be free to do what they please as long as they hurt no one. Classic Liberalism, which is the general sort of philosophy of Hayek et al, is the idea that lives should be lived as free from coercion as possible. That it is immoral for anyone to force people to do their bidding.

    The economic argument is fought on two fronts: Morality and Utility. The moral argument is where I generally sit but it’s kind of seen as a fringe ideal. Most of the people who formed the original Mont Perlerin society feel that free markets are the best thing for society because they provide the best outcome for society as a whole. When you leave as much spending up to the people as possible then you have less waste and the standard of living goes up as a consequence.

    So these men share the same ideals as you. They want a better lot for everyone. It’s just that they have reached a different conclusion about the path to take to get there. Their ideas, contrary to what John Q may say, have been proven to be right. The world marches towards a better world for all of us and it’s thanks to governments giving more and more control back to the people.

  28. Ben, if you want to ignore the evidence and keep on claiming victory for the free market amid its obvious collapse, I can’t stop you, but I’m not going to respond any further.

  29. That’s so weird! I was pretty much about to say exactly the same thing to you John Q. We should buy a lottery ticket or something.

  30. 79# Ben – Include me on the lottery ticket Ben. I think Id do better out of that than I have out of the free market ideologies that have been forced on me in Australia over the past two decades. Better buy a syndicate share for the Icelanders too.

  31. Tom#72

    If you had a hand in formulating that NCP that was pushed throughout the public sector, you ought to be ashamed of yourself. You replaced a better system with an inferior one. You diverted legions of public servants from getting on with providing their helpful services, on a wild goose chase of wasteful, unnecessary and inventive charging of the department next door to theirs and the public. The NCP failed dismally to notice the distinction between public and private purpose and turned the public service into a circus juggling balls.

  32. #72 Furthermore Tom – on Michael Pusey,

    Michael Pusey, Professor of Sociology at UNSW and a Fellow of the Academy of Social Sciences in Australia, was listed in 2005 by the Sydney Morning Herald as “one of Australia’s top 100 public intellectuals.”

    Your comment,

    “Hence my crticisms on the unhinged, Puseyesque nature of much of the discussion in some of the comments threads”

    is a shabby attack on one of Australia’s foremost academics, in an attempt to support of your own questionable policy initiatives.

  33. Alice, you’re not related to Alana, are you?
    I say this partly because she didn’t understand what NCP did and didn’t require either. As for Pusey’s honesty and ranking as an intellectual, I suggest you read Andrew Norton’s piece here.
    Over and out,
    T.

  35. In case somebody has not already mentioned this, but Michael Lewis´ article “Wall Street on the Tundra” in Vanity Fair is worth reading:

    http://www.vanityfair.com/politics/features/2009/04/iceland200904

    In view of all that, it is all the more remarkable that Mishkin and Herbertsson gave a clean bill for Iceland back in 2006:

    Click to access 555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf

    All this is quite extraordinary: anyone in his or her right mind and with some understanding of the speculative bubbles of Nordic countries (Norway, Sweden, Finland) could have predicted the sordid end of the Icelandic flight of fantasy. And yet the Icelandic free market fundamentalists went ahead and found economists crazy enough to cheer them on!

  37. Andrew Norton doesnt even do any research. He just appears to be an outspoken critic of what other much superior academics do. Where is Andrews analysis? Where are his surveys? Where is his data? There doesnt seem to be any but no doubt he locks himself away writing publication after publication (for his sole publisher) on the emporers new clothes. He is one of those offered up as “a doctor” with nothing useful to push except the political ideology of the silly far right (and yes, JQ is correct, The CIS is linked to Monty Pelikan through one of their Australian directors who seems to be the local MP Branch president. Sillier and sillier. I was down at the beach today and saw three of them sitting in a Norfolk island tree branch. It was swaying badly and threatening to break.

  38. That’s surprising, Alice, as the link works from my and other machines. However, since your 186 seems to have a filter on material that might contradict your world view, here is a summary of the key points.

    MICHAEL IN A MUDDLE:
    Michael Pusey’s bungled attack on economic reform
    By Andrew Norton, May 2003

    In his new [2003] book, The Experience of Middle Australia: The Dark Side of Economic Reform, Michael Pusey argues that the economic reforms carried out since the early 1980s have had significant detrimental effects on Australian society. Major newspapers have reported his argument, but there has been little discussion of numerous serious errors of fact and logic.

    • Many of Pusey’s economic claims are incorrect—unemployment has not increased, job turnover is not higher, job security is not lower, small business is not in decline, and real wages have not been held down.

    • Even when Pusey gets his facts right, he wrongly assumes that economic reform caused certain outcomes, and does not consider alternative explanations such as technological advances, social change affecting work participation, varying international trading conditions and increasing levels of education.

    • Pusey misinterprets his own survey data to suit the argument he wants to make. The polling results are often inconsistent with Pusey’s hostility to economic reform.

    • Pusey quotes or cites very few economic reformers, and shows little sign of understanding why economic reform took place.

    • Instead of real explanations, Pusey offers conspiracy theories about ideology and corporate interests. More likely reasons, such as the mostly Labor reforming governments trying to increase employment and maintain social services despite resistance to higher tax, are not considered.

    * * *

    You will find the evidence underpinning these points carefully set out in the article, which can easily be googled if you really can’t link it. The second last point above – about Pusey criticising what reformers have been doing (and why) without actually ever citing or consulting the source of those reform recommendations – is something that I think has been particularly prevalent in the comments on this blog, which is one reason why I have referred to them as Puseyesque.

  39. Right Tom – thats enough for me. The CIS is scurrilous and this hearsay of Nortons “opinion piece” that is not even research but a wailing criticism, when he offers no research on anything himself anywhere, is even more scurrilous. He is a witchdoctor hired as a propagandist by the CIS who is his only publisher as far as I can see (unless you want to include any media pieces).

    I will not be continuing this conversation. I dont approve of the tactics of the CIS and I dont approve of the denigration of real researchers with virulent ideological rants like Nortons. Its a total disgrace, the extent of it that exists in this country. Australian people are not fools even though some with means seem to think they are.

  40. Thanks for the link to the vanity fair piece chacona. From what it says though, these guys were hardly free market fundamentalists. They were…fishermen. Fishermen who believed that they could continue to buy cheap money and make interest on it by buying up assets at inflated prices.

    Somehow or other some people seem to think that free market advocates claim that this won’t happen in a free market. That’s not the case. What does happen though in a free market is things are allowed to bust. Prices find bottoms and bad decisions are punished. This discourages the bad decisions from occurring again. Bailouts only encourage bad behavior and throw the system into disarray.

    It was interesting to read that the government turned the fishing industry into a profitable system by clearly defining property rights though. Well done!

  41. Socrates @48

    I accept I was a little unclear.

    Liberalism is a political ideology/doctrine (as you pointed out). Liberalism is the philosophic next step of the morality of altruism which in the end decends from the overall philosophy of romanticism.

    Conservatism is a political ideology/doctrine. conservatism is the philosophic next step of the morality of capitalism which in turn descendes from several philosophies, but has never been fully defined. Which is why it has so many weaknesses when confronted by romanticism.

    Which brings me back to your point that Aristotle’s suggests two “extremes”, absolute communism vs unfettered capitalism are foolish positions to take. You imply the Social Democratic position seems to try to encapsulate the best of both ideologies, “The middle ground” (correct me if I am wrong). I suggest this is a impossible position to take because of the contradictions between both ideologies.

    The impossibility of these two ideologies coexiting in harmony is evidenced in our current economic climate.

  42. Alice @66

    Iceland economy has imploded ( bankrupt)from what I can understand (and I don’t claim to be an expert on the Icelandic economic woes) as a result of foreign money dissapearing from it banks and economy. It was clearly part of the global economic community and practiced its ” Mt Pelerin like unfettered capitalism” (to the glee of many of the bloggers here) with absolute confidence whilst the rest of the world practiced some sort of democratic socialism.

    Iceland primary fault was not to take into account the weaknesses of the foreign economies it was so dependent on for its prosperity. The irony of the argument for protectionism in “a bit of capitalism and a bit of socialism” managed / mixed global economy.

    Now that Iceland is broke, it continues to practice what it preached. For me the proof in the pudding is who gets going first and how many tents are on the fringes of Reykjavík.

    Alice you said

    “So by your logic Ubiquity, in order to get the perfect economy, first we destroy it, to watch it rise like a pheonix from the ashes.”

    The economy is imploding on itself, we don’t have to destroy it. It isn’t a perfect economy but surely one of the indicators of a successdul economy is the speed of recovery. Iceland will be one the ones first pass the post.

  43. You are correct Alice (#89) that diminishing marginal utility has set in, but in one respect I am surprised that you withdrawing, as the Black Knight always wanted to fight on, regardless of how many limbs had been lopped off.

    Either way, this will be my last word too…

    Regarding Andrew Norton, since you obviously won’t take my word for it, I should point out that Andrew has John’s respect too, I’m fairly certain, as a sensible and solid researcher and commentator. (At least, at a minimum, John has linked to Andrew’s blog and has contributed to discussion on it).

    Moreover, as I mentioned, the evidence underlying Norton’s “scurillous”, “wailing”, “hearsay” critique of Pusey’s book, based on CIS “ideology” – as you variously sought to denigrate it – is actually referred to in his article.

    However, it is clear that there is not much point in trying to tie you down to evidence and reality. In this context, it is worth quoting an extract from the end of Andrew’s article – ironically under the heading The Impossibility of Debate – that you might do well to reflect on too:

    In Pusey’s mind, when reform wasn’t motivated by a desire to further enrich big business, it came from ideology. He says that “our own economic rationalist prescription proceeds from the extreme assumption that economies, markets, money and prices can always, at least in principle, deliver better outcomes than states, governments, and the law”. Aside from a few anarchists with no influence on Australian government, nobody believes this, and no policy proceeds on its basis. If Pusey read in detail what actual economic rationalists say—only four are cited or quoted, and even then only in passing—he would know that the limits of markets are well-known and widely discussed.

    John has effectively endorsed this same point earlier in this thread (at #63), at least insofar as policy economists are concerned but would also, I have no doubt, in relation to people like Andrew Norton – notwithstanding that he sometimes writes for the CIS. By eulogising Pusey as you have, and through your extreme language about Andrew Norton, who your own words reveal that you actually know little about (eg “He just appears to be…”), you rule yourself out of any serious discussion of these issues.

    Alas, you are not the only forum dweller who engages in such unhinged conmmentary. However, you and the other “Al” are together among the more prolific.

  44. Its not just Iceland Ubiquity. But Iceland is a test case for extreme market practices (so is global financial deregulation). So I will not be continuing my discussion with either yourself, Ben or Tom. You people have a very strange view of the world economy and how you think it should be managed (or mismanaged in my view).
    As for the poor Dr Norton – to even say that unemployment has not risen can be disproved in two seconds flat. Dr Norton also doesnt even (conveniently) mention casualisation and underemployment. If half your “entrepreneurial” masters at CIS got on with the job of building widgets, instead of spinning their share prices of spinjets inc up with media nonsense, acquiring and divesting in the same month, to make themselves and mostly only themselves a complete fortune I might have more respect for these Captains of industry and their views. But when they turn into extremely self interested distorters of the facts for short term share price hot air or policy changes (from which they can extract profit through insider knowledge and speed of entry and exit and avoiding sensible and important regulation) I dont have a lot of respect for them at all. They are not true entrepreneurs. Let them build a company and stay in for the long haul in Australia and create jobs and a product that is worthwhile and that everyone here can enjoy even if their personal family wealth is slightly less (then they will have my respect), not argue a case for why they should be allowed to freely outsource labour to India or the slums of Pakistan or Asia and shift subsequent profits tax free to the Seychelles. There are in Australia currently some diectors of businesses working for a dollar a day to preserve their businesses and keep their workers. I take my hat off to those like that – not to these obscenely wealthy fly by nights who think they can run the country via a savage media campaign of distortions and outright lies. I also add, that, many on the list of directors of CIS probably have greater interests overseas and their most enduring interest in Australia is the token spare change they devote to divisive and disturbing media seeking organisations like the CIS. All I would suggest is, “obedience to conscience”, something they CIS dont seem to have in overly large quantities.

  46. Bruce #95 says
    What does “Iceland is bankrupt” mean in principle and in practice?

    The “practice of bankruptcy” of an entire country is apparently something of little concern to Ben and friends and I doubt they could explain its everyday effects on the group of people who actually reside in Iceland (and cannot fly off to the Mediterranean for the summer and ignore the parlous state of their economy).

  47. From about 1995 when I first read Atlas Shrugged, and on ward to my attendance of the Mont pelerin Society meeting in Kenya 2007, I have been of the impression that unregulated markets/small state are the basis of progress and civility. Wwhat happened? I bumped into Francis Fakuyama’s book on State building. It carries the expert insight that the issue at stake isnt what size ought states be, rather whether the state is strong enough to deliver on the primary objectives for which states exist.Its take home suggestion is that it is the combination of a strong state with a bias towards extensive relegation to the market, of tasks the state can only do poorly, which ought to be our supposed focus, and not our hitherto misplaced recipes regarding state and markets. The market and the state, like man and woman, should be married,and not antagonised against each other.We are free and have been free to disenfranchise the authority each commands. To what end?

  48. The market and the state, like man and woman, should be married,and not antagonised against each other

    Exactly – that was the original idea and purpose of the state until some like the Monty Pelicans decided we could do better without any state at all. People and nations like the U.S. spent decdes (and many thousands lost their lives) fighting those who thought the State should own the entire means of production. This is just as bad for their extremist ideas (the private sector should won the entire means of production) have infected the highest levels of government in Western industrialised nations, to the great detriment of the ordinary working man on the street.

  49. Tom#93
    “Andrew Norton – notwithstanding that he sometimes writes for the CIS. ”

    Sometimes Tom? Come now. He is a prolific in CIS publications.

    Anyway, I tried to be polite about it before, but I find both the economic ideas of the Monty Pelicans and CIS tediously boring and empty without any substance, research or rigour at all. Lets be honest about it – their brief isnt research and honesty and a cold impassionate look at what would work in terms of economic policy at all – its about reducing costs for big business (their business costs). No credibility at all.

  50. “The market and the state, like man and woman, should be married,and not antagonised against each other”

    My intial impression of this comment is optimistic with a warm fuzzy feeling. But then..

    I must say, I am not buoyed by this comment after checking out the divorce rates in some parts of the world. I am not sure whose doing the antagonising but I am assuming it is in the hands of the man and woman, market and state.

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