Equality. The False God

Michael Dwyer

China and India poverty reduction

Oxfam has with much clamour announced that next year the wealthiest 1% of the world will possess more wealth than the poorest 50%. The manner and means of their establishing this factoid has been shown nonsense by our friends at the IEA and the Adam Smith. Their metrics would make the graduate intake in Goldman Sachs to fall into dire poverty and there is a widespread suspicion that this is not “if fact” the case.

But what concerns here is not that they should be so incompetent with numbers. Nor that such incompetence to some suggests more a malign intent to deceit than mere dyscalculia. What worries me and should worry anyone who gives money to Oxfam and many other likeminded organisations is that they seem to value equality over the destruction of poverty.

What does it matter to a woman in Chad who no longer has to walk ten miles for clean water if I make a killing on the market. What does it matter to child in Laos who is goes to bed full every night if house prices in London are steepling? What does it matter to the girl working a sewing machine and not in a brothel if I possess seven apple devices? The fact is that the very poorest in the world for the past 20 years have been getting richer at twice the pace of the very richest.

Economic-Growth-in-China_graph-2

By throwing off the chains (to a degree) of the planned economy of Marx and the LSE India and China in twenty five years dragged a billion people out of poverty. The Market, the immoral, dangerous and untamed Market has shown itself to be without question the best if not only tool for taking large numbers of people quickly out of poverty.

And not just there. Finally across Africa the good news is heard. Where the people are allowed to freely trade they make themselves wealthy. They can feed their children, can cure their sick and support their aged parents. No longer is Botswana the lonely beacon of advance across the great continent.

Yet it is precisely this mechanism for poverty destruction that Oxfam disdains and fears. Because the market is not the rain, success falls not on all alike. It inevitably produces inequality and therefore is axiomatically wicked.

But what I find wicked and I use that word deliberately is that one might choose a world which valued equality more highly than a system where though some might be rewarded extravagantly the poverty absolutely was reduced quickly and meaningfully.

global poverty

It might be useful anyway to remind Equality worshippers that in the former Soviet Union and its satellites inequality were in fact much greater than in the West. The party members had their big flats in Moscow, their dachas in the country and access to luxury goods like butter and fresh meat and soft toilet paper.

 

Ps

Same story but different story. I could not help but notice that Pravda Donnybrook (RTE) reported this story first up and with the sentence which began “Oxfam has warned that next year…”

I don’t wish to join the ranks of tin foil hats and illuminati but a national broadcaster must be mighty careful of its language. Warns, not claims or states or predicts. Warns. A story which was a hash of nonsense statistics was given the headline place on our national news and its content basically uninterrogated.

What happens in a planned economy.

What happens in a planned economy.

Trinder on the Industrial Revolution.

By Richard Miller.

 

trinder's bookBarrie Trinder, “Britain’s Industrial Revolution, the making of a manufactring people, 1700- 1870” ( Carnegie Publishing, London, 2012) £19.99

I can not claim to have read, let alone mastered this 676 page volume. But it seems to be so interesting and so important that I should mention it now, and perhaps return to it later, for a more detailed look ( although as always no promises in blogging)

For the present then, let me note three points about this remarkable book. Firstly Trinder’s treatment renders all previous popular accounts of the subject, for example that by T.S. Ashton obsolete.

Also important is the fact that Trinder includes Irish developments in his account. This grows out of the way in which he sees the growth of modern industry taking place within local and regional contexts.

This focus on the particular explains the way in which he more or less ignores general themes such as the impoverishment, or otherwise of the working class during the period in question. While he certainly does not fail to mention such exploitation as went on- and there was a good deal of it- he does not see it as being central to the very complicated, and fascinating story that he tells so well…

But as I say…perhaps more soon. In the meantime, buy this book! Strongly recomended.

The masters of the universe and the great Inflation God

puppets

The Euro falls against the Dollar. To historic lows. Why ? Well it seems that the ECB has been sending out some fairly strong signals that it is going to launch a significant stimulus in the face of the looming threat of deflation. That means it will print money because they are afraid that things folk buy may get cheaper rather than dearer.

 

There are a number of rational responses to this news. Sometimes a good cry can make a fellow fell better. The more contained can have a good hard cynical laugh. Those like me can shake their heads in disbelief and observe that we are truly through the looking glass.

 

I once observed that a government stimulus in an economy like Irelands was much like pissing in a colander. You don’t save the piss and you ruin the colander. Well the fact is this is true pretty well every where, and this fact is well known everywhere. It didn’t work in depression era USA. It didn’t work most recently and spectacularly in Japan and it wont work here. It will drive asset prices and create a big bull market but when the heroin of cheap cash is eventually withdrawn those bubbles will deflate with all the concomitant damage.

fine bonds

But why are we so frightened of deflation anyway? If there is bad deflation and we have it then that is a signal that the economy simply has not yet been allowed to clear the malinvestment  which accrued during the periods of growth. But surely in the modern economy we are surrouded by the joyous miraculous deflationary power of the free market and technology.

 

Every single thing in your house that comes with a plug is cheaper now in absolute terms, not real terms, than it was ten or twenty years ago. Food is cheaper. Travel is cheaper. Books are cheaper. Cars (adjusted for quality) are cheaper. We know all too well the noxious power of inflation yet now our policy makers desire it, a little  just a little inflation to make us feel better. We live in states where saving is now regarded as a dangerous and contemptible activity. It must be punished while those who borrow and get deep into debt are treated with the utmost solicitude and it of them and only them that our dear leaders think when setting the price of money.

 

Recently our friends at the Cato Institute published what was in effect an obit on Keynesian economics. Their brief return to popularity was over; the tide was going out on JMK once more. Would that it were so. The error that Cato makes is to assume that simply because something patently doesn’t work means politicians who have tried everything else won’t try it.

 

It is the nature of Parliaments to be full of people who are there in order to do things. These are active and energetic people. This is our own fault for sending people like that to govern instead of decent lazy sceptics who would do as close to nothing as possible. When bad things happen they run and rush and do. And when all the running and rushing and doing still don’t not have the desired effect they know in their hearts only one thing. Something Must Be Done. Like patients with terminal illness they will abandon the scientific and the rational and return to magic. When very very often what an economy most desperately needs is that they do nothing. And lots of it.

 

Until we return to a time where we elect men and women to Parliament who see their principle duty as being stopping the state from poking around in the lives and affairs of people we will be ruled by a class which will fall back on magic and alchemy rather than admit its own uselessness.

And that is simply why Keynes will never die. Whether or not his theories correspond to reality or have any predictive or curative powers is irrelevant (they don’t). What Keynes provides is a system which needs, indeed demands, experts administrators and politicians and makes them the masters of the economic universe. Such a system will never lose its attraction to the people who rule over us; experts administrators and politicians.