Monthly Archives: May 2014

Arsonists in charge of the fire brigade

A favourite economic justification for state action is to deal with externalities–the effects on people of some action or transaction that they were not willingly a party to.  The problem with this is that the coercive nature of the state makes it a prime creator of externalities: since it has coercive power, it can force consequences […]

The Jacobin impulse

What makes the decent Left decent is not that it is Left, but what it shares with decent folk who are not of the Left. Failure to grasp that leaves one claiming that any person of the Left is morally and intellectually superior to any person of the “Right”: so Pol Pot is morally and intellectually superior […]

The vicious logic of equality

The Left likes to view itself as the champions of equality, compassion, tolerance and support for the oppressed. As with many people, my most dramatic experiences of the Left are of people who are entitled, self-righteous, vicious and nasty. Some of the latter has been on display in the recent round of commencement addresses in […]

The illusion of free banking

Reading Fragile by Design: The Political Origins of Banking Crises and Scarce Credit by Charles Calomiris and Stephen Haber continues to stimulate. As one comes to appreciate how immense the damage done by central bankers has been–causing the Great Depression, Japan’s “lost decades”, the Great Recession, the Eurozone crisis–[which, I should clarify, is not the subject matter […]

Catholicism against success (bargain keeping monarchies, or not)

Protestant monarchies have a much better survival rate than Catholic monarchies. The ultimate willingness of the British monarchy to support broader rather than narrower social interests–in the Reform Bill crisis of 1832 and Parliament Act crisis of 1911–was in stark contrast to the performance of Bourbon monarchy in 1789-1792, the Hohenzollern monarchy under Wilhelm II (despite his support for protective legislation) or the House […]

An awkward wrinkle in Bagehot’s dictum (or Circeronian public policy)

Bagehot’s Dictum (aka Bagehot’s Rule)—that [in a financial crisis] the central bank provide money at higher interest rates to illiquid financial institutions if they are solvent (their assets are greater than their liabilities) but lets insolvent financial institutions (their liabilities are greater than their assets) fold—has, as it is usually summarised, an awkward wrinkle. Tight monetary […]

Banking privilege as social bargaining: a nice case study

Have been reading Fragile by Design: The Political Origins of Banking Crises and Scarce Credit by Charles Calomiris and Stephen Haber. It is an excellent, and highly readable, history of banking: slides from a presentation explaining the basic thesis of the book are here (pdf). The information in the book also explains a puzzle of economic history. Technologically, the key […]

On the US world-role and the economic rise of China

This is based on comments I made here. The World Bank reports that, on a purchasing power parity (PPP) basis, China’s economy is set to become bigger than the US’s while India has overtaken Japan.  China has declined the honour of being soon the world’s largest economy. The economic rise of China to becoming (at some stage) the world’s biggest economy is the return of […]