Hayek – left right and centre

My friend Martin Stewart-Weeks points me to this piece by Simon Griffiths which argues that “an engagement with Hayek does not mean a capitulation to the market”. Quite. Indeed it’s always struck me that it’s a pity that Hayek pursued his ideas in such a tendentious way. He had a great critique of the necessary foibles of central planning and he won that debate, even if it took until the fall of the Berlin Wall to really drive the victory home.

I wonder how much this is actually typical of many political philosophers. They start with some ideological intuition they want to support and then produce a set of considerations that tend in that direction. Still I think Hayek’s ideas and sensibilities have plenty of implications that don’t point particularly clearly to the right, implications that Hayek, and sadly, so many of his followers show virtually no interest in. Continue reading

Forging a more encompassing politics: solving the Greek crisis – a thought experiment

greece-v-germanyEveryone is charging into print on the smoking ruin that the Europeans will be leaving Greece after the latest barely believable debacle in which the newly elected government Syriza, after receiving the overwhelming support of its electorate to reject the punitive terms of the payday lending it was being offered went back to Brussels and asked where to sign.

Jeff Sachs makes a good case that the root cause of the problem is insufficiently inclusive institutions. He offers the excellent analogy with the American Articles of Confederation: Continue reading

The Iran nuclear deal: a new détente between the Shi’ites and the non-Muslims of the world?

The Iranian Revolution of the late 1970s meant a huge shift in Middle-East politics and the relation between Islam and the rest. Within a period of just a few months, the ancient civilisation of Persia went from a strong ally of the West, to a committed enemy of Western interests. In the next 35 years, the US became the Great Satan; fatwas were pronounced on Salman Rushdie; and Iran got involved in conflicts from Afghanistan to Lebanon. In reaction, Iran was isolated and economically crippled with sanctions.

Now there is an accord between all the 5 permanent UN security members on the one hand and Iran on the other hand. It is thus not merely the US, but also Russia, China, and Europe that has wanted this deal, which involves a lifting of economic sanctions in return for UN inspectors going to suspected nuclear weapons production sites and Iran getting rid of its stock of enriched uranium.

Looking beyond the nuclear issue, this re-alignment with Shi’ite Iran makes perfect geo-political sense. The non-Muslim world, including Russia and China, finds itself in conflict with predominantly Sunni fanatics in a large number of countries. The Chinese authorities worry about their Muslim Uygur minority which is turning increasingly violent. The Russians are battling Muslim minorities in the Caucasus and in the South-East Siberian rim. France and the UK battle Muslim fanatics both at home, in Africa, in Afghanistan/Pakistan, and in the Middle East. The US pretty much fights Islamic militancy everywhere, cheered on by pretty much every non-Muslim power block.

‘The enemy of my enemy is my friend’, a well-known Arab saying goes, which makes Iran the natural ally of the whole of the non-Muslim world as Iran’s friends have come up against Sunni enemies too in recent years. Continue reading

The Grexit deal, Varoufakis, and anti-greek sentiments

The deal yesterday morning between the Greek PM and the Eurozone Finance ministers is an agreement to reform before talks. By tomorrow evening, the Greek parliament has to accept 4 pieces of legislation on a large range of issues (pensions, labour markets, taxation), after which the other 19 Eurozone countries will start negotiations on another bailout. The European Central Bank has refused any loosening of the conditions for more loans to banks, meaning that Greece will have to keep up its end of the deal whilst its banks are essentially bankrupt and the rest of the countries take their time to negotiate and decide whether they agree with the outcomes.

Any negotiated bailout will need unanimity to go ahead. So the Fins, whose government is dependent on the ‘Real Fins’ who are adamant that there will not be more money going to Greece, would have to agree. The Dutch liberal party PM, who brought a long list of broken Greek reforms to the attention of the Eurozone meeting (backed up by the Slovenians and others) would have to break an election promise not to send any more money to Greece. The German parliament, which is being inundated with stories of Greek corruption in the German press, would have to agree. The Baltic, Irish, and Portugese governments would also have to agree to more money for the Greeks, when the Greeks failed to push through the reforms that they did implement the last 6 years.

Forget it. Not gonna happen. Discussions on whether the reforms are useful or whether they would push Greece into another recession are beside the point: the outside money has dried up and Greece will have to live within its means whilst its government and its banks are bankrupt, so you should see the agreed-upon reforms as the first step of Greece outside the Eurozone. A tragedy for the population of Greece. Continue reading

Three perspectives on the coming Grexit

The Greek referendum and the hype leading up to it have gone exactly according to my script of 8 days ago, where I predicted a resounding ‘no’ vote and a Grexit to stop the bank-run, with the other European politicians too offended and belittled by Tsipras and Varoufakis to organise another bailout.

The Grexit is now very likely, so likely in fact that Varoufakis’ friend Jaques Delors is writing open letters to European newspapers to implore the rest of Europe not to let Greece go!

To get a good view of what has happened in the last 15 years and what is going to happen in the coming months, let us take the perspectives of three fictitious people: that of an informed Greek businessman, that of an informed Dutch politician, and that of an American commentator.

The Greek business man, February 2015

Syriza has just had its moment with a landslide victory in the elections, getting the population to believe that the Eurozone countries will indefinitely support their pensions and welfare, and allow Greece to not reform in any meaningful way. Party time!

The election after-party was great, with lots of Ouzo and olives, but I know it can’t last. The other Europeans might have seemed gullible to the extreme so far, but even they will not want to be to be hung out to dry in the media like saps, month after month. At some point, the EU countries will stop lending money to anything Greek and ask to be paid back something, whether that is a government, a bank, or a business. How to plan for this, what to do?

Let’s think about what I stand to lose if the Greek government starts issuing that awful Drachma again, worth a fraction of the current Euros.

Firstly, my bank accounts in Greece will halve in value, if not worse. So I am going to take out all the money from my deposits and park it in Northern European banks, or Northern European treasury bills. Moreover, I will give my uncle, the bank manager, a call so as to invite him for dinner and discuss the possibility of taking out a long-term loan with his bank, Euros I will then also park in Northern Europe. When the Drachma is re-introduced, we both know his bank will be in terrible trouble as it simply will not have the Euros to pay depositors what they are owed, but he and I will be doing very well indeed as our loans will be converted into Drachmas whilst our assets are still in Euros in Northern Europe. I am going to get rich from this!!!

Secondly, once the Drachma comes back, my holiday resort will have Greek workers paid in Drachmas and foreign guests who want to pay in Euros. That should work just fine and, since I know my workers will then be paid a lot less, I can start to withhold their pay in the months just before the reintroduction of the Drachmas. I will then pay them later in fewer Euros or perhaps not at all if the mess is big enough and I manage to go bankrupt for the fourth time this decade. All the assets are in my 2-year old son’s name anyway, so I should be able to get away with that trick again. By the same token, I can make a deal with my old school-mate who is now a tax auditor so as to delay paying my taxes until just after the reintroduction of the Drachma.

Thirdly, I am going to have to think about all that German beer I stock for the tourists and thus have to pay for in Euros. There has got to be a way I can use the coming Grexit to have my beer and not pay at all. They don’t trust me at all over there in Germany, which means they insist I pay beforehand, but perhaps I can wriggle out of that if I have to for a few months. Oh, I know what to do: I am going to set up a post-office business in the Netherlands via which I then buy lots of beer with credit, which I then transport to my resort. Those post-office businesses provide a means for American companies to hide from their tax authorities, so why shouldn’t I set one up to defraud a German beer company? By the time they find out what has happened and have traced things back to me, all the intermediary companies will be bankrupt anyway and I will have that beer but no need to pay for it.

Now, what other opportunities will open themselves up? Continue reading

Why is a Grexit now likely?

Greece owes the IMF 1.6 billion euro that it doesn’t have but is supposed to pay by tomorrow. Unless the ECB lends it to the Greeks, effectively converting the IMF debt into an ECB debt, Greece is bankrupt tomorrow. In months to come, much bigger debt repayments are scheduled to the ECB-IMF in tranches of 4 billion, and Greece won’t have that money either as its economy is still contracting.

Greece didn’t have the money to pay off the previous debts in the last 5 years either though, and that just lead to more debts in return for symbolic reforms that weren’t implemented.

Why not muddle through then and let the Northern European politicians present a pretend-reform package to their population as a victory? And why would bankruptcy force a Grexit, given that there is no official mechanism to force any country out of the Euro, once it is in?

What is forcing it is the combination of the referendum on the symbolic reforms, together with the bank-run on the Greek banks that has this morning lead to capital controls. Let me explain how the two force a Grexit. Continue reading

Showdown at the Supreme Court corral

Queensland’s judicial system looks to be in quite a bit of strife at present. The former Newman LNP government’s ill-advised appointment of an utterly unsuitable Supreme Court Chief Justice in Tim Carmody is continuing to cause serious problems.

Mercifully, at least Carmody CJ has been belatedly bludgeoned by his judicial colleagues into recusing himself from further hearing an appeal against conviction by Brett Cowan, who was convicted last year of the murder of Daniel Morcombe.  Carmody CJ  grudgingly admitted when pressed that he had held a private meeting with Hetty Johnson, outspoken founder of child sexual abuse lobby group Bravehearts, while considering the Morcombe appeal.  Simultaneously the DPP is appealing Cowan’s sentence as manifestly inadequate.  Daniel Morcombe’s parents apparently don’t agree, but Carmody’s colleagues may have actually done them a favour.  Had he not recused himself, there is a significant probability that an appeal to the High Court on grounds of reasonable apprehension of bias would have succeeded. The Morcombe family would have been faced with a least a couple more years of litigation pressure and lack of “closure”.

Holding private meetings with parties and their associates during court proceedings is one of the classic bases for disqualification on bias grounds. Bias decisions on this ground almost always cite McInerney J in R v. Magistrates’ Court at Lilydale; Ex parte Ciccone [1973] VicRp 10; (1973) VR 122:

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More metadata musing

In answer to my post earlier today about the data retention bill, frequent commenter Patrick Fitzgerald made a rather important point about the data retention zeitgeist:

Embrace the panopticon Ken, buy yourself a webcam, attach it to your head and stream live 24×7. Plus for good measure get a fitbit with GPS and stream that live 24×7 too – that way at least your friends will know as much about you as your enemies, and you may kill at least one enemy through boredom ;)

As it was, I had already made pretty much the same point earlier in the day on Twitter in answer to a tweet from FOI guru Peter Timmins linking an article about the US situation regarding metadata retention.


 

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