Oliver Kamm

Do-it-yourself economics

'Do-it yourself economics' was a term coined by the economist David Henderson in his Reith Lectures for the BBC in 1985, and is the title of an occasional series in this blog. It refers to notions that are widely accepted - by media commentators, politicians, businessman, clerics and so on - as axiomatic principles of economics yet have not the slightest theoretical or empirical support from that discipline. Most instances have a distinct anti-market bias, though it should be said that economic illiteracy is a politically heterogeneous cause, as the following example illustrates.

The Telegraph reports:

The Government yesterday launched a campaign to persuade hospitals, prisons and schools to buy more British produce, while admitting that European competition law forbids ministers from actually telling people to buy British. Lord Whitty, the food minister, said that British producers should get "a fair crack of the whip" by gaining more of the £1.8 billion that is spent each year on food by the public sector.

Excuse me? I was under the impression that the role of the public sector was to serve the public, not to hand out favours to interest groups. Yet the notion that we must 'Buy British' is so entrenched in our political culture that the chief lobbyist for the sectional interest thus favoured can state his own agenda openly without being hauled up for it by the minister concerned:

Sir Ben Gill, president of the NFU [National Farmers' Union], said: "This is a tremendous opportunity for the British farmer to supply the public sector. For too long the Government has concentrated on the lowest possible price."

If the government isn't concentrating on the lowest possible price, then it's engaged in a dereliction of duty for which Lord Whitty - a former trade union and Labour Party functionary of no known qualifications in public administration, finance or agriculture - should resign immediately. As Paul Krugman - alternately a fine economist at MIT and an execrable political columnist at the New York Times - has made his mantra, the essential lesson of economics is that Things Add Up. If the public sector is paying higher prices than it needs to for food, then someone is paying those prices. The 'someone' in this case is the taxpayer, who - as ever, because the cost is dispersed whereas the benefit is concentrated - ends up being stuffed by a more vocal producer group.

There is nothing inherently patriotic in buying British produce regardless of price, any more than there is in buying British companies' stocks and shares regardless of earnings yield. British agriculture has no more reason to be treated as a protected industry than had uneconomic coal mines 20 years ago. It's a cardinal principle of economics that there is a circular flow of income. Consumers wish to buy goods or services; those who satisfy that demand receive income; they then spend the income on other goods or services, or save it. There is no 'lump of labour' such that economic activity in one sector that is deprived of government support cannot be replaced.

This isn't a doctrinaire notion held only by laissez-faire ideologues. As a Keynesian, I believe government should be prepared to maintain total spending at a level consistent with a target for growth in (nominal) GDP. Nothing in that premise commits me to the view that government should maintain growth and employment at a certain level in a particular sector, still less one that has for so long - regardless of cyclical fluctuations in economic activity - benefited from taxpayer subsidy.

I should have liked to report that the minister was being challenged by a stern and unyielding Thatcherite critique of wasteful public spending. But the modern Conservative Party is in so advanced a state of intellectual chaos that its representation is confined to hoping that the government is in earnest in forcing the taxpayer to subsidise an uneconomic lobby group:

David Liddington, the shadow minister for environment, food and rural affairs, said: "I hope this is more than a gimmick. The public sector should be buying more British food and these large contracts from outside have been going on too long."

I hope the Shadow Cabinet is more than a gimmick, but the countervailing evidence is sometimes too strong to resist.

Red and brown

Tory blogger Matthew Turner observes:

I've not seen much on the blogosphere about the death of French politician Pierre Poujade.

He enterprisingly demonstrates his point by writing nothing else on the subject while linking to The Guardian's obituary. Still, I have something to say about Poujade, the populist, antisemitic demagogue who came to prominence in the French Fourth Republic, and whose movement launched Jean-Marie Le Pen's infamous political career.

The Guardian's obituarist, Douglas Johnson, states, of Poujade's pre-war affiliations:

[H]is political sympathies lay with the extreme right, and he was a follower of the proto-fascist Jacques Doriot.

This is true as far it goes, but - presumably mindful of Guardian readers' sensibilities - Johnson is careful to say nothing else about Poujade's intellectual mentor. Jacques Doriot was in fact a senior figure in the French Communist Party. Having split with the CP (ostensibly, and ironically, because he favoured a 'popular front' with social democrats against fascism) he founded the Parti Populaire Francais, an explicitly pro-Nazi and antisemitic organisation. The PPF claimed a membership of half a million; this was an absurd exaggeration, but the party certainly enjoyed the support of John Amery, the most notorious British traitor after William Joyce ('Lord Haw-Haw'), and who was a noted propagandist for Doriot's programme of the nationalisation of the means of production, distribution and exchange. (Both Amery and Joyce were hanged after the war for treachery, though it has to be said neither sentence ought to have been carried out - Amery was mentally unbalanced, and Joyce, it turned out, held American rather than British citizenship.)

The PPF was by no means the only pro-Nazi organisation of the revolutionary Left in pre-war France; the Mouvement National Revolutionnaire of Jean Rous provided a distinctive Trotskyite variant. And in Germany, Communist collaboration with Nazism long-predated the Hitler-Stalin pact, going back as far as the Prussian referendum in 1931 and the transport workers' strike in 1932.

It's worth recalling this history because some people still believe that the Nazi-Soviet pact was a historical idiosyncrasy rather than a meeting of minds, and that apart from that episode the revolutionary Left provided heroic resistance to fascism. Such romantic notions are, to say the least, not supported by the historical evidence.

New Democrats and Israel

Re: my post earlier today referring to the Canadian apologist for Hezbollah Joe Comartin. A couple of correspondents have asked for further information, and I'm happy to give it.

Comartin is a member of the Canadian House of Commons. He sits for the left-wing New Democratic Party, and earlier this year ran unsuccessfully for the party leadership. His election campaign focused tightly on special interest groups (which was not a bad strategy for an internal party election given how unrepresentative of the voters the New Democrats are), and he targeted one interest group in particular. The Muslim Council of Montreal officially endorsed Comartin's candidature and urged its members to join the NDP in order to support him. This was an integral part of Comartin's campaign, as the registration period required for a party member to be eligible to vote in the election was absurdly short - a matter of a few weeks. His message was wearily predictable, on Iraq (he had recently visited the Baathist regime in order to echo its anti-sanctions propaganda), on the supposed racism of US security policies, and on this issue:

Comartin stated that: "There are elements in the NDP party that would prefer that we not deal with the issue of Palestine and the atrocities committed by the military of the Sharon government, that somehow we take a neutral position."

"I cannot do that as a leader of a political party or as a member of the party," he said.

"We have to speak out when those types of human rights are being violated and those atrocities are being committed."

He invited those in attendance to visit his website (http://www.joecomartinndp.ca) and to read his policies on Palestine.

I did that, not expecting to be surprised. But I was: amid the standard vitriolic imprecations against Israel, and various testimonials to Comartin's stand, was a supporter's reading list. And there, prominent among the recommendations, was Roger Garaudy's notorious work of Holocaust denial, The Founding Myths of Israeli Politics.

Comartin's leadership web site was a personal and not an official party site. It was online purely for the duration of the campaign and has since been discontinued. I therefore wish to record on this site, before the fact is lost forever, that a serious contender for the leadership of Canada's social democratic party made as a central feature of his campaign an outreach to those who believe the Holocaust was a hoax concocted by a Jewish conspiracy.

Comartin would presumably deny knowledge of that book's contents and dissociate himself from those who spread such poison. But that would still be a culpable ignorance, for the signs of intolerance and extremism were there throughout his campaign. Here, for example, is how one Islamist writer promoted Comartin's cause:

Of all the candidates, Comartin has taken the most forthright and principled position on many issues: the question of Palestine, opposition to the US-led campaign to launch a war against Iraq, racial profiling of Muslims and Arabs at the US-Canada border, and an unequivocal denunciation of the B’Nai Brith advertisement [calling for the banning of Hezbollah] in the Ottawa Citizen as hatemongering. He has also criticized the Canadian government for caving in to pressure by banning Hizbullah.

Attacks on Comartin have intensified because the zionist lobby has realized that Israel’s brutal policies are now being exposed and condemned. While the NDP has been in the forefront of this campaign, Comartin’s position has been the most clear-cut. The zionists do not want anyone who can take an independent stand on these issues to become the leader of a major political party in Canada; hence the strength of their attacks.

Readers who are familiar with this type of conspiracy-mongering will recognise the significance of the habitual use of 'Zionist' as a euphemism for a noun beginning with 'J'. I can only note with incredulity, and some distaste, that Comartin is now party spokesman on Multiculturalism, and on his official web site has the impertinence to link to the Simon Wiesenthal Centre and the Stockholm International Centre on the Holocaust.

The New Democrats are a declining force in Canadian politics, having run far into the ideological wilderness over the past few years. (At least they met the British Labour Party ambling in the opposite direction.) And Comartin is clearly not a weighty, intelligent or informed political figure. But his style of campaigning - bluntly, entrist tactics to take over a weak minor party, attracting his support from some of the worst elements on the political fringe - is disturbing, and might work.

Well, fancy that...

War will do more harm than good to the US economy, and it is foolish to suggest otherwise.

Oiling the Wheels of War, leading article, The Guardian, 16 September 2002

Second-quarter gross domestic product, a measure of all the goods and services produced in the U.S., rose at a revised 3.1% annual rate, the Commerce Department said Thursday, higher than the government's initial estimate of 2.4%.... A surge in military spending was a major factor in the strong GDP report.

GDP Revision Shows Economy Grew More Than Expected, Wall Street Journal, 28 August 2003

Time to ban Hamas

Last week the Bush administration banned five charities that serve as financial conduits for the terror group Hamas, based in the West Bank and Gaza. The British government is now pressing the EU to enact an outright ban on Hamas's 'political wing':

A British official told BBC News Online that joint action by the EU would be best but that Britain could act by itself if necessary. The military wing of Hamas is already banned in the EU but there has been resistance to the idea of preventing its political wing from operating. A decision was last discussed by the EU in June but was put off. The timing was not felt to be right given the promising state of the peace process at that time.

You read the last sentence right: the EU felt that cracking down on front organisations for terror would be inimical to a negotiated peace. I throw up my hands in disbelief. Only when Israeli civilians feel safe when they travel on a bus or go shopping - the things that are the stuff of everyday life, but for which reserves of courage are required by Israelis - will a negotiated peace, and a Palestinian state, become a reality. And that requires a serious, good-faith effort on the part of the Palestinian Authority to defeat Hamas.

In the circumstances, the British government's pressure is not before time. The notion that the activities of Hamas can be segregated between the violent and the philanthropic is worse than ill-informed: it's frivolous. The distinction itself is a mainstay of Hamas's propaganda, and is a means by which it draws supporters into terrorism. The ostensibly non-violent activity - the Da'wah - agitates and recruits, provides infrastructure and raises funds. It is the route traversed by men who later become rioters and finally suicide-bombers.

While the EU is dallying, other democracies are not. Canada has hardly distinguished herself in the wider battle against terrorism, but the Chretien government banned both Hamas and Hizbollah at the end of last year, and without indulging any nonsense about differentiating between different types of pro-terror activity. Indeed the Chairman of the Canada-Palestine Association, Hanna Kawas, was moved to write to prime minister Jean Chretien:

The Canadian government's announcement to ban the Palestinian groups Hamas and Islamic Jihad, and the Lebanese group Hizbollah, as 'terrorist groups' is ill advised, biased and outrageous.... It is worth noting that all the military actions of the three above-mentioned groups were carried out against their enemies on the soil of Palestine/Israel in the case of Hamas and Islamic Jihad, and in Lebanon and in cross-border clashes with Israel in the case of Hizbollah. It is well documented that Israeli Government-sponsored terrorism has reached to the four corners of the world.

Thus the campaigners against a ban, from supposedly representative institutions, make no attempt to disguise the fact that they are justifying the activities of the organisations in toto. Given that they regard 'all the military actions' of Hamas et al as being 'carried out against their enemies on the soil of Palestine/Israel', we must assume that these actions encompass the periodic destruction of buses and everyone travelling in them. And the declared 'enemies' include the six-year-olds blown to bits in a pizza restaurant.

That's my point.

Regarding Canada, a minor piece of political trivia - and you'll see that's an apt description for the personality involved - was prompted in my mind by reading the English translation, provided today by the Middle East Media Research Institute, of an article by a Hamas leader, Dr 'Abd Al-'Aziz Al-Rantisi. Rantisi says:

Many thinkers and historians have exposed the lies of the Zionists, thus becoming a target of Zionist persecution. Some have been assassinated, some arrested, and some are prevented from making a living. For example, Jewish associations and organizations have filed lawsuits against famous French philosopher Roger Garaudy, who in 1995 published his book 'The Founding Myths of Israeli Politics' in which he disproves the myth of the 'gas chambers,' saying, 'This idea is not technically possible. So far, no one has clarified how these false gas chambers worked, and what proof there is of their existence. Anyone with proof of their existence must show it.'

Hamas, in short, promulgates the most repellent and bigoted claim to be heard anywhere: that the Holocaust was a hoax concocted by international Jewry in order to squeeze reparations out of Germany. The Holocaust denier Roger Garaudy was put on trial - unwisely in my view - in France and was required to pay nominal damages. (The full text of his book may be found here. Warning: this is extreme antisemitic material posted on a Holocaust-denial web site; I link to it purely for information.) Garaudy is, moreover, hardly a philosopher; he is celebrated in France purely for his longevity and the inconstancy of his beliefs. In the mid-70s he was a Christian-Marxist, basing his beliefs on a naive interpretation of the revolt of the Anabaptist Thomas Muentzer, of whom Engels also wrote uncomprehendingly. Before that he'd been an orthodox Communist. After it he became a Muslim.

One of the few public figures in Canada to oppose the banning of these terrorist groups was a Member of Parliament called Joe Comartin, a recent unsuccessful contender for the leadership of the small New Democratic Party. (The NDP is technically a sister party to the British Labour Party. Its number of MPs barely reaches double figures, however, while its views on globalisation and the war in Iraq are exactly contrary to those of Tony Blair - whom NDP MPs refused to applaud when he delivered a speech to the Canadian Parliament three years ago.) Comartin is known for the extremism of his views on this issue: he even argued in his leadership campaign for a 'right of return' to Israel for all Palestinian refugees from 1948, evidently without knowing or caring that such a step would destroy the demographic character of the Jewish state. Or perhaps he knew perfectly well.

And Comartin certainly isn't careful about his choice of ally. In his leadership campaign web site he posted an extensive selection of his anti-Israel invective, campaign resources and messages of support from the narrow but passionate constituency supporting him. Among that material was a list of recommended reading on the Israel-Palestine issue. And you can see what's coming.... The recommended books included Garaudy's toxic work of antisemitism. Comartin's web site came down quickly after the party election - but not so quickly that I failed to spot this. If any Canadian reader wishes to contact Comartin to ask him what he was doing promoting works of Holocaust denial, I should be interested to know his answer.

In the meantime, I can think of one aspect of the war on terror in which the UK is lagging. We've allowed fund-raising for terror groups to be practised largely unhindered. We should follow Canada's example, and put a stop to it right now.

'If this is competition, they can stuff it....'

Stephen Pollard in The Times captures a glorious instance of old-fashioned paternalism:

When you have a competition between lots of people providing the same thing, prices come down. And what then happens? You have winners and losers. The winners provide the best service at the best cost and the losers don’t. The losers lose customers and go out of business. It’s, er, that simple. And it’s precisely what has been set in train with Directory Enquiries. We call it competition and, as we should have learnt by now, it works better than monopoly.

Not, however, if you are the Consumers' Association, one of the most grotesquely misnamed organisations in the country. According to Dame Sheila McKechnie, its director: 'If this is competition, they can stuff it . . . There should be one central number.'

There's something about British public life: we've never quite shaken off the legacy of a Victorian distaste for 'trade', though we have no compunction about enjoying the benefits. The United States has little trace remaining of this sort of snobbery dolled up as rationalism. Yet I was reminded by Dame Sheila's prejudices of one the most unintentionally depressing utopian schemes ever devised by an American writer: Looking Backward: 2000-1887 by Edward Bellamy. It's a typically 19th-century novel of political exhortation, with naive economic views conveyed by uniformly wooden characters - and in its day, in the late 1880s through to the 1920s, it was astoundingly successful, selling more than half a million copies. Colonies and communes were established to live out its socialist principles, while an entire generation of populist reformers was touched by it.

It tells the story of a wealthy Bostonian, Julian West, who falls into a hypnotically-induced sleep in 1887 and awakes in the year 2000. The entire book is taken up with his sense of wonder at the planned and rational society that now exists in Boston, and the interminable explanations of its workings given by West's rescuer and host, Dr Leete, and Dr Leete's beautiful daughter Edith. In this society the waste of capitalism has been replaced by a cooperative egalitarianism in which there is only one economic enterprise, doing and owning everything. Dr Leete - whose smugness just makes you want to slap him - is constantly chuckling over the innocent questions of his guest, and takes pleasure in explaining such triumphs of a planned society as a single raincovering for the streets that thereby avoids the anarchy of individual ownership of umbrellas. Really. And the amazing thing is that Bellamy - and many others - never once saw the implications for personal liberty if conflicts in society were abolished and superseded by this type of arrangement.

What's still more amazing, though, is that Bellamy's notion that monopoly equals social progress is evidently still alive and kicking in Britain, and claiming to operate on behalf of consumers.

The whole novel is in hypertext here. See which you think is worse: the coherence of the ideas or the quality of the prose. I go for the latter: needless to say, the central character falls in love with Edith Leete and here's how it all ends:

When at length I raised my bowed head and looked forth from the window, Edith, fresh as the morning, had come into the garden and was gathering flowers. I hastened to descend to her. Kneeling before her, with my face in the dust, I confessed with tears how little was my worth to breathe the air of this golden century, and how infinitely less to wear upon my breast its consummate flower. Fortunate is he who, with a case so desperate as mine, finds a judge so merciful.

Case closed.

Those Liberal Democrat statistics

The principal Liberal Democrat Health spokesman (or, in common with the way Liberal Democrats like to present themselves these days, the party's 'Shadow Health Secretary'), Evan Harris, has issued a press release thoughtfully entitled BOOZE DEATHS SOAR WHILE GOVERNMENT DITHERS. In it he declares:

Amongst 13 -14 year-olds, 40% report being drunk or under the influence of drugs when they first had sex.

It took me a while to work out what this factoid could possibly refer to. The answer comes in a briefing published by the charity Alcohol Concern in March 2002. But this is Alcohol Concern's version of the same statistic:

Forty per cent of sexually active [emphasis added] 13 and 14 year olds were 'drunk or stoned' at first intercourse.

Removing the qualifier does alter the meaning of that sentence, and not subtly.

And even when you put it back in, Harris still hasn't checked his source material. Alcohol Concern takes its statistic (and properly references it) from an article by Daniel Wight and others in the British Medical Journal, dated 6 May 2000. The article is entitled, with a degree of geographic specificity that’s hard to miss, Extent of regretted sexual intercourse among young teenagers in Scotland: a cross sectional survey. It's based on data derived from this source:

In 1996 and 1997 a questionnaire was administered to all third year pupils in 24 non-denominational state secondary schools in east Scotland as part of a sex education trial.

The authors at no point extrapolate their findings to England and Wales. You wouldn't know this from Harris's account; the paragraph in which he relates his statistical claims reads in full:

Alcohol abuse causes other problems too - one in seven 16-24 year-olds in the UK admits to unsafe sex after drinking. One in 10 cannot remember whether or not they had sex while drunk. Amongst 13 -14 year-olds, 40% report being drunk or under the influence of drugs when they first had sex. Britain has one of the highest rates of teenage pregnancy in Europe.

And you wouldn't know either that, as the BBC reported in February:

Teenage pregnancy rates across England and Wales have dropped for the third year in a row, official figures reveal.... Overall, teenage pregnancy rates have dropped by 9% since 1998. The Department of Health said this meant 8,000 conceptions in girls under 18 have been avoided. Conception rates have dropped faster in girls under the age of 16, down by 4.5% last year and down by 10% since 1998.

That's still consistent, of course, with Great Britain's having the second-highest rate of teenage pregnancy in the developed world (UNICEF figure). But given that the purpose of Harris's press release is to suggest that the government could have prevented the premature deaths of 'up to 240000 people' from alcohol abuse if only it had adopted Liberal Democrat policies, you would have thought he could at least acknowledge - and give due credit for - equivalent powers of social engineering in the government's wish to reduce the rate of teenage pregnancy.

In truth, I'm a little suspicious of the extent to which government can successfully ameliorate social pathologies such as alcoholism and teenage pregnancy. But you have to share the hopes the Liberal Democrat Health spokesman has invested in his scheme to save hundreds of thousands of lives now blighted by excessive drinking. Here is that scheme in full:

There must be more research into the problem, better information and a structured alcohol strategy.

It has come to this. The party of Gladstone, Lloyd George and Keynes, of the deployment of rhetorical splendour and analytical originality in the service of the reform of state, after reflective study of one of the pervasive problems of the Condition of England, concludes that there must be more research and better information - and a structured strategy. All through the conduit of a politician who neither verifies his statistics, nor renders his sources accurately, nor even checks his prose for sense.

Pakistan's responsibility

Of all the words uttered about the atrocities in Bombay, the most empty come from across the border:

"We deplore these attacks. We condemn all acts of terrorism and I think that such wanton targeting of civilians should be condemned in the strongest possible terms," [Pakistani] Foreign Ministry spokesman Masood Khan said.

Pakistan patently doesn't condemn all acts of terrorism. After her military defeat in 1965, she set her intelligence agency, the ISI, to train Indian and Kashmiri Muslims in terrorist camps, with financial and technical support from Arab countries, notably Libya and Saudi Arabia. (See Walter Laqueur's The New Terrorism, 1999, pp. 150-54, which makes the additional observation that such support received far less publicity than support for similar activities targeted on Israel. Unsurprisingly, sponsors of terrorism are reluctant to be seen to be conducting a proxy war against a militarily powerful state: an adversary that can hit back and has international support is a less tempting proposition than a state that is constantly under rhetorical attack and threat of diplomatic isolation.)

Indian diplomacy has been shockingly inept over Kashmir, while the Hindu nationalists, especially those in Bombay, are as repellent as any force driven by religious intolerance. Neither of those factors absolves Pakistan of responsibility over many years for transforming a territorial dispute in Kashmir into a theocratic jihad. Pakistan does not even dispute having provided material (though not military) aid in the past to the Jammu and Kashmir Islamic Front. India has had strong suspicions also of Pakistani aid to the Harakat al Ansar, an explicitly Islamist group responsible for bombings in the 1990s in New Delhi and elsewhere.

It's as yet unclear who planted the bombs in Bombay, but the presumption must be that Islamist terrorists were at work again. It is no presumption but a matter of record that Pakistan has encouraged that Frankenstein's monster till it has coincided with an international campaign of terror against us and what we stand for. The same message must go to Pakistan, under untrustworthy military rule, as President Bush has rightly given to the Palestinian Authority, a squalid and corrupt autocracy: you may not have built these terrorist fractions, but you fostered them, and you know where they are. Stop dissembling, stop making excuses, and crack down hard.

Those Liberal Democrat forebears

[Liberal leader Sir Herbert] Samuel favoured 'the continuous strengthening of the collective system of control - the active participation in international affairs through the League of Nations and the strengthening of the collective system.' It turned out, however, that he did not suggest British support for Article 16 of the League Covenant. This pledged all members to treat any resort to war against any other member as an attack on themselves, immediately to sever 'all trade or financial relations' with the offending state, as soon as the League Council decided, and to contribute whatever 'effective, military, naval or air force' the Council thought necessary 'to protect the Covenants of the League'. Samuel's speech [to the House of Commons in July 1934] showed no eagerness in this respect; indeed, it was isolationist in rejecting the idea of any British military action.... 'The collective system must be really collective, and there is no reason why this country alone, or even with one or two sympathetic allies, should undertake obligations which really devolve upon humanity at large.' Support for the League became a disguise for isolation when its covenant was to be enforced by 'humanity at large'. Samuel, and the Liberals, seemed then to suppose that Britain could leave international problems to the League to solve.

R.A.C Parker, Chamberlain and Appeasement, 1993.

Feckless and feeble leadership. Isolationism dressed up as concern for collective international decision-making. Indifference to potential military threat. Distaste for confronting dictatorships. British Liberalism has clearly changed radically in 70 years.

Welcome

Welcome to the new site for my blog. I became frustrated with the bugs in the software in the last place, so moved here. Thanks to Jackie for suggesting it. So far as I know, it's not possible to transfer the archives on the old site to this one, so I'll keep the old site up for now. But please adjust Bookmarks and Links.