Tuesday 25 September 2012

Masters of Money - Hayek

If you ever trawled through my old blog posts (not recommended), then you would not BBC bias being something that frequently comes up. But I was pleasantly surprised last night watching the second episode of Masters of Money by Stephanie Flanders. This episode, based on Hayek, did miss out quite a few details which I think I would have got in, was fair to him. It gives credit to him having predicted the Great Depression and it suggests that his followers predicted the current one (although not making it too obvious).

Hayek's concept of the Fatal Conceit was explained fairly, as was the complication of the market, although the price mechanism explanation was rushed through, meaning that the viewer wouldn't understand the point unless they were already aware of it. The program was also fair when it came to government interventions in the market, and their distorting effects, with money being singled out both by Hayek and by Flanders as the most important. It was great to see. Seeing Ron Paul being listened to without derision or spin on the BBC was marvellous. OUtlining the differences between Hayek and Friedman was also great to see, as the left usually lumps all right-wingers together.I hope to see more like this in the future.

There were of course some typical howlers, like declaring Bush to be a free marketeer (the state growing in size and increasing tariffs are somewhat different to free market positions). Hayek was also described as the most extreme free marketeer, something clearly not true. Rothbard, anyone? The lack of any mention of Mises and the fact that Hayek was a socialist until he read Mises' work as possibly the most disappointing part of the program. The program also resorted to talking to both Mervyn King and Paul Krugman, possibly two of the least useful people to talk to with regards to Hayek and Austrian economics - Krugman probably being the worst economist for mis-characterising the school. Krugman talked about the nineteenth century US as if it was in a state of free banking in an attempt to refute Hayek. Of course Krugman is completely wrong here, with both the First and Second Banks of the US (government chartered quasi-central banks) playing their part early on, government green-backs during the civil war era, the ban on branch banking, and many, many other examples utterly destroying his point. Whilst examples of successful, stable free banking periods abound (Canada during this same period into the twentieth century being a prime example).

Ignoring Krugman, we did get an admission from Merv that economic models are often quite badly wrong. He, and the makers of the program didn't quite connect up the dots on this one for current circumstances, neither were the dots connected for modern QE and Austro-Hungarian money printing (in both cases to buy government bonds).

Overall, there was plenty wrong with the program, but by BBC standards it was pretty fair, and it was a surprise that it was even broadcast in between the Keynes and Marx sessions of the series. I hope to see more like it in the future, perhaps with more in-depth explanation of problems. However, for now, I'll brace myself for Marx next week.

Tuesday 4 September 2012

The Reshuffle is Pointless

As Dan Hannan points out (seemingly doing his usual, one awful post, one great post routine), the reshuffle will really offer no difference either to the coalition or the government as a whole, the mandarins in Whitehall and Brussels still call the shots. Why is there so much coverage? Well, it's easier for the media to talk about differences in the cabinet, and it is easy to follow, unlike the opaque bureaucracies already mentioned.

Even if the changes could make a difference, the pathetic nature of the changes made by Cameron show why nothing will really change under him, whether in coalition, minority or majority government. Osborne is still in a job - having failed to do anything useful except nudge pension reform slightly in the right direction (but nowhere near enough to combat the eventual collapse). He is too weak, and not enough of an ideas man to take anything like flat-tax proposals or closing departments forward. The backbenches have excellent people like Steve Baker and Douglas Carswell who could perform the role, but there are many less controversial ones who could actually sort a few things out. Jeremy Browne could have been an outside bet, and would have thrown the LibDems a hefty bone.

Of course, the LibDems would need some good news to compensate for throwing Cable out, or giving him a non-position like Clarke or Warsi (who are both only kept in to appease certain groups, everyone knows they are both liabilities). However, Cable stays at BIS, red tape will not be cut, the EU will not be challenged and we will continue to lose our global economic standing.

Next up on the list of useless choices is Hunt. He was in a fairly pointless position before (why do we need a 'Culture Secretary'?), and given that we didn't just scrap the department, why didn't he just stay where he couldn't screw up anything serious? Now we have a health secretary who believes in homoeopathy. Given that the Conservatives are generally not trusted by the health lobbies and unions, why did Cameron give them such an easy target? How will that help push through vital reforms (let alone the cuts that really should, but will not occur).

There is one ray of light amongst all this, Owen Paterson. He is apparently supportive of shale gas and sceptical of AGW. Excellent, but can he really do anything to stop the mandarins, Brussels and the rest of his cabinet pushing through more subsidies, wind farms and other tripe? I reckon he is just a sop to "the right" to quieten them down. It might work for a week or two, but once it becomes obvious that there will be no change, the backbenches will be as "rebellious" as ever.

There was never any real change during the reshuffles of the Labour years, there was very little difference when the coalition came in and there will be very little difference from this reshuffle. The same steady decline, weak leadership and the various economic cans being kicked down the road.