Eskom’s fears about rising electricity demand in 2011 bring home a simple lesson: agitating for “services for all” usually means not getting the services in question. My latest Daily Maverick column explores this irony.

You may also have missed a few holiday-season columns. The new year started with a piece on How to hire a hitman in SA. Before that, I was talking about taxis, traffic and road safety, in The oppression of taxis, and Arrive alive and neurotic. Earlier in December, I wrote two columns about WikiLeaks which proved to be sufficiently controversial to spark the interest of a few radio stations: One day we’ll all hate WikiLeaks and Protection of Information Bill and why WikiLeaks is so dangerous.

Hope you’re settling into the new year well. It promises to be a good one.

In Joburg, it’s that time of year again. The cyclists invaded, took over the city, banned everyone else from the road, and had their private lycra-fetish party. Here’s what I think of that.

The laws about seat belts and motorcycle helmets are a direct infringement on your liberty by an overweening nanny state. This week’s column in The Daily Maverick stirred up a great deal of emotional response: Away with fascist seatbelt laws.

While the government talks tough about joining the currency war that has broken out as a result of the collapsing dollar (see my column at The Daily Maverick: Currency: the race to the bottom), I was thinking about the many other grand but ultimately futile ideas government comes up with to plaster over the cracks of past failures. Then I thought how nice it would be for everyone, including the ANC’s own constituency, if the government tried to do far less, but do it well.

In other news, some guy on the interwebs said I called for genocide, and proceeded to point out how barbaric that would be. I quite agree. Well, I would, if there was even a shred of truth in the words he put in my mouth: The algebra has a devil for a sidekick. Cute headline, though.

I thought that headline would grab some attention. It is entirely justified by the ITWeb column on internet pornography censorship above which it appears, methinks: I love my pussy.

Here’s a round-up my latest columns and articles:

The bonsai economy, on The Daily Maverick, prompted by president Zuma’s promises of tighter labour law in his May Day speeches.

The death of an industry, on ITWeb, which celebrates the coming demise of a telecoms sector (least-cost routing) that existed merely because of a temporary market inefficiency.

South Africans rock Texas, which appeared in print in Brainstorm magazine, and contains a detailed report-back from our trip to South by South West, including some pretty cool notes on technology in Africa.

I trust you’ll enjoy reading them as much as I enjoyed writing them.

(For some reason, this wasn’t published when it should have been, last week…)

How long can a columnist avoid the subject of our great leader of youth, Julius Malema? I don’t know. My experiment in this regard came to an end today. So here it is, published by The Daily Maverick. The alert reader will note some evidence that there was some discussion this morning about what the headline should be.

Here’s a great little piece by Jeffrey A. Tucker, the editor of Mises.org, on the delusional and self-serving habit of politicians, journalists and dinner party guests to declare that this or that price movement is a problem, or worse, that it is “unfair”.

I’ll extract the most salient sections from the article:

What kind of theory of the world insists that houses and stocks always go up in price, whereas gas and grain prices always go down? That doesn’t really make sense. A price is not set by natural law, nor are price movements intended to follow a preset pattern like the movements of stars. Prices are nothing but exchange ratios — points of agreement between buyer and seller. They reflect many factors, none of them fixed parts of the universe.

So why do we expect some to rise and some to fall? It all depends on whether you are in the position of a producer or a consumer. As homeowners, we are in fact “producers” of our homes; that is to say, we are holding them with the expectation of someday offering them for sale. The same is true of our stocks. We already own them, so of course we want the price to go up. Then we can sell them at a profit.

On the other hand, on things we intend to buy, things like gas and grain, we want the price to be as low as possible. We want their prices to fall. That way we save resources.

So what’s at work here is self-interest. Think of the same situation from the point of view of someone who is a first-time homebuyer. Does this person want high prices or low prices? Of course the answer is obvious. This person wants the lowest price possible, so for this person this “housing bust” is not a bust at all. It is a boon. But once this person becomes a homeowner, matters change. Now he wants prices to rise.

Now think of the gas station owner. If it didn’t affect how much he sold, would this person want prices to rise or fall? Of course, he wants the highest prices possible.

[…]

It’s the same in all markets. We can see that it is perfectly absurd to attempt to fashion national policy around the interests of only one party to an exchange. To try to keep house prices high and rising cheats the first-time buyer. To keep them low cheats the current owner. To keep grain prices high helps grain producers but hurts grain consumers. Some gas companies might like high gas prices, but consumers hate them. On the other hand, gas prices forced lower by dictate might thrill consumers but producers might end up hurting so much that they shut down. That helps no one.

[…]

There is no way to observe an existing price and declare it just or unjust. As St. Bernardino — a shrewd observer of economic affairs — said,

Water is usually cheap where it is abundant. But it can happen that on a mountain or in another place, water is scarce, not abundant. It may well happen that water is more highly esteemed than gold, because gold is more abundant in this place than water.

The Late Scholastics, followers of St. Thomas Aquinas, all agreed that the just price has no fixed position. It all depends on the common estimation of traders. Luis de Molina summed up the point:

A price is considered just or unjust not because of the nature of the things themselves — this would lead us to value them according to their nobility or perfection — but due to their ability to serve human utility. But this is the way in which they are appreciated by men, they therefore command a price in the market and in exchanges.

[…]

Now, there are ways for a price to become a matter of injustice. It can mask fraud. The prices can result from or be influenced by some act of force, such as price controls or taxation or restrictions on supply and demand. Behind each of these, we find coercion, a body of people who are mandating or restricting in a way that is incompatible with free choice. Arguably, this is not just.

We can conclude, then, that to the extent we complain about unjust gasoline prices, we need to look at the restrictions on refineries or exploration or drilling, or examine the role that high gas taxes have in pushing up prices beyond what they would be under conditions of free exchange.

And as for those who believe that all prices should move in ways that benefit their own particular economic interests at the expense of everyone else, don’t confuse your agenda with a matter of justice. […]

This article makes a nice introduction for the coming week’s project: poking holes in last week’s Financial Mail cover story, Spillover: SA’s response to soaring global oil prices.

Every economist, expert and commentator I’ve seen seems to be flummoxed (and mildly panicked) about food inflation. The question on everyone’s lips is, “What can be done about high food prices?” The answer to that is fairly simple. I asked Thomas Carlyle’s parrot to explain.

Price is a wonderful number. It contains a lot of information, and alerts both producers and consumers to a variety of facts. Examine each of these signals, and you’ll have a fairly good idea whether a perceived problem really is a problem, and if so, what public policy prescription might help.

The first point to make is that the solution to high prices is high prices.

Read the rest of this entry »

Jim Fedako wrote an interesting article over at the Mises blog musing about the nature of accounting in public services. It neatly captures the problem that the public provision of a public good is not meant to be done for profit, so how do you really account for government’s performance? An extract:

Government accounting is a true oxymoron. We can determine the cost of government, but what about the value produced? What is the product? What is its value? What is the bottom line? Of course, these unanswered questions do not stop government from playing business, pretending to create value and profit for society.

[…]

[W]henever government officials speak of fiscal accountability, they are only considering approved budget versus actual spending. They are not referring to worthiness of expenditures, only whether or not they spent revenue according to the budget, with no outright theft of money. Oh, sure, the officials will claim that fiscal accountability means that money was spent on productive activities since, as expected, it is assumed by the governmental entity that only productive activities were approved in the budget. Circular reasoning.

[…]

The implication is that a governmental entity that increases its tax revenue faster than its expenditures is performing a service for its constituents; the entity is achieving a profit for the taxpayers. Conversely, a governmental entity in a deficit cycle is creating a loss for its taxpayers. So, the more a government confiscates, the better off the taxpayers. Does that make sense? Down is up, and up is down. Somewhere, somehow, we ventured down the rabbit hole.

I’m not convinced this is the final word on the subject, but it certainly is food for thought.

Since the pre-9/11 threat of American isolationism and its reversal on that fateful day, American politics has been a bit of a preoccupation in my thinking. In this election cycle, however, I find myself far from sure whom I’d prefer to see stand for election less than a year from now. Seems I’m not alone. Tyler Cowen, over at Marginal Revolution, has the same problem, as he muses in this interesting take on Ron Paul’s candidacy.

It’s true I’m broadly speaking libertarian, and Ron Paul in many ways approximates libertarian positions, but there’s a lot about him that I find discomfiting. Not least among them are his unrealistic stance on the Iraq war (principled though it is), the nationalistic undertone in his talk, and the odds against his winning even a primary, which raises the spectre of splitting votes away from another putative small-government individual-liberty candidate.

It’s true, however, that his Austrian views, and particularly his classical libertarian view on central banking and sound money make him a very interesting candidate to watch. He was on CNN yesterday, talking to Wolf Blitzer, who (some would say appropriately) got to stand in for the faux-news show hosted by starving-and-striking Jon Stewart. It’s not often you hear someone trying to explain sound money versus inflationary currency on CNN.

A frequent theme in political rants, both on the libertarian/anarchist right and the socialist/anarchist left, is the notion of the limited liability company. Usually, the concept of limited liability is defined however it best suits the argument, and usually to negative effect. For example, the film The Corporation (2003) was recently screened on SABC 1 in South Africa. As with most bulk-buy trash, it was a late-night broadcast, and I couldn’t keep my eyes open after an hour and a half of distortion, sly inference, slander, oversimplification, quasi-legal mumbo-jumbo, out-of-context quotation, innuendo, and general anti-capitalist drivel. I’m strong, but not strong enough for 145 minutes of Michael Moore, Noam Chomsky and Naomi Klein all together.

Still, I got the idea: The Corporation, portrayed with sinister madness through a montage of accidents, disasters, lost legal battles, famous frauds, cuts to Hitler and a clever theme of selected crude advertising footage from the 1950s, is evil and dangerous. Worse, you and I are just wide-eyed ingénues too stupid to defend our virtue. For that, we have heroes like Captain Moore, Gnome Chomsky and the Little Gnome. One of the major themes in the film was this notion of (cue dramatic crescendo)… limited liability. It was vaguely interpreted to imply a corporation and the evil people that comprise it — by which they mean everyone above the LOE (line of evility) that you’ll find on every HR (human resources) org chart at about the level of M/CM (middle and compromised management) — gets to deny liability for their actions. In essence, a limited-liability company charter, granted by the evil corporatist government, is a licence to exploit, harm and kill, and exploiting, harming and killing customers and employees is a great way to make money. Or so the illogic goes.

If this kind of thinking is appealing, because you’re either a right-wing anarchist who thinks governments are evil and therefore legal protections granted in corporate law are probably evil too, or you’re a left-wing socialist who thinks corporations are evil and have corrupted government in order to exploit the poor masses, it may be worth reading an excellent essay by Brad Edmonds, over at the Ludwig von Mises Institute, in which he discusses what a limited liability company is and is not, who is and isn’t liable, and on what legal, political and philosophical grounds the concept is based.