It’s Monday, and this week prudentbear.com ran the Hutchinson take on property rights and the brief and likely fatal joys of outsourcing.  The bearish nature of this message runs with the dissident grain and is a clever man’s way of introducing reasonable doubt into the conventional-thinking, mainstream mind.

GW

In a world in which information is an increasingly important commodity and intellect is the principal means of producing such information, David Ricardo’s 1817 Doctrine of Comparative Advantage may no longer be valid.  However the theory that free trade enriches all participants, central to modern globalization, depends crucially on Ricardo, with protectionists being denounced (sometimes correctly) by professional economists as economic illiterates.  What then is an economically literate framework for trade in a post-Ricardo world?

In his 1990 paper “Endogenous Technological Change” economist Paul Romer showed that economic growth is caused primarily by the spread and interaction of information, some but not all of which is “excludable” in that others can be prevented from using it once it’s created.  As an instance of information-driven technological change, he instanced Francis Cabot Lowell’s 1811 industrial espionage on British power looms, through which he created the U.S. textile industry.

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Forced by the suspension of the blog to find some other source of intellectual diversion, and having re-thumbed my entire stock of Chronicles back copies, I hit the TV remote before Sunday lunch and, for my pains, saw (turn away NOW, if you of a squeamish nature) the big, bland face of David Bloody Cameron.

He was being interviewed by John Sopel for the BBC’s Politics Show.  They were fencing with one another about the political flavour of the moment, the Stern Report on climate change.

Now, I readily acknowledge that climate change is the only issue bigger than the survival of Western Man, and I don’t seek to belittle it in any way.  But it wasn’t Cameron’s fine intentions and general planetary high-mindedness that piqued my interest.  It was his repeated refusal to identify holiday air travel as a frivolity that - “if ‘the polluter pays’ is to mean anything” - must shoulder its share of the CO2 burden.  He wouldn’t, he informed Sopel, be the one who told the common man that he can’t have his sun ‘n sangria.

In so doing Cameron revealed himself to be too much of a politician ever to be much of an environmentalist.  He also demonstrated that his abiding concerns are specifically voter-related rather than UK industry-related (ie flightwise, outbound rather than inbound).  In the Opposition’s perfectly understandable struggle to get elected frivolity, it seems, is more important than profits and jobs.  That’s probably a correct strategy.  These days, the economy is not a strong electoral card for the Conservatives and the generality of employment in UK tourism is, anyway, very poorly paid and far too frequently filled by Poles and Filipinos.

So it’s beer and skittles all across the cloudscape to sunny Espagne, and CO2 be damned.  And if the on-line tabloids are a good judge of their own audience, young master Cameron and his pet tarantula are right.

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Sincere apologies to all MR readers and writers for the recurrence of the blog’s suspension by Bluehost.  The issue, as before, is overstepping the CPU limit on our server.  The solution, as before, is a transfer to a high capacity server.  That was promised a month ago.  But we missed out on the 80 slots available on that particular server, and must now wait for Bluehost to build another.

Meanwhile, the blog’s functionality will be further paired back to try to keep us under the CPU limit.  I hope the loading speed will improve as a result and not too much time will pass before Bluehost upgrade us to a server that can deliver the performance we need.

But anything, frankly, will be better than another weekend with nothing better to do than hammer nails into walls.

Apologies again.  Thanks for keeping faith with us.

The European Defence Agency employs a number of analysts whose function is “long vision” - looking into the future of Europe from a defence perspective.  The IHR circularised this summary by EU Business of one of these guys’ reports.

There’s nothing in the demographic aspects of it that aren’t familiar fare to MR readers.  But, of course, the EDA reports directly to the highest echelons of European political life.  EU Business, meanwhile, is well-read by corporate and financial Europe.

These two sectors - fundamentally, the European political Establishment and European finance and capital - don’t get their opinion from VDare or Amren.  But they are getting the raw facts.  What they make of them, however, is another matter.

Here’s the first half of the text from the EU Business article:-

The European Union will become older, poorer and increasingly vulnerable to wide-scale immigration from its neighbours, according to a new European Defence Agency report.

The agency also highlights the problems of increasing unemployment and desertification in its 32-page “long-term vision” for European defence needs which will be presented to EU defence ministers meeting in Finland on Tuesday.

The document, described by one diplomat as “pretty bleak”, is the result of a year’s work identifying the main trends for EU member nations and their defence needs.

The overall picture is of an aging, less prosperous Europe surrounded by regions—Africa, Middle East, Russia—“which may be struggling to cope with the consequences of globalisation”.

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This morning the Telegraph leader demanded a debate about devolution for the English.  This follows on the launch of the pressure group, the English Constitutional Convention, at a meeting in the House of Commons today.

At that meeting the architect of Scottish devolution, Canon Dr. Kenyon Wright, made a clear moral argument for an English Parliament.

English people have a “sovereign right” to a Parliament of their own if they want one, the architect of Scottish devolution has said.

Canon Kenyon Wright said it was “undemocratic” that Scottish MPs could vote on England-only issues but not vice versa.

He said he wanted to see “a strong English Parliament” and a strengthened Welsh legislature.

Opponents say they fear the break-up of the United Kingdom.

But Canon Wright said creating an English Parliament would strengthen the union and “may well save it”.

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Here is Martin’s latest offering at PrudentBear.com.  Subject matter: the highly political global oil economy, following on rather neatly from James’ antennae-twitching piece on hyper-inflation.

Since the recent drop in oil prices, the market appears convinced that we have seen the last of their stratospheric rise – the NYMEX oil futures contract remains under $70 per barrel for the next 2 years, for example. However the free market economists’ theory that supply will always arrive to meet demand increases is pretty shaky in the oil sector, and the market looks likely to be wrong.

In conventional analysis, the surge in demand from the emergence of India and China and a strong economy in the West is believed to be temporary.  Prices may be boosted by an unexpected event such as Hurricane Katrina or the Nigerian oil disturbances, but a sustained period of high prices such as in 2005-06 produces additional sources of oil supply. These take time to appear but eventually satisfy demand and drive prices down to their equilibrium level, currently thought to be in the $25-30 per barrel range.

This analysis may be wrong for a number of reasons.  On the demand side, this is not an ordinary economic boom, but has been “turbocharged” in China and India by the Internet’s one-off enabling of outsourcing to those two countries.  Thus the world’s economic growth is heavily concentrated in China and India, particularly China, rather than in the countries of the West and Japan in which oil demand is relatively saturated. 

The Chinese automobile market has grown from 3.2 million vehicles in 2002 to 7 million in 2006, and is now the second largest automobile market in the world, just ahead of Japan, 40% of the size of the U.S. market and 10% of the world market. Naturally the buyers of these vehicles are going to drive them, since gasoline remains a relatively small part of the overall purchase and maintenance cost of an automobile. Hence gasoline demand in China is rising not by the country’s 10% overall economic growth, let alone by the lesser figure that might be expected as usage becomes more efficient, but by something fairly close to the 22% per annum growth rate of Chinese automobile ownership. 

While Chinese gasoline usage still represents a modest share of world oil demand, if even a small part of the oil market is growing structurally by 22% per annum, the normal effect of higher prices in encouraging conservation and reducing consumption may be swamped. Indeed, that appears to be the case; in 2005 world oil demand increased by 1.2 million barrels per day, in spite of an average oil price around 40% higher than in 2004. Almost all that increase in demand was outside the OECD group of wealthy countries.

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CNN Money reports that:

“The typical double-income family is worse off financially than ever, a study released Thursday said, warning that few Americans have saved enough to brace for financial setbacks.”

The New York Times reports that:

“The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public today. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.”

Slate reports that:

“The dollar’s decline against the euro shows no sign of ending. Clearly, currency traders have made a long-term judgment about the relative value of the currencies of the Old and New Worlds. That sounds bad enough. But now there are signs that we’re losing some of the most devoted fans of the greenback: drug dealers, Russian oligarchs, and black-market traffickers of all kinds.”

These are the key ingredients contributing to my question, posed July 16: Hyperinflation within a year? wherein I proposed it is quite reasonable to expect to see the first signs of hyperinflation within a year due to the in-rushing of dollars no longer considered the world’s reserve currency.  Against this pressure the Fed will not have the option of raising interest rates to the levels it did in the early 80’s since there is no wealth of well-educated, dutiful white kids whose fertility can be destroyed in order to pay for the insane policies that place urbanization above the people as organic reality.  (There was no significant “baby boom echo”—merely open borders.)  Then the game of borrow-now and pay back in future inflated currency, in-turn driving inflation faster upward, that was getting out of hand just before the Volker interest spike, will face no containing powers.

“There are different kinds of truths for different kinds of people. There are truths appropriate for children; truths that are appropriate for students; truths that are appropriate for educated adults; and truths that are appropriate for highly educated adults, and the notion that there should be one set of truths available to everyone is a modern democratic fallacy. It doesn’t work.”

Irving Krystol

Many watchful MR readers will have come across the following court report.  I say watchful because it appeared initially in the most out of the way and journalistically humble place, the Colne News Column of Pendle Today, date 6th October.

Chemicals Find

TWO Pendle men have appeared before Pennine magistrates accused of having “a master plan” after what is believed to be a record haul of chemicals used in making home-made bombs was found in Colne.

Robert Cottage (49), of Talbot Street, Colne, and David Bolus Jackson (62), of Trent Road, Nelson, made separate appearances before the court charged with being in possession of an explosive substance for an unlawful purpose. The offences are under the Explosive Substances Act 1883.

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