The Long View

A Variety of Bad Ideas

Readers planning on founding their own authoritarian states should consider carefully David Goldman's analysis of why the Iranian nuclear industry proved vulnerable to hacking:

Most Iranian computers...run on stolen software obtained from public servers sponsored by the Iranian government...Even the software that the Iranian authorities use to block Internet access is apparently stolen...Iranians, to be sure, can learn to program as well as anyone else. But a software industry depends on such preconditions as enforceable patents...A country that steals its software cannot build its own, even if the sort of individual who excels at software development wanted to live in Iran. Most of those who can, leave...Iran has so few skilled programmers that it could be that the security services do not have the capacity to distinguish sabotage from incompetence. That may explain why Tehran blames foreign intelligence services for a recent succession of economic reverses, including the near-collapse of the local markets for gold and foreign exchange.

The East Germans had this problem, too. Markus Wolf's security service was as adept at stealing Western computer technology as they were at stealing NATO military secrets, but this tended to discourage the creation of institutions that could develop new technology independently.

These points should apply to China in one way or another. There is a large software industry in China. It exports principally to Japan. Is that chiefly outsourced work, I wonder?

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In the wake of the happy rescue of the Chilean miners, a particularly dimwitted flamewar has broken out about whether government or private enterprise should be congratulated. This from The Huffington Post:

And what made all this possible? A government takeover. The private company that sent those men down thousands of feet to dig for copper and gold could not possibly have funded and organized the rescue operation. So it was taken over by the government of Chile, which spent more than 22 million dollars to get the men out.

No, no, says another set of links. It was all the doing of John Galt and his little subcontractors:

The Center Rock drill, heretofore not featured on websites like Engadget or Gizmodo, is in fact a piece of tough technology developed by a small company in it for the money, for profit. That's why they innovated down-the-hole hammer drilling. If they make money, they can do more innovation.

This profit = innovation dynamic was everywhere at that Chilean mine. The high-strength cable winding around the big wheel atop that simple rig is from Germany. Japan supplied the super-flexible, fiber-optic communications cable that linked the miners to the world above.

Might I suggest that political discourse is in a bad condition when civil society and the state are regarded as mutually exclusive? The effective state is the mark of a healthy civilization. It's like expecting everyone to be literate. The state's effectiveness, of course, is predicated on the existence of a larger society on which it can draw for expertise. None of this should be problematical.

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"Free will does not exist."

"What makes you say that?"

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So the Federal Reserve thinks that what this country needs is a bit of inflation, does it? Martin Hutchinson at Asia Times gives us both history and remedy:

Through the 18th and 19th [centuries], fiat money was regarded as an unfortunate but temporary expedient for poorly run countries, to be replaced by a return to the gold standard as soon as financially possible.

The reversal came after the destruction of World War I, when in a world of rapidly increasing population the gold standard was found to be unacceptably deflationary (because gold supplies could not be increased fast enough to keep up)...In a world where governments were relied upon for unemployment insurance , old age pensions and increasingly healthcare, it seemed natural to trust them to maintain careful control over the money supply...the central confidence problem of a fiat money system was overcome....

A global turn towards money creation would reverse this. It would quickly become obvious that none of the world's major currencies now represented a stable store of value....This collapse of confidence would not restore the gold standard...the official response would probably be some equivalent of German chancellor Gustav Stresemann's 1923 rentenmark scheme...However, the private sector does not necessarily need government in order to act. This week, the first "gold to go" gold-dispensing ATMs in the United States were announced, by which investors will be able to use cash or credit cards [to buy gold]...The next step would be for them to be able to hold gold-denominated bank accounts...governments could find their money creation and management functions entirely dispensed with.

This is not different in principle from monetizing the value of your house through a reverse mortgage. The price of real estate can never go down, can it?

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Climate science aside, the real objection to a cap-and-trade carbon-management regime is that it is a tax-farming scheme. It would do for energy prices what the American system of pseudo-private health insurance does for medical costs.