2008

With only hours left of 2008, this seems to be a good time to summarise the year that’s gone by, and perhaps to take a quick look at what is coming. Last year, I had this to say about the future:

The defining issues of 2008 will be whether the U.S. will stay in Iraq long enough to ensure continued relative stability; the outcome of the turmoil in Pakistan; whether the protectionist voices will be heard and tariffs increase; what happens in the Balkans over the next 6 months or so, when and if Kosovo declares independence. And, of course, the U.S. presidential election — among many things, expected and unexpected.

It’s always hard to predict the future, and given the financial troubles we’ve had there has certainly been other issues at the forefront. The U.S. has stayed the course in Iraq, and the new administration does not seem to intend to change strategy, so my expectation for 2009 is that things will continue to stabilise, allowing for a substantial reduction in the number of soldiers on the ground. Pakistan on the other hand, remains uncertain and could quickly become problematic. I have no idea what to expect there. The same thing goes for Kosovo and the Balkans; while things appear stable at the moment there are conflicts hidden under the surface. Chances are they can be managed, but it’s quite possible that they will explode in our faces leading to another tragic episode in the region. As for free trade, economic woes are seldom good for it, as people turn to populistic protectionism. I’m not optimistic.

Overall 2008 has not been a particularly good year for liberty, with governments using the financial crisis to increase their scope. There is also the ongoing trend of stronger surveillance, less driven by terrorism fears and rather more by clumsy attempts to adapt legislation to new technology. I’m specifically thinking about copyright protection — a legitimate concern — that has been taken on by a considerable weakening of the protection of the private sphere.

The economic recession will continue far into 2009, perhaps longer than that, but I feel the main danger lies in the regulations that may arise from this. The recession will pass over if left alone, but laws that stifle innovation and risk-taking could well continue to hurt us for decades. In particular it will be interesting to see what approach the Obama administration will take. I’m expecting an overly activist policy, probably along the lines of that of Bush, but with a different rhetorical slant.

In international policy the major challenge will be in dealing with Iran. 2008 has been a lost year, and I fear 2009 could be as well. The key, I believe, to an improved Middle East, will be convincing the Arab countries — especially the smaller but more moderate ones — that it is in their interest to align themselves closer to the West than with Iran. This is a tough challenge, especially while observing the current Iran driven violence in the region. Offering strengthened economic ties might be a good way in, providing a chance for better economic conditions for the citizens of the region while also giving ourselves better leverage in negotiations. Plus, economically speaking, it would provide a net benefit to us. As for the current violence, a cease-fire must first be achieved and Palestinian rocket launching prevented, before fruitful talks can be held. Trying to achieve peace the other way around — by first talking and then asking islamists to stop bombarding Israeli civilians — as a lot of Western media seem to suggest, is entirely backwards.

Overall, one year from now, I think things will largely be what they are. But then again, anything could happen. Personally speaking, I’ve had a really good year, and I hope you have as well. Blogging, unfortunately, has been slow and while I hope to improve I can’t promise anything. Even so, I hope you have enjoyed my scribblings this year, and that you will continue to do so in 2009.

Happy new year!

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Updated software

I just updated the blogging software to the latest version, so if something looks broken please let me know!

Hopefully there will be a couple of blog posts over the holidays, to get some life into this rather sleepy and slow paced blog.

Toilet Paper Money

This sign, photographed in South Africa, says something about the level of inflation in Mugabe’s Zimbabwe.

The Freakonomics Blog, from which this picture is taken, reports that inflation is currently running at 231 million percent. That is an incomprehensibly large number.

The interesting question: How do you go about to get out of it?

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Bilstölder

Kan inte undanhålla er denna pärla, signerad Johan Norberg, appropå regeringens beslut om mångmiljardstöd till de annars inte alltför framgångsrika biltillverkarna här i landet.

Ja, vad ska man säga? Jag har varit utsatt för bilstölder tidigare. Men ingen som har kostat 28 miljarder och bara har mötts av jubel från regeringen, oppositionen, näringslivet och facket.

Det står illa till när även en retoriskt sätt marknadsvänlig regering tror sig framgångsrikt kunna styra ekonomin från toppen.

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Oh dear (or throwing money at failure)

Markets work well because they convey information about what people desire, and how much they are willing to pay for those things. Companies become successful when they serve these desires, and as a result the owners and management become rich. When companies don’t serve these desires they fail, and their owners and management become poor. That is all good and well, as the producer who wants to get rich has a strong incentive to make whatever people want. Thus we get the amazing process of creative destruction, as it was aptly named by Schumpeter.

In light of that, this is rather worrying:

Congressional Democrats and the White House yesterday settled on a plan to rush $15 billion in emergency loans to the cash-strapped Detroit automakers and were working into the night to resolve final disputes over the conditions the government should attach to the money.

Under the plan, unveiled by Democratic leaders, the Treasury Department would cut checks for the car companies as soon as next week. The proposal also calls for President Bush to name a “car czar” to manage a vast restructuring of the firms and restore them to profitability.

There are a lot of things wrong here. Most obviously, if you throw money at a failing company, this weakens the incentive of that company to produce what people want, leading to a slower rate of innovation and a less focused effort to cut costs and be efficient. Also it tempts the company management to put resources into convincing the government to give them money — resources that might otherwise have been spent on building better products.

Then there is the scary prospect of at car czar, who — magically — is assumed to know better than the auto makers, what people want, even though the czar is not risking any of his or her own money. That seems rather unlikely.

The media is doing what they can to encourage this wasteful business of government bailouts, for example by claiming that Nobel Prize winning economist Paul Krugman believes U.S. auto making will otherwise be a thing of the past. According to Dr Krugman himself, that is not his view.

These are indeed worrying times.

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Arbetarrörelsens självbild

Dagens citat:

Ty som de står skrivet i Första Pampebok: På den första dagen skapade arbetarrörelsen Gud till sin avbild.

Det är Johan Ingerö, appropå att den dominerande politiska kraften i Göteborg, avgående ordföranden i kommunstyrelsen Göran Johansson, fått för sig att regeringens brist på entusiasm för att rädda Volvo i själva verket är en konspiration syftande till att ställa stadens sossar i dålig dager. Så måste det självfallet vara …

Jag noterar även att LO:s ordförande Wanja Lundby Wedin blivit riktigt ilsk, när arbetsmarknadsminister Sven-Otto Littorin pressat henne på frågan om varför socialdemokraterna vill göra det avsevärt dyrare att anställa exempelvis en varslad Volvoanställd. Tydligen får man inte betrakta Lundby Wedin som representant för socialdemokraterna — hon är ju LO-bas! Att hon därmed sitter i partiets mäktiga verkställande utskott har inget med saken att göra …

Det vore nog hälsosamt med litet markkontakt.

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