The Bear’s Lair: The economics of plague

Boris Johnson’s decision to lock down England again until December 2, is economically and scientifically bizarre. It is based on advice from the faulty mathematicians at Imperial College, who proved to be hopelessly in error when the COVID-19 pandemic first arrived in March. It will damage the British economy, and probably kill more people than it saves. We seem to have completely lost the calm efficiency with which we faced plague outbreaks in 1665. Continue reading

The Bear’s Lair: Back to the politics of Henry Fox

Henry Fox, 1st Baron Holland (1705-74) made £400,000, equivalent to about $100 million today, from the office of Paymaster of the Forces during the Seven Years War. Shortly after his departure, British politics was cleaned up, so that fifty years later statesmen such as Lord Liverpool lost money on 15 years as Prime Minister. In the United States, Presidents such as McKinley, Coolidge, FDR and Truman remained relatively poor men. Yet the post-presidential career of Bill Clinton and now the allegations about Joe Biden suggest that U.S. politics may be reverting to the Henry Fox standard. It is worth looking at what that implies for the quality of government and the people who go into it. Continue reading

The Bear’s Lair: Trump beats Biden or a Bushie.

Calvin Coolidge is not running. Nor is Lord Liverpool, though his ability to win four successive general elections in his own time suggests he could do so now, with only modest policy adjustments. When deciding whom to vote for, we must measure the available candidates, not against perfection, but against the opposition candidate and those their parties might have chosen. Looked at that way, Donald Trump beats a Bush, a Rubio or a Romney hands down, let alone Joe Biden. Continue reading

The Bear’s Lair: Philip II’s lessons for America

For the 244 years of the United States’ independent existence, few would have thought that the country had anything to learn from the ultimate Old World monarchical autocracy, Philip II’s Spain (he ruled 1556-98). Yet as politicians debate the merits of yet another public spending “stimulus” on top of a $3 trillion 2020 deficit, Philip II’s four debt defaults in 42 years of rule come uncomfortably into view. Philip II’s overspending wrecked the power and wealth of Spain, the greatest superpower of its day. No question, his unhappy rule has lessons for the United States today. Continue reading

The Bear’s Lair: The emerging global one-party state

Twenty years ago, I was strongly in favor of globalization. I recognized the theoretical benefits it could bring and believed that poor countries could get richer while rich countries and their inhabitants did not get poorer. Alas, I favored a globalization that we did not get, and that maybe does not exist. Politics, as always, messes up the process; once you take account of politics, it becomes clear that extreme globalization must be fought tooth and nail. Continue reading

The Bear’s Lair: The use and abuse of Supreme Courts

Every economic textbook trumpets the need for the rule of law and will tell you that one major reason for many Third World countries’ poverty is their uncertain legal system and bribery-susceptible judges. Yet to have a rule of law, we need a court system to enforce the law and general agreement on what the law says. Since words can have multiple meanings which change over time, Supreme Courts of some sort or another have been instituted in many countries to interpret them. That is where the trouble starts. Continue reading

The Bear’s Lair: Treason of the billionaires

This summer has seen a rush of billionaires and their companies donating to left-wing causes, or even giving extraordinary amounts of money to the Joe Biden campaign to defeat President Donald Trump. That is their right, of course. But I find it extraordinary that a majority of the world’s ultra-rich are supporting people whose policies would destroy the system by which they rose. It is worth thinking about why they do it. Continue reading

The Bear’s Lair: Springtime for Artificial Hitler

A Harvard Business School presentation on artificial intelligence by Professors Karim Lakhani and Marco Iansiti this week was fascinating but creepy. While the technology is empowering numerous new businesses, most of those businesses seem to be in China. Gradually, as the capabilities of artificial intelligence combined with Big Data sank in, I came to a chilling realization that in the wrong hands, the technology may be very dangerous indeed. We had better make sure our defenses are raised against this possibility. Continue reading

The Bear’s Lair: The rapid dynamism of free markets

In August 2020, under President Donald Trump, the U.S. unemployment rate fell in one month from 10.2% to 8.4%. Under President Barack Obama, the U.S. unemployment rate peaked at 10.0% in October 2009; it then took 27 months, until January 2012, to fall to 8.4%. That is not a commentary on the relative competence of the two Presidents concerned; it is a commentary on the relative efficacy of their economic policies. The free market moves very quickly indeed to restore full employment when disruption has occurred; the regulated and micro-managed socialist market may never restore full employment at all. Continue reading

The Bear’s Lair: The Windmill Effect

Between 1600 and 1795, the Netherlands did most things right to industrialize, yet the country’s industrialization occurred only after 1850. In the 17th century, the Netherlands made a massive investment in windmills, a technology clearly superior to water and animal power, but not readily adaptable for railroads or most industrial purposes. Then later, with industrial windmills predominant, the early steam engines were not sufficiently cost-effective to be worth adopting. This syndrome, of an existing technology becoming locked in and preventing further progress, has occurred elsewhere, and may be hampering us today. Continue reading