First, there is the story of Taiwanese PRC agent Ko-suen "Bill" Moo (慕可舜) in J.Michael Cole's headliner. The man was jailed in the U.S. for attempting to illegally transfer high-end technology from Lockmart to the PRC whilst employed as a defense procurement agent for the Taiwanese Air Force. Upon his release from prison in the U.S. he was deported to Taiwan, arriving at Taoyuan airport last Wednesday, whereupon he somehow gave officers of the NIA's Border Affairs Corps the slip. My comment at Cole's place on the first break of the story:
"A specimen like him has to have expensive handlers."What does he know, and what use might he be to whom now? This is a very interesting story, which could be the making of an enterprising young journalist's career.
Second, there was a featured editorial from a Cato guy, Doug Bandow, with which I largely agree. What I would add to Bandow's prescription that the U.S. government not interfere with the sale of advanced weapons systems to Taiwan is that the leadership in the Taiwanese government ought to be brave and intelligent enough to consider implementing a strategy of social depoliticization as a domestic complement to external defense systems, with both aspects of this broader defense policy aimed at raising the costs of annexation as much as possible. The most important aim within this strategy would be monetary reform, with the abolition, not necessarily of the central bank, but of the laws which prevent private competition in the issue of currency. Perhaps the first aim of such a strategy however (given the likely difficulties with even getting monetary reform discused - though, having said that, see below...), should be the decentralization and even outright removal of State control over education - that would be one of the most valuable State assets that the PRC would attempt to control in any annexation. Put that "asset" out of their reach as far as this is possible to do.
Third, Skidelsky was back (responding to his recent participation in the LSE debate) but this time in more sober appearance than his usual clownish regalia. His argument is not that Hayek's analysis of the business cycle is incorrect per se, but that Hayek "deserved" to lose the debate in the '30s and again today because he does not offer Statists the solutions they would like. He is effectively saying that even if Hayek's explanation is correct, "we" cannot afford the recommendations that follow from his explanation. Yet that claim is itself made on flawed grounds. Here is what he thinks is Keynes' knock-down argument to Hayek:
"As Keynes pointed out, if everyone — households, firms and governments — all started trying to increase their saving simultaneously, there would be no way to stop the economy from running down until people became too poor to save."The problem with that is twofold.
First, it contains the assumption that, were "everyone" to begin saving simultaneously, the economy would collapse - but this assumption is invalid because saving is a response to incentives which are themselves dynamic. As more people begin to save, so the relative costs of saving rise and the relative benefits fall - consumption then becomes more attractive. Of course, a deflationary contraction and liquidation of malinvestments would be extremely painful, but it would be better in the long term than an inflationary collapse - which now seems inevitable.
The second problem with that argument is that it simply assumes the truth of its' own premise, i.e. that government intervention is necessary to manage the market. Yet it is precisely government intervention which distorts the price mechanism and retards the market from functioning with the efficiency with which it would otherwise work.
I say Skidelsky is wrong about the business-cycle, and that his longed for "national investment bank" would be a long-term disaster.
Meanwhile, I hope to have my defense essay finished by next weekend - now that I've said that, it ups the ante on me to actually get it done.
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