Erin Go Bragh?

For reasons that are mysterious to those who know Irish history, the Irish think of themselves as an almost uniquely virtuous people. That self-appraisal first became evident when Irish nationalist history began presenting the nation as—in the words of skeptical revisionist historian Ruth Dudley Edwards—“the most oppressed people ever” or MOPE. Since the present age is one that worships the cult of victimhood, the most oppressed people ever have morphed easily into the most virtuous people ever. And because today’s dispensers of accolades of virtue are overwhelmingly woke progressives in politics and culture, the most virtuous people ever were soon encouraged to think of themselves as the most progressive people ever. (Those who would like a bracing corrective to this sentimentality with an edge of amnesia are advised to read the columns of Kevin Myers passim).

Currently essential requirements for internationally virtuous progressivism are a patriotic devotion to the European Union and a passionate attachment to all forms of Green politics. The Irish seem to score higher than anyone else by these tests. Indeed, this last week has seen the Irish government—composed as it is of Ireland’s two major “legacy” parties, Fine Gael and Fianna Fail—demonstrate a bipartisan conversion to the E.U.-backed international consensus that all governments should adopt a minimum corporate tax rate of fifteen percent.

Love it, hate it, tax it.

That conversion represents an astounding reversal of Ireland’s long-term economic strategy of attracting investment from multinational corporations with much lower rates—an economic strategy that has been largely successful and been declared irreversible by both parties many times. Yet it was abandoned with almost no prior debate and almost no subsequent controversy, as Irish Times columnist David Quinn has pointed out.

“Roma locuta, causa finita”—Rome has spoken, the debate is settled—used to be quite literally the motto of Irish governments in the bad old days of De Valera’s Catholic Republic. In the new modern progressive Ireland, however, an almost identically rigid rule—Brussels locuta, causa finita—applies to decisions of the European Union. And that includes decisions that the Brussels bureaucracy has taken but not yet formally managed to get into European law. Why bother when the subject nations prevent their own oppression “by a timely compliance”?

Superficially at least the same seems to be true of Green politics. In the run-up to the COP26 Climate Change Conference in Glasgow, few peoples are as pleased with their own deep-green commitments as those governed from Dublin. As political editor Pat Leahy reported in the Irish Times: Ireland’s Parliament “has passed legislation requiring the Government to reduce carbon emissions by 7 percent a year, leading to a reduction of 51 per cent by 2030.” That’s a massive commitment—one that would impose real sacrifices on ordinary Irish people—but a massive poll last year showed that the voters thought climate change posed a catastrophic threat to them and their way of life. A massive threat justifies making massive sacrifices to keep it at bay, right?

Well, as it turns out, no.

Mr. Leahy reports that according to a very recent Irish Times poll, when you break down massive sacrifice into specific burdens caused by policies the government may soon introduce, people become much less willing to bear the pains. Its general import can be seen in the following examples. Large majorities opposed higher taxes on energy and fuel (82 to 14 percent), making it more expensive to buy cars (72 to 23 percent), higher property taxes for homes that are not energy efficient (69 to 23 percent), reducing the size of the national cattle herd (60 to 25 percent), and running the risk of interruptions of electricity supply (81 to 13 percent.) Even higher taxes on air travel were firmly nixed (53 to 40 percent.) In fact the only proposal for greater sacrifice that got an actual majority (60 to 24 percent) was “allowing more land to be used for wind energy/turbines”—and it’s likely that this idea was supported by landowners who expect to be well-subsidized for their sacrifice and opposed mainly by wildlife enthusiasts. It doesn’t directly affect many other people.

Despoiling the Irish countryside in order to save it.

I don’t suppose that most of my readers will be too shocked by this. Most polls in other countries have similar results, confirming that people’s willingness to make painful financial sacrifices declines in proportion as the reality of the sacrifices increase. Why did the government not notice the same thing?

My guess is that they knew there’d be trouble—just not quite so much trouble—for an understandable reason. When all the major institutions of society (including both major parties and the media) support even a painful policy, controversy over it gets damped down. The voters aren’t alerted to what’s coming down the pike. That’s what happened when Ireland abandoned its lucrative low level of corporate taxation, and government spinmeisters may have calculated it would happen again with Green taxes and higher energy bills.

The difference between the two cases isn’t that abandoning Ireland’s low corporate tax strategy won’t hurt multinational investment, Ireland’s economic growth, and thus the voters’ prosperity. It will hurt all three, but it will do so gradually, moderately, and above all imperceptibly. Higher electricity and property taxes, electricity supply interruptions, and unaffordable vacation flights, on the other hand—well, people notice that kind of thing. And when they do, they conveniently forget that they had once expressed a noble willingness to endure pain to avert climate catastrophe. Instead they doubt that the catastrophe is as urgent as the need to keep their homes heated, their cars running, and their tax bills moderate.

In the next two weeks we’ll have the run-up to COP-26 in Glasgow. We may then see how much raw virtue democracy can take in any country. The Irish are unlikely to feel ashamed by comparisons.

Asking an Over-Burdened Capitalism to Save the World

My boss in my first job in journalism on the Daily Telegraph in London was a genius—a forgotten genius now, alas, because he was known in the trade as “the best editor the Daily Telegraph never had” and those kind of titles don’t pass down the generations. Colin Welch was both a clear-sighted anti-socialist with a sound grasp of economic theory and a wit perpetually fizzing with epigrams and ideas. In a debate in the magazine Encounter with Anthony Crosland, later Foreign Secretary but then Britain’s leading social democratic theoretician, Colin pointed out that the main intellectual flaw in moderate socialism was that it had far too much faith—indeed, unbounded faith—in capitalism.  

Whereas more orthodox leftists wanted to nationalize companies and plan their operations to make them more efficient and profitable, modern-minded social democrats like Crosland accepted that free market disciplines were simply better than state ownership at making companies efficient, profitable, and thus taxable.  

State-owned companies in Britain in the 1960s and 1970s had a distressing tendency to absorb more money in subsidies than they generated in profits and tax revenue. At one point it was estimated that the costs of subsidizing the UK’s coal, steel, and auto industries were equal to the total annual tax revenue from North Sea oil. That kind of thing discredited orthodox socialism and led to Margaret Thatcher’s program of mass privatization in the 1980s that was exported through the world. 

With the collapse of the Soviet Union in late 1991, socialists of all kind had to invent a new definition of socialism, and they came up with one like Crosland's that amounted in theory as well as practice to regulated capitalism.  

Nothing very dramatic there, you may think; capitalism has been regulated since the Victorians. But this kind of regulation went far beyond forbidding the emission of poisonous gases or punishing the man who watered the workers’ beer. Social democrats continued those regulations, of course; indeed, they generally made them heavier. But they also imposed novel regulations under two headings.  

The first were regulations designed to control every aspect of how industries would be allowed to operate—what forms of energy they could use, the composition of their workforce, the kind of finance they could raise, etc., etc.  The second regulations required companies to spend their own resources in achieving political objectives for which the government was reluctant to levy taxation.  I covered this use of regulations by governments more fully in my earlier piece Towards the Socialist Corporation.

As Welch had foreseen twenty years before, however, when socialists did this, they were taking for granted that companies would be able to factor in the costs of these impositions more or less indefinitely without collapsing or going bankrupt. They had infinite faith in capitalism and a belief that it would always deliver the goods for them. 

And now the bills are coming home to roost.   

In his consistently original, usually correct, and sometimes scary Wall Street advice column, "True Blue Will Never Stain," Martin Hutchinson looks at how the first set of regulations has obstructed the development of three large economic development projects—exactly the kind of project that are necessary if we are to keep our economy moving forward and delivering growth (even at today’s anemic rate of productivity.) 

He points out that the so-called Holy Roman Empire (i.e., broadly speaking, Germany before its unification in 1870) was about eighty years behind the Brits and the U.S. in developing its own industrial revolution because of two flaws: its feudal system of land tenure which was only one step up from serfdom, and its system of internal tariffs which obstructed trade and raised the prices of goods in all its subject principalities. There could be no creation of a large “single market” while these absurd economic institutions survived which they did until 1833, after which Germany began its successful catch-up. 

Charlemagne. King of the Franks and Emperor of the Romans.

Why did they survive so long in the light of the fact that they were holding the statelets of the Holy Roman Empire back in a fast-developing world? Hutchinson argues that they were so stitched into the Empire’s legal system and so into the thinking of its people that reforming them seemed inconceivable. Hutchinson then delivers his blow; that in the U.S. today a similar duo is holding back the American economy. It is the combination of aggressive environmentalists and over-powerful lawyers who between them exploit the opportunities that the government’s over-regulation gives to them to halt economic development and to win large legal settlements.  

Hutchinson gives three recent examples:  

  1. "A recent Supreme Court decision allowed the Atlantic Coast pipeline to run under the Appalachian Trail, a lawsuit that had held up the pipeline for years. However, this decision was essentially nullified when Dominion Energy, one of two companies that had been developing the $8 billion project, gave up and sold its remaining natural gas assets to Warren Buffett. Apparently, even with Supreme Court approval, the remaining environmental harassments and legal delays were sufficient to make the project uneconomic.
  2. "In a second case, the $4 billion Dakota Access oil pipeline, which has been opened with oil passing through it quietly for three years, was suddenly blocked by a Washington district court, and prevented from further operation, because of some alleged defect in the pipeline’s paperwork before it was opened. By this decision of a lower court 1,500 miles from the pipeline, the operation of a $4 billion asset will be prevented for an indefinite period, at least 13 months.
  3. "In the third case the Keystone XL pipeline, a major international project which was held up arbitrarily for the entire eight years of the Obama administration, and had slowly been working its way through the paperwork since 2017, was held up by the Supreme Court for yet another environmental review, thus dooming it if Joe Biden should win the November election. "

As Hutchinson concludes, not only are huge costs added to these projects by such delays but they are almost never completed on time, sometimes the delays become cancellations, and some projects are never started because the obstacles to them deter investment in the first place. 

There are three villains in this account, however, not just Hutchinson's two. They are the close-minded, single-issue environmentalists; the aggressive lawyers—as George Gilder has written, “Entrepreneurial lawyers are the cancer of capitalism” -- and the government that makes and sustains the regulations that enable the first two to play their obstructive roles.

What makes the obstructive role of governments so hard to understand is that they are enabling the failure of their signal policies. Both political parties are loudly committed to large infrastructure spending to revive the U.S. economy. But unless they reform the regulations that allow the other two to flourish, they will be spending billions of taxpayers’ money mainly on legal fees, cost over-runs, and abandoned projects.  

It seems so lunatic that it couldn’t possibly be true. Before you say that, however, consider this disturbing fact: governments around the world have steadfastly refused to publish the cost estimates of their promise to move towards carbon neutrality by 2050. Everybody knows that this policy (if it’s ever implemented) would be enormously expensive as well as reducing the standard of living of their populations. Still, it’s telling that governments are nervous about putting an actual figure on it -- as if the voters are so distracted by word inflation that they won't notice words such as horrendous or terrifying unless they're backed up by a statistic.  

So we can understand the reluctance of governments when we learn that one government has done so with results that would alarm a drunken sailor into fiscal sobriety. As the Danish economist and head of the Copenhagen Consensus, Bjorn Lomborg, points out in a New York Post oped, adapted from his new book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet:

Only New Zealand has asked for an independent assessment of the cost of its climate policy. It will cost 16 percent of its GDP each and every year by 2050, making it more costly than the entire New Zealand public expenditures for education, health, environment, police, defense, social protection, etc. (My italics.) 

Lomborg comments reasonably “We need smarter solutions.” For that, however, we would need smarter governments and smarter politicians. What we have are people who think you can pile ever-larger burdens on capitalism, progressively starve it of real investment and opportunities, and then ask it to save the world.