I read blogs, as well as write one. The 'blogroll' on this site reproduces some posts from some of the people I enjoy reading.

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If you tax everyone, send all the money through a bureaucracy, then....

Adam Smith Institute - 5 hours 18 min ago

…then you seem to get less of the output that you were originally trying to engineer in the first place. Leading to the conclusion that perhaps government and bureaucracy aren’t the answer to every problem:

Apprenticeships are falling despite the Government’s introduction of a new levy, the Public Accounts Committee has found. The number of apprenticeship starts dropped by 26 per cent after the apprenticeship levy was introduced, the report said.

In the 2017/18 academic year, there were 375,800 apprenticeship starts, compared to 509,400 in 2015/16, the last full year before the apprenticeship levy was introduced.

The apprenticeship levy forces companies with a wage bill of more than £3 billion to pay 0.5 per cent of it to the Education and Skills Funding Agency (ESFA), which is part of the Department for Education (DfE).

The companies have until April 2019 to draw down the funding, which they must use to take on new apprentices, or train existing staff.

The DfE has failed to make the progress it predicted when it reformed the apprenticeships programme two years ago, according to the PAC report.

It didn’t work under the first set of bureaucratic rules, it didn’t work under the second set of bureaucratic rules as reformed. Perhaps the problem is with bureaucracy and tax as a solution?

Which is to ask Thomas Sowell’s question again. “Compared to what?”

Perhaps it is true that there are insufficient apprenticeships in the country. This might be the manner in which all the Technical Colleges, which used to do the day release schemes, are now universities doing full time grievance studies courses. It is, theoretically at least, possible that the helping hand of government has been giving insufficient bureaucratic support to the endeavour to train Britain’s young.

Once you’ve stopped laughing at the back there we might just try observing reality. More government here has led to a worse outcome. The solution therefore is to have less of that government.

We’re often accused of having a slash and burn approach to government itself which is fair enough for we do have a distaste for it as an institution. Sometimes it’s necessary and we’ll put up with that. But we do also insist that the other side of the idea be given more of a hearing. Sometimes - often - government just isn’t the manner of gaining the end goal. Assuming that the goal isn’t just more government. Thus there are myriad tasks and problems we shouldn’t apply the government solution to. This apparently including how to teach the young of the nation to do something useful.

That is, the Telegraph article should read “Apprenticeships are falling because of the Government’s introduction…”

Categories: Current Affairs

The Real Problem

Blog & Mablog - 10 hours 18 min ago

“We demand to know how a loving God can send anyone to Hell, when the real problem is how a just God could send anyone anywhere else” (Mere Fundamentalism, p. 59).

The post The Real Problem appeared first on Blog & Mablog.

Categories: People I don't know

Money Supply Growth Inches up From March's 12-Year Low

Mises Institute - 11 hours 24 min ago

Money supply growth inched up in April, rising slightly above the March growth level, which was at a 12-year (145-month) low.

In April, year-over-year growth in the money supply was at 1.99 percent. That was up slightly from March's growth rate of 1.92 percent, but was well down from April 2018's rate of 4.32 percent.


The money-supply metric used here — the "true" or Rothbard-Salerno money supply measure (TMS) — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth.

This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler's checks, and retail money funds).

M2 growth rose slightly April, growing 3.84 percent, compared to March's growth rate of 3.77 percent. M2 grew 3.72 percent in April of last year. The M2 growth rate has fallen considerably since late 2016, but has varied little in recent months.

Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slow-downs in rates of money-supply growth.

Moreover, periods preceding recessions often show a growing gap between M2 growth and TMS growth. We saw this in 2006-7 and in 2000-1. The gap between M2 and TMS narrowed considerably from 2011 through 2015, but has grown in recent years.


The overall M2 total money supply in April was $14.6 trillion, and the TMS total was $13.4 trillion.

Categories: Current Affairs

Envy, Inc.

Mises Institute - Wed, 22/05/2019 - 21:45

Presidential aspirant Kamala Harris promises to compel private companies with more than 100 employees to disclose what they pay employees to the Equal Opportunity Employment Commission. Companies that don't pay women "enough" will pay fines until they demonstrate an acceptable level of gender parity. South Bend, Indiana's "Mayor Pete" Buttigieg thinks America needs a federal "Equality Act" to make up for past racism, sexism, and homophobia. Senator Elizabeth Warren champions direct cash payments to black Americans as reparations for slavery. And all of the 2020 hopefuls take great pains to characterize income and wealth disparity as the defining issue of our time.

The ostensible thread connecting all of these public policy ideas is equality. Millions of Americans firmly believe the proper role of government is to make us more equal, and thereby make society more just. Old-fashioned liberal ideas about private property and natural rights barely register in this worldview. And it won't be changed by an election or politician; egalitarianism as an animating political, economic, and social principle is firmly entrenched across the West today. 

Are these proposals rooted in justice, or hatred and envy? Are they presented as an appeal for restitutionary justice, however far-fetched and far-removed? Or do they represent a gross display of cynical politics, an appeal meant to divide? We hate to play amateur psychologist. But after more than a century of progressive claims of good intentions, the results speak for themselves: capitalism and markets increase freedom and prosperity, while political engineering is zero-sum and antagonistic. 

Ludwig von Mises explained so much of what still plagues us today in his underrated classic The Anti-Capitalistic Mentality. Written in the early 1950s, toward the end of Mises's long career, this short book exhibits easier language and faster pace than his earlier works. Having been in the US for more than a decade at this point, one senses a change in Mises's written English. He's more comfortable in his diction and syntax, and utterly unconcerned with staying in his lane as an economist. The surprising result is a normative book about psychology and envy, from a man known for his utilitarian, causal-realist economics.

For Mises, capitalism is private property and markets. It is the engine of civilization, and the hallmark of any society with a natural and healthy "urge for economic betterment." It is the only way to organize society that comports with human nature, promotes peace and social cohesion, and advances material well-being.

So what accounts its constant vilification? Capitalism's critics, no less self-interested than anyone else, must be explainable by their unease and dissatisfaction with life. And envy, no less than a biblical sin, is the source of that unease and dissatisfaction. So while Mises much earlier advanced the concept of "felt uneasiness" in his explanations of praxeology, he goes much further here into an outright examination of the psychological source of that uneasiness.

Why do intellectuals, particularly university professors, resent capitalism? Simple, Mises explains: they resent the higher incomes and prestige of the risk-taking, entrepreneurial widget makers they look down upon.

Why do working class voters resent capitalism? Capitalism provides freedom, Mises tells us, but also imposes responsibility for one's lot in life (a suggestion for which Jordan Peterson is deeply resented on the Left). A more successful sibling or neighbor serves as a reminder of one's failings, and every day presents an opportunity to advance or fall back. This is hardly comforting.

Why do literary and artistic elites, including Hollywood and Broadway, resent capitalism? The consuming public's taste is fickle and fleeting. The sensitive artist's work may go completely unappreciated by middlebrow mass audiences, and even the successful actor may become forgotten after a poorly received film or two.

Capitalism produces bad art? Who is to say, Mises asks, how the tired working class spend their leisure time and money? And with the plenitude capitalism provides, every taste is satisfied. Over time, particular genius like Shakespeare tends to emerge and prevail—albeit not always in time for wealth and fame in the artist's lifetime.

But doesn't capitalism result in other kinds of impoverishment, by making us less happy, more unequal, and crassly materialistic? Again, Mises unapologetically stands his ground: materialism is worthy of celebration; as today's luxuries are tomorrow's affordable middle class necessities. Inequality is meaningless until we grapple with scarcity, the starting point for any economic analysis. Capital accumulation is the only way to alleviate the scarcity that defines our natural world. Happiness is perhaps undefinable and un-measurable, but who among us should have the right to deny an automobile or refrigerator to satisfy a consumer's wish? Why do the anti-capitalists want to forbid the common man his "daily plebiscite"?   

Of course Mises's account of the anti-capitalist mindset did not go unchallenged by critics. The infamous former Soviet spy Whittaker Chambers took to the pages of National Review for a denunciation of the book's "know-nothing conservatism." The Economist magazine (was it ever good?) lambasted Mises's "sad little book" and its caricature of liberalism by a debater of "Hyde Park standard."

But in the intervening 65 years, has Mises's identification of "envy, conceit, ignorance, and dishonesty" among western anti-capitalists proved correct? Did events in the second half of the 20th century, particularly the collapse of Soviet communism, tend to vindicate him? 

Certain sentences like "Under capitalism...everybody's station in life depends on his own doing," and "Under capitalism, material success depends on the appreciation of a man's achievements on the part of the sovereign consumers" will strike some readers as depicting an overly rosy view of American meritocracy. But again, Mises's conception of capitalism is unfettered, not the mixed system of political patronage in the US then and now. His larger point stands: markets and property present the individual with opportunities never before known in human history, while state planning makes us all cogs in a wheel. 

Ultimately, The Anti-Capitalistic Mentality is a defense of dynamic capitalism against the doctrines of both progressives and conservatives. The former would deny average people that most unique and cherished American opportunity, the chance for upward class mobility. The latter seek to protect their own status against the nouveau riche the market disruptors. Both seek to keep people in their place, whereas unbridled capitalism—warts and all—gives them hope with responsibility. 

Mises understood this. Politicians should read him.

Categories: Current Affairs

Central Banks' Forecasts Are Basically Garbage

Mises Institute - Wed, 22/05/2019 - 18:35

Animals are a curious topic in finance, and we find them all over the place. We describe upward, downward or side-ways moving markets as bull, bear or deer markets. We have investment strategies ( "Dogs of the Dow") and trading behavior ( 'dead cat bouncing ') named after pets. We have "pigs" and "wolves" and "ostriches" and Nassim Taleb’s "black swans,"  all of which reflect this tendency to name stock market phenomena after wildlife.

Most people are also aware of central bank language wrapped in similarly zoological terms: hawks and doves refer to central bankers preferring higher and lower interest rates, respectively. In the rest of the economics profession, this animalistic naming trend has been associated with certain iconic graphs, most famously through Branko Milanovic's 'Elephant Graph ' that aims to show how economic growth has been distributed among global income deciles.

Recently, another animal has been called up to serve: the Hedgehog. Over the last decade – or even longer – central bankers have exaggerated their benign impacts on the economy and their forecasts have consistently misjudged its future path. The central bank projections of the most important variables for monetary policy – GDP growth, unemployment and the Fed’s favored inflation metric, the PCE – have been rosier than reality later revealed, over and over and over again.

When graphed, as those projections occasionally are, the erroneous forecasts stick out from the observed reality like the spiky outer armor of hedgehogs. The projection errors of various central banks have thereby given rise to an entirely new derisive class of graphs – I give you the Hedgehog graphs of the Fed, The ECB and the Swedish Riksbank.

The Federal Reserve:

Gaeto & Mazumder’s (2019: p. 22) recent survey of Fed officials’ public predictions show that

When we examine the forecast accuracy scores of the Fed chairs over time, we see that their mean forecast score has been declining over time from about 2 in 1997 (specifically correct forecasts within approximately 2 standard deviations) to about 1 in 2015 (generally correct predictions)

Fed projections of GDP growth repeatedly overestimated the speed of the recovery after the 2008 financial crisis, and the overly rosy trend in growth forecasts has continued:

ook1.png For inflation forecasts , it seems, the hedgehog has turned its spikes sideways, much in contrast to the Riksbank and the ECB that we’ll see below: ook2.jpg

The bottom line in the literature that analyzes Fed prediction behavior seems to suggest that the quality and accuracy of their forecasts have both gotten worse and less specific.

Admittedly, Fed researchers (judged by Summary of Economic Projections data, despite all their technical flaws) are not the only ones whose projections are noticeably off. The Survey of Professional Forecasters , published by the Philadelphia Fed, show a much clearer hedgehog – one that systematically overestimates the Fed’s willingness to hike interest rates, up until the time of the first hike in 2015, at which point SPFs estimations have underestimated the speed of hikes:


Regardless, it is remarkable how the forecasting errors are so uniformly wrong in one direction at a time. But they make for pretty hedgehogs.

The Riksbank

The Riksbank’s projection for where its future short-term interest rate will be has suffered from a similar upward bias for close to a decade:


Indeed, the Swedish financial press has taken to ridicule the Riksbank for its excessively optimistic projections, both regarding price inflation and its own future interest rate. Surveying projections made between 2013 and 2017 for 11 major Swedish institutions (the Riksbank, the 4 largest banks, 3 government departments, 2 major labor market organizations and a retail consultancy), Sweden’s National Institute of Economic Research showed that the Riksbank’s forecasting errors, ironically, are larger for inflation than for other variables. Relative to its forecasting peers, the Riksbank’s accuracy in forecasting GDP is much better than its ability to forecast inflation (the same seems true for the Fed). And surprisingly, it is unbeaten in its forecasts for unemployment. Note, however, that the Riksbank does not have the Fed’s “dual mandate” , and its sole task is to keep inflation at 2% – the very thing it is comparatively worst at forecasting.

The ECB:

The European central bank does not fare any better. According to Zsolt Darvas , senior fellow at the European think-tank Bruegel, the ECB’s “forecasts since [2013] have proven to be systematically incorrect”. Surveying the bank’s Eurozone inflation projections, we again find the optimistic forecasts making up the hedgehog graph’s spikes:


Indeed, the ECB staffers’ overly optimistic view of inflation is strangely enough coupled with an overly pessimistic view when it comes to unemployment , where measured unemployment has continually fallen faster than projections for more than five years. Given a basic Phillips curve assumption, this is of course inconsistent, Darvas notes :


The tendency for many different central banks to systematically fail at forecasting does call into question their future credibility. Indeed, if every single forecast of the past decade has been utterly mistaken, what makes you think that your current forecasts ought to fare any better? And why should the rest of us pay you any attention?

If hedgehogging is unintentional, as Jonathan Newman observed on a few years ago, "their models are junk." If the tendency is intentional, they are just trying to project unwarranted optimism – which is indeed the suggested explanation among those who’ve studied the Fed’s forecasting failures. There is some evidence that private sector actors revise up their growth forecasts when the Fed raises interest rates – concluding, effectively, that the Fed has superior non-public information about the (future) state of the economy. The hedgehog graphs would suggest otherwise.

Finally, a projection track record that consistently errs in the same direction could in principle be amended – adjusted downward or upward by the median of previous' forecasting errors. Indeed, that's what successful forecasters do . Why the three central banks here considered don’t update their consistently inaccurate “junk models” remains a puzzle.

Categories: Current Affairs

The Unseen Costs of "Medicare for All"

Mises Institute - Wed, 22/05/2019 - 18:35

Many of the worst costs that will come with "Medicare for All" won't be calculated in dollars. They'll come in the form of doctor shortages, long wait times, and less access to care.

Original Article: "The Unseen Costs of "Medicare for All"".

Categories: Current Affairs

Tucker Carlson and AOC Are Wrong About Christianity and Usury

Mises Institute - Wed, 22/05/2019 - 18:35

Alexandria Ocasio-Cortez thinks Christian theology supports her bill on excessive interest. Her position ignores the actual history of Christian views of usury.

Original Article: "Tucker Carlson and AOC Are Wrong About Christianity and Usury".

Categories: Current Affairs

NGINX structural enhancements for HTTP/2 performance

CloudFlare - Wed, 22/05/2019 - 18:14
NGINX structural enhancements for HTTP/2 performanceNGINX structural enhancements for HTTP/2 performance


My team: the Cloudflare PROTOCOLS team is responsible for termination of HTTP traffic at the edge of the Cloudflare network. We deal with features related to: TCP, QUIC, TLS and Secure Certificate management, HTTP/1 and HTTP/2. Over Q1, we were responsible for implementing the Enhanced HTTP/2 Prioritization product that Cloudflare announced during Speed Week.

This is a very exciting project to be part of, and doubly exciting to see the results of, but during the course of the project, we had a number of interesting realisations about NGINX: the HTTP oriented server onto which Cloudflare currently deploys its software infrastructure. We quickly became certain that our Enhanced HTTP/2 Prioritization project could not achieve even moderate success if the internal workings of NGINX were not changed.

Due to these realisations we embarked upon a number of significant changes to the internal structure of NGINX in parallel to the work on the core prioritization product. This blog post describes the motivation behind the structural changes, how we approached them, and what impact they had. We also identify additional changes that we plan to add to our roadmap, which we hope will improve performance further.


Enhanced HTTP/2 Prioritization aims to do one thing to web traffic flowing between a client and a server: it provides a means to shape the many HTTP/2 streams as they flow from upstream (server or origin side) into a single HTTP/2 connection that flows downstream (client side).

Enhanced HTTP/2 Prioritization allows site owners and the Cloudflare edge systems to dictate the rules about how various objects should combine into the single HTTP/2 connection: whether a particular object should have priority and dominate that connection and reach the client as soon as possible, or whether a group of objects should evenly share the capacity of the connection and put more emphasis on parallelism.

As a result, Enhanced HTTP/2 Prioritization allows site owners to tackle two problems that exist between a client and a server: how to control precedence and ordering of objects, and: how to make the best use of a limited connection resource, which may be constrained by a number of factors such as bandwidth, volume of traffic and CPU workload at the various stages on the path of the connection.

What did we see?

The key to prioritisation is being able to compare two or more HTTP/2 streams in order to determine which one’s frame is to go down the pipe next. The Enhanced HTTP/2 Prioritization project necessarily drew us into the core NGINX codebase, as our intention was to fundamentally alter the way that NGINX compared and queued HTTP/2 data frames as they were written back to the client.

Very early in the analysis phase, as we rummaged through the NGINX internals to survey the site of our proposed features, we noticed a number of shortcomings in the structure of NGINX itself, in particular: how it moved data from upstream (server side) to downstream (client side) and how it temporarily stored (buffered) that data in its various internal stages. The main conclusion of our early analysis of NGINX was that it largely failed to give the stream data frames any 'proximity'. Either streams were processed in the NGINX HTTP/2 layer in isolated succession or frames of different streams spent very little time in the same place: a shared queue for example. The net effect was a reduction in the opportunities for useful comparison.

We coined a new, barely scientific but useful measurement: Potential, to describe how effectively the Enhanced HTTP/2 Prioritization strategies (or even the default NGINX prioritization) can be applied to queued data streams. Potential is not so much a measurement of the effectiveness of prioritization per se, that metric would be left for later on in the project, it is more a measurement of the levels of participation during the application of the algorithm. In simple terms, it considers the number of streams and frames thereof that are included in an iteration of prioritization, with more streams and more frames leading to higher Potential.

What we could see from early on was that by default, NGINX displayed low Potential: rendering prioritization instructions from either the browser, as is the case in the traditional HTTP/2 prioritization model, or from our Enhanced HTTP/2 Prioritization product, fairly useless.

What did we do?

With the goal of improving the specific problems related to Potential, and also improving general throughput of the system, we identified some key pain points in NGINX. These points, which will be described below, have either been worked on and improved as part of our initial release of Enhanced HTTP/2 Prioritization, or have now branched out into meaningful projects of their own that we will put engineering effort into over the course of the next few months.

HTTP/2 frame write queue reclamation

Write queue reclamation was successfully shipped with our release of Enhanced HTTP/2 Prioritization and ironically, it wasn’t a change made to the original NGINX, it was in fact a change made against our Enhanced HTTP/2 Prioritization implementation when we were part way through the project, and it serves as a good example of something one may call: conservation of data, which is a good way to increase Potential.

Similar to the original NGINX, our Enhanced HTTP/2 Prioritization algorithm will place a cohort of HTTP/2 data frames into a write queue as a result of an iteration of the prioritization strategies being applied to them. The contents of the write queue would be destined to be written the downstream TLS layer.  Also similar to the original NGINX, the write queue may only be partially written to the TLS layer due to back-pressure from the network connection that has temporarily reached write capacity.

NGINX structural enhancements for HTTP/2 performance

Early on in our project, if the write queue was only partially written to the TLS layer, we would simply leave the frames in the write queue until the backlog was cleared, then we would re-attempt to write that data to the network in a future write iteration, just like the original NGINX.

The original NGINX takes this approach because the write queue is the only place that waiting data frames are stored. However, in our NGINX modified for Enhanced HTTP/2 Prioritization, we have a unique structure that the original NGINX lacks: per-stream data frame queues where we temporarily store data frames before our prioritization algorithms are applied to them.

We came to the realisation that in the event of a partial write, we were able to restore the unwritten frames back into their per-stream queues. If it was the case that a subsequent data cohort arrived behind the partially unwritten one, then the previously unwritten frames could participate in an additional round of prioritization comparisons, thus raising the Potential of our algorithms.

The following diagram illustrates this process:

NGINX structural enhancements for HTTP/2 performance

We were very pleased to ship Enhanced HTTP/2 Prioritization with the reclamation feature included as this single enhancement greatly increased Potential and made up for the fact that we had to withhold the next enhancement for speed week due to its delicacy.

HTTP/2 frame write event re-ordering

In Cloudflare infrastructure, we map the many streams of a single HTTP/2 connection from the eyeball to multiple HTTP/1.1 connections to the upstream Cloudflare control plane.

As a note: it may seem counterintuitive that we downgrade protocols like this, and it may seem doubly counterintuitive when I reveal that we also disable HTTP keepalive on these upstream connections, resulting in only one transaction per connection, however this arrangement offers a number of advantages, particularly in the form of improved CPU workload distribution.

When NGINX monitors its upstream HTTP/1.1 connections for read activity, it may detect readability on many of those connections and process them all in a batch. However, within that batch, each of the upstream connections is processed sequentially, one at a time, from start to finish: from HTTP/1.1 connection read, to framing in the HTTP/2 stream, to HTTP/2 connection write to the TLS layer.

The existing NGINX workflow is illustrated in this diagram:

NGINX structural enhancements for HTTP/2 performance

By committing each streams’ frames to the TLS layer one stream at a time, many frames may pass entirely through the NGINX system before backpressure on the downstream connection allows the queue of frames to build up, providing an opportunity for these frames to be in proximity and allowing prioritization logic to be applied.  This negatively impacts Potential and reduces the effectiveness of prioritization.

The Cloudflare Enhanced HTTP/2 Prioritization modified NGINX aims to re-arrange the internal workflow described above into the following model:

NGINX structural enhancements for HTTP/2 performance

Although we continue to frame upstream data into HTTP/2 data frames in the separate iterations for each upstream connection, we no longer commit these frames to a single write queue within each iteration, instead we arrange the frames into the per-stream queues described earlier. We then post a single event to the end of the per-connection iterations, and perform the prioritization, queuing and writing of the HTTP/2 data frames of all streams in that single event.

This single event finds the cohort of data conveniently stored in their respective per-stream queues, all in close proximity, which greatly increases the Potential of the Edge Prioritization algorithms.

In a form closer to actual code, the core of this modification looks a bit like this:

ngx_http_v2_process_data(ngx_http_v2_connection *h2_conn, ngx_http_v2_stream *h2_stream, ngx_buffer *buffer) { while ( ! ngx_buffer_empty(buffer) { ngx_http_v2_frame_data(h2_conn, h2_stream->frames, buffer); } ngx_http_v2_prioritise(h2_conn->queue, h2_stream->frames); ngx_http_v2_write_queue(h2_conn->queue); }

To this:

ngx_http_v2_process_data(ngx_http_v2_connection *h2_conn, ngx_http_v2_stream *h2_stream, ngx_buffer *buffer) { while ( ! ngx_buffer_empty(buffer) { ngx_http_v2_frame_data(h2_conn, h2_stream->frames, buffer); } ngx_list_add(h2_conn->active_streams, h2_stream); ngx_call_once_async(ngx_http_v2_write_streams, h2_conn); }

ngx_http_v2_write_streams(ngx_http_v2_connection *h2_conn) { ngx_http_v2_stream *h2_stream; while ( ! ngx_list_empty(h2_conn->active_streams)) { h2_stream = ngx_list_pop(h2_conn->active_streams); ngx_http_v2_prioritise(h2_conn->queue, h2_stream->frames); } ngx_http_v2_write_queue(h2_conn->queue); }

There is a high level of risk in this modification, for even though it is remarkably small, we are taking the well established and debugged event flow in NGINX and switching it around to a significant degree. Like taking a number of Jenga pieces out of the tower and placing them in another location, we risk: race conditions, event misfires and event blackholes leading to lockups during transaction processing.

Because of this level of risk, we did not release this change in its entirety during Speed Week, but we will continue to test and refine it for future release.

Upstream buffer partial re-use

Nginx has an internal buffer region to store connection data it reads from upstream. To begin with, the entirety of this buffer is Ready for use. When data is read from upstream into the Ready buffer, the part of the buffer that holds the data is passed to the downstream HTTP/2 layer. Since HTTP/2 takes responsibility for that data, that portion of the buffer is marked as: Busy and it will remain Busy for as long as it takes for the HTTP/2 layer to write the data into the TLS layer, which is a process that may take some time (in computer terms!).

During this gulf of time, the upstream layer may continue to read more data into the remaining Ready sections of the buffer and continue to pass that incremental data to the HTTP/2 layer until there are no Ready sections available.

When Busy data is finally finished in the HTTP/2 layer, the buffer space that contained that data is then marked as: Free

The process is illustrated in this diagram:

NGINX structural enhancements for HTTP/2 performance

You may ask: When the leading part of the upstream buffer is marked as Free (in blue in the diagram), even though the trailing part of the upstream buffer is still Busy, can the Free part be re-used for reading more data from upstream?

The answer to that question is: NO

Because just a small part of the buffer is still Busy, NGINX will refuse to allow any of the entire buffer space to be re-used for reads. Only when the entirety of the buffer is Free, can the buffer be returned to the Ready state and used for another iteration of upstream reads. So in summary, data can be read from upstream into Ready space at the tail of the buffer, but not into Free space at the head of the buffer.

This is a shortcoming in NGINX and is clearly undesirable as it interrupts the flow of data into the system. We asked: what if we could cycle through this buffer region and re-use parts at the head as they became Free? We seek to answer that question in the near future by testing the following buffering model in NGINX:

NGINX structural enhancements for HTTP/2 performance

TLS layer Buffering

On a number of occasions in the above text, I have mentioned the TLS layer, and how the HTTP/2 layer writes data into it. In the OSI network model, TLS sits just below the protocol (HTTP/2) layer, and in many consciously designed networking software systems such as NGINX, the software interfaces are separated in a way that mimics this layering.

The NGINX HTTP/2 layer will collect the current cohort of data frames and place them in priority order into an output queue, then submit this queue to the TLS layer. The TLS layer makes use of a per-connection buffer to collect HTTP/2 layer data before performing the actual cryptographic transformations on that data.

The purpose of the buffer is to give the TLS layer a more meaningful quantity of data to encrypt, for if the buffer was too small, or the TLS layer simply relied on the units of data from the HTTP/2 layer, then the overhead of encrypting and transmitting the multitude of small blocks may negatively impact system throughput.

The following diagram illustrates this undersize buffer situation:

NGINX structural enhancements for HTTP/2 performance

If the TLS buffer is too big, then an excessive amount of HTTP/2 data will be committed to encryption and if it failed to write to the network due to backpressure, it would be locked into the TLS layer and not be available to return to the HTTP/2 layer for the reclamation process, thus reducing the effectiveness of reclamation. The following diagram illustrates this oversize buffer situation:

NGINX structural enhancements for HTTP/2 performance

In the coming months, we will embark on a process to attempt to find the ‘goldilocks’ spot for TLS buffering: To size the TLS buffer so it is big enough to maintain efficiency of encryption and network writes, but not so big as to reduce the responsiveness to incomplete network writes and the efficiency of reclamation.

Thank you - Next!

The Enhanced HTTP/2 Prioritization project has the lofty goal of fundamentally re-shaping how we send traffic from the Cloudflare edge to clients, and as results of our testing and feedback from some of our customers shows, we have certainly achieved that! However, one of the most important aspects that we took away from the project was the critical role the internal data flow within our NGINX software infrastructure plays in the outlook of the traffic observed by our end users. We found that changing a few lines of (albeit critical) code, could have significant impacts on the effectiveness and performance of our prioritization algorithms. Another positive outcome is that in addition to improving HTTP/2, we are looking forward to carrying our newfound skills and lessons learned and apply them to HTTP/3 over QUIC.

We are eager to share our modifications to NGINX with the community, so we have opened this ticket, through which we will discuss upstreaming the event re-ordering change and the buffer partial re-use change with the NGINX team.

As Cloudflare continues to grow, our requirements on our software infrastructure also shift. Cloudflare has already moved beyond proxying of HTTP/1 over TCP to support termination and Layer 3 and 4 protection for any UDP and TCP traffic. Now we are moving on to other technologies and protocols such as QUIC and HTTP/3, and full proxying of a wide range of other protocols such as messaging and streaming media.

For these endeavours we are looking at new ways to answer questions on topics such as: scalability, localised performance, wide scale performance, introspection and debuggability, release agility, maintainability.

If you would like to help us answer these questions and know a bit about: hardware and software scalability, network programming, asynchronous event and futures based software design, TCP, TLS, QUIC, HTTP, RPC protocols, Rust or maybe something else?, then have a look here.

Categories: Technology

What happens when we make sure the brightest spotlight shines on us?

Ministry Nuts and Bolts - Wed, 22/05/2019 - 18:00
Are we willing to use people who are better than us? Because if not, we are doomed to be the best person in the room.
Categories: Friends

Menu Item Extras - Moderately critical - Cross Site Request Forgery - SA-CONTRIB-2019-050

Drupal Contrib Security - Wed, 22/05/2019 - 17:29
Project: Menu Item ExtrasDate: 2019-May-22Security risk: Moderately critical 10∕25 AC:Basic/A:User/CI:None/II:Some/E:Theoretical/TD:DefaultVulnerability: Cross Site Request ForgeryDescription: 

This module enables you to handle fields for Custom Menu Links.
The module doesn't sufficiently check requests to one of the module controllers if the user has permission 'administer menu'.
This vulnerability is mitigated by the fact that an attacker must have a role with the permission to create content.


Install the latest version:

Reported By: Fixed By: Coordinated By: 
Categories: Technology

Workflow - Moderately critical - Cross Site Scripting - SA-CONTRIB-2019-049

Drupal Contrib Security - Wed, 22/05/2019 - 17:27
Project: WorkflowDate: 2019-May-22Security risk: Moderately critical 13∕25 AC:Basic/A:Admin/CI:Some/II:Some/E:Theoretical/TD:AllVulnerability: Cross Site ScriptingDescription: 

The Workflow module enables you to create arbitrary Workflows, and assign them to Entities.
The module doesn't sufficiently escape HTML in the field settings leading to a Cross Site Scripting (XSS) vulnerability.
This vulnerability is mitigated by the fact that an attacker must have a role with the permission "administer nodes" and "administer workflow".


Install the latest version:

Reported By: Fixed By: Coordinated By: 
Categories: Technology

Letter to a Trapped Husband

Blog & Mablog - Wed, 22/05/2019 - 16:58

Dear Garrett,

Thanks for the letter. It is good hear from you, and yes, I do have a few thoughts on your situation. We have your wife’s perspective already—Nancy has related to me the outlines of what Angie has been posting on social media for the last six months. The bottom line there is that she says you are a tyrant and an abuser, and that your three teen daughters agree with her completely. In your letter you assure me that nothing like abuse has ever happened, and that what we are reading on social media is either a total fabrication, or is a story with some nugget of truth at the core, but which has been distorted out of all recognition.

Now we live in an era where the official line is “believe all women.” This is a radically unbiblical approach—the biblical process is to “believe all evidence.” Now assuming just for a moment that your wife’s account is true, which it certainly could be, I think we can safely say that to ventilate all her complaints online is a drastically poor way to handle things. It looks like a play for emotional support, and not very much like a plea for a judicious sorting of facts.

Nevertheless, genuine victims sometimes react badly to a bad situation, or they get terrible advice from self-appointed victim advocates, and so they take this approach of public recrimination. So after we got your letter, I asked Nancy to email Angie to let her know we would really like to hear both sides, and to ask her if we could help in any way—if we could provide some marriage counseling, in other words. The reply she got last night was somewhere between “mind your own business” and “drop dead.” So whatever road Angie is on, she is pretty far down it. There were some pretty clear indications in her reply that she is on the verge of denying Christ, and in a couple other places in her email she quoted some new-agey therapists, people whose teaching on abuse in marriage really is toxic.

That being the case, I feel comfortable answering your letter on the supposition that you are telling me the truth, and that you are giving me a fair approximation of the entire truth. This is not to say that she would have no valid points to make if she wanted to, but it is to note that because of her refusal to work on it together with you, this means that we have to do whatever we can do to help from this side only. But keep in mind the fact that the biblical approach to conflict resolution is not at all “believe the man,” any more than it is “believe the woman.” We are obligated to believe the truth, and nothing else. More about the truth in a moment.

You tell me that you are on the verge of divorce, and it certainly looks that way to us as well. She has been threatening online to file at any time, and given the lurid stories she has been telling everyone it is astonishing to her support group/cheering section in the comments—“you are so brave, so beautiful”—that she hasn’t done so already. This being the case, it seems to me you have very little to lose—and this means you might be open to an approach that will feel pretty drastic to you.

Your whole approach to keeping your marriage together in peace has been an approach of lying to your wife. She is now therefore living in a bubble, but it is a bubble that you paid for yourself, and which you constructed for her. She is living in an emotional bubble, a financial bubble, a relational bubble, and much more.    

Now here is a good place to interrupt the flow to say something about a husband’s “federal” responsibilities in marriage. As I have taught in numerous places, the apostle Paul teaches that husbands are to love their wives as Christ loved the church, and that they are therefore to function as covenant heads. This means that the husband is responsible for the state of the marriage. He is the head. This means that, bringing us back to the point, you are responsible for the fact that your marriage is on the brink of divorce.

But because we live in “blame the male” times, this teaching has been radically distorted and misapplied. This does not mean that wives can’t sin, or that whatever happens must be the man’s fault. It does not mean that the wife must always get her way, or have her perspective catered to. She is to be queen in your home, not the queen bee.

There is a difference between fault and responsibility. You are the head, and so you are therefore responsible. But part of your responsibility, had you assumed it properly, would have been to not give way to your wife’s more egregious emotional demands. If you are the responsible head, part of that responsibility would entail not telling lies.

According to your letter, you have been catering your wife’s alternative emotional universe from the time you first said I do. The arrival of three daughters reinforced this pattern. Your wife has trained them up in this same way of reacting, and you have subsidized it. You have sought to keep peace in your marriage and in your household, and you have sought to build this peace on the very shaky foundation of lies.

But lying to a woman is not loving her. Allowing her to lie to herself and to all her friends is not loving her. Letting her read books that are crammed with lies is not loving her. This bubble that she is in is a bubble that was constructed under your watchful (albeit despairing) eye. You watched it all grow, and the most you ever spoke against it to her was buried under dark hints. Given what you wrote to me, I assume that you agree with this.

So what might repentance look like? Repentance means that you must stop lying to her, even for the sake of what you call “peace,” and you must stop any actions that reinforce any such lies. The actions you take must line up with reality—reality as Scripture defines it, and as right reason elicits it from the world as God created it. Speak the truth, live the truth, and love the truth.

This might appear as though I am changing the subject, but I can assure you I am not. And it is just for a moment anyway. You attend a large evangelical megachurch, and they don’t really believe in church membership. You are not formally accountable anywhere. Over the last several years, you asked the elders on at least two separate occasions to intervene in your situation, and nothing came of that. And you tell me that over the last several years you know of at least four marriages in your church that cracked up over infidelity, and nothing happened. There was no discipline of any kind. And you say that at least two of the new couples are still attending church regularly.

I say this because it might be easy for you to assume that whatever you do will not matter to them. You might conclude that you are part of a laissez-faire, come-as-you-are church. And in a weird sort of way, that could be true, but only in a certain direction. They don’t discipline in traditional categories, but they will discipline. If you left Angie and just moved in with your secretary, it is likely that the same thing would happen to you as happened in these other cases, which is to say, nothing. But if you move out in a last ditch attempt to save your marriage, and if you are doing it as a form of husbandly discipline, and if anybody gets a whiff of that, the chances are excellent that you will find yourself on the receiving end of some very Christiany rebukes and admonitions.

But you have to do this anyway. I am not telling you that you have grounds for divorce, because I don’t believe you do. I am telling you that you have to move out, and that from that place, you must start communicating truth and reality to your wife. You must speak the truth to her, and the first truth you must communicate is your repentance for all your lies, offered in support of her lies. What you offer her in terms of financial support must also be true and fair—and I can pretty much guarantee that a fair amount to her will seem like cruelty. She will claim that, at any rate.

Whatever you say or do, your approach must be established on a bedrock of love and concern for her. This is what you must do, and it is a last ditch attempt to save your marriage. When men from the church tell you not to “give up” on your marriage, tell them that you have not given up. You are ready to reconcile. But if this marriage is to be saved, it will have to be saved on God’s terms, not yours, and not hers.

Your concern should be to check and mortify your every impulse to equate true with nice, and you need instead to focus on equating true with facts. Your concern should be to be loving toward her, not to seem like you are loving her. You are a husband, not a marketing department.

So your marriage is on the brink of divorce. That means it is time for some brinksmanship. We will pray. Let me know how it goes.

Cordially in Christ,


The post Letter to a Trapped Husband appeared first on Blog & Mablog.

Categories: People I don't know

Intellectals and Property - a non-rivalrous rivalry?

Adam Smith Institute - Wed, 22/05/2019 - 15:25

While property is often a defining topic in the centre right, in some cases, it also divides free marketeers and libertarians. This is most clearly manifested by the rivalrous debates on (the non-rivalrous) intellectual property. The Adam Smith Institute’s contribution is the paper ‘Patently Good’ which astutely outlines the liberal case for intellectual property.

The most ardent anti-intellectual property regulation ideologues are often driven by the premise that ownership derives from ‘mixing one’s labour’ with the land (homesteading). The argument goes, 'ideas are in essence free goods and, therefore, common property', in this context common property is equated not with collective ownership but with unrestricted access.

Thus if intellectual property is given the same protection under the law as tangible property (at least in principle) it binds all third parties thereby, preventing others from using their property. So, it is a violation of property rights based on the idea that one cannot have a right to the value of one’s property, only its physical integrity.

The issue with this line of reasoning is that the premise of this kind of ownership sounds awfully like the labour theory of value. Which means it sounds awfully wrong. Ownership does not and ought not to arise from one’s material relation to a good or the labour they put into its creation. If it was, we’d be having workers co-operatives left, right and centre. Did someone say proletariat revolution?

Property ownership arises from intersubjective claims on a good such as land. This is evident by the history behind English common law which was shaped by the feudal system of property where all land theoretically belonged to the monarch. Ultimately, property was indivisible in theory but it had several owners and could be bought and sold without altering the property itself. This led to a system which allowed intangible entities such as copyrights and patents to be recognised as forms of property today.

While the idea of ‘property’ is not malleable or an empty vessel it is the end purpose that matters. Its sole purpose is to make lives more prosperous by excluding others rather than being a static bundle of incidents of ownership, thus politics based on ‘public interest’ is not entirely vacuous. This is supported by the consensus that as long as property rights are ‘exclusive, universal, and transferable, they will form the basis of free markets leading to ‘socially optimal outcomes in the aggregate’.

When this purpose of property rights (which works pretty well) becomes blurred, it becomes open to slippery slopes by the political class.

Nonetheless, how do we know what is ‘socially optimal’? First, it is important to note, new ideas are usually great; the total benefit to society of an extra pound of research and development is four or more times the benefit to the firm. But how do we know how much patent strength is most conducive for innovation?

Let me present, your new sick obsession, the Tabarokk curve:

ip graph.png

Here, it is important to distinguish between barriers to entry and costs to entry. The former generally discourages innovation while the latter allows economic rents to be reaped. Patents are not strictly a barrier to entry, for a number of reasons.

In medical research, patents provide an incentive to create and trial drugs which usually take an extended period of time. However, paradoxically, such laws often lead to a ‘tragedy of the anticommmons’ as discovered in biomedical research ‘more intellectual property rights may lead to paradoxically fewer useful products for improving human health’.

This is why the Tabarokk curve is a curve and not a straight line. Whilst restricting patents would cause firms to lose some of their monopoly rights, they would also gain the opportunity to use the innovations of others. Furthermore, without patents or copyrights, firms would have an incentive to be secretive and keep crucial information from the scientific and research community, inhibiting further research.

Why not use prizes to incentivise innovation? Well, empirical evidence reveals that they are unsystematic and unpredictable and since they are ex ante rewards, they did not correlate with how useful or popular an invention or innovation was. This proposal seems more motivated by dogma than evidence.

Property, for economists, is too normative and for politicians, it sullies their election victory. It isn’t the sexiest of topics. Nonetheless, it is not a black and white issue. Intellectual property laws, like all laws, exist to be conducive to a prosperous society and they should not be shunned under the pretense of some arbitrary libertarian creed.

Categories: Current Affairs

Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Business

Mises Institute - Wed, 22/05/2019 - 15:25

As candidates in the 2020 Democrat primary race try to outbid each other with grandiose promises to voters, the rising level of student loan debt makes for attractive campaign fodder. Making headlines with a plan aimed at addressing the student loan problem is Elizabeth Warren, whose loan forgiveness plan already enjoys the support of more than half the voting population, even among those who do not have student loans .

It’s no mystery why the policy is popular. With government-guaranteed access to loans, combined with a culture that inundates young people with the idea that success depends on a college degree—any college degree—there has been little restraint on borrowing, creating a cycle of rising tuition that necessitates ever-larger loans. Making the situation worse, the consequent increase in university education has effectively eliminated any potential financial return on non-STEM degrees. The problem has begun to reach a tipping point, with “strategic default” becoming a cultural norm .

Libertarians and conservatives are more likely to politically oppose student loan forgiveness. Opposition generally comes from two angles: personal responsibility and economic freedom. On the first point, it is hard to deny the importance of taking responsibility for bad financial decisions, and learning to borrow wisely (or not at all) and repay debts is a vital part of functioning as an adult. Nobody is holding a gun to anybody’s head and forcing them to go to college.

But this does little to solve the very real problem of the millions of young people entering adulthood with $100,000 in debt and an unmarketable degree. And when our reaction to their situation essentially amounts to telling them that they should have had the wisdom to reject a lifetime of cultural and political indoctrination at an age when their brains had not yet fully developed, we shouldn’t be shocked to find them unreceptive to the message.

The matter of economic freedom relates both to the ethics and consequences of a government interceding on voluntarily contracted loans. If Congress gets into the business of wiping out personal debts, the ramifications of such a policy aren’t difficult to imagine. Borrowers are likely to take out larger and riskier loans, and creditors are unlikely to continue lending with the looming possibility of politicians erasing their balance sheet. Alternatively, if the State pays off the loans, the financial burden would in practice translate to borrowers simply paying debts indirectly with taxes high enough to both service the loan and fund whatever inefficient bureaucracy serves as the middle-man.

Less commonly acknowledged, though, is that the United States government currently owns virtually all of the $1.5 trillion in student loan debt. With the passage of the Affordable Care Act, the government effectively nationalized the student loan industry. Today, the government not only guarantees loans, but it also generates substantial revenues from payments. In fact, the profit that the government earns from the student loan industry is roughly double the average profit margin that private companies enjoy.

In effect, student loans have been turned into another form of taxation. True, young people can still choose not to take out loans, but the perverse incentives attached to a nationalized student loan industry make it unlikely that the government is going to end its decades-long practice of indoctrinating elementary school children with why they simply must go to college. And the revenue provided by student loan payments, while negligible in the scope of the national budget, still funds some undoubtedly destructive policy or another.

Given this, we may almost be inclined to believe that Elizabeth Warren has accidentally adopted a libertarian position on student loans. There is no ethical dilemma with the government forgiving debts it owns—that issue only applies to the government forgiving the debt held by private creditors. And there’s always reason to laud reductions in government revenues in any form. At worst, student loan forgiveness fails to teach young people the value of financial responsibility. But even while people can be reckless with credit cards and auto loans, we can at least rest easy knowing that no other loan market has government guarantees compelling credit approval; markets have natural regulations deterring destructive lending (though fewer than would exist without expansionary monetary policy, but that’s a topic for another day).

So what’s the problem with Warren’s plan?

There may be a libertarian case for student loan forgiveness — at least for debts held by the State — but this argument comes with one giant asterisk that Warren and few other politicians would be willing to accept. The government has to get out of the student loan industry entirely. As long as the State continues to hold a monopoly on student lending—and especially while it continues to guarantee loan acceptance—loan forgiveness is merely a recipe for socialized higher education. This, unsurprisingly, is exactly what Warren wants.

Free college—which is really to say, taxpayer financed college—seems to face largely the same problems as the current system of nationalized student lending. Universities would still require funding, creating a tax burden that shouldered by the very people the policy seeks to help. It seems naive to assume that universal college education will see trends different from public schools, which have enjoyed skyrocketing administrative costs with no accompanying gains in student performance . And if young people are going to pay for it whether they go to school or not, bachelor’s degrees will predictably become even more common, and therefore worthless, than they already are.

The only functional difference between Warren’s proposal and the existing system is that currently, for all its moral problems and economic consequences, it is still an option to skip college and avoid the loans, and an increasing number of parents are giving their children this advice. The culture of sanctifying college degrees survives in public bureaucracies, but it’s dying a slow death among private citizens. If college becomes universal, this cultural change will be rendered meaningless. Warren won’t make you go to college, but she’ll still make you pay for it.

We should be sympathetic to the young people who were hoodwinked into entering adulthood with debt that averages a reasonable down payment on a house and a degree that lands them a job as a janitor. But this system, terrible as it is, is still preferable to reforms that would demand other young people to finance the bad decisions of their peers through taxation. Student loan forgiveness combined with universal college simply spreads the consequences of a broken higher education system to the few people smart enough to avoid it. Libertarians can make a case for the forgiveness of government-owned loans, but if forgiveness is couple with the complete privatization of the student loan industry—and that reform is unlikely to win Elizabeth Warren many votes.

Categories: Current Affairs

Why Turkey's Debt Crisis is a Bigger Risk to the Eurozone than the PIGS

Mises Institute - Wed, 22/05/2019 - 15:25

Turkey has been almost constantly in the news over the past year, as troubling headlines about its economy and political situation continue to pile up. In a currency meltdown that escalated last summer, the Turkish lira has plunged by nearly 40%, threatening the Turkish economy as a whole. In January, inflation topped 20%, with skyrocketing food prices having an especially severe impact on the population. At the same time, unemployment hit 14.7%, its highest level in a decade, and a figure that’s only expected to rise further, as the Turkish economy is projected to contract by 2% in 2019. Politically, the country’s intense friction with the US, as well as its internal upheaval, have also provided plenty of reasons for concern and clouded its outlook going forward.

Grass_KW_17_1-600x429.png An Artificial Boom and a Very Real Bust

After the hotly contested and high-stake local elections at the end of March delivered severe blows to the Erdogan regime, the prospects of further instability were soon solidified. Erdogan, already in power for 18 years, is now pushing for a rerun of Istanbul mayoral election, following his party’s narrow defeat. It is precisely this timing, of a political inflection point combined with a recession, that makes the situation in Turkey all the more precarious.

For the last two decades, the country’s economy has been instrumental to the expansion and consolidation of power for Turkey’s president. However, the adoption of populist monetary policies and the artificial, debt-fueled growth has become increasingly unsustainable, as is usually the case. As the cracks are now apparent in the country’s economy, support is also at critical lows for the ruling party. In the midst of a recession, with further political friction on the horizon and a potential rerun in Istanbul, investors are justifiably concerned that political goals will overshadow the urgent need to resolve the economic woes of the country. The tough measures needed to stop the lira’s death spiral and to control the toxic debt ticking bomb, are unlikely to be winning electoral arguments.

The Turkish president is, after all, known for his interference in the economy and the private sector, while the central bank itself has lost credibility, as its independence has come under widespread doubt. Just before this last election, for example, it used its reserves to prop up the lira, with the relevant published data revealing that its foreign exchange reserves declined more than $2 billion in the week prior to the vote. According to rating agency Moody’s, gross and net reserves were “already at very low levels.”


Apart from shaking investors’ trust and encouraging suspicions over the politicization of the central bank, the move also failed to support the currency, as the lira has continued to plummet anyway, under the pressure of the extensive concerns over the country’s dwindling reserves. Further pressure is exerted on the weakened currency, and on Erdogan’s credibility for that matter, by the increasingly dominant dollarization trend domestically. More and more Turkish citizens are turning to the USD and the Euro to protect their purchasing power, and even use them in their everyday transactions. According to recent reports by the Financial Times, foreign currency deposits by residents jumped by $2.1 billion in the last week of March, bringing the total to $167 billion.

The Turkish government has nevertheless been persistent in ignoring the flashing danger signs. Instead, the Erdogan regime remains focused on the political aspects of the current crisis, blaming all problems on foreign conspiracies and insisting on policies that would only serve to paper over the core weaknesses of the economy. Despite their efforts to control inflation and to pull the economy out of the recession, the fundamentals are still dire and investor sentiment remains very low. A new reform program unveiled in mid-April also failed to convince market participants of an improved outlook, with a J.P. Morgan survey showing that more than 80% of investors did not have confidence in the government’s ability to revive the economy. The plan merely included a $5 billion injection to struggling state banks, with no references to spending cuts or to any other realistic fiscal steps that would concretely help rein in the spiraling debt problem.

Spillover Effects

Turkey’s debt problem, coupled with the plummeting lira, is arguably the most important risk factor for the nation’s economy. To make matters worse, far from it posing a threat just to Turkey itself, it also has the potential to inflict significant damage elsewhere too, starting with key economies in the Eurozone.

At first glance, the situation in Turkey might resemble many past similar scenarios of a heavily indebted nation with a plummeting currency that descends into a severe recession and eventually gets bailed out, like Greece. However, there is one key difference that makes Turkey’s debt problem much more complicated and potentially dangerous. Unlike Greece, Italy or other seriously debt-laden economies, it’s not just government borrowing that’s the main risk here. Instead, it’s the unsustainable and increasingly unfinanceable corporate debt that makes Turkey a ticking time bomb and renders an IMF-rescue option problematic.

Private debt to GDP stands at a staggering 170%, while, overall, over half of the borrowing is denominated in foreign currencies. Thus, the collapse of the lira has made it extremely challenging for businesses to pay off or even service their debt, while the default risk has surged. Around $179 billion in external debt is due to mature until July 2019, which amounts to almost a quarter of the country’s annual economic output, according to JPMorgan estimates. Most of that, $146 billion, is owed by the private sector and banks in particular.

However dire the current debt predicament might seem for Turkey’s businesses and economic outlook, it is important to also consider the implications for its debtholders, especially since European banks feature prominently among them. In fact, the level of exposure in some cases is so worrying that it justifiably raises concerns that what happens in Turkey won’t just stay in Turkey.


Spain’s banking sector is one of very few in the European bloc that was so far considered not to be problematic; especially in comparison to Italian or Greek banks. However, the exposure of Spanish banks to Turkish debt means that the currency and debt woes of Europe’s neighbor have decisively challenged these assumptions. Spain’s second-biggest bank, BBVA, controls 49.9% of Turkish bank Garanti, which has already reported a rise in non-performing loans. Spanish banks also led the lending spree to Turkish businesses over the past years, rendering them vulnerable to the spiking default risk.

Although Spanish banks were by far the greatest lenders for Turkey, French, Italian and German banks also have significant exposure to Turkish debt. This already became problematic from the onset of the Turkish woes this past summer, when investors dumped Eurozone bank shares and prices suffered significant blows. Among the worst hit were BBVA, Unicredit, and PNB Paribas. Yet still, a blow to the stock price is nothing compared to the damage that a sustained currency crisis and rising default risk can inflict to the already vulnerable European banking sector.

Key Lessons

Overall, Turkey’s woes are yet another important and timely reminder of the frailty of the current monetary system and of the banking sector, as well as of the systemic weaknesses and inevitable unsustainability of a centrally planned economy and of fiat money.

After all, the lira’s value, as that of any other fiat currency, depends on the trust the people place in its issuer. Once that is lost or even shaken, no measures and no force applied by the central planners can stabilize it. We saw that play out over the last months in Turkey, with the government trying a wide variety of approaches to control the currency’s fall, to no avail. That clearly demonstrated the flimsy and fickle nature of the entire system.

As the Turkish currency collapsed, demand for gold more than doubled in the country, while gold priced in lira reached all-time highs, as is to be expected in times of crisis. Erdogan’s public calls for citizens to sell the “gold under their pillows” and buy lira to help defend the country against the “economic attacks” from the outside were clearly ignored. Consumers flocked to the precious metal in response to the deteriorating fiat currency and gold imports to Turkey increased eightfold last December, while the Turkish central bank itself also dramatically increased its official reserves over the last two years.


As the country now joins the long list of nations that came to regret reckless interventionism and aggressive monetary manipulation, it also sends a strong message to those investors who are wise enough to heed it.

Excerpted From a Two-Part Series at
Categories: Current Affairs

CJay Engel on the Entrepreneurial Life

Mises Institute - Wed, 22/05/2019 - 15:25

The entrepreneurial life is good for the individual, the family, society and civilization. Whether your entrepreneurial undertaking is something small or something huge, or somewhere in between, doing something entrepreneurial, utilizing your own resources, benefits others and is therefore heroic.

Show Notes

Successful entrepreneurs should not be called upon to “give back” to society. The entrepreneurs’ role itself is socially beneficial. They make money by producing goods and services that consumers value more than the money they pay to acquire them. Society — in the form of the market — has its own feedback loop to tell the entrepreneur whether or not value is being created for others: profit is the signal that society is experiencing value, and loss is the signal that the entrepreneur got it wrong and is not creating value. There is no need for a bureaucrat to tell us.

But you don’t need a social purpose or a change-the-world idea, or even a monetary goal to be an entrepreneur. Just get started. C Jay Engel started straight out of school. Entrepreneurship was stability; bread and butter. He had skills in project management and found that people needed those skills, and he developed a consulting business. He was able to try to expand in other areas, which took him into technology; successes and failures were part of the recipe, as was fun. He enjoyed himself and was able to develop as a person.

The pursuit of higher values can come later, when your entrepreneurial business matures and stabilizes. Initially, C Jay focused on what was immediately in front of him. Plans shift quickly and new directions open up, and agility is required. You can’t plan your entire entrepreneurial life at the outset. Now — still in his thirties — he is able to reflect on what he calls “grander things”, like the legacy he will leave to his kids. Not the financial one, but the kind of world he can contribute to, that they will live in. He likes to think that there are hundreds and thousands of entrepreneurs all over the world doing the same thing to help bring about that good world. It’s an exciting and inspiring spontaneous order: entrepreneurs making a better world by helping individuals.

Is entrepreneurship especially arduous? It can be. Think of Elon Musk. The task of getting people to Mars to establish a colony is pretty arduous. It’s less so if you’re setting up a consulting shop. But there is uncertainty to grapple with, and doing so requires a certain mindset. It’s a learning process, and trying different ways to handle uncertainty in the multiple different ways you’ll encounter it makes you a better, more developed person. Constant self-awareness helps you realize what you need to do to handle conditions of uncertainty.

Does that mean that a special set of personal attributes is required to be an entrepreneur? Is there a personality test? We’ve had a number of guests talk about elements of entrepreneurship, like a bias for action, risk mitigation, and brutal determination. But these are patterns of behavior more than they are personality traits. C Jay’s advice is: just do it. Examine yourself along the way and you’ll find out your strengths. And when you find that there are places where you can strengthen yourself (or your team), that’s what other people are for. You can’t be highly successful without engaging other people, so focus on that rather than on any so-called “weaknesses” you may be told you have.

Technology helps you assemble not only your team, but also a full set of entrepreneurial resources. The entrepreneurial economy is highly collaborative. Whether it is Upwork or LinkedIn or Alibaba or Amazon, technology can help you assemble a team, a full set of resources and a supply chain. You can find marketers and accountants and engineers and interconnect them all over the globe or locally, in a team. Team building and team motivation are core skills (and can be a limiting factor). Self-reliance does not mean the same thing as it did in the past. The rugged individual is not the driver of the market economy. In fact, the entrepreneurial economy is highly collaborative — self-supporting rather than self-reliant. Any capital you acquire depends on the entrepreneurs in the earlier stage who produced it for you, in anticipation of your needs. Price signals from other entrepreneurs guide you. No entrepreneur is alone. The invisible hand is actually visible — it’s the price mechanism connecting you to all the people and all the resources in the world.

How do we communicate this narrative to the world? The socialists are better at marketing than the entrepreneurs. Such harsh words are used about profit, and yet it is the social signal of approval. People who are benefiting from capitalism, like Hollywood celebrities and Silicon Valley billionaires, do not understand capitalism and decry it. What should entrepreneurs do? Just keep working at entrepreneurship. Keep making life better for customers and everyone else. It’s also healthy to reflect on how you are benefiting people around you. If you have a chance to say something or write something and share an idea then take it. Doing so is itself an act of entrepreneurship. Our message will emerge from the communication efforts of individuals.

C Jay Engel himself has started Austro Libertarian magazine. It’s a new publication located somewhere between the academic rigor of QJAE and the shorter articles of Mises Daily. Original content in longer form articles, in your choice of digital or a beautifully designed and printed physical magazine. For C Jay, starting a magazine is another example of economic action rather than political action.

Categories: Current Affairs

Piracy and smuggling helped spark Britain's Industrial Revolution

Adam Smith Institute - Wed, 22/05/2019 - 14:09

Why did the Industrial Revolution begin in Britain and not elsewhere? Was it because Britain was an empire with resource-rich colonies? The economic liberalism of the British? Or factors “at home” like institutions, property rights, private property and abundance of coal mines in the North?

All of these factors contributed some extent. But if we think of other places or times with similar underlying features, such as Florence during the 16th century or Holland during the 17th century, we can see that the Industrial Revolution did not develop for these reasons alone. So, there must be more to the story, something that - together with the other factors - produced the Industrial Revolution.

A crucial, underappreciated factor was American demand from the Spanish territories and the associated piracy and smuggling in that part of the world. Without smuggling, the Industrial Revolution may never have happened.

Despite their historical reputation, most pirates did not live off hunting and pillaging ships. Pirates were largely dependent on attacking ports and settlements and facilitating illegal trade. Piracy was very profitable during the 16th and 17th centuries. But, once the British colonies flourished, piracy started being prosecuted more systematically. Traditional piracy declined by the end of the 17th century, leading the pirates to refocus their efforts on the booming smuggling industry. This lead to the Golden age of smuggling.

After the Treaty of Utrecht (1713), Britain was issued an Asiento licence by the Spanish Crown, allowing them to trade with Spanish territories through the South Sea Company - with 4,800 slaves annually for 30 years, and one cargo ship per year. Jamaica was the principal base for operations. This English company was quite profitable, even more so when it was done illegally. It was thought to control as much as one-third of the contraband in the Americas.

Precisely measuring the amount of smuggling is impossible - but historians have estimated that illegal trade by the South Sea Company reached at least 5.5 million pounds between 1730 and 1739. Additionally, there are the unknown figures of what was smuggled by third parties (directly or indirectly related to the South Sea Company), which would increase the total numbers. This is an extraordinarily high amount of money: 5.5 million pounds in 1713 is equivalent of 150 billion pounds today. So we can see the huge impact on the Spanish/American economy as a direct consequence of the contraband of a company like the SSC.

But let’s also consider the economic impact for Great Britain.

What happened when the SSC lost its right to trade in the Spanish territories? Well… the smuggling continued. The area between the Campeche Bay and Costa Rica became a home for illicit trade. It was in the region of Mosquito: 50 to 60 vessels annually sailed from Jamaica towards Belize and during 1762, the year when La Habana was occupied by the British, 96 merchant ships docked there instead of the 3 as was usual. Additionally, the Río de la Plata and the route of Buenos Aires were identified as an ideal way to introduce English manufactures, that would easily reach Peru and Chile.

So while Spain based the commerce between the peninsula and the American provinces in a monopoly system that benefited the monarchy, Sevilla and Cádiz but not much more, Great Britain looked to satisfy the American demand through legal trade, but also more profitably through smuggling.

Between 1740 and 1760, we already find the beginnings of the Industrial Revolution. But in the same time frame, there were other contributing factors:

  • The Seven Years War (1756-1763), that meant Great Britain annexed Canada from France, and the decline of the French presence in the Caribbean.

  • The opening of four free British ports in Jamaica in 1765.

  • The American War of Independence (1776-1783), which meant for GB the loss of the colonies.

  • The publication of An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith in 1776 and the spread of economic liberalism.

Taking into account this context, if the Industrial Revolution was already ongoing when commerce started being “liberalized” with America opening ports, and when the colonies took their independence, then it doesn’t appear that the Industrial Revolution was caused by economic liberalism alone (even if, for sure, the ideas contributed to its acceleration). Nor is it accurate to say that the Industrial Revolution was caused by the circumstances of the colonies in the north.

So, then, why did the Industrial Revolution happen in Great Britain? Of course, contributing factors as already mentioned as well as money from America used to invest in industries/machinery are to be taken into account. But, above all, it was because Great Britain was the nation that answered most effectively to the existing American demand.

Great Britain detected the growing unmet demand and responded, and it was through regular smuggling that the demand could be fulfilled. This commercial opportunity, provided by the market and the smuggling, led Britain to develop production capabilities and capacity that was essential for the Industrial Revolution.

Dr Lorena Carrasco is at the Universidad Francisco Marroquín (UFM) in Guatemala. She has a PhD in Medieval History and is a member of London Royal Historical Society and Asociación Española de Amigos de los Castillos.

Categories: Current Affairs

The Great Society

Adam Smith Institute - Wed, 22/05/2019 - 12:01

Fifty-five years ago, on May 22nd, 1964, President Lyndon Johnson announced his Great Society program at Ann Arbor, Michigan. Its scope was breathtaking, aiming at nothing less than the total elimination of poverty and racial injustice in the United States.

Fundamentally, it came down to a series of spending programmes that aimed to tackle shortcomings in education, healthcare, transport, and the problems faced by people in cities and rural areas. Johnson had small working parties of about half a dozen people, working in secret so their initiatives would not be “derailed by criticism.” This meant that shortcomings, which might have been recognized and addressed as the programmes were being planned, were not identified and rectified.

In practice this involved vast spending schemes. The “war on poverty” started with a $1 billion appropriation in 1964 and then another $2 billion in the following two years. It involved dozens of programs such as the Job Corps, to help disadvantaged youths develop marketable skills, the Neighborhood Youth Corps, to give poor urban youths work experience, and the Economic Opportunity Act of 1964, designed to help young people from poor homes gain access to job training and higher education.

Its well-meaning, but ill-thought-out, idea was but to help the poor better themselves through education, job training, and community development, and to have them participate in the development of the programmes designed to help them.

It did food stamps, Medicare and Medicaid, and granted billions of dollars for states to spend on everything from educational research to library books and school buses. It provided money for slum clearance and urban regeneration. It tackled every perceived problem by providing vast sums of money to address it. While it undoubtedly achieved some positive results, critics pointed out that its biggest achievement was the creation of a giant bureaucracy that attempted to step into every aspect of American life, and to guide and steer it. They further claimed that the results it achieved were tiny compared to the input of effort and resources. Milton Friedman famously described such state welfare progammes as akin to throwing silver dollars at a barn door in the hope that some would slip though the knot-holes.

Critics from the Left suggested that its shortcomings were down to not enough money being spent, and blamed its failures on the Vietnam War sucking up the funds it needed. In retrospect it was a much-hyped failure, big in intentions, but poor in its outcomes. The monies diverted to fund it could almost certainly have achieved more in terms of economic growth and the opportunities this brings for advancement of poorer and underprivileged people, including ethnic and racial minorities.

The lessons are perhaps that big often doesn’t work, and that small-scale, carefully targetted efforts involving voluntary and private sector participation can be more efficacious. The legacy of the Great Society is with America still, in the form of costly entitlements that cannot be funded in the future, and which all politicians kick down the road for the next generation to solve.

Categories: Current Affairs

Is free will an illusion?

The Good Book Company - Wed, 22/05/2019 - 10:13

You are out shopping for snacks to bring to the office party and decide on breadsticks and hummus. Did you make the decision? Or did your brain make it for you?

The next day your boss announces cutbacks, and you have to decide whether to go forward for voluntary redundancy or not. You decide yes. Did you make the decision? Or did your brain make it for you?

We make decisions all the time. Mundane decisions like what to eat for breakfast, and important decisions like where to live or who to marry. Our decisions seem to be real and impactful.

But if we are just our brains, as some scientists propose—if our decisions are simply the product of synapses firing—are we really free in any meaningful sense? A number of scientists and philosophers strongly believe not. It may seem to us that our choices are freely made, but free will is actually an illusion, they argue. We simply do what our brains tell us.


Predetermined to decide?

The brain-imaging scientist and atheist Sam Harris began his book Free Will by describing a sordid and brutal attack on a family in Connecticut. It was an attack by two men, one of whom was called Komisarjevsky, that was only intended to be robbery, yet ended with four counts of murder. According to Harris, the attackers could not have done things any differently, even if they had wanted to. The violence inflicted on July 23, 2007 was a product of their genes and upbringing over the long term, coupled with their brain activity in the moment. Harris reflects:

"As sickening as I find their behaviour, I have to admit that if I were to trade places with one of these men, atom for atom, I would be him … If I had been in Komisarjevsky’s shoes on July 23, 2007—that is, if I had his genes and life experience and an identical brain (or soul) in an identical state—I would have acted exactly as he did. There is simply no intellectual position from which to deny this.… Free will is an illusion."

It is disturbing to hear a respected scientist make a dogmatic statement like this. Do science and philosophy necessarily take us to this hard-deterministic place, in which prior causes guarantee a particular outcome? Is it true that there is no other intellectual position? Or is there still a case for free will?

Very much so, thankfully. If we dig deeper, we begin to spot a number of problems with so-called “hard-determinism”. We could ask the following questions.

Is it internally coherent? Does hard-determinism make sense according to its own frames of reference? Not really. Hard-determinism makes it difficult to assert any personally-held belief. Religious people are sometimes accused of being programmed to believe in God. But, we could equally make the case that an atheist has been programmed to reject God, or an agnostic has been programmed to sit on the fence. Hard-determinism makes all personally-held beliefs difficult to justify, and impossible to critique—including hard-determinism itself.

Does it have explanatory power? Does hard-determinism make sense of the world around us? Again, not really. For example, hard-determinism does not make sense of the fact that we humans strive for autonomy. So much of life centres around staying in control. We want to make our own rules, decide our own fate, shape our own lives. So much fear surrounds loss of control over the things we hold dear. But why strive for autonomy if human freedom is an illusion? There is a deep contradiction here. Are we free to make our own rules or not? We cannot have it both ways. In terms of explanatory power, hard-determinism creates more confusion than clarity.

Can it be lived? Does hard-determinism line up with our experience of life? Once more - not really. We live as though our choices mean something: as though those decisions are made by us as volitional people, and not by the mechanistic firing of neurons in our brains. We are considered morally responsible and therefore accountable for our actions, good and bad. Komisarjevsky was tried and sentenced to six life terms without possibility of release. Yet, if his actions of 23rd July 2007 were merely driven by forces beyond his control, then why punish at all? Hard-determinism threatens to completely unravel moral responsibility with implications for justice and society as a whole, which few are willing to implement. We do not live as hard-determinists. We live as though our choices mean something.

Friendship with Jesus is freely available, but begins for those who make the decision to respond to his invitation.

Several viewpoints argue in depth that free will is real not illusory. “Compatibilists” or “soft determinists” believe that, although human behaviour is determined by prior causes, we can also act freely when we are not being constrained or are seeking to fulfil our desires. Libertarians hold that the person, not their brain, is the true source of their actions, regardless of the determining factors in their biology and background. Brains don’t make choices: people make choices and can bring about alternative possibilities, if they so wish. And even if impulses do arise, we still have the capacity to allow them or stop them. We call it self-control, or resisting temptation. Philosopher Michael Shermer calls it “free won’t”, and describes this as “veto power over innumerable neural impulses tempting us to act in one way, such that our decision to act in another way is a real choice.”

Why free will?

Much more could be said about the case for free will. If it is true that we are free, volitional beings, then for what purpose? Choice is integral to relationships. Romantic relationships and friendships begin and continue on the basis of decisions and feelings. It is no different with God. God’s desire is that all people would come to know him. He offers us friendship. Jesus himself said, “Come to me, all you who are weary and burdened, and I will give you rest” (Matthew 11 v 28). Friendship with Jesus is freely available, but begins for those who make the decision to respond to his invitation.

In Am I Just My Brain? neuroscientist Sharon Dirckx lays out the current understanding of who we are from biologists, philosophers, theologians and psychologists, and points towards a bigger picture, that suggests answers to the fundamental questions of our existence. Not just "What am I?", but "Who am I?"—and "Why am I?". Buy the book here

Categories: Christian Resources

The Greenpeace protestors rather misunderstand the purpose of a company like BP

Adam Smith Institute - Wed, 22/05/2019 - 07:01

There’s always an amusement to watching those who have no clue trying to discuss a technical subject. It’s that old joke about the typist trying to use tippex on the screen come to life. So it is with the Greenpeace activist trying to tell us all what should be done with BP. Or what BP should do perhaps:

So what should BP do? It should go 100% renewable, starting with abandoning all of its fossil fuel exploration plans, today, and become part of the solution to the catastrophic problem it has caused.

This is to entirely fail to understand Coase on the existence of the firm - as well as other bits and bobs of economics.

The firm exists to perform a task. The form of that firm will depend upon the task to be undertaken and the technology and structure of the economy around it. Whether a firm even exists - instead of a shifting network of contractors - depends upon those things.

All of which means that if we change the task then that current firm becomes an irrelevance.

We can approach the same point from the other way. BPs varied assets are optimised to the extraction of, transport, refining and marketing, of fossil fuel products. These are all done in markedly different manners than anything to do with renewables. We shouldn’t, wouldn’t and can’t repurpose them to building, say, solar panels. To think that “energy provider” equals “energy provider” is to think that the toy scooter maker should be building jumbo jets - they’re both transport, right?

Further, all that implicit and explicit knowledge within the company is about those fossil fuels. BP actually sold off the division that knew anything about polycrystalline silicon decades back.

If we have some new task that needs to be done then we need that new organisation, in whatever different form, to do that new task. The idea that oil companies should up and build windmills is absurd.

Categories: Current Affairs


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