Gissurarson: Iceland A Two-Faced Janus

From left: Nordal, Thorisdottir, Heimisdottir, Jonsson and Gissurarson. Photo: Kristinn Ingvarsson.

RNH Academic director, Professor Hannes H. Gissurarson, was a speaker at a conference 19 April 2017 organised by the Institute of International Affairs at the University of Iceland, the Icelandic Ministry of Foreign Affairs and others on Iceland’s future role in international affairs. He recalled that the Roman god Janus had two faces looking in different directions. Iceland was like that: She was located in the middle of the North Atlantic and had to look both west, to America, and east, to Europe. Gissurarson took issue with the thesis promoted by Professors Anne Sibert and Baldur Thorhallsson that Iceland was too small to be sustainable on her own and that she had therefore to seek shelter in the European Union. Gissurarson said that, on the contrary, Jon Sigurdsson’s arguments for independence, presented in mid-19th century, were still valid. Small states had indeed proliferated in the 20th century, for two good reasons. First, they benefited from the international division of labour made possible by free trade, or ‘globalisation’; second, the advance of democracy had brought about a general recognition of the right to national self-determination. Gissurarson pointed out that economies of scale did not always apply to small states, for example in the maintenance of law and order, because small states were frequently more homogeneous than big ones, typically also enjoying a higher level of trust and more transparency. Often the economies of small states were more open and flexible than those of big ones, which might explain why they tended to be more affluent.

Iceland’s foreign policy should first and foremost have the two limited and practical aims, Professor Gissurarson submitted, of selling fish and other goods and services and of seeking security for a small country without her own military. He quoted the late Icelandic Prime Minister Bjarni Benediktsson: “The respect for a small country in the international arena is inversely proportional to her loquaciousness there.” Even if the Icelanders had been disappointed in their traditional allies during recent difficulties, they were now faced with two alternatives. The Atlantic option meant increased cooperation with their neighbours in the North Atlantic, Norway, the UK, the US and Canada, and also with their friends in the Faroe Islands and Greenland. The EU option, on the other hand, meant increased integration with the countries on the continent. While the two options were not necessarily mutually exclusive, the Atlantic one seemed more natural and also more desirable: the UK was Iceland’s biggest single customer, and the US was by far the most powerful country in the world, with the military might to protect Iceland. Historically, the Anglo-Saxon powers and the Nordic countries had also fostered values such as freedom, democracy and the rule of law. However, in the modern world the Icelanders should take care not to lose their identity. They had to maintain the delicate ties woven by more than thirty generations living in the same country, speaking the same language and sharing the same memories. While the Icelanders had to be conscious of their tiny size, they should not be overwhelmed by it; instead, they should try to overcome it.

On the same panel, economist Asgeir Jonsson observed that monetary sovereignty had proved effective in helping the Icelanders over the 2008 bank collapse, but that in the long term it had produced instability. Using David Held’s distinction between sovereignty and self-governance, philosopher Salvor Nordal argued that some nations might be formally sovereign, but with limited control over their own affairs. According to lawyer Kristrun Heimisdottir, former Assistant to the Foreign Minister, the 2008 Icelandic bank collapse had demonstrated to the Icelanders that they were on their own in the modern world. Consequently they had, she added, to undertake a thorough review of national security. Psychologist Hulda Thorisdottir presented new surveys on the attitudes and opinions of the Icelanders, showing that the level of trust had not significantly gone down despite the bank collapse. The level of trust remained higher in the Nordic countries than elsewhere. In response, Professor Gissurarson pointed out that the high level of trust and widespread sense of solidarity enjoyed by the Nordic nations were important factors in their relative success. He also expressed his agreement with a point made by Heimisdottir that there was an important difference between the election of Donald Trump in the US and Brexit in the UK: Trump was a protectionist, whereas the leadership of the Conservative Party was firmly for free trade. Gissurarson’s lecture formed a part of the joint project of RNH and ACRE, the Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland, and the Future of Capitalism.”

Gissurarson Slides Reykjavik 19 April 2017

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Gissurarson: Allocation on Basis of Catch History Preferable

Professor Hannes H. Gissurarson, RNH Academic Director, gave a paper about the Icelandic system of Individual Transferable Quotas, ITQs, in the fisheries at a luncheon meeting of the Washington Policy Center in Seattle in the state of Washington Friday 14 April 2017. He recalled that he had first put forward the idea of defining private use rights to fish stocks at a conference in Iceland in the autumn of 1980, and that he had been ridiculed in the socialist newspaper afterwards. Hannes said that fisheries economists all agreed that open access to fishing grounds led to overfishing: The number of boats increased to the level where no profit was any longer to be gained from harvesting. The problem of reducing the number of boats (i.e. fishing effort) could be resolved in two ways. One possibility was to define exclusive and transferable use rights to the fish stocks on the basis of catch history. The other possibility was to auction off the fishing rights. The first method was more feasible because then no great existing interests were threatened. Nobody made a loss. The number of boats (i.e. fishing effort) would decrease naturally, in a spontaneous evolution where the more efficient would buy out the less efficient. The great disadvantage of the second method was that a great number of the fishermen would be driven out from the waters, almost all at once, and not bought out in by virtue of quota transfers.

This was the explanation, Professor Gissurarson submitted, why initial allocation on the basis of catch history had almost invariably been chosen when fishing grounds had been enclosed by the introduction of fishing rights. This had been done in Iceland with great success. Unlike the auction method, the initial allocation of fishing rights on the basis of catch history was Pareto optimal: Nobody lost; everybody gained. Such an initial allocation of rights also satisfied Locke’s proviso for the just appropriation of private goods from the commons, that nobody would be made worse off by it. The only right which others than quota holders was deprived of was the right to harvest fish at zero profit, as fisheries economists had demonstrated, a worthless right. Gissurarson’s talk was well received, with a lively discussion following it. In some coastal states of the U.S., quota systems are now being introduced in the fisheries. Gissurarson’s book, The Icelandic Fisheries: Sustainable and Profitable, was published in late 2015 and is freely available online. Professor Gissurarson’s talk formed a part of the joint project by RNH and ACRE, Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland, and the Future of Capitalism.”

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Gissurarson: Nordic Prosperity Despite Social Democracy

Photo: Olav A. Dirkmaat.

RNH Academic Director Hannes H. Gissurarson read a paper to the annual conference of APEE, the Association of Private Enterprise Education, in Maui, one of the Hawaian Islands, 12 April 2017 on “The Nordic Models: Prosperity Despite Redistribution.” He argued that it was a myth that the Nordic countries were successful because of the long-time social democratic domination of their politics. What explained their prosperity was a strong adherence to the principles of free trade and the rule of law, protection of private property rights, and cohesion, solidarity, mutual trust and transparency, brought about by their unusally high degree of homogeniety and strong collective identity.

Gissurarson pointed out that in the 18th, 19th and early 20th century, a vibrant liberal tradition could be found in the Nordic countries, as seen in the words of Anders Chydenius, a promoter of the invisible hand before Adam Smith, and in the deeds of Prime Minister Johan August Gripenstedt who laid the foundations for Sweden’s prosperity. The liberal constitution adopted by the Norwegians in 1814 and the extensions of personal liberties in Denmark after the 1848 end of absolutism also bore witness to the strength of Nordic liberalism. Three prominent Swedish economists of the 20th century belonged to the liberal tradition, Eli Heckscher, Gustav Cassel and Bertil Ohlin. If people were speaking about the “Swedish Model”, they had to distinguish between the liberal model of 1870–1970, the social democratic model of 1970–1990, when entrepreneurship was practically stifled in Sweden, and the mixed model since 1990 when Sweden has returned to some extent to the old liberal model.

Gabriel Calzada of the Francisco Marroquin University in Guatemala, Matt Ridley and Professor Gissurarson. Photo: Parellada Centeno Javier.

Professor Gissurarson presented many data in support of his argument: For example, Swedes in the US do better than average US citizens, and much better than Swedes in Sweden. This shows the importance both of culture and institutions on performance. Another example was a comparison between the “Nordic countries” in North America such as Manitoba, Minnesota, the two Dakotas, Alberta and Saskatchewan and the five Nordic countries in Europe. The North American ones are on average much more successful economically. This shows the importance of institutions on performance.

Finally, Professor Gissurarson discussed the liberal tradition in Iceland, well expressed in the works of Jon Sigurdsson, Iceland’s leader of the 19th century Independence Struggle, Arnljotur Olafsson, the author of the first book on economics in Iceland (almost straight out of Frederic Bastiat), and Jon Thorlaksson, a strong classical liberal, Prime Minister and founder in 1929 of the Independence Party. He described the comprehensive and successful liberal reforms in 1991–2004 under David Oddsson, Prime Minister and Leader of the Independence Party, and added that even if the Icelanders had discovered America in the year 1000 and lost it again, they had also discovered and developed two unique systems of settling possible conflicts about scarce resources: The private enforcement of Law during the Icelandic Commonwealth of 930–1262, and the system of individual transferable quotas in the fisheries, implemented since 1975 and becoming comprehensive in 1991. The latter system was both sustainable and profitable, Gissurarson maintained, but it was under siege by people envious of the profits being made there. Hopefully the Icelanders would not lose it as they lost America.

At the conference, Professor Gabriel Calzada from Guatemala was elected APEE President and Professor J. R. Clark from Tennessee reelected Treasurer. Professor Gissurarson’s participation in the conference formed a part of the joint project by RNH and ACRE, the Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland and the Future of Capitalism”. In Maui he had the opportunity to meet many liberal leaders and thinkers, many of whom have visited Iceland, for example Matt Ridley, Barbara Kolm, Bob Lawson, Douglas Rasmussen and Douglas den Uyl.

Gissurarson Slides in Maui 12 April 2017

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Arnason Keynote Speaker

For his paper, Professor Arnason received a gift from a local artist.

Professor Ragnar Arnason, Chairman of RNH Academic Council, was the keynote speaker at the conference of North American Association of Fisheries Economists in La Paz in Baja California in Mexico 22–24 March 2017. His paper was called “Catch shares: Potential for Optimal Use of Marine Resources.” More and More nations are introducing systems of transferable and permanent catch shares in their fisheries. The Icelandic system of individual transferable quotas is an example.

Professor Arnason will also be a keynote speaker at the conference of the European Association of Fisheries Economists at Dublin Castle in Ireland 25–27 April where he will speak about “Fishing Rights”, private use rights or even property rights to marine resources. Arnason wrote, with two co-authors, a much-discussed report for FAO and the World Bank, The Sunken Billions, about the enormous waste in international fisheries, brought about by more or less open access to the fish stocks instead of limiting their utilisation to holders of rights to do so. Arnason is, with Professor Thrainn Eggertsson, the best-known Icelandic economist internationally.

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Iceland’s Free Market Road Show

Dwight Lee, Federico Fernandez and John Fund (speaking).

The Association of Libertarian High School Students, led by Isak Hallmundsson, RNH and the Austrian Economics Center in Vienna, led by Dr. Barbara Kolm, held a well-attended “Free Market Road Show” in the University of Reykjavik Saturday 1 April 2017. John Fund from National Review and Fox News spoke about the new populism which was the expression of frustration and grievances by people who felt that they were ruled by an international elite of bureaucrats and intellectuals who were closer to each other than to the voters of their nations. Fund emphasised the progress brought about by free international trade. In the discussion after Fund’s talk Professor Hannes H. Gissurarson stressed that conservative liberals should not abandon international free trade, but that they should direct attention to the international elites which worked against the interests of taxpayers and consumers, safely ensconced in their faceless and non-responsible citadels in international organisations, universities and the like.


Federico Fernandez  from the Austrian Economics Center defended the share economy, including airbn accommodation and Uber transport. Professor Dwight R. Lee from the University of Georgia in Atlanta reminded the audience of the fact that government intervention rarely was effective in reaching their stated goals. One advantage of market competition was that people had to stop making mistakes, because they made a loss on them, whereas in public institutions they continued making them, because they were subsidised by taxpayers’ money. Gordon Kerr, a financial analyst from London, discussed weaknesses in the fiscal and monetary system prevailing in Europe. Gloria Álvarez from Guatemala criticized Latin American populism, inspired by the Castro Brothers in Cuba and by Hugo Chávez in Venezuela.

Thordarson giving his speech. Álvarez (obscured) to his left, Bragason and Kerr to his right.

Foreign Minister Gudlaugur Thor Thordarson gave the final remarks. He argued that Trump’s election in the US and Brexit were not comparable. Trump was against international free trade, whereas most Brexit supporters were in favour of it. The Icelanders ought to concentrate on selling fish and their other products, but not join other alliances than those required by their interests, such as NATO. He had however not seen any signs of a changed US foreign policy under Trump. In addition to Isak Hallmundsson, Magnus Orn Gunnarsson organised the event, and historian Bjorn Jon Bragason chaired the meeting. John Fund was interviewed on Icelandic television about American politics and Gloria Álvarez in the business magazine Vidskiptabladid. In the evening the participants met at the Petersen bar in Reykjavik centre for a more informal discussion.

The participation by RNH in the Free Market Road Show formed a part of its joint project with ACRE, the Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland and the Future of Capitalism.”

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The World after Brexit and Trump

RNH, The Association of libertarian high school students and the Austrian Economics Center in Vienna organise a “Free Market Road Show” at the University of Reykjavik Saturday 1 April, 11–15:30. The programme is as follows:

11:00 Opening Remarks

11:20 A Major Economic Reconfiguration: The End of the Free Trade Area?

Speakers: John Fund from National Review, previously Wall Street Journal, and Professor Dwight R. Lee

12:20 Informal Lunch

13:30 Troubled Times in a Divided World

Speakers: Gloria Álvarez, Latin American libertarian activist, and Gordon Kerr, London-based financial analyst

14:30 Coffee Break

15:00 Closing Remarks: Foreign Minister Gudlaugur Thor Thordarson

In the evening, 21:30 onwards, a get-together will be at the Petersen Bar in the centre of Reykjavik. The participation by RNH in the event forms a part of the joint project with ACRE, the Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland and the Future of Capitalism.”

Admission is free, and all are welcome, young and old, the curious as well as the hard-core libertarians. Books from the IEA and from the Icelandic Public Book Club will be available, with a great discount for students.

Here Glora Álvarez speaks on socialism:

Here John Fund comments on current affairs.

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