Saturday 7 September 2019, in the afternoon, the American Institute of Economic Research held a seminar at Hlidarsmari 19 in Kopavogur. The speakers, Professor Edward Stringham and financial expert Brad DeVos, talked about the Institute and about French 19th century writer Frédéric Bastiat, an eloquent defender of free trade, as is demonstrated by his famous essays on ‘What is Seen and Unseen in Political Economy’ and ‘The Petition of the Candlemakers’. In the former essay, Bastiat points out the invisible consequences of trade restrictions, and in the latter one the candlemakers demand protection from another producer of light, the sun. At the meeting, the Icelandic Bastiat Society was founded, one of many such societies in the world, under the leadership of Magnus Orn Gunnarsson.

In the following discussion, Professor Hannes H. Gissurarson pointed out that the first Iceandic treatise on economics, Audfraedi (The Theory of Wealth) by Arnljotur Olafsson, published in 1880, had been written very much in Bastiat’s spirit, as the author himself acknowledged. Bastiat had many other disciples in the Nordic countries in the 19th century, including Swedish statesman Johan August Gripenstedt who had created the preconditions of Sweden’s wealth by extensive liberal reforms in 1856–1866. One of Bastiat’s works, The Law, has been published in Icelandic, and RNH is going to have it reprinted as soon as possible. The accessible introduction to economics by Henry Hazlitt, Economics in One Lesson, written under Bastiat’s influence, is also available in Icelandic.

Stringham and DeVos were in Iceland for the conference of Students for Liberty the day before. RNH’s support of the Icelandic Bastiat Society forms a parts of a joint project with ACRE, the Alliance of Conservatives and Reformists in Europe, on ‘Bluegreen Capitalism’.

Daniel Hannan, Secretary-General of ACRE, the Alliance of Conservatives and Reformists in Europe, and leader of the UK Conservatives in the European Parliament, gave the keynote speech at a regional conference of Students for Liberty Iceland and the American Institute of Economic Research, on “The Future and Freedom”, in Kopavogur in the afternoon of 6 September 2019. Hannan said that Iceland and the United Kingdom were good friends and that he had often visited Iceland. These two nations should maintain their close ties. Turning to Europe, Hannan remarked that it was extraordinary to witness the attempts of some people to disregard the decision in the national referendum on EU membership. The fact was that the UK would be much better off outside than inside the EU. The arguments for international free trade were however persuasive. Hannan said that his support of Brexit was not least in order to increase free trade, although the British would of course continue to do business with the EU countries. He himself wished them well. It was the ordinary man who benefitted most from free trade, Hannan added, and indeed it was often opposed by special interest, seeking protection from competition.

David Oddsson, Prime Minister in 1991–2004, delivered some opening remarks. He recalled that Hannan had publicly protested when the British Labour government inexplicably had invoked an Anti-Terrorist Act against Iceland in the midst of the 2008 bank collapse. This had been a noble gesture indeed. Oddsson discussed how different generations seemed to have different worries. When he was Prime Minister in the 1990s, he had had countless warnings of an impending 2000 Problem, but there had been no problem. Then there had been a lot of talk about a chronic fatigue syndrome, and about workplace burnouts, and now about global warming, even global heating. Often the danger was exaggerated and the great worry not well-founded. Never had there been more prosperity and peace than at present, but the young generation must not forget that this did not come about without a struggle. The fight for freedom had to go on. Indeed, to use yet another fashionable term, freedom was being bullied and harassed every day. Turning to Europe, Oddsson pointed out that many of the reforms implemented by his government—such as reduction of public debt, tax cuts, privatisation, the strengthening of pension funds and development of the system of individual transferable quotas in the fisheries—had been quite independent of Iceland’s membership in the European Economic Area, EEA, although it has of course been an important step in the right direction to open up the Icelandic economy and to gain access to the European market.

Professor Hannes H. Gissurarson described green capitalism. He distinguished between wise-use environmentalists (like himself) who wanted to utilise natural resources prudently and beneficially, and ecofundamentalists believing that nature had special rights against man. In fact the conflict was not between man and nature. It was between two groups of people who wanted to utilise resources in different ways. Consider wolves in the French Alps, Gissurarson said; they killed sheep. Which was to be preferred, the interests of those who wanted to preserve the wolves, or the interests of those who wanted to rear sheep in order to feed and clothe people? It was however not sufficient, Gissurarson added, to price resources. They had also to be transferred into private hands. Protection required protectors. By one stroke of a pen, for example, poachers threatening elephants and rhinos in Africa could be changed into gamekeepers—by allocating private property rights to the elephants and rhinos to their villages.

Gissurarson Slides at SFL 6 September 2019

Halla Sigrun Mathiesen chaired the conference. The other speakers were Mariam Gogoshvili from Georgia, Professor Edward Stringham, Peter C. Earle og Andrew Heaton. The Icelandic media paid much attention to the conference. The daily Morgunbladid printed a full report of it, the business magazine Vidskiptabladid published an article about Hannan and the online journal Viljinn interviewed Hannan. RNH participation formed a part of the joint project by RNH and ACRE, the Alliance of Conservatives and Reformists in Europe, on ‘Bluegreen Capitalism’.

RNH was one of the sponsors of the Students for Liberty conference in Reykjavik 6 September, with the American Institute for Economic Research. In connection with the conference, many scholars visited Iceland, including Economics Professor Edward Stringham and the financial expert Peter C. Earle, both from the US. The Institute of Economic Research at the University of Iceland used the opportunity to hold a seminar in the morning of 6 September with Stringham and Earle, about the 2008 financial crisis and its aftermath. Stringham argued that the two main factors in the crisis had been the availability of cheap and risky mortgages on the one hand and low interest rates charged by the US Fed on the other hand. He stressed that he saw nothing wrong with financial institutions trying to lower their risk by credit default swaps and other kinds of derivatives. The Director of the Institute of Economic Research, Dr. Sigurdur Johannesson, chaired the seminar.

The participation of RNH in the visit by Professor Stringham and his associates, and in the meetings they held in Iceland, formed a part of the joint project by RNH and ACRE, the Alliance of Conservatives and Reformists in Europe, on “Bluegreen Capitalism”.

The best way of tackling environmental damage is free trade and definition of property rights to natural resources; it is much better than trying to prohibit DDT for example, or whaling, or trade in ivory, Professor Hannes H. Gissurarson argued in a lecture 21 August at a seminar on environmental protection in the Summer University on political economy in Aix-en-Provence. According to Gissurarson, the international prohibition on using DDT against the mosquitos transmitting malaria to people has cost the death of millions of people. Whereas DDT was probably over-used in agriculture in the past, it was harmless to human beings.

The international moratorium on whaling was also unreasonable, Gissurarson maintained. For example, the whale stocks harvested by the Icelanders, fin whale and minke whale, were both robust. Whales in the Icelandic waters eat approximately six million tonnes of seafood, including small fishes, a year, while the Icelanders harvest a little more than one million tonne of fish. Whale preservationists seem to expect the Icelanders to feed the whales without being able to utilise them. They were like a truculent farmer grazing his livestock on his neighbours’ meadows.

Neither did the international ban on ivory trade have the consequences desired, Gissurarson said. Undeniably, some elephant stocks in Africa were endangered, but this was because poachers craved the ivory which was much in demand. The wisest move would be to define property rights to elephants, and to allocate them to the communities living next to them. Then, in one stroke, poachers would change into gamekeepers. Environmental protection required protectors, stewards, owners. The old adage was still in force: Everybody’s business is nobody’s business. Gissurarson suggested that the Icelandic system of individual transferable quotas was a good example of the sustainable and profitable utilisation of a natural resource. He gave some other examples of environmental damage and protection from his book Green Capitalism.

Gissurarson Slides Aix 21.08.2019

In the seminar, Professor Jean-Pierre Chamoux also gave a talk. He emphasised that freedom meant responsibility. People damaged the environment because they did not bear responsibility for it. Environmental damage cost them personally little or nothing. This had to change, not least by defining property rights to goods. The participation of Professor Gissurarson in the Summer University formed a part of the joint project by RNH and ACRE, the Alliance of Conservatives and Reformists in Europe, on “Bluegreen Capitalism”. In the closing dinner of the University, Gissurarson met with two former chairmen of the Hayek Society at Oxford, which he had participated in founding in 1984: Martin Cox, director of John Locke Institute, and Sunny Chen, still a student at Oxford. During term, the Hayek Society invites distinguished speakers to give papers on the principles and problems of individual liberty.

Small states tend to be more efficient and flexible than big ones, RNH Academic Director, Professor Hannes H. Gissurarson, argued in a lecture 19 August 2019 at a seminar on small states at the Summer University on Political Economy in Aix-en-Provence. Small states usually are more homogeneous, and consequently they have lower political transaction costs and spend less per capita on police and the military. Gissurarson found it no coincidence that the world’s richest countries were small states, Norway, Switzerland and Iceland in Europe and Singapore and Hong Kong in Asia, not to forget the fifty states forming the USA. He pointed out that international free trade enabled small states to benefit from the international division of labour: political units therefore could be smaller. Economic integration facilitated political disintegration, so to speak, as shown by the proliferation of independent states in the latter half of the twentieth century. The most serious disadvantage of smallness was however military vulnerability, as was demonstrated by the countries in Central and Eastern Europe before the Second World War. Small states therefore had to try to provide for their security by alliances with powerful states, as in NATO. Gissurarson is the author of a recent report, In Defence of Small States.

HHG Slides Aix 19.08.2019

At the seminar on small states Professor Carlo Lottieri discussed the example of Switzerland, perhaps the richest and most successful country in Europe. Her special features could be traced to the middle ages when the Swiss followed a different course from other European nations, devolving power, not only to cantons, but also to communes, Gemeinde. The Swiss economy consequently did not have to bear the burden of princes, kings, emperors and popes and could grow peacefully and spontaneously. The power to tax was circumscribed and private property rights were respected. Gissurarson’s contribution to the Summer University formed a part of a joint RNH-ACRE project on “Bluegreen Capitalism”. At a reception given in the City Hall by the Mayor of Aix-en-Provence for teachers and students at the Summer University, an old friend of Iceland, Dr. Tom Palmer of Atlas Network, received a medal from the city and gave a talk on the dangers of right-wing populism.

Gissurarson delivering his remarks. Next to him: Professor Gwartney.

At Freedomfest in Las Vegas in July 2019, RNH academic director Professor Hannes H. Gissurarson was asked to be a commentator on a paper by Professor James Gwartney on increased global income equality. Gwartney used data from the Angus Maddison Project and from the World Bank which show that income inequality, as measured by the Gini coefficient, was being reduced worldwide. Gwartney argued that the main explanation was the communications and transport revolution of recent times: This revolution was even more important than the Industrial Revolution of late Eighteenth Century, because this time it extended to the whole of the world. Some heavily populated countries had gone from poverty to prosperity. Gwartney suggested that the reason for the relatively even income distribution in the Nordic countries was not government policy, but rather the homogeniety of the population.

Professor Gissurarson devoted his comments mainly to the Nordic countries. He pointed out that they had a long and vibrant liberal tradition. For example, the Finnish-Swedish pastor Anders Chydenius had proposed a theory of the coincidence of private gains and the public good under unfettered competition, some years before the publication of Adam Smith’s Wealth of Nations. Liberal Swedish statesmen of the 19th century had implemented comprehensive economic reforms which had encouraged rapid and continuous economic growth in the country for a long period—the first Swedish model. Gissurarson argued that the success of Sweden and other Nordic countries in the 20th century could be attributed to 1) a strong tradition of the rule of law, including protection of private property rights, 2) free trade and 3) solidarity, a high level of trust and the pursuit of consensus, based on national homogeniety, as Gwartney had indeed pointed out. It was not until 1970 that the politically dominant Social Democrats had changed course and introduced heavy taxation and extensive government intervention.

The second Swedish model, implemented in 1970–1990, turned out to be unsustainable, according to Gissurarson. Sweden had ended up on the wrong side of the Laffer Curve where taxation became elf-defeating: an increase in the tax rate did not result in an increase in tax revenue, but rather in its decrease. The scenario described by Ayn Rand in Atlas Shrugged indeed seemed to apply to Sweden in this period: Those who created wealth either moved away, ceased to produce or desisted from innovations. The only jobs created during this period were in the public sector. However, now the Swedes found a new consensus which could be called the third Swedish model: From 1990 onwards government has tried to encourage private enterprise and keep taxation from becoming self-defeating. Professor Gissurarson’s participation in the conference formed a part of the joint project with ACRE, the Alliance of Conservatives and Reformists in Europe, on ‘Bluegreen Capitalism in Europe’.