Ragnar Arnason, Professor of Fisheries Economics at the University of Iceland, criticized the call for a special tax or resource charge in fisheries at an international conference on the quota system and resource rent taxes, in the memorial hall of the University of Iceland Monday 14 October 2013. According to him, the call for a special tax on fisheries was based on two false assumptions about the fisheries. The first was that the profit generated in this sector derived from the resource alone. If this was the case, why was there then no profit prior to the quota system? The truth was that this sector was only profitable under the right set of rules. The other false assumption was that a special tax on fisheries would not distort the creation of wealth in the sector. Quite the contrary: Such a tax would remove the incentive of quota-holders to maximise the long-term profitability of the resource, for example by limiting the total allowable catch to the economically most efficient level. It would stifle innovation, transfer capital to other sectors and discourage spontaneous co-ordination within the fishing community. Moreover, it would reduce the competitiveness of the Icelandic fisheries in international markets: While the Icelandic fisheries were profitable and did not receive any government subsidies, fisheries in the neighbouring countries were all heavily subsidised.

Ralph Townsend, Professor of Fisheries Economics at the University of Maine and a former President of the North American Association of Fisheries Economists, argued that fisheries would create most wealth for their respective countries if quotas firmly belonged to their holders. He described his experience as Chief Economist for the New Zealand Ministry of Fisheries, and pointed out that New Zealand and Iceland were the first countries to adopt a comprehensive system of ITQs, or Individual Transferable Quotas, in fisheries. The result was the same in the two countries: Losses turned into profits. Townsend said, however, that the system could be made more efficient if the TAC, or Total Allowable Catch, over each season was set, not by government bureaucrats, but by those with most at stake—the quota holders themselves. Fisheries economists had, after a promising start in the 1950s, neglected to develop ideas about efficient self-governance in the fisheries. Possibly the idea of a corporation owning and managing each kind of fisheries would be appropriate.

Dr. Gunnar Haraldsson, Director of the Economic Research Institute at the University of Iceland and the former Fisheries Senior Adviser at the OECD, analysed the CFP, Common Fisheries Policy, of the EU, European Union. There was a consensus, Haraldsson said, that the aims of the CFP, such as the long-term sustainability and profitability of fish stocks in EU waters, had not been achieved. 95% of the Mediterranean fish stocks and 47% of the Atlantic fish stocks were being overfished, according to recent statistics, while subsidies to European fisheries amounted to 3.3 billion euros, or to roughly half of the value of the total catch of European vessels. It was well-recognised by EU leaders that the CFP had to be revised. Some of the possible reforms now being discussed were to transfer the management of some fisheries to individual regions and associations and to create some kinds of fishing rights which need not however be labelled ITQs. One problem was that TACs, Total Allowable Catches, in European fish stocks were all set in Brussels, not always according to the best scientific or economic advice.

From left: Kristjan Loftsson, Ralph Townsend, Hannes H. Gissurarson, Dadi M. Kristofersson, Gunnar Haraldsson. Photo: Omar Oskarsson.

Hannes H. Gissurarson, Professor of Politics at the University of Iceland, wanted to focus on the political and ethical aspects of the utilisation of scarce natural resources. If the freedom of one to utilise a resource was not to harm others or to infringe upon their rights, access to the resource had to be limited. An old Icelandic example was “itala”, summer grazing rights in the mountains being allocated as quotas to each farm in the valley community below. Another example was the system of fishing rods in the Icelandic salmon rivers, by which each farm owned a right to the use of a preset number of rods in the river per day during the season. The third example, of course, was the quota system in the Icelandic ocean fisheries. In the beginning, quotas had been allocated according to catch history, because that was the only way to limit access without changing too abruptly the conditions under which the owners of fishing capital operated. The only right which had been removed from others had been the right to run fishing firms at zero profit; and this right was by definition worthless. Gissurarson then moved on to whaling. He asked why whale preservationists could send whales to “graze” in the fertile Icelandic “meadows” or fishing grounds, where the whales were taking about 6 million tonnes of krill, other seafod and fish each year, while the Icelandic fishing fleet harvested little more than one million tonne of fish each year. This was as if somebody sent his pets to graze in the garden of his neighbour without the neighbour being allowed to do anything about it, neither to utilise the pets or to receive any compensation for their grazing. Similar considerations applied to the mackarell, Gissurarson said. This highly predatory, but tasty fish had recently moved into the Icelandic waters, almost like the biblical plague of locusts. The EU threatened sanctions, however, if the Icelanders harvested more than a fraction of the mackarell. It was as if a farmer would allow his cows to drift into his neighbour’s meadows, and then resolutely refused to compensate the neighbour in any way.

Ingibjorg Bjornsdóttir by the bust. Photo. Omar Oskarsson.

The conference was held in the memory of Arni Vilhjalmsson, Professor of Finance at the University of Iceland and a leading Icelandic entrepreneur and businessman. One of the companies which Professor Vilhjalmsson was involved with, Hvalur Inc., gave the University a bust of Vilhjalmsson, sculpted by Gerdur Gunnarsdottir. The bust was handed over by Kristjan Loftsson of Hvalur, and Vilhjalmsson’s widow, Ingibjorg Bjornsdottir, unveiled it. Dr. Dadi Mar Ingolfsson, President of the School of Social Sciences at the University of Iceland, received the bust on behalf of the University, and he also chaired the conference which was very well-attended. Vilhjalmsson was a respected and popular teacher, and many of his old students were present. After the conference, there was a reception on the premises. The main sponsors of the conference were Hvalur Inc. and Landsbankinn, where Vilhjalmsson served on the board for many years. He was also on the board of many prominent Icelandic companies, such as Icelandair, Nyherji, Hampidjan and Grandi. The conference formed a part of the joint RNH-AECR project on “Europe, Iceland, and the Future of Capitalism”. The conference was well reported in the press, Morgunbladid publishing an account of it 15 October and an analysis of the papers 17 October.

Arnason Slides

Gunnar Haraldsson Slides 14 Oct.

H.H. Gissurarson Slides 14 Oct.

Photo: Kristinn Ingvarsson.

Margaret Thatcher was, with Winston Churchill, the only world-historical political figure which came out of the United Kingdom in the 20th Century, British writer John O’Sullivan said to a meeting endorsed by RNH, but held by the Young Independents in Iceland on 13 October, Thatcher’s birthday. Whereas Churchill was President Roosevelt’s junior partner in winning the Second World War, Thatcher was President Reagan’s junior partner in concluding the Cold War successfully and giving freedom back to the oppressed peoples of Central and Eastern Europe.

In the Falklands War and in the disputes with militant trade unionists, Thatcher also showed her resolution and courage, according to O’Sullivan. It had become essential to break the stranglehold unions had on British enterprise and to reverse thirty years of decline. At the meeting, O’Sullivan—Thatcher’s friend and speechwriter while she was Prime Minister in 1975–90—give a spirited analysis and defence of Thatcher’s remarkable political career. According to him, Thatcher kicked up and kissed down: she could treat her distinguished colleagues in the cabinet and senior civil servants with brutality and even contempt, and should perhaps have done less of this, but she was always kind and nice to her chauffeurs, tea ladies and other members of her staff.

O’Sullivan has written many pieces on Thatcher, for example about her two sides for Daily Telegraph. He also spoke on Thatcher for the online Wall Street Journal:

At the meeting, a short documentary produced by the British Conservative Party was shown:

Many documentaries about Mrs. Thatcher are available on Youtube.

Before O’Sullivan’s talk, Icelandic Interior Minister Hanna Birna Kristjansdottir, who chaired the meeting, spoke about what an inspiration Thatcher had been to her and many other women in the fight for the equality which really mattered: the full and equal freedom of all, men and women, to pursue their interests under the law. Professor Hannes H. Gissurarson concluded the meeting by telling a few stories about his own encounters and discussions with Thatcher, and also about the relationship between Thatcher and Friedrich A. von Hayek, their common mentor on whom Gissurarson wrote a doctoral dissertation. Thatcher, the Baroness Kesteven, was the patron of AECR, Alliance of European Conservatives and Reformists, with which RNH is working on two projects, “Europe of the Victims”, and “Europe, Iceland and the Future of Capitalism”. The meeting on Thatcher’s birthday provoked much discussion. On 12 October 2013, the libertarian online magazine Andriki advertised it. On 21 October 2013, Morgunbladid published an interview, conducted by journalist Kolbrun Bergthorsdottir, with John O’Sullivan on Thatcher, especially the personality behind the public image. O’Sullivan’s talk will be published in an Icelandic translation in the magazine Thjodmal.

From left: Butler, Petratos, Gissurarson, Jonsson, Oskarsdottir. Photo: Kristinn.

In the well-attended international conference on the Icelandic bank collapse 7 October 2013, five years on, Dr. Eamonn Butler of the Adam Smith Institute, London, stressed that misguided government intervention, not least subprime loans in America and the soft monetary policy both of the American Fed and other central banks, was mostly to blame for the financial crisis of 2007–8. The right response was therefore not more of the same, increased regulation and intervention in the financial markets.

Professor Hannes H. Gissurarson of the University of Iceland pointed out that the Icelandic banks were not proportionally bigger than for example British or Swiss banks. The difference was, however, that the British and the Swiss banks, not to mention the Nordic banks, were bailed out by the American Fed. Moreover, Gordon Brown’s labour government did not only close down the Icelandic banks in London at the same time as it bailed out all other banks in the United Kingdom, but it also invoked an anti-terrorism law against Iceland, a long-time ally with no military, stopping all transfers to and from the country, and thus rendering impossible any attempt to save the banking sector, or a part of it. These decisions by the American and the British, having an enormous impact on an already vulnerable economy, had still to be adequately explained.

Dr. Pythagoras Petratos of the Said School of Business at Oxford University gave a description of the financial crisis in Cyprus, an island like Iceland, but unlike it in the European Union and with the euro as its currency. For those Icelanders who believed that becoming a member of the EU and adopting the euro was a panacea, this talk was very interesting.

Dr. Asgeir Jonsson of the University of Iceland argued that one cause of the bank collapse in Iceland was, paradoxically the high credit ratings extended to Icelandic companies in the early 2000s, which were in turn brought about by the successes of the David Oddsson governments of 1991–2004 in stabilising the economy, liberalising foreign trade, privatising previously loss-making enterprises, reducing taxes, developing further the efficient system of ITQs in the fisheries, strengthening the pension funds, and so on. Jonsson said that the easy access to cheap credit had been an irresistible temptation to young Icelandic entrepreneurs, supported by the banks. He discussed the many mistakes which Steingrimur J. Sigfusson, Minister of Finance in the first years after the bank collapse, made, including selling two of the banks to foreign creditors.

The conference gave rise to a lively debate in Iceland. Gissurarson published an article in Morgunbladid 7 October on the issues to be debated at the conference. Vidskiptabladid printed an interview with Butler 10 October, and Morgunbladid published a report of the conference 8 October and interviewed Butler 7 October, Petratos 8 October and Jonsson 9 October. The government broadcasting service interviewed Butler—who had defended the Icelanders in their lowest hour in October 2008 when the Labour Leader Gordon Brown had invoked the anti-terrorist law against them. Also, the online edition of Vidskiptabladid broadcast an interview with Butler 7 October. The same day, former Minister of Justice Bjorn Bjarnason blogged about the meeting.

Following the international conference, on Monday 7 October, 141 guests attended the RNH Freedom Dinner in Bjortuloft in Harpa. The speaker of the evening was David Oddsson, editor of Morgunbladid, former Prime Minister and Governor of Iceland’s Central Bank during the collapse. Oddsson reminded the audience of the famous television interview with him exactly five years earlier, on 7 October 2008, where he had said that the Icelandic population should not be made to pay for debts incurred by reckless people. However, in the analysis of the bank collapse, many in Iceland and abroad had ignored the fact that this was an international financial crisis where Iceland had been hit first. Oddsson quoted words to this effect from a telephone conversation with Mervyn King, the Governor of the Bank of England, just before the collapse. Oddsson also described a discussion he had had with an influential financial expert on 30 July 2008. This expert had said to him that in order to send the right signals to the financial markets soon one bank would be taken down, and that he predicted it would be Lehman Brothers; and that one small country would be taken down, and that he predicted it would be Iceland. Here is a trailer from a documentary about David Oddsson and his political career, produced by the Young Independents and available at their online shop:

Gissurarson Slides 7 October 2013

Jonsson Slides 7 October 2013