Posts Tagged ‘libertarianism’

God Rot Ye Libertarians and other ditties

Saturday, April 10th, 2010

While searching online for old folk music (as I often do), I came across some excellent Tory tunes from ye olde days (i.e. the 17th and 18th centuries), along with some more modern compositions. Possibly my favourite is this one:

(To the tune of “God Rest Ye Merry, Gentlemen”):

God rot ye libertarians; you fill us with dismay!
Your atheistic tendencies, your anarchistic way,
Your flaunted immorality leads innocents astray,
But you’ll get yours on Judgment Day, Judgment Day,
Yes, you’ll get yours on Judgment Day!

Other, more ancient Tory songs to follow:

Glorious things of thee are spoken,
Charles the wearer of our crown,
For thy sceptre ne’er was broken,
Nor thy throne e’er battled down.
True-born kings are ne’er cast under
By the means the Roundheads chose;
Even though they rant and thunder,
Thou may’st smile on all thy foes.
 
 
Hapsburg, Stuart, Bourbon, Romanoff -
Where are our men great as those?
All we get are unleashed peasants,
Incompetents irrationally chose.
Such petty tyrants, egalomaniacs,
Loosed into the masters’ beds.
How can we expect our liberties
When the masses can’t use their heads?
 
 
Naught’s been gained by revolution;
Levelers, grovel in your graves!
Ye who sought the institution
Of a freedom that enslaves
Shall receive no absolution
While St. George’s banner waves!
Always shall we shun pollution
From your swarms of traitor knaves!
 
 
In his cornfield, Periander
Nipped the barley stalks, ‘tis said.
Each that stood o’er others grander,
Leveled, lost its golden head.
Thus do tyrant and supplanter
Strive to fill the world with dread.
Yet in vain their toadies pander -
Crown and Right shall ne’er lie dead!
 
 
Cavaliers and loyal Tories,
Like the ivy, ever cling
To the past’s untarnished glories!
To the Right we drink and sing.
Fie on modern Liberal mores -
Sovereignty’s a finer thing!
Nobler monarch e’er reigned o’er us:
Charles the Blessed Martyr – King!
 
And finally…
 
To Edmund Burke we raise our glasses up!
Damn the French, call the wench,
Bring up another cup
To pass around until we call for more.
Toast the Queen! Drink the Green!
Raise a raucous roar!
 
Tradition! Tradition!
Raise the cup high, and DON’T ASK WHY!
Tradition! Tradition!
Ours but to do or die.
 
Heretics beware!
Remember Neitzche’s dead.
It’s no fluke; like the Duke
Of Cambridge always said,
“All change is bad. Progress is perverse.”
Restore the Crown! Sing a round!
Another solemn verse:
 
Tradition! Tradition!
Raise the cup high, and DON’T ASK WHY!
Tradition! Tradition!
Ours but to do or die!

How to fix the banks

Sunday, March 22nd, 2009

On Tuesday 17th March 2009, Professor Kevin Dowd gave the Libertarian Alliance’s 2nd Annual Chris Tame Memorial Lecture, “A Libertarian View of the Financial Collapse”, which I attended at the National Liberal Club in London.

http://video.google.com/videoplay?docid=2495820480786986515&hl=en

There is a transcription with notes and appendices at http://www.libertarian.co.uk/lapubs/econn/econn111.htm.

Despite its title, Professor Dowd’s lecture did not focus on the causes of the financial crisis. For that, I would recommend “The Financial Crisis: Causes and Possible Cures” by John Allison, CEO of BB&T, on 29th January 2009.

Professor Dowd did identify statist measures which contributed to the banking crisis: limited liability laws which encourage irresponsible risk taking; the deliberate destruction of the convertible pound, which allowed inflation; state-mandated deposit insurance; and central banking. All this is the opposite of a free market, far from a laissez-faire system which some people claim it to be.

He criticised the reappearance of Keynesianism, which he described as “discredited and abandoned in 1976″. He criticised the government response so far, pointing out that credit is tight because confidence is lacking, not because interest rates are too high, and that printing money will erode confidence further. Erratic government action, such as further bailouts when previous ones didn’t work, also erodes confidence.

However, most of Professor Dowd’s lecture was on how to fix the banks. Our objective is “a safe, stable and efficient financial system”. “This can be achieved through a system of laissez-faire, or free banking.” Our objective is free banking on a sound commodity based currency.

We could apply laissez-faire immediately, in the middle of the crisis, and let market forces purge the rot out of the system. This sharp but short shock, says Professor Dowd, would be better than what governments actually did do. However, it would be politically difficult.

More importantly, we can do better.

The Bank Recovery Programme

Professor Dowd proposes a “bank recovery programme”, involving no state guarantees and no bailouts, which would deal with the fundamental structural problems of the banking system.

The key question is: How do we deal with financially distressed firms?

Professor Dowd says that we should simply apply receivership law to banks just like any other firm. A firm’s liabilities should match its assets. If a firm’s liabilities are greater than its assets, it should go into receivership. The aim should be to restructure a bank’s balance-sheets so the firm is adequately capitalised, and hopefully return it to operation. Assets are written down, and creditors are paid off first. Shareholders get what is left, if anything. If creditors have to take a hit, then shareholders lose everything. If the firm is still potentially viable, it is recapitalised with new shareholders and returned to operation in a financially healthy state.

In the case of banks, there is share capital, and deposits (debt). The debt obligation is fixed in nominal terms. If a bank does not have enough assets to meet its debt obligations, the depositors make a loss, and the shareholders are wiped out.

This programme deals with people who claim banks are too big to fail. It allows us to fix the banks without them failing, yet without a bailout; without taxpayer involvement.

The programme treats banks just like any other firm. Some people claim that “banks are different”. Yes, but not in any relevant way. Existing bankruptcy law should cope just fine with banks. Indeed, before the present crisis, the authorities were saying just that: that we were operating in a “non-zero failure regime”.

There is one way in which we must treat banks differently from other types of firm. “Any receivership solution to a distressed firm needs to take into account the nature of the firm’s business”. If an electricity provider goes into receivership, you don’t want to switch off the the generators while the firm is sorted out. If a hospital goes into receivership, you don’t close it down while you sort the accounts out.

Banks are central to credit system for the rest of the economy. Banks are central to the payment system. So receivership must be implemented carefully.

The government has placed an obstacle to receivership: deposit guarantees. This reassures depositors (with a catastrophic long term cost). But it prevents receivership operating normally. It prevents depositors taking a hit.

So the government must rescind the deposit guarantee at the same time as implementing the receievership package.

They should do it over a weekend. On Friday evening, the government should inform banks that the deposit guarantee is immediately rescinded. Any bank that was confident could choose to weather the possibility of a run on its deposits. Other banks would go straight into receivership. The receivers would move in overnight, and work quickly to minimise disruptions to the wider economy.

Cash withdrawals would be limited for the duration of the operation. It is important to keep the banks’ assets in the banks while we devalue them. Assets would be written down quickly according to prepared write-down formulae for different asset classes. These wouldn’t need to be particularly accurate: indeed, it is best if write-downs are harsh, worst-case valuations to be on the safe side.

Now comes recapitalisation. Shareholders lose everything. The new capital comes from deposits: some deposits are converted into shares.

For example, imagine a bank with £80 of assets and £100 of deposits (debt) on its books. The shareholders are wiped out. The depositors lose £20. The receivers then judge how much share capital is needed, and convert a proportion of deposits into shares. The depositors become the new shareholders.

We could protect smaller depositors to make the plan politically easier.

On Monday the banks reopen.

Hopefully, the market would realise assets were worth more than they were valued at, and share values would rise. That’s the advantage of harsh write-downs. Depositors would make a loss on their deposits, but a capital gain on their new shares. The capital gain would increase as confidence returns.

Shareholders should take the hit. After all, what has the taxpayer got to do with it?

With a good capital base, the banks would be healthy again.

Here is a letter Professor Dowd wrote to the Telegraph on Sunday 25th January 2009:

SIR – The Government’s policy towards the financial crisis is clearly not working. Having “saved” the banking system with the big bail-out last October, it now turns out that the banking system needs another big bail-out three months later, and the plunges in the banks’ share prices last week suggest that this second bail-out is not working either.

The Government’s blundering is leading towards the piece-by-piece nationalisation of the banking system, with no thought-through solution to the underlying problems.

Any solution has to provide a framework within which banks can restructure their balance sheets and restore their financial health. Were these institutions anything but banks, the obvious answer would be for them to go into receivership. Their assets would be written down and creditors’ claims on those assets would be cut; they could then be recapitalised and returned to normal operations.

Yet, radical as it might appear, this same receivership-recovery model can also be applied to banks. It could be implemented via formal receivership, as existing law provides for, but could also form the basis of a government rescue package that would stop further losses being inflicted on taxpayers.

The key elements would involve: write-downs on assets; write-downs on banks’ debts (for example, swaps of deposits for equity, with exemptions for smaller depositors); and measures to minimise disruption to banks’ ongoing ability to provide both credit and payment services (including ensuring that the rescue took place over the weekend).

The combination of asset write-downs and fresh equity would restore confidence and put the banks on a sound footing again.

Prof Kevin Dowd
Centre for Risk and Insurance Studies, Nottingham University Business School

Johnathan Pearce also has a write-up with comments over at Samizdata.

What is Capitalism for?

Monday, January 19th, 2009

by Hugh Burling

The other night I was accused of being a Socialist. In conversation I had pursued the claim that it would be a good idea to encourage ordinary people and high-street banks to make lower-risk investments, such that there would be less risk overall in the system, and that slower growth was a fair price to pay for a steadier market. I made no reference to legal compulsion at any stage. As I understand it, the high-risk investment strategies that were until recently so widespread became so partly due to the popular demand for them. That is, ordinary people wanted higher and higher returns on their savings accounts and their small-scale investments, alongside lower and lower interest charged them on their use of credit cards and borrowing. To meet these demands, win more customers and stay ahead in the finance market, banks (investment, lending and otherwise) encouraged their employees to engage in more sophisticated and risky practices. Some thing or things went wrong and the cards slipped. I beg forgiveness for my primitive understanding and exposition of our financial markets and crisis: I think my comments below will make clear why I don’t take as much interest as some in the minutiae of the operation of our collective greed.

At any rate, the conversation was reduced to the question being asked of me: “Imagining that you trusted the borrower so implicitly that the ‘risk’ of a loan could only be judged as ‘zero’, what would you consider a fair rate of return, when you leant someone your money?”

Once upon a time, the moral engines of our society condemned usury, the lending of money for the lender’s profit. The consequence was the emergence of a complex system of gifting and deviously-worded insurance deals based on bartering. I am no expert on the financial operations of the Knights Templars but I strongly suspect that even their feudal wheelings and dealings were much simpler than usury has become since it was made legal for the majority of the population. We have always had markets and capital. At least, they both seem to go back a long way (see Sean Gabb’s “Market Behaviour in the Ancient World: An Overview of the Debate” (also available as a pdf). Wanting to make a profit from helping other people is probably ‘innate’ to human economic behaviour – at least it is so common that the desire needs to be factored into considering how to motivate people to help each other.

Indeed, the beauty of Capital‘ism’ is that it reveals how a selfish motivation can benefit others. But that beauty does not stem from the selfishness of the motivation. Intellectually (rather than historically or emotionally), we support financial markets because of three truisms: (1) “many people act out of selfish motivations more readily than out of altruistic ones”, (2) “borrowing money is a very efficient way for an individual to be able to begin new enterprises and hence develop new technology, provide more services, and a variety of other things we like to have” and (3) “many incidences of borrowing and lending must occur in order to have all the things we like produced or provided”. Because so many ‘lending transactions’ – the term ‘investment’ assumes that the transaction has a selfish motivation – must be carried out, we need to take account of the selfish motivations of the aforesaid many people. Also because selfish motivations are so popular, we do not expect a majority of entrepreneurs, inventors, artists and so forth to make a living on the feudal basis of patronage (in which they suffered perpetual disadvantage). So what we do is to try and facilitate selfishly motivated lending.

The problem arises when that facilitation changes to expectation, then reliance and finally the inability to imagine that people do, sometimes, want to help other people for reasons other than financial gain, and that alternative motivations are ultimately better, if rarer. This inability leads to a twisting of the truisms. The selfish ‘many’ changes to ‘all’, and usury becomes, in the mind of the public, the only means towards growth rather than merely a very efficient one.

To end the suspense, the answer I gave to the question was “nothing”. If one could spare the money, and one sufficiently trusted the borrower to return it to one before one needed it, there would be no point in one asking for interest. Nothing would have been lost. Of course, the lender would have gained nothing either. My accuser was flabbergasted at the idea of performing a transaction without the aim of capital gain, hence his accusation.

When we advocate a free market, extol the virtues of honest trade and applaud the system which makes the best of our too-often selfish instincts, we must never forget that a compromise is all capitalism is: a compromise with our greed. It is not an ideology, it cannot provide a goal and we should not allow its mathematical doctrines to persuade us that all humans are only ever selfish, simply because we have a clever system for working with the many of us who often are. In short, capitalism is not an ism like the isms that suffix its opponent theories. It is a perpetual jury-rig, not because we once had some pristine, more efficient system or are likely to manufacture a new one, but because we’re basically not good enough to build a proper mast ourselves.

On the Moral Necessity of Liberty

Saturday, September 13th, 2008

The following was originally intended as a reply to Mr Gavin Rice’s post ‘On the Inadequacy of Liberty’ but I realised it had become quite long before I had said my peace.

Libertarianism does not have to be about defending individual rights, or freedoms, or paycheques. Rather, it is rendered best to me as a weapon against the might of government. Since we cannot defeat the police force or the Army without creating a chaos out of which a new and mighty government would rise to take their place, we must reign in such governments with limits that take advantage of the legalistic structure with which they deploy their might.

I do not believe, any more, that apologists for modern Liberalism really believe in relativism. Rights-speak often serves as buttery dressing for bitter hedonic calculation, usually made necessary because that calculation is in error. Take, for example, the notion that elective abortions must be legal and state-funded because a woman has a ‘right to choose’. This argument is often given even in reply to the claim that foetuses are humans, whereupon it collapses because we do not entitle anyone else the right to kill in any other situation. Rights-speak here disguises the hedonic calculation that abortion policy makes women happier and spare potential unhappiness to children born into poverty. It is necessary because the claim is in the first instance demonstrably false and in the second uncalculable (happiness units do not average out where they were never gained or lost).

My point there was that the ‘liberalism’ that apologises for modern society and statism is founded in moral intention (the desire to maximise happiness units) and formed in its wonky shape by intuition and cowardice that rail against such an intention (happiness units would be maximised by injecting people with certain hormones for a few years until they die, not by allowing them to live full lives – few but Peter Singer himself would have the balls to bite that bullet). The fact that moral intention can, when misguided or misapplied, lead to destructive policies is why people are so reluctant to use the language of morality when talking politics or economics. Not only do they fear abusing the language. They also, for the most part, share the same ‘moral vision’ and so think it unnecessary.

Benthamite Utilitarianism is not a theory which has won humanity over in the last century or so. It could not. There is no good literature in its defense. Rather, utilitarianism in its most basic form – the belief that the feeling of happiness is what we are supposed to seek with our lives – is a constant temptation offered to human civilisation. Currently, in the vacuum created by the failure of atheism to come up with a coherent account of universal morality, we in secular European countries have reverted to selfish default. We egg our governments on to ‘make’ us feel happy. The men who tend to fill the chambers of these governments have in the most part been produced by the same philosophical, cultural circumstances as ourselves and embrace the task with baton-wielding, needle-jabbing relish.

Mr Rice has below implied that inviting governments to participate in, rather than get out of the way of, helping to create a better society is more effective. I do not agree with him and here is why. He proposes the recapture of virtues to reform and improve our situation. Virtues must, by their nature, be taught by exhortation, encouragement and example. This is the way that Aristotle taught them, that medieval priests taught them and Victorian gentlemen (the few real ones) taught them to the societies in which they lived. Governments have a very different way of enacting their ‘moral visions’. This is not because of which vision it may be, who is in them, or who elected them but because of what governments essentially are: monopolies of force. If you beat a man for ignoring a beggar, you will teach him violence, not charity.

Everything governments do stems from what they are. Taxation is carried out by the threat of force and so every action that governments carry out with the revenue raised is carried out by force. Laws are merely a means of teaching morals to people in the way that parents slap their childrens’ wrists when they try to steal. They impose by force the moral beliefs of a governing minority (or at best the original beliefs of electors filtered through that minority) onto their subjects, often remaking subjects’ beliefs in the minority’s ideological image. This problem is extended in proportion to how far the government extends. The messages given to the taxpayer by institutions like the NHS or the National Curriculum include “plastic surgery must be a human right because if I do not pay for someone else’s I will be imprisoned” and “global warming must be true because if I do not pay for it to be taught I will be imprisoned”. I did my best here to think of the least reprehensible of examples I could.

This is one reason why Libertarianism, primarily legal and secondarily fiscal, because money is power, is necessary if we wish to morally reform society. The alternative, where the power of government is utilised to teach people how to be better, is much easier in less democratic and stable societies – one needs only catch the young king’s ear, or have get together some fesity paramilitaries.

In modern Britain, however, it would require still the uphill struggle of moral education required by the civil method of reform, in order to get sufficient candidates and voters to be better than Utilitarians. The large influence of large government on people’s minds would, however, raise the gradient of that uphill struggle tenfold. Even if this mission were completed, I am sure that those very virtues we had wanted the government to inculcate in the populace would be rendered meaningless or destructive as it beat, cajoled and hollered them at Britain.

The key to all of this may be the term ‘moral reform’. It is a double-entendre. I believe that extortion, threat and violence are immoral. These are the tools government uses to bring about reform, the first made possible by the second and finally the third if necessary. How then can a government bring about moral reform? On the contrary, in order to prevent immoral reform we must restrict its ability to use these tools. The goal of Libertarianism is a muzzle on Leviathan.

On the inadequacy of liberty

Wednesday, September 10th, 2008

In a response to my own request for non-libertarian articles, I have decided that it would be advantageous to make a case for the insufficiency of liberty as our sole aim and desire, and its inadequacy as a moral principle. The idea is inspired by an article in this month’s “Prospect” magazine by Edward Skidelsky, a philosopher at Exeter University, who makes a case for the importance of the taditional virtues, and the poverty of any attempt to reduce morality to a mere matter of rights and obligations. According to Skidlesky, there is much in the rich intellectual treasury of the pre-moderns from which modernity can learn.

David Cameron was right when he recently warned that we are “becoming quite literally a demoralised society, where nobody will tell the truth any more about what is good and bad.” In a previous edition of “Prospect”, Richard Reeves argues that Britain’s poor lack not only the material but also the moral resources to better themselves. Put simply, Britain’s underclass are by and large lacking in the basic virtues of hard work, self-restraint, a sense of discipline and respect for authority, and consideration for the needs and rights of others. Such moral poverty is the cause of much crime, but also of an ethically impoverished culture that has descended into little more than hedonistic barbarism. Sadly, this is often as true for the rich as it is for the poor, only the rich have enough money to indulge themselves without falling foul of the law. Mr Cameron’s comments would come as a breath of fresh air from the stagnant moral framework called liberalism, if only he had any idea of how it ought to be challenged. The notion of returning to traditional notions of “good” and “bad”, “right” and “wrong”, is a step in the right direction, but it is of no use if one’s frame of reference has been so defined by liberal, relativist orthodoxy that one is unable to draw conclusions that differ in any way from those of a utilitarian Benthamite.

The liberal “big idea” (to use employ a disgustingly trendy phrase), is that individuals are sovereign in their own sphere, and that only when they infringe upon the rights of others may they be rebuked. Unfortunately, this nice-sounding principle, which underpins both liberalism and libertarianism, is totally inadequate. Firstly, I would argue that individuals are an awful lot less free and sovereign than John Stuart Mill (possibly, in pure academic terms, the worst moralist of ethical intellectual history) would like us to think. For example, a hallmark of modern liberal values is sexual libertinism. However, I would argue that it is very difficult to decide at what point a person infringes the rights of his sexual partner, since, especially on this most animalistic and irrational of activities, we can hardly be described as cool, calculating agents, fully capable of calm decision-making. Someone who is emotionally pressured into sex has, according to the liberal mind, consented, and under the rule of sexual contract, has not been offended by their partner. I would argue that a moral offence has indeed been committed, which has damaged the emotional welfare of the pressured partner. As such, a far more rigid set of rules for sexual behaviour is needed, based on external, general principles, since allowing a contractual model is inadequate, fails to take proper account of the complexity of human emotional behaviour, and as such is downright dangerous.

This is but one example of the failings of the idolatry of liberty. A wonderful diagram for the liberal view of mankind is one of many gardens with fences erected between them, each gardener being free within his own domain but unable to interfere with his neighbour’s garden. This view of human behaviour is simplistic and simply wrong. Humans are by their very nature social, each forms is frame of reference in terms of the influences of others around him, and each is reliant on the activities of others for his very existence. From this much more comprehensive view of human interaction I do not draw the Marxist conclusion that all men must therefore by subordinated to an impersonal state; by disempowering individuals and (dare I say the “c” word?) human communities, the statist philosophy is just as inhuman as the notion of dogmatic individualism.

Skidelsky argues that humans must cultivate virtues in order to give purpose to their existence, but also to improve their relationships with other human beings. For the libertarian, an individual is sovereign in his own sphere, and may indulge himself as much as he wishes so long as he does not inflict upon the rights of others. The problem is, the libertarian concept of not infringing upon the rights of others is not broad or detailed enough. By being selfish, unpleasant and malicious in one’s personal relationships, one may damage other people just as much as if one took property from them (to the libertarian’s mind the greatest capital sin). Skidelsky uses the example of a man who, having completed his “obligations” towards others (e.g. having completed a day’s work and therefore satisfied his contract with his employer), sits down with a six-pack to watch porn all day. To the liberal, who’s moral outlook is shallow and incomplete, he isn’t offending anybody, and is within his “rights”. On the contrary, there is immense fallout from such a self-destructive activity. The man’s attitudes to women and sexuality will become (possibly slowly and subtly, but nevertheless surely) selfish, centred around his own gratification. The man has failed in his obligations to respect women and to treat them as individuals worthy of respect, and to uphold this general principle in terms of society’s moral fabric. By being so irresponsible in cultivating virtues and indulging vice, he will mould himself in such a way that he is likely to behave badly towards others in the future. To the liberal this is irrelevant: the man is operating within his own garden. But the garden fences are permeable. Since we may not propogate any system of coherent values without offending the man’s right to detemine his own lifestyle, we as a society fail that man, since his behaviour will not ultimately result in happiness. Liberalism is unable to distinguish between long-term happiness and short-term hedonism, or to criticise the latter in order to protect the former.

There are left-overs in our minds from the days when virtues were cultivated and vices looked down upon. People find the beer-guzzling porn-watcher instinctively disgusting, and many are revolted by gluttony, obesity and binge drinking. There is a (often culturally suppressed) negative gut reaction when we see another person smoking, as we are aware of the damage they are irresponsibly inflicting on themselves. However, liberalism has rendered us incapable of expressing this revulsion except in liberal terms, hence the (spurious) stress on passive smoking; it “infringes” upon the rights of others.

However, modern society has no frame of reference with which to make sense of these instincts. In centuries past the Church was the bearer of this ethical tradition, but it is now a casualty in the war with the dogma of individual sovereignty. Some churches have embraced individualism and as such have merely leapt into bed with the enemy, and as such will have nothing of relevance to say except to prop up the liberal orthodoxy. The conservative churches who have refused to be reconciled to modern liberal values have been exiled to the cultural fringes of society. Marxism provided a clear sense of values, direction and purpose, as well as a way of explaining the way in which people ought to relate to each other (albeit within the framework of a philosophy with which I profoundly disagree), but it has been superseded by global capitalism.

A quote from Skidelsky: “The erosion of these languages, sacred and secular, explains the ploriferation of targets and guidelines that has overwhelmed the public sector. Targets are an attempt to codify the uncodifiable, to substitute bureaucratic directives for professional honour and wisdom. Their implacable logic denies hospital beds to the sick and swells academic journals with unreadable articles. Yet the main damage they do is to the self-respect of those who must implement them. There is no surer way of destroying public spirit than to deny its existence. Those treated as jobsworths will become jobsworths.”

The academic field of economics is a further domain within which liberal individualism, assuming the sovereignty of the individual as an isolated logical agent, has taken hold. An methodology that treats humans as earners and spenders, producers and consumers, as collections of numbers rather than as morally equipped individuals is a poverty for academia. Economists are debarred from talking about “morality”, except as an instrument of growth – “moral capital”. Furthermore, they can only talk about happiness in terms of the absurdity called “happiness economics”.

Skidlesky is enthusiastic about contemporary virtue ethics, which led Oxford philosophers such as Iris Murdoch away from the prevailing consensus that morals are a matter of personal choice towards the realism of Plato, Aristotle and the Scholastics. It allows us to make a moral judgment about another’s actions, and indeed about the person who performed them, without risk of being told that we are imposing a mere opinion, and impeding the object of our criticism’s rights to moral sovereignty. I am less certain, since society takes many years to catch up with academic opinion, if it catches up at all. The inadequate theories of Bentham and J S Mill have become so ingrained in the public mind, the concept of choice valued so highly, the notion of one’s own preference or what one personally feels comfortable with reigns so supreme, that it is hard to see society’s mass retreat from the moral abyss.

Libertarians and conservatives have much in comman – politically, at least. We both know that taking individual human behaviour and locating it within “society” rather than individuals is artifical and wrong: if a criminal commits a crime then it is his fault, not society’s. However, for libertarians the matter stops there. The criminal is sovereign in his own moral garden, chose to break down a fence, and will pay the price. For the intellectual cultural or social conservative the question must penetrate deeper, and we must find ways of attributing blame to individuals while also identifying and tackling the sources of immoral (and I mean immoral) behaviour. We must abandon garden-fence theory, and look more closely at the complex ways in which individuals interelate, and realise that while the market is useful for producing wealth, it is not universal explanatory theory for human behaviour. The consequences of our actions are much more widespread than we like to think, and we must not abdicate moral responsibility by using the excuse that we are individually sovereign. A common values system, allowing us to make judgments about what is really right and really wrong, must be rediscovered, and we must realise that humans have an obligation to cultivate behaviour that is good, not merely behaviour that doesn’t adversely affect others in a direct, immediate sense. We need to replace “liberty” as an end in itself with a rather old-fasioned idea, which Plato called “the Good”, and we need to realise that there is a lot more to being good than to keeping within the boundaries of one’s own garden fence. In order to set about achieving this societal redirection we could do a lot worse than rediscovering and applying virtue ethics.

 

This article draws on ideas and arguments from “The return of goodness” by Edward Skidelsky, in “Prospect” magazine, September 2008

Response to two speakers: Simon Heffer and Lord Blackwell

Saturday, May 17th, 2008

Simon Heffer visited CUCA in Lent, resulting in the most attended and best talk of the term. He spoke of the creation of a “client state”, where the Labour Party massively increased the number of tax-funded state jobs in order to increase their voter base. People working in the state sector tend to vote Labour, so Labour’s strategy was clear: make more of them. This is massively costly, but seems to work.

Heffer’s solution is that the Conservative Party should not bother seeking these votes, because they will not vote Conservative anyway. Heffer is a critic of Cameron’s rebranding and apparent change of focus of the party, though has recently said he might consider voting Conservative. (He probably will.) He suggests that Cameron should not adopt policies to try to please everyone including these voters, but should focus on their traditional voter base.

In an article since, “Labour is malignant, not incompetent” (Telegraph, 2nd April 2008), he sees this strategy repeated by Labour with immigration. The Lords Economic Affairs Committee report on “The Economic Impact of Immigration” showed quite clearly that net immigration is not beneficial to the country. This has been obvious for years. The figures show that net immigration does not increase GDP more than it increases population, so has no effect on GDP per person and therefore general well-being. Government responses to this resort to obvious double-speak.

Heffer believes, as do I, that the government has known full well that net immigration is not beneficial, but has pursued it because it knows that immigrants tend to vote Labour. It has put electoral success above the country when it knows they are opposites.

Heffer calls for a radical cut in the amount of money spent by the government, which currently spends over £600 billion per year. Government spending has increased by 50% in real terms while Labour have been in power over the last ten years. As Lord Blackwell pointed out in his talk, the amount of stuff the government needs to provide doesn’t increase every year, so government spending should remain constant. Indeed, this means it should reduce as a percentage of GDP. If the government was spending the same as it was ten years ago, we could have abolished income tax.

Heffer demands tax cuts mostly to save money and free the economy to grow, but he echoes the calls of Sean Gabb for tax cuts to cut the funding to the ruling class – those who draw money and status from the state.

Lord Norman Blackwell visited CUCA yesterday, speaking and taking questions in the Union Dining Room, and then over dinner at Strada. Like me, he is very keen on policy: he worked on policy for Margaret Thatcher and John Major.

He started by talking about how radical some old policies seemed at the time, and how he believes others which seem radical now will be considered common sense in the future. For example, the Post Office used to run the telephone network in this country. As one might expect from a monopoly, the service was shoddy and expensive. If you wanted a telephone, you had to be put on a waiting list, and an engineer had to come to your home and fit one into the wall. You could only buy telephones manufactured by the state, which were very expensive.

People thought that the telecommunications couldn’t be provided by private companies. Now that it is, we know that of course they can.

Later, Lord Blackwell himself presented a report to British Telecom trying to convince them that it was safe for people to have telephone sockets, rather than a telephone hard-wired into the wall. Now, the idea that telephone sockets are dangerous is ludicrous. Then, it seemed radical.

Of course, there is an element of natural monopoly in landline telecomms. It does seem there needs to be some involvement by the state. But it should be as small as possible. As Hayek said, the state needs to create a legal framework in which competition can function. This should be designed to encourage as much competition as possible. Just because a market can’t function without the state, that doesn’t mean the sector should be run entirely by the state.

In the UK, British Telecom runs the lines (and even this is changing), but other companies can run calls on top of them. Much like Network Rail running the train tracks, but other companies running the trains. This is much better than BT doing everything, without having to compete and therefore having no incentive to provide a good, cheap product.

The same thing has been done with broadband internet. Can you imagine what our internet would be like if the government still had complete control of telecomms? Atrocious! Things would never have improved so rapidly.

We probably wouldn’t even know what we were missing out on. In Cuba, the state has to stop its subjects from finding out about the standard of living in other countries, so that they don’t know what they’re missing (toasters). What are we missing at the moment that we don’t know we’re missing? We’ll only find back if we stop the state slowing us down.

So telecommunications is one area where those advocating privatisation have been proved right. So are railways. Alex Singleton of the Globalisation Institute addressed CUCA at the Gin & Tonic party at the beginning of term, and he pointed out that by every objective measure, the railways have been improving since Conservative privatisation – the turning point.

Lord Blackwell suggested that healthcare and education are next to be privatised. People don’t know what they’re missing. They don’t know how good things could be.

However, Lord Blackwell didn’t suggest that “privatising” healthcare meant abolishing tax-funded (“free”) healthcare. Abolishing state-run schools doesn’t mean abolishing free education.

He suggested a voucher system. Consider education. The system would require very little change. Instead of being told what school you must go to, you could choose. Instead of only the state being able to set up state-funded schools, anyone could. That’s all.

He suggested not using the word “vouchers”, for two reasons. One, he thought it was as tainted as “privatisation” for many voters. Two, people didn’t know they wanted it, even though they wanted its consequences. If you offer people “choice” in your manifesto, they say “We don’t want a choice of schools. We don’t want to send our child to the next village. We just want to send our child to the local school, and we want it to be good.”

Choice (i.e. competition) doesn’t even need to be exercised to have beneficial effects. You don’t have to take your business from the local pub and drive to the next town. It’s just the fact that you could that means your local pub has to make an effort.

Similarly, if you go to a bad school and a good new one starts up, things won’t just be improved if everyone moves to the good school and the bad school shuts down. In most cases this won’t even be necessary. All that is necessary is that you can move. That is enough to give the old school some incentive to improve.

A similar scheme could be implemented for healthcare.

He suggested rolling out education vouchers in poor areas first. Even though this would mean richer areas wouldn’t get the benefits so quickly, it would demonstrate that the measures were to improve education in poor areas the most. This might help get voters used to them.

“Privatisation” seems radical in the UK at the moment, but it won’t when people see the consequences. We just need to look at the success of the Swedish implementation of vouchers.

People like to claim that there is something special about education and healthcare: that they are “public services” rather than products like any other. This is wrong. They are products like any other. People said the same about telephones.

Lord Blackwell used much libertarian rhetoric, and seemed to consider himself a libertarian. I’m not sure whether I’m a libertarian or not, though I have very strong libertarian sympathies.

I think vouchers are a good idea. But they’re not a libertarian idea. Vouchers roll back the state by allowing the state to pay for, but not run, education and health. They do mean that the state bureaucracy is smaller even if taxes stay the same. But libertarians would not even have taxes to pay for education or healthcare.

It may be that complete abolition of the welfare state is better for the country, especially in the long run. As Andrew Perraut says, “if markets are as massively productive as we libertarians believe and compounding returns to growth in the long term are taken into account, you could probably justify no more than very basic safety nets, for fear of distorting the economy and dramatically lowering everyone’s goods in the future.” But the safety net could include healthcare and education.

In any case, vouchers are better than the current system, and we need them fast.

My commitment to reducing the size of the state is Perraut’s: any taxation reduces economic growth. Some taxation is necessary, but the optimum amount is far lower than it is at present.

Lord Blackwell’s seems to be for a different reason. Statism cows people. It reduces the striving, self-reliant ethic. If people have a problem, it encourages them to expect the state to solve it, rather than solve it themselves. This attitude reduces economic growth because it discourages innovation.

He ended on a quotation that Lady Thatcher looked up while they were working on a speech. It is one of the closing sentences from John Stuart Mill’s “On Liberty”:

“a state which dwarfs its men, in order that they may be more docile instruments in its hands, even for beneficial purposes, will find that with small men, no great thing can really be accomplished.”

Postscript.

Afterwards, over dinner, he talked about the historical consequences of global cooling, including the halt of the expansion of the Roman Empire. This would be an excellent way to write an article aiming to change people’s minds about global warming. The scientific evidence that global warming will stop, rather than being catastropic, is clear. We haven’t had any for over ten years. So take this for granted! Treat global cooling as inevitable, and write an article about its historical consequences and how we must prepare to meet them again.