Posts Tagged ‘statism’

« Older Entries

And another thing…

Sunday, April 5th, 2009

cartoon

When will the government stop transferring wealth from the the poor to the rich? The hundreds of billions for bailing out banks or “stimulating” the economy are far more significant than the millions claimed by MPs. Whether the money comes from taxation, borrowing (deferred taxation), or inflation (taxation by stealth), it is theft from the poor. The poor are the only people who face marginal tax rates of 70%, 80%, 90%, 100%, 110%. This must stop.

“The main assumption behind which the Enemy Class justifies its looting of the taxpayers is that any cuts in public spending must fall on the welfare budget. Of course, it is a false assumption…”

Tags: ,
Posted in Politics by Hugo Hadlow | 2 Comments »

Creditcrunchy by Fergus McGhee

Friday, April 3rd, 2009

Creditcrunchy

A Cautionary Tale

~

Behold the Crunch of Credit!
That alliterative beast
Which skulks along Threadneedle Street
With violent caprice;
Which darkens every board room door,
And prowls about the trading floor,
Devouring Christmas bonuses;
Disturbing fiscal peace.

Beware the Crunch of Credit!
The debt that bites, the risks that catch!
Defaults of every size and sort
He’ll frumiously despatch!

Observe the Crunch of Credit
And his wicked weaponry.
The stocks have crashed, the LIBOR soars,
¡Negative equity!

Survey the Crunch of Credit:
How he slithers, how he writhes,
How he toppled with one subprime swipe
The fated Rock, the mighty Bear,
Brought low the Brothers Lehman,
Made the Scottish banks despair!

Perceive the Crunch of Credit,
And detect his subtle powers:
How he raised from rank obscurity
That mercurial Peston of ours.
Admire the bard’s concise adage
And prescience so stellar:
“The nature of bad news,” he wrote in truth,
“Infects the teller!”

And banks, in their lividity,
Sent copious liquidity
Careering through pecuniary pipelines.
Recapitalisation was on all the experts’ lips,
While the name of Keynes was whispered in the streets.
And so we took the plunge
And bailed them out, the bungling banks.
Each mortgage-backed security
We bought hold-to-maturity,
And now we must all hold on to our seats.

Eheu!
The Crunch of Credit
Hath another victim slain.
Just as we mourned the passing
Of the noble Woolworths chain
The news arrived of worse to come –
GM and Chrysler are undone!

Across that vast new continent
Exhausted cries of woe accrue;
Their answer is a distant, but distinct,
Bavarian “Juhu!”
And yet they have their problems too:
The market shrank, the Euro flew
As the glorious pound became less sound;
O what were we to do?

St Gordon took his sword in hand:
All boom and bust he’d soon disband.
Long time his manxome foe he sought –
So rested he by his brooding tree
And stood awhile in thought.

And as in dithering thought he stood,
The Credit Crunch, with eyes of flame,
Came whiffing through that tulgey wood,
And burbled as it came!

A spending spree, slashed V.A.T.
The fiscal blade went snicker-snack!
And though the sword was double-edged
It didn’t hold him back.

And at Westminster’s Palace
He arrived in prudent pomp,
And took to the despatch box
With a clunking-fisted thomp.

“Fear not,” said he (for mighty dread
Had seized their troubled minds);
“Glad tidings of great joy I bring
To you and all mankind.”

A silence grasped the chamber,
Every member was in thrall…
“For I have slain the Credit Crunch
And saved the world withal!”

And hast thou slain the Credit Crunch?
Come to my arms, my beamish boy!
O frabjous day! Callooh! Callay!
The Dow Jones shall be up today!

What forces dark could explicate
These grand felicitations?
A Faustian pact, no less,
Bought with our future generations.

It was now clear the Saint had been
Trained in the School of Madoff,
And all men of good sense agree
It’s time that he was laid off.

But Gordon is not all to blame;
Some people bear a greater shame.
The problem, if you care to see,
Was monetary policy.

Who spawned the Crunch of Credit?
That ‘twas bankers still persists.
All true, but don’t forget
The scholarly economists.

The money in supply, M4 –
as it’s known in the trade –
Approximately doubled over that
Debtors’ decade.

The learned persons thus assembled
Knew this and lamented;
And yet, instead of raising rates
Accordingly, relented.
And as night follows day
They had unwittingly consented
To preconditioning
This boom and bust unprecedented.

But how now learned friends?
What weaponry are you possessed of?
Alchemical de-squeezing
Such as “quantitative easing”?
The Crunch of Credit scoffs
And, Calibanically gleaming,
Jeers, “Who are these pretenders
With their gyring, gimbling scheming?”

And lo! so sudden from the sky
A voice was heard to prophesy,
“Hark, ye mimsy banks!
Hark ye, thou uffish Premier!
Hearken all who hear the call
Of downturns and despair!
The reckless beast cannot be maimed
With instruments of recklessness.
No victory can yet be claimed
While mired in such a fecklessness.”

And choirs celestial sang the strain
Which plumbed the very azure main:
The words of our absolving shrift,
The ancient liturgy of thrift:
“Sumptus censum ne superet!”
Repeat it, pray, lest we forget:
“Sumptus censum ne superet!”

The Hellenistic world agreed:
“????? ????” they decreed.
And in the plain vernacular,
Micawber took the lead.

Yet howsoever it may be said,
How loud, how slow, how clearly read,
Let each without exception
Brand its meaning on his head.

And then, just when
We can say Amen!
To being in the black,
We’ll go anew galumphing
To spend what we don’t lack.

~

(with grateful acknowledgements to Mr Lewis Carroll)

Tags: , ,
Posted in Creative, General, Politics by Admin | 1 Comment »

Bias in TCS 3

Thursday, January 29th, 2009

Third of 8 weekly articles documenting bias in “The Cambridge Student”: Lent 2009 Issue 3.

TCS’s statist bias is well known. This week, an article on government funding for universities was entitled “Give with one hand, take with the other”, despite there being no taking from universities involved whatsoever. The sub-title was “£700 million extra investment criticised as too little” (!). The “take with the other” referred to a reduction in student grant funding. Of course, the government aren’t “taking” anything, merely giving less of other people’s money than they previously were.

The £700 million increase to £7.8 billion next year is an almost 10% rise on £7.1 billion this year. However, the article claims the increase “barely accounts for inflation”! Well, we know that the government are inflating the currency at ludicrous rates, but the official CPI measures inflation at only 3.1%, down from 4.1% in November. Even if the actual rate was double that, a 10% rise in spending is still a increase in real terms.

TCS seems to think that it would be wrong to maintain government spending at present levels - it must increase, perpetually! Obviously government spending on universities as a proportion of national output can’t increase forever, otherwise eventually we’d be spending everything on universities, and nothing on anything else! They really haven’t thought this through.

On page 13, there was a comment piece on the just-ended “occupation” of the Law Faculty by some nutters.

“Last Friday at around 7pm a small group of protestors [sic] entered the law faculty and refused to leave. Like so many student protests in Cambridge, this could have ended with issuing an obligatory and unrealistic list of demands to the university, a photo-shoot with the student media and then… nothing. Everyone goes home because, hey, they’ve got an essay in for Monday. Except this time something was different.”

Oh really? It seems to me that the protest fits those criteria perfectly: unrealistic demands like “We demand that Cambridge University issue a statement which condemns Israel’s action in Gaza” and “We demand that Cambridge University grant a minimum of ten scholarships to Palestinian students every year”; a photo-shoot with the student media, and now everyone’s gone home, accomplishing nothing. “This is the largest, most protracted protest of 21st century Cambridge”. Well, that wasn’t particularly hard: they accomplished it with 30 people and six days.

The Editors “feel there is much to be praised” in the actions of these trespassers. They found them “sleep-deprived, hungry, but undaunted. It takes organisation, guts and conviction to spend your weekend - and much of your week - in a cold, dull building, potentially to the detriment of your degree. The Cambridge Student admires the protesters for their dedication to politics and their own ideals”.

What dedication to politics? These people weren’t engaging in politics, but blackmail. Their message was, give in to our demands or we will not leave. Good on the university for turfing them out.

On page 15 there’s an interview with John Prescott. Uninformative tosh. Says Prescott: “having produced the most sustained growth of any European economy, we [had it] undermined by greedy bankers and financial institutions”. Labour produced sustained economic growth? Well, Tony Blair thinks it was luck! Any real economic growth was hindered by Labour’s policies, and most of it was fake growth caused by too low interest rates. The interviewer doesn’t call Prescott up on this. Maybe it’s because the interviewer didn’t want to interrupt the flow of the interview? Or maybe it’s because the interviewer was Pete Jefferys, Secretary of the Labour Club!

Excellent article about education vouchers on on page 12 though: “if schools select on academic aptitude, they will draw from an eclectic mix of different backgrounds, which is far favourable to the current system where your geographical location, or your level of economic privilege, usually determines which school you attend.” Quite right.

Tags: , ,
Posted in General, Politics by Hugo Hadlow | 4 Comments »

Abolish the Bank of England

Friday, November 14th, 2008

I have an article in this week’s “Varsity Debate”.

The title was “Should the Bank of England have cut the interest rate? Last week, in desperate bid to protect the UK economy from a severe recession, the Bank of England announced its decision to slash interest rates to their lowest level in 50 years.”

I argue that “The decision should not be up to the Bank of England; it should be up to us”, and that the rate should be higher, not lower, because the natural rate would be higher. As Jock Bruce-Gardyne said, “There is no economic problem that cannot be solved by a stiff rise in interest rates”.

The problem with a government set interest rate is that it disconnects the ratio between investment & consumption, and people’s true time preferences. When the government sets any price, they disconnect the relationship between demand and supply. If a price is set above the market equilibrium, more people supply the good, but fewer people demand it, creating a surplus (and an illegal “black market” selling the good at the true price). If a price is set below the market equilibrium, more people demand it, but fewer people supply it, creating a shortage. The only situation when the same amount is produced as is demanded, is when the price is allowed to be set by the market. That is the only way resources can be allocated efficiently. And this applies not just to markets for food, or furniture, but to markets for currency and for credit. An interest rate is a price like any other.

A government interest rate disconnects the relationship between investors and savers. However, a low government interest rate does not create a shortage of capital, because not only does the govenment set the price, it enters the market as a lender, and it controls the currency. The low rate means that far fewer people save for the future, but investors can still borrow even more money because the government provides it instead of the savers.

Here’s the complete version:

The interest rate is the price people demand for postponing consumption. If you would give up ten apples now for eleven next year, your interest rate is 10%. A free market will naturally find an equilibrium interest rate. If you would be willing to lend at lower than the market rate, you can lend at the market rate and make a profit. If you are only willing to lend at above the natural rate, no one will borrow from you.

Why can the government lend at below the natural rate? Anyone else who lends their money at below the natural rate will have no shortage of customers looking for a bargain, and will soon have lent all their money. And anyone lending at below the natural rate of interest is making a loss, so no one does it. No one, that is, except the government. The government cannot run out of money, because it can print it. And while an ordinary lender lending at below the natural rate will not have much effect on it, the government can affect it simply because so much of the money in the economy is on loan from the government.

The current interest rate is lower than it would be in a free market. Why does the government lend at below the natural rate? Why does it want to distort the interest rate? A low interest rate encourages more spending now. It is in essence a Keynesian policy, and shares his deep contempt for savings and thrift, because a low interest rate discourages saving and planning for the long term. After all, “in the long run, we are all dead”, so why bother to plan ahead?

Just as spending by the government will cause a short-term boom, cheap lending by the government will encourage more private spending and cause a short-term boom. Most investment is funded by borrowing, and so the more money there is available, the more investments that will be made. The extra investments enabled by extra government money would not be made in a free market: they are the riskiest investments. Government intervention destroys the natural equilibrium between savers and borrowers, causing malinvestment, followed ultimately by correcting recessions when unprofitable investments are liquidated, freeing up capital for new investment.

Make no mistake: this recession is temporary. It is an inevitable correction to bad investments encouraged by government intervention. Long-term economic growth caused by technology will not stop, but the short-term economic growth caused by cheap money must stop eventually.
Further government action, including dropping the interest rate and the resulting inflation from this expansion of the money supply, might stave off recession temporarily, but it cannot stop it forever, and will make it worse. Further government action might be justified to allay the suffering caused by previous government action, though, of course, it would have been better if the economy had been allowed to grow more slowly in the first place, so it didn’t have to recede now. But shock tactics are best: abolish the Bank of England and go straight to a market interest rate. In the long run, we’ll all be better off.

Gordon Brown was recently asked if he regretted his boast, “No more boom and bust”. He replied, “I actually said, ‘No more Tory boom and bust’”. He did indeed say this, once, so he’s not lying. But, of course, he said it without the “Tory” on many occasions. The implication is that Labour boom and bust is fine. This is the kind of drivel Brown is now reduced to spouting.

Brown is often lauded for removing government interest rate from control by politicians and handing it to the Bank of England’s Monetary Policy Committee. This has certainly removed the ability of governments to slash interest rates before an election, causing a boom, with the bust only following after they have been re-elected. However, when it was made independent, the Bank of England was charged with controlling inflation. This has enabled Brown to carry on spending massively while being able to absolve himself of responsibility for inflation.

The interest rate certainly shouldn’t be controlled by politicians. But neither should it be controlled by appointed “experts”. It should be controlled by us. Then it will reflect people’s true time preferences, enabling us to allocate resources efficiently. To prevent politicians for meddling again in the future, we should abolish legal tender laws and go back to free banking, with competing currencies, so that no one will be able to get away with inflating them. In the meantime, any increase in the government rate is welcome. We need a return to a natural interest rate. We need to return to a truly free market.

Tags: , , ,
Posted in Politics by Hugo Hadlow | No Comments »

Radically reforming welfare, part 1

Saturday, October 18th, 2008

In this article I consider a “madcap scheme”.

The “Poverty Trap” (also known as the “unemployment trap” or the “welfare trap”) means any situation where the costs of moving into work are greater than the increase in income, caused by means-tested benefits.

A very simplistic example would be where the government gave £5,000 to everyone with a salary below £10,000. Someone with a salary of £9,999 would receive an additional £5,000 from the government, bringing their total income to £14,999. Imagine such a person was offered a better job or position, requiring slightly longer hours, more of their skills, or more responsibility, with a salary increase of £1000. Performing such a job would increase the wealth of society. But the person would not take it. For with a salary of £10,999, they would no longer receive benefits, so their total income would be £10,999. By working more, they would decrease their income by £4,000. So of course, while in an undistorted market they could better themselves by working more, with government distortions they would have no incentive to learn new skills or get a better job.

In practice, welfare payments are distributed by the government according to a much more complicated system. Usually they are not cut off suddenly, but phased out. But means-tested welfare, i.e. welfare that depends on your circumstances, will always mean that the pay increase from working better or longer will be less than it would be in a free market. There will be less incentive to work better or longer. The poverty trap discourages people from getting off welfare and bettering themselves with their own efforts.

In extreme real cases, working can indeed reduce income in absolute terms. Chris Dillow points out:

Our existing system already subsidizes idleness. Some people prefer to stay on benefits because they’d lose these if they went out to work. Take a married couple, both out of work. One’s offered a 16-hour week job at the minimum wage. How much better off are they if they take the job? Not at all - they are about 5% worse off. Table 1.4a of this massive pdf shows.

Sure, I’ve taken an extreme example. But it’s easy to find replacement ratios for part-time jobs of over 70%. For many, then, the financial gains from working are so small that the hassle’s not worth it.

As one commenter on Peter Hitchens’ blog said,

“A safety net is exactly what social security should be - not a way of life. I would suggest, however, that with 5.4 million people languishing on out-of-work benefits, Britain’s welfare system is more ‘comfort blanket’ than ’safety net.’”

The solution is to make benefits non-means-tested. This means giving the same welfare payments to everyone, regardless of their income. Obviously there would be exceptions for the disabled, but for ordinary people, welfare payments should be the same, whether you are unemployed or a millionaire.

That way, working an hour at a job which pays £5/hour, increases your income by £5, instead of by some amount less than £5.

What we should do is replace all social security by giving every adult in the country £5,000, cash, with no conditions. My economics teacher at school suggested this briefly as a “madcap scheme”, but this idea is actually not as mad as it seems. I believe it should gain wide acceptance. It should be acceptable to both the left and the right. For those on the left who really want to help the poor, rather than just increase their dependence on the rulers, it maintains their income but massively simplifies how they get it. It frees them having to spend a lot of time dealing with the state, and allows them to pursue a more fulfilling life doing what they want, without discouraging them from working. For those on the right, it is certainly an improvement, because it removes the disincentive to work that goes with the current welfare system.

This is a Basic Income system, which could be implemented either as a “Citizen’s dividend” or the negative income tax advocated by Milton Friedman.

I was reminded of the Basic Income idea by Charles Murray’s book “In Our Hands”.

Another commenter on Hitchens’ blog described the book thus:

“For anyone who is interested in welfare reform, can I commend the works of Charles Murray. His thesis: the state [despite its good intentions] is inevitably wasteful and inefficient. As well as morally neutral, spawning vast bureaucracies etc.etc. The solution: end all redistributive welfare INCLUDING THE NHS. Cut out government and give the money straight to the people. To receive a monthly sum, people must be: over 21, have a bank account, have a British passport, to get a monthly sum (£10,000 pa) for life. Two rules only: they MUST buy health insurance, and they must invest in a pension plan. After that, they can do whatever they like.

The human urge to do what is best for the self (denied by the left) then comes into play. Because not getting a job, getting married and having babies too young hurts, and the counterpoint pays, people will behave in ways that are constructive, not destructive.”

Chris Dillow surveys some arguments here.

James Bartholomew describes it here:

“His idea, briefly, is this: that the government should give every person US$10,000 a year in place of all welfare benefits, retirement payments and healthcare. Of this, US$3,000 would have to be used to buy health insurance.
…
He said he was not primarily concerned that the welfare state costs too much “though it does”, nor that it tends to make things worse “though it does” but that it “drains” the life out of people - particularly the spiritual life and sense of meaning.
…
He said that if his plan were introduced, behaviour would be affected. There would be ‘feedback loops’. I think he implied that a girl would be less inclined to get pregnant out of wedlock if she knew she would get no extra money from the government. She would also be able to get money from the father because his regular money from the government would be paid to a known bank account and money could be taken from it. This would, Murray suggested, affect his behaviour, too. He would be more cautious about making women pregnant.
…
I am struck first of all by how he admitted that this was a compromise. He said he was making an offer to the Left. They would be allowed to keep big spending - since his plan would continue big state spending. But it would be in a different form that would curtail many of the bad effects of state welfare.

Many times I have been asked, when giving talks about my book, ’so what is the answer?’ I have always felt it is impossible to give a satisfactory answer. The ideal solution - minimal state welfare - would probably not be politically acceptable in a democracy. But reforms that would be politically acceptable would probably not be radical enough to make a ‘good society’.”

As Sean Gabb says,

“Something we should leave substantially alone is the welfare state. The main assumption behind which the present ruling class justifies its looting of the taxpayers is that any cuts in public spending must fall on the welfare budget.

Of course, it is a false assumption, but it does not help that libertarians have always made a great noise about the corrupting effects of state welfare, and that libertarian schemes of improvement always give prominence to privatising or abolishing it. This shows a failure of political understanding.

All else aside, it would be madness to give the now displaced ruling class an issue on which it might claw its way back from oblivion. It may be regrettable, but most people in England like welfare. They like the thought that if they lose their jobs, they will receive some basic support, and that if they fall ill, they will receive treatment free at the point of use. That is what is wanted, and that is what a government of reaction must continue providing.”

I disagree with Murray about health insurance. Instead I would pay some of the money into Personal Health Accounts, as described by Hannan and Carswell in “The Plan”, because these also increase the incentive to use the money wisely.

All other social security would be ended, including the minimum wage, council housing and the NHS. Hannan and Carswell explain how the transition could be made from the NHS to private healthcare. There would be no difference in income for those living in places like London where living costs are higher. As one commenter on Chris Dillow’s blog said, “If I live in an expensive area and lose my job, and can’t find a new one, I will have to move somewhere cheap. Why is it beyond the pale for an unemployed CBI-only person living in London to consider moving himself to a cheaper town or city?” Another replied sarcastically, “it is universally recognised as an affront to civilisation and all we hold dear to suggest that someone who isn’t inclined to should leave London.”

There would be no child benefit. This would remove the incentive to have children, and indeed would give an incentive not to have children. Removing child benefit normally seems harsh because it penalises the child for the decision of the parent - a child does not choose to be born. But in this case it would be okay because the family would still be guaranteed enough income to live on.

The commenter on Hitchens’ blog said,

“I asked George Osbourne about the theories of Murray. His reply: I had lunch with him last week! But there are things I don’t believe in. Translation [to me]: I don’t possess the necessary size of testicles to do it.”

Tomorrow, I’ll be considering “tradable citizenship”.

Tags: , , ,
Posted in Politics by Hugo Hadlow | 2 Comments »

Ideological monopolies

Saturday, October 4th, 2008

Religion in general has come under a lot of criticism in recent years. It is becoming more and more common-place to claim that religion is not only misguided but the root of much evil in the world. However, it is far too simplistic to claim that it is an institutional belief in God which has caused so many of the world’s problems. Rather it is a belief in something (anything) which claims to have a have a monopoly on truth that causes most of the evil in society. As such, we should all fear it when any ideology is accepted by a society as a given.

Derived from attacks against religion, secularism has become the watch-word for state action. Lip service is still paid to the union between church and state in the British constitution, but when it comes to government action, religion must take a back seat. Indeed, it must be pulled along clinging onto the back bumper. Of course, most people do not have a problem with this. As we all know, the Bible does teach us that homosexuality is wrong, and adulteresses should be stoned to death, and implicitly that the earth is only 6,000 years old. But for society to accept uncompromisingly the default position is equally unfortunate.

An example of the default position to creationism is Darwinian evolution. Although it is ridiculous to claim that an adherence to Darwinian evolution leads inevitably to eugenics – the evolution of the emotion of self-sacrifice discredits the notion of ‘survival of the fittest’ in every case – any idea is necessarily debased for wider consumption. This is why the inaccurate belief that evolution means ‘survival of the fittest’ has gained currency. When a state accepts this position uncompromisingly, allowing simplistic generalisations to take hold, it is not ludicrous to see how it could lead to a policy of eugenics. Absolute power corrupts absolutely.

This is the problem when one idea holds a monopoly on truth in a society. If an idea is taken as read, it can be moulded to suit the will of those in power. It is now accepted in the West that democracy is absolutely right. The underlying principle behind the Iraq War for neo-conservatives was the unwavering belief that it was right to bring democracy to a country otherwise in the grips of dictatorship. It is perfectly acceptable for individuals to accept this position, but when a society’s assumption becomes a policy of its state, alternate ideas cannot be voiced. Opposition to the Iraq War was based on the idea that it was not a war that should be fought, not that it may be wrong in principle to bring democracy to a country that had never known it.

The solution is to avoid state ideology, even if it is secular or democratic. A state needs to adopt one principle over another to function (after all, the state needs a political ideology in order to form a government), but it should not adopt such an ideology as a given in the execution of policy. For example, the argument that Britain is a ‘secular country’ should not rear its ugly head in the debate on faith schools. This argument necessarily makes religion something alien to British society in principle, thereby allowing the state to take actions without recognising the alternate position. As such, the state can take unilateral action without debate: maybe there is a God; perhaps democracy is not an end in itself for every country; conceivably nationalised industries are bad. The state must not be allowed to hold a monopoly on truth.

This is not to say that individual people cannot hold monopolistic ideas. It is impossible for someone to both believe in God and at the same time not believe in God. Either they believe, do not believe, or have yet to make up their mind. But the state cannot and should not make the same judgment. Otherwise individual liberty to believe something different is trampled and cannot be debated in society.

With monopoly comes exploitation and abuse. And a good way to prevent monopoly is individualism.

Tags: , , , ,
Posted in Politics by James Arthur Sharpe | 1 Comment »

“An Englishman’s home is his castle”

Friday, October 3rd, 2008
An Englishman's Home: Socialism would mean inspectors all round

An Englishman's Home

An Englishman’s home ceased to be his castle a long time ago. The state has 1000 laws allowing it to break into your home. It is not enough to streamline the law. We need wholesale repeal of much legislation.

It’s not just entering your home, though. Rafts of legislation prevent us doing what we want to or in our home,whether it’s minor building works or lighting a coal fire. The state intrudes even when you buy or sell your home.

Last year I read an article by Boris Johnson on government plans to put health warnings on alcoholic drinks.

“In all that time, no government in history has yet thought the people so moronic that they needed to be told, on the bottle, that wine could go to your head; and Flint’s proposed act of desecration is all the more shameful and baffling when you consider - in your state of agreeable post-prandial rapture - that a bottle of wine is really a thing of quiet beauty.

For hundreds of years, the play of light on the glass and the liquid has entranced the eye of our greatest painters, from Caravaggio to Manet. Think of all those bottles twinkling away behind the bar girl in the Folies-Bergeres; think of that Van Gogh still life - the bottle, the bread, the cheese.”

No one would possibly argue that we need the state because without it we wouldn’t have these warnings. They are philistinistic: a bottle of wine should indeed be a thing of beauty, not a reminder of the power the government has over the minutiae our lives.

But worse, it represents an intrusion of the government into an Englishman’s home. My home is largely free of the government. I do not want government icons looking down at me from my drinks cupboard.

“Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country for ever without a passport or any sort of official permission. He could exchange his money for any other currency without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter, a foreigner could spend his life in this country without permit and without informing the police. Unlike the countries of the European continent, the state did not require its citizens to perform military service. An Englishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state who wished to do so. The Englishman paid taxes on a modest scale: nearly £200 million in 1913-14, or rather less than 8 per cent. of the national income. The state intervened to prevent the citizen from eating adulterated food or contracting certain infectious diseases. It imposed safety rules in factories, and prevented women, and adult males in some industries, from working excessive hours. The state saw to it that children received education up to the age of 13. Since 1 January 1909, it provided a meagre pension for the needy over the age of 70. Since 1911, it helped to insure certain classes of workers against sickness and unemployment. This tendency towards more state action was increasing. Expenditure on the social services had roughly doubled since the Liberals took office in 1905. Still, broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.

All this was changed by the impact of the Great War. The mass of the people became, for the first time, active citizens. Their lives were shaped by orders from above; they were required to serve the state instead of pursuing exclusively their own affairs. Five million men entered the armed forces, many of them (though a minority) under compulsion. The Englishman’s food was limited, and its quality changed, by government order. His freedom of movement was restricted; his conditions of work prescribed. Some industries were reduced or closed, others artificially fostered. The publication of news was fettered. Street lights were dimmed. The sacred freedom of drinking was tampered with: licensed hours were cut down, and the beer watered by order. The very time on the clocks was changed. From 1916 onwards, every Englishman got up an hour earlier in summer than he would otherwise have done, thanks to an act of parliament. The state established a hold over it citizens which, though relaxed in peacetime, was never to be removed and which the second World war was again to increase. The history of the English state and of the English people merged for the first time.”

A. J. P. Taylor, English History 1914-1945 (1965)

Tags: , ,
Posted in Politics by Hugo Hadlow | No Comments »

Market Crisis and Regulation

Wednesday, October 1st, 2008

The financial sector is in crisis. Lehman Brothers has collapsed, Merrill Lynch sold, Fannie Mae and Freddie Mac nationalised, and AIG looks like it may well go the same way. In the face of such market turmoil, it is to be expected that the old doomsayers are out in force, bemoaning the folly of the free market, and wallowing in the glories of nationalisation as our collective saviour. But such joy is misplaced. The free market is still only partial, and indeed too young to be blamed for the current economic woes.

To use an analogy, imagine that person A and person B have been given a chain saw. Person A has been given an instruction book, reads it, and follows it to the letter. As such they immediately and quickly get started trimming a few bushes.

Person B, on the other hand, has not been given an instruction book. Instead he must work out how to use the chain saw for himself. Because he is an intelligent person (and can learn from the work performed by A) B quickly works out how to use the chain saw. However, because B does not have an instruction book, he is quite happy to cut everything in site, while A checks each section to ensure that he does not attempt to cut something that is too thick for the chain saw.

Very quickly, B is able to take over A, and produces, because he is not stopping and starting, produces a cleaner and more even cut. Unfortunately, B is suddenly stopped in his tracks when he tries to cut something too thick. The chain saw jams; indeed, the chain saw backfires and B loses his grip. B is shaken for a few minutes, but he quickly recovers and starts again. This time he avoids the thick branch.

Soon, A and B find a poll in the bush made of a material neither has come across before. A can find no reference to the poll in his instructions. As such, both A and B decide to try and cut it. They both fail and the chain saws backfire. Afterwards, A is given a new instruction book, listing iron poles as another thing that the chain saw cannot cut through. B is not given any regulation.

Later, A and B come across a pole made of another material neither have come across. With his new instructions, A is told not to cut through anything that he does not recognise. As such, he does not cut it. In contrast, B tries to cut the pole and finds that it is made of rubber and cuts easily. He can then continue, ending up with a clean shaven bush with only a couple of thick branches and iron poles protruding.

What this is trying to show is that a regulated market is retrospective. With deregulation, banks have been able to make investments they have never been able to try before. Some of these investments, like the metal pole, have proved to be bad. But it is only after the investment was tried that this proved to be the case. As such, the free market has also learnt the lesson.

Nevertheless, some investments, like the graphite pole, were successful. In an ever changing world where regulations are often years behind progress, such investments would not have been realised had it not been for the free market.

Undoubtedly, the current economic crisis derives from banks lending to people who cannot pay them back. The fall-out from this has meant that the liquidity upon which banks depend has contracted. But what should be emphasised is that the free market can now learn from this mistake. As such, person B will not try and cut the thick branch with the chain saw again.

A deregulated market is in its infancy, and people are still learning how to use the freedom it affords. To finish with a final analogy, a child who has been playing virtual rugby for years is finally allowed to play it for real. During his first match he breaks his leg, and mother prevents him from ever playing again. So, he returns to his virtual game. Just imagine the opportunities lost by that child had he been able to learn rugby properly, especially now that he is an overweight couch potato in front of a television screen.

Tags: , ,
Posted in Politics by James Arthur Sharpe | No Comments »

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.

Tags: , , , ,
Posted in Politics by Hugh Burling | 2 Comments »

What was the HFE Bill really for?

Monday, May 26th, 2008

Those who supported the various alterations that the Human Fertilisation and Embryology Bill made or aspired to make to law most probably saw it as an opening up for discussion and reform of long-standing issues that were causing concern to various parties. Scientists wanted legal permission to create hybrid stem cells and increase production of embryonic stem cells besides. Liberals wanted to abolish the requirement for IVF providers to consider a child’s need for a father. Pro-lifers wanted to lower the time limit on abortions, apparently by any degree possible (votes were taken on reductions to 16, 18, 20 and 22 week limits). I’m not exactly sure how to politely stereotype those who wanted to legalize the practice of having a child so as to donate its body parts to a sibling.

The discussion and controversy that surrounded the bill and its amendments, however, made it appear a more and more curious parliamentary phenomenon - it gradually became clear that its various elements were basically unrelated as commentators spoke with the pretense of expertise in fields that were far from their own.

If we look at the arguments for considering some of the changes made, it becomes clear that there was a more subtle reason for introducing all these ideas at once, and one that may have indelibly increased the prerogatives of the government against the rule of common law in this country.

Let’s begin with the attempt to lower abortion limits. The argument used in opposition to this was that scientific evidence had not sufficiently changed since the 24-week limit was set even to show that children are ‘viable’ at twenty-two weeks. Whether this was the case or not (13 of 18 witnesses giving evidence to the Science and Technology Committee were known Pro-Choicers and many did not submit written reports), the argument’s strength rested on the fact that all ‘ethical debate’ on time limits had been ruled in favour of supposedly impartial ’scientific’ debate: terms of discussion had been established that prejudiced a given outcome, although this is less important than the fact that the debate had been limited in this way. The government had assumed the right to define human life, in this case by viability.

The debate concerning stem-cell research was full of red-herrings. Outspoken religious leaders bandied about sensationalist descriptions defaming both sides of the debate, whilst the scientific case in point - that adult, rather than embryonic, stem cells have produced the most significant advances in research - was ignored under the weight of scientistic rhetoric. Supporting stem-cell research per se was joined to the issue of ‘hybrid’ cells, an unnecessary confusion of separate issues. What was assumed all along was the forgone conclusion that human life should be defined exclusively and executively, rather than inclusively and cautiously: you are an inhuman without rights if you have a certain amount of animal DNA, and an inhuman and without rights if you are below a certain age or do not possess certain faculties.

The other two issues I have flagged up are relevant her insofar as they were irrelevant to each other and the other elements in the Bill. That is, we need to ask why they were included. The reasons for including an amendment to the Abortion Act revolved around the renewal and replacement of that piece of legislation, whereas IVF parenthood requirements are a social and fiscal, rather than scientific or negative-rights related. The ’saviour siblings’ section of the Bill is not related to human fertilization or embryology, but rather, perhaps, human termination and why some embryos are more worthy of life than others.

What a human is and when life begins is a philosophical question, not one that can be adequately addressed by legislation. This is why British common law is such an excellent tool to deal with its social and legal implications. Common law is cautious and case specific, ideally independent of party-political programs. Government legislation, however, affects the entire nation at once; it creates attitudes, delegitimizing some opinions and legitimating others. Yet in the HFE Bill we saw the latest assertion of this Government’s assumed right and ability to answer all our questions, make all our choices, for us.

By lumping all these different issues together, the real issue of whether we define human life exclusively (excluding others from humanity by chosen criteria that ’serve society’ like slave-traders and racialists) or inclusively was overlooked and the Government control over the answer to this question asserted. The artificial complexity of the Bill also made it nearly impossible for politicians who share my view - that morally ambiguous legislation be left to our common law tradition - to decide how to negotiate the issue. Abstention is seen as support or careerism. Voting no or yes agrees that Parliament is the place to deal with these issues - but it is not. Doubtless the HFE Bill is only part of a trend, where the state assumes prerogatives until we agree with them. It is a deeply regrettable trend, especially when such literally vital issues are at stake.

Tags: , ,
Posted in Politics by Hugh Burling | 5 Comments »

« Older Entries