Category Archives: Business

Fly Alitalia!


Note: The Italian State is providing Alitalia with a large subsidy. What the Italians do should normally be none of our business. However, the opaque nature of much spending by member states of the European Union allows me to suspect that this subsidy will come partly out of our pockets. It will also hurt British airlines.

I publish the following document to show what may be the general quality of service provided by Alitalia. It was sent at the time to the Chairman of Alitalia, and was taken up by Syed Kamall MEP. I was eventually made a piffling offer of compensation, which I decided to ignore. Towards the end of 2006, I had to choose between forgetting the matter and spending much of the next year pestering an Italian corporate bureaucracy. I think I was wise to choose the former. I have now remembered my complaint and decided to publish it for informational purposes. I believe that my experience is typical, though do please bear in mind that my identification of the officials concerned may not be accurate. SIG Continue reading

Customer Service


My wife and I bought this kettle from the Aga Shop in Tunbridge Wells on the 2nd October 2004. Yesterday, the handle sheared away. I wrote to the Aga Shop at once, enclosing the photograph and a copy of the receipt. I got a reply this morning, promising a replacement within seven days.

Aga products are expensive. The original kettle cost £64 in 2004. A new one now costs £100. But you can’t fault the company’s attention to customer service. British often is best.

104 Years Ago – G.K. Chesterton on Ideas and Ideals


Christopher Houseman

A wonderful answer to all the proud pragmatists who dismiss the power of ideas – including libertarianism.

Ideas are dangerous, but the man to whom they are least dangerous is the man of ideas. He is acquainted with ideas, and moves among them like a lion-tamer. Ideas are dangerous, but the man to whom they are most dangerous is the man of no ideas. The man of no ideas will find the first idea fly to his head like wine to the head of a teetotaller. It is a common error, I think, among the Radical idealists of my own party and period to suggest that financiers and business men are a danger to the empire because they are so sordid or so materialistic. The truth is that financiers and business men are a danger to the empire because they can be sentimental about any sentiment, and idealistic about any ideal, any ideal that they find lying about. Just as a boy who has not known much of women is apt too easily to take a woman for the woman, so these practical men, unaccustomed to causes, are always inclined to think that if a thing is proved to be an ideal it is proved to be the ideal. Many, for example, avowedly followed Cecil Rhodes because he had a vision. They might as well have followed him because he had a nose; a man without some kind of dream of perfection is quite as much of a monstrosity as a noseless man.

Chesterton, G. K. (2010). Heretics (297–298). Bellingham, WA: Logos Research Systems, Inc.

7 Reasons HMV Closed


by Carps
http://www.itsafamilything.co.uk/

HMV was part of the fabric of the British high street but – like Woolworths, Jessops, Currys, C&A, Ethel Austin, Borders, Virgin Music and a slew of lesser known names – at some point in the last decade time caught up with its business model. A lot of people speculate as to why it failed.

Here are my thoughts. Continue reading

Why is the State Involved in Childcare?


by D.J. Webb

Women are forced out to work by house prices. This is the real subtext to absurd plans for the state to pay £2,000 to each working woman for childminding. With high taxes and council tax, high transport fees and high childminding bills, it is hard for women to make work pay — and the only result of their trying to do so is to push up the income on which mortgage loans are calculated, thus supporting the property Ponzi scheme. Continue reading

WHY LIBERTARIANS SHOULD SUPPORT A LAND VALUE TAX


by D.J. Webb

Libertarians support low taxation on principle, in order to free people and the economy from the burden of the state. If the writings of Adam Smith and John Stuart Mill are anything to go by, however, there is an important exception: land taxation. Land taxation is not just a necessary evil that affords the state some revenues with which to perform the very few necessary functions of government; it is a positive good, in that it tackles monopoly and speculation, and should ensure efficient use of land. If land taxation had remained the key source of government revenue in the UK, the current economic crisis would not have taken place. Continue reading

Dark Satanic Cubicles – It’s time to smash the job culture!


Note: O Loompanics! When will we see thy like again? SIG

Dark Satanic Cubicles was originally published in 2005 on Loompanics Unlimited, written by Claire Wolfe.

You load sixteen tons, and what do you get?
Another day older and deeper in debt.
St. Peter don’t you call me, ’cause I can’t go.
I owe my soul to the company store.
Merle Travis, chorus of the song Sixteen Tons

Back in 1955, thunder-voiced Tennessee Ernie Ford recorded that song as the B-side of a single. Soon, nobody could even remember what the A-side was. DJ’s all over the country began flipping the disc – and within two months of its release Sixteen Tons had become the biggest single ever sold in America.

Sixteen Tons is a John Henry style fable about a coal miner who’s tough as nails – one fist of iron, the other of steel.

He’s able to do the most back-breaking job and slaughter any opponent. But even though he’s been working in the mines since the day he was born, he can’t get ahead. Merle Travis wrote and recorded the song in 1946. But until Ford covered it, Sixteen Tons hadn’t done Travis a bit of good.

Far from it. Although Travis was a patriotic Kentucky boy, the U.S. government thought any song complaining about hard work and hopeless debt was subversive. The song got Travis branded a communist sympathizer (a dangerous label in those days). A Capitol record exec who was a Chicago DJ in the late 40s remembers an FBI agent coming to the station and advising him not to play Sixteen Tons.

Pretty big fuss over one little song. Continue reading

Power Doesn’t Just Attract Mean and Stupid People — It Makes Them That Way


by Kevin Carson
http://c4ss.org/?p=10803

In “Empire of the Rising Scum,” Robert Shea observed that, regardless of their ostensible mission, hierarchical institutions tend to be headed by people whose primary skills are careerist climbing and bureaucratic in-fighting. As I’ve said before, you simply cannot become a President of the United States, or a Fortune 500 CEO, unless there’s something fundamentally wrong with you. The same is true of the intellectual capacity of those who manage to advance upward within hierarchies. Being a team player, engaging in groupthink, demonstrating an ability to shut off critical thinking when evaluating the communications of a superior — these are qualities that authoritarian institutions select for. Continue reading

In Praise of Credit Checks


by Jeffrey Tucker
http://mises.org/daily/5789/In-Praise-of-Credit-Checks

“The credit report is the best friend of the responsible in the same way that it is the worst enemy of the irresponsible.” Continue reading

There is No Disinterested Authority


by Kevin Carson
http://c4ss.org/?p=8744

In a recent discussion, someone proposed “a political system comprised of professionals rather than career politicians.” Policy-making bodies, she suggested, might be equally divided between professionals and elected politicians. Continue reading

Battle for the Heart of the Occupy Movement


by Kevin Carson
http://c4ss.org/?p=8737

Center for a Stateless Society Media Coordinator Tom Knapp, summarizing his experience with the Occupy St. Louis movement, reported a movement “with an ideological center of gravity somewhere in the neighborhood of ‘mild reform Democrat.’” Most of the people there, apparently, were basically Coffee Party people with better signs and slogans. Continue reading

Robbing Us Blind


by David D’Amato
http://c4ss.org/?p=8712

Calling attention to the crises spawned by contemporary global capitalism, the Occupy movement provides an opportunity for more than mere response to the symptoms of that system. Just as doctors would be remiss to merely attend to symptoms on an ad hoc basis, we who are concerned with social and economic justice must set ourselves upon the underlying disease. Continue reading

2011 Index of Economic Freedom


http://attackthesystem.com/?p=11153

As determined by the collection of neocons, theocons, vulgar libertarians, and stooges for the military-industrial complex that comprise the Heritage Foundation. Continue reading

It isn’t a crisis of capitalism but a crisis of globalism


by Robert Henderson
http://livinginamadhouse.wordpress.com/?p=1116

It isn’t a crisis of capitalism but a crisis of globalism

Amongst the wailing and gnashing of teeth from all parts of political mainstream over the ongoing economic crisis its prime cause goes unmentioned. Free market capitalism, which has been accepted , whether enthusiastically or resignedly, by Western elites for the past quarter of a century as the only economic theory worthy of support, is being questioned. Even some of its firmest adherents are questioning whether there has been too much freedom of individual action in the economic sphere. Some mainstream commentators who write for resolutely “free market” supporting newspapers like the Daily Telegraph and Daily Mail, are even beginning to wonder if capitalism is in a crisis from which it may not recover: Continue reading

Which Side Are You On?


by Kevin Carson
http://c4ss.org/?p=8630

Occupy Wall Street has come under fire from some libertarians, on the grounds that it’s relatively silent about the role of big government, and its proposed remedies lean heavily toward increased government intervention. Continue reading

When the Mafia Can’t Compete With the Chamber of Commerce


by Kevin Carson
http://c4ss.org/?p=8150

I’ve written frequently on the national regulatory state as a source of monopoly rents to big business. But the true nature of regulation as a naked power grab by incumbent businesses is nowhere more apparent than at the local level. At the lower levels of government, conventional, brick-and-mortar business establishments are heavily involved in using regulatory enforcement to shut down low-cost competition. Continue reading

What to Make of “Capitalism”


Note: This posting has generated nearly a hundred comments, and has been viewed by pushing towards 10,000 people. We are not surprised, as the issues discussed are central to the future direction of the libertarian movement. For this reason, we are pinning it to the top of the blog until the comments and views fall away. SIG

by David D’Amato
http://c4ss.org/?p=8156

For the United Kingdom’s The Guardian, Pankaj Mishra says the world is “looking at a fresh political awakening,” citing examples from Egypt and Greece to Israel and China. “[E]xtreme and seemingly insurmountable inequality,” Mishra argues, are the source of the new “public anger,” and that inequality is itself the result of “the west’s model of consumer capitalism.” Continue reading

Personal Perspectives 27, Austrian Economics and Anarcho-Capitalism: Peace, Prosperity and Freedom (2011), by Michael McKay | www2.libertarian.co.uk


 

Austrian Economics and Anarcho-Capitalism: Peace, Prosperity and Freedom
Michael McKay

Personal Perspectives No. 27
ISBN 9781856376372
ISSN 0267-7156 (print)
ISSN 2042-275X (online)

© 2011: Libertarian Alliance; Michael McKay

Personal Perspectives 27, Austrian Economics and Anarcho-Capitalism: Peace, Prosperity and Freedom (2011), by Michael McKay | www2.libertarian.co.uk

Kevin Carson in Forbes Magazine


 

As Kevin Carson has noted in the past, the IMF’s “actual purpose was to subsidize the disposal of surplus American goods and capital in foreign markets. The World Bank and IMF were created as an adjunct of William Appleman Williams’ “Open Door Imperialism,” a safety valve for the chronic overproduction and overaccumulation under state capitalism.”

Should We Abolish the IMF? – E.D. Kain – American Times – Forbes

Back in the USSA, by Kevin Carson


http://c4ss.org/?p=5477

Politicians and talking heads, of both the mainstream liberal and conservative persuasions, commonly refer to this as “our free market system,” or maybe “free enterprise.”

But we haven’t had anything even remotely resembling a free market for over 150 years. (For that matter we didn’t have one before, what with Enclosures, the Combination Law, mercantilism, slavery and colonialism.) Since the mid-19th century, what we’ve had is massive collusion between big government and big business. The corporate economy was created almost whole-cloth through a monstrous act of top-down government intervention, with the help of such things as the railroad land grants and other infrastructure subsidies, the exchange and pooling of patents, tariffs, regulatory cartels, and union-busting by uniformed thugs. The New Deal was just corporatist icing on the cake.

What we have is not a free enterprise system, but an interlocking directorate of giant, centralized government and corporate bureaucracies. The same personnel circulate, through a revolving door system, between senior corporate management and government political appointees. The same person who is now Assistant Vice President for Such-and-Such at So-and-So Corp LLC, is apt in five years to be Deputy Undersecretary for the Other Thing. And vice versa, of course. It makes about as much sense to treat a Fortune 500 corporation as a “private business” as it makes to treat a count in fourteenth-century France as a private landlord.

Within the large corporation, management bears more resemblance to the Soviet Nomenklatura than to free market entrepreneurs. They justify their power in the name of shareholder value, but in fact shareholders exercise almost no control over corporate management. Proxy fights almost never work, and corporations are typically controlled by inside directors. After a brief period of hostile takeovers in the ’80s, management quickly acted to restore insider control and nullify the threat of such attacks through measures like poison pills and greenmail; today, most takeovers are friendly and carried out by the management of both companies in collusion. If some seats on the board are occupied by institutional investors, it’s more accurate to describe it as a coalition between interlocking corporations. Bond issues are reserved mainly for financing mergers and acquisitions, and most new investment is financed by retained earnings, so the external control exerted by the capital markets is largely mythical.

American corporate management claims to represent shareholders as a legitimizing ideology, just as the Soviet bureaucracy claimed to represent the workers or the people — meanwhile having dachas, private cars, and shopping privileges in the luxury department stores reserved for Party members. In both cases, though, what you really had (and have) is a self-perpetuating oligarchy in control of a free-floating mass of unowned capital.

The typical Fortune 500 CEO invests money that she didn’t contribute from her own past savings, but that lacks any external owner capable of exercising any genuine control over it. Corporate management spends other people’s money, amounting to de facto owners of it. Shareholders are conventionally regarded as residual claimants, because in legal theory they have a claim on all revenue that’s left over after after all contractual claims are paid. But in the real world, it makes more sense to say that the shareholder is a contractual claimant with even fewer rights than a bondholder, and that management is the real residual claimant. A shareholder is entitled only to whatever dividend management sees fit to issue, if any. But senior management is entitled to whatever salaries and bonuses they can get, through mutual logrolling with the board of directors.

A lot of establishment libertarians, when they call for a “free market,” really seem to mean the present corporatist system without the welfare or the health and safety regulations — a world owned by Wal-Mart and Halliburton.

But when you hear a call for a freed market by someone at the Center for a Stateless Society, or anyone else on the free market left, please be aware that we mean something completely different by it. What we want is a society in which corporations are deprived of all the subsidies, privileges, protections, and artificial property rights they currently enjoy. What we want is a society in which all market activity consists of free exchange between equals, without anyone paying monopoly rents to the privileged and powerful. What we want is a society in which all functions of the state are replaced by voluntary association, whether by market transactions, mutual aid associations, or gift economies.

In short, the free markets we talk about have nothing to do with those of Dick Armey and FreedomWorks, the AEI, or the Heritage Foundation. We’re not talking about socialism for the rich and a Dickensian work house for everyone else.

When we say we believe in free enterprise, we mean it.

“Bad news coming” thought Winston…


Christopher Houseman

No, not the impending cuts of so many public payroll salaries (some of which have jobs associated with them), but rather a certain commonality in the Coalition about the motives for their present course of action.

Nick Clegg has assured the LibDems that he doesn’t want to cut the state for the sake of cutting it. No, he wants to cut it so he can rebuild the state differently. Likewise, Liam Fox has informed the Tories that he doesn’t want to cut defence and nor does David Cameron (cue Tory applause) – but at the moment, he has no choice.

Thus is the libertarian ideal of a smaller state smeared in the eyes of political activists and the wider public as a necessary evil, a stopping-off point to be endured on the road to the sunny uplands of a reshaped and re-expanded State tomorrow.

Unless libertarians can convincingly and appealingly present to the public the truly joyous reality of being able to work (or not) as we please, with whom we please, to offer goods and services we’re proud of to whomever we please, libertarians will remain marginalised and misunderstood. They’ll be seen as an articulate but callous bunch, perversely rejoicing over the wider dislocation and misery caused by the State’s champions ditching the minions they think they can most easily do without.

When faced with people determined to do exactly the wrong thing, Lenin’s “The worse the better” dictum may be an accurate response to their failures. But it’s no way to market anything to anyone.

PS. I note the Tories’ pledge to let headteachers discipline children for misbehaviour on the way to and from school. I leave the last word on this news to John Taylor Gatto:

As schooling encroaches further and further into family and personal life, monopolizing the development of mind and character, children become human resources at the disposal of whatever form of governance is dominant at the moment.

Will Hutton on How the Banks Won (and keep winning…)


Christopher Houseman

Will Hutton presented a Dispatches documentary recently on Channel 4 about the British banking cartel system.

The extent of Mr. Hutton’s connections with the previous Government were plain to see, as he treated us to an hour of breast-beating to the tune of “Why oh why do the noble politicians not rescue us from the greedy bankers?” This seems more than a little rich (in irony only, you understand). As I recall, the recent banking crisis would have lawfully removed large numbers of greedy bankers from the UK economy – but for Labour’s insistence on debasing the money supply still further to try to prop them up.

Perhaps the most informative snippet came towards the end when Mr. Hutton revealed that British banks currently lend out fifty times more money than they have on deposit, and five times more than the value of everything else the UK produces. No wonder our glorious leaders are worried about a repeat performance. Mr. Hutton’s solution? To try to force the banks to stop inflating residential property prices by switching the focus of their lending activities to (British-based?) businesses.

Sadly, Mr. Hutton didn’t tell the viewers how his proposals would avoid inflating the prices of business “assets” (commercial property, plant and machinery, R&D, properly skilled and experienced labour, etc.). Nor did Mr. Hutton explain how artificially stimulating productivity could be compatible with any conceivable form of environmental responsibility (so much for the alleged anti-environmentalism of decision-making in a free market). In fact, Mr. Hutton didn’t even tell us why businesses should apply for his proposed extra loans if they can’t be sure there are enough additional customers able and willing to pay for all the proposed new supplies of goods and services.

100 watt light bulbs.


Fred Bloggs.

0209-MATT-web_1473184a

Although there is a store in Southport which has a large sign saying  “We now stock 100 watt light bulbs.”

Here’s the details:
Chris Taylor Electrical Supplies
01704 544047

Enjoy.

Review by Sean Gabb of Kevin Carson’s “Organization Theory”


Free Life Commentary

Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 184
18th June 2009
Linking url: http://www.seangabb.co.uk/flcomm/flc184.htm
Book Review by Sean Gabb

Organization Theory
Kevin A. Carson
Booksurge, 2009, 642pp, $39.99
(ISBN 9781439221990)
Available from Amazon

(http://www.amazon.com/exec/obidos/ASIN/1439221995/ref=nosim/kayetechsystems)

I will begin my review by stating its main conclusions. These are that Kevin Carson has written one of the most significant books the libertarian movement has seen in many years. I do not agree with everything he says here. I do not suppose any libertarian will unreservedly accept what is said. Even so, I doubt if there is a libertarian who can read this book and not, in some degree, have his vision of a free society enriched and even transformed by it.

Summarising an argument that is worked out over more than six hundred pages is not easy. However, Mr Carson begins by observing that, while economic theory seeks to analyse the behaviour of individuals and small groups within a market system, the economic reality is a world dominated by large corporations within which prices are largely administered and there is an absence of competition.

He asks why this should be so. Why is there so much substitution of hierarchy for individual contracts? The standard answer, provided by Ronald Coase, among others, is that large firms are more efficient than small firms. The further the division of labour is carried, the larger the potential economies of scale. In an open market, however, the division of labour involves transaction costs – these being the costs of negotiating exchanges between many different suppliers of goods and services. Within a firm, these costs are not abolished, but are much reduced. Therefore, a firm will expand to the point where the cost of organising one more transaction within itself is equal to the cost of letting that transaction be made on the open market.

According to this analysis, firms grow large so far as their lower internal transaction costs make them more efficient than their smaller competitors. And there is an obvious temptation to regard size in a market economy as evidence of greater efficiency.

Against this analysis and its conclusions, Mr Carson argues that the point at which internal transaction costs become equal to the costs of transactions via the market has been artificially raised by state intervention. There are few objective benefits in size. Lowest long run average cost is often achieved by rather small scale production methods. There is little evidence that large factories are more efficient than small factories. There is little evidence that large firms are more innovative than small firms. Anyone who looks inside a large firm will see information and management and resource allocation problems similar to those described by Hayek and von Mises in their work on socialist calculation.

For two hundred years, economists have been content to repeat and elaborate on the example of the pin factory described by Adam Smith – in which the operations of making a pin are divided among many workers, thereby raising average output. In fact, these efficiencies can be realised just as easily by dividing the operations so that individual workers perform them one after the other.

If large firms predominate, it is not because they are the outcome of free market forces. Rather, they are called into being by systematic distortions of the market that amount to a subsidy on size. These distortions include the following:

First, there is subsidised transport and communication infrastructure. According to Mr Carson,

[i]t’s… important to remember that whatever reductions in unit production cost results from internal economies of large-scale production is to some extent offset by the dis-economies of large-scale distribution.[p.34]

The British and American railway networks, for example, were built in the nineteenth century by private companies. However, investment was only made profitable by

Continue reading

Free Enterprise: The Antidote to Corporate Plutocracy Keith Preston


http://www.libertarian.co.uk/lapubs/econn/econn112.htm
Economic Notes No. 112

ISSN 0267-7164                   ISBN
1856376303
An occasional publication of the Libertarian Alliance,
Suite 35, 2 Lansdowne Row, Mayfair, London W1J 6HL.
© 2009: Libertarian Alliance; Keith Preston

Keith Preston is the founder and director of American Revolutionary Vanguard, a USA-based tendency committed to advancing the principles of anti-statism, personal liberty, cooperative individualist economics, and the sovereignty and self-determination of communities and nations.  He is a graduate student in history, an independent business owner and entrepreneur, and advocate of a new radicalism that reaches beyond the archaic left/right model of the political spectrum.  See the ARV website at www.attackthesystem.com.  He can be contacted at 1108 West Grace Street-Apartment 8, Richmond, Virginia, USA, 23220; email: kppgarv@mindspring.com; Phone: 804-355-7161.  This essay is a very slightly edited version of the winner of the Libertarian Alliance’s 2008 Chris R. Tame Memorial Prize: “Can a Libertarian Society be Described as ‘Tesco minus the State’?”

THE PERILS OF SELECTIVE LIBERTARIANISM

A political libertarian, broadly defined, is someone who wishes to dramatically reduce the role of the state in human social life so as to maximize individual freedom of thought, action and association.  The natural corollary to libertarian anti-statism is the defense of the free market in economic affairs.  Many libertarians and not a few conservatives, at least in the Anglo nations, claim to be staunch proponents of free enterprise.  Yet this defense is often rather selective, and timid, to say the least.  Libertarians and free-market conservatives will voice opposition to state-owned enterprises, the social welfare and public health services, state-funded and operated educational institutions, or regulatory bureaus and agencies, such as those governing labor relations, relations between racial, ethnic, and gender groups, or those regulating the use of the environment.  Curiously absent among many libertarian, conservative, or free-market critiques of interventions by the state into society are the myriad of ways in which government acts to assist, protect, and, indeed, impose outright, an economic order maintained for the benefit of politically connected plutocratic elites.  Of course, recognition of this fact has led some on the Left to make much sport of libertarians, whom they often refer to, less than affectionately, as “Republicans who take drugs”, or “Tories who are soft on buggery”, and other such clichés. ….[More]

If the G20 Moochers and Slairs would only stick to this sort of public schmoozing, and leave the rest of us poor sods alone to get on with it, the wordl would rapidly become….


….a better place.

David Davis

Look at this. Really, it’s all very nice and cosy and innately harmless. One is still – despite all that has occurred since, er,well, the beginning of times when one man thought he could enslave and corrupt the will of another – inclined to believe that even these G20-buggers, like the huggers below, are human beings after all.

 

aaaahhhhhh.....blessss....!

aaaahhhhhh.....blessss....!

 

 

 

 

 

 

 

 

 

 

 

 

Minimal-statist type libertarians are not in principle against nations deciding to have some sort of titular “Head of State”, if that is what they want, provided that everyone agrees what the limits of authority of such an outfit under Common Law are beforehand, and _provided that_ everyone stays awake sufficiently for those limits to _be observed_ , and _be observed permanently_ . It is dangerous to allow a “State” to deirect, or even have the slightest hand in influencing, things such as “education” or “broadcasting”, if these conditions are to be met. Look at what has happened to ordinary and necessary qualifications for teenagers, for example under modern socialism in the UK, or to the propagandising output of the British State television braodcaster.

The present lot of outfits have clearly got out of hand, are rampaging drunk with power, and ought to be brought to heel. The malign influence of pre-capitalist barbaric anti-guides to survival, such as socialism, cannot be forgotten here.

In a Classical Liberal market civilisation, i suppose it would be perfectly all right for people to dress up as “Heads of State”, jet off to somewhere or other expensive, and pretend to have a “summit”. They could exchange ritual gifts of no value to anyone but each other, such as personalised I-Pods or silver framed photos of their dogs.

Moreover, being all bloggers by necessity, they could even issue “Joint Communiqués”. These would most probably give details of the joints they smoked while together as they will all undoubtedly be superannuated GreeNazis, ageing hippies, GramscoFabiaNazis, sad socialist,s and other varieties of worthless CO2-exhaling scumbag (although rich. Libertarians have “nothing against people getting filthy rich”….aka Tony Blair etc.) Or they might refer to statements of intent to regulate things such as “banks”….The great joy of such an arrangement is that nothing bad would come about as a result of their junketings.

The Kevin Dowd lecture on free banking | Samizdata.net


Sean Gabb

The Kevin Dowd lecture on free banking | Samizdata.net

The Kevin Dowd lecture on free banking

Johnathan Pearce (London) Globalization/economics

As promised, I have some thoughts following on from the talk given by Kevin Dowd, a professor at the Nottingham University Business School and a noted advocate of what is called “free banking”. He gave his talk at the annual Chris R. Tame Memorial Lecture as hosted by the Libertarian Alliance. (The LA was founded by Mr Tame, who died three years ago at a distressingly young age after losing a battle against cancer.)

Professor Dowd covered some territory that is already pretty well-trodden ground for Samizdata’s regular readers, so I will skim over the part of the lecture that focused on the damage done by unwisely loose monetary policy of state organisations such as central banks, or the moral-hazard engines of tax bailouts for banks.

Instead, I want to focus on those aspects of Professor Dowd’s talk in which he tried to sketch out what a laissez faire, free market banking system would actually look like. This is essential; a great deal of commentary so far – while it is very good – has mainly focused on how we got into this fix and why the fixes being attempted by Western governments are proving so stupid. As PJ Rourke said recently, the attempt by the Obama administration to flood the market with cheap money as a “solution” is a bit like the case of when your Dad has burned the dinner, so you ask the dog to cook it instead. No, what Professor Dowd did this week was lay out three broad areas for reform.

Firstly, he says we should remove many of the existing regulations, government-mandated deposit protection schemes, bank capital adequacy rules and other restrictions on what banks can do and how they work. For example, government support for depositors – who are also effectively creditors to their banks – means that there is a moral hazard problem; the banks have less incentive than they would otherwise have to act prudently if there is always the government, acting like a sort of 7th Cavalry, able to ride to the rescue. That has to go. Professor Dowd also wants to hack away at the morass of rules and regulations that violate client/banker confidentiality, or those rules that force banks to lend to people, as is the case in the US, where banks are forced to lend to certain groups or else violate laws about racial discrimination, etc.

Secondly, Professor Dowd addresses the issue of letting banks fail. At the present, policymakers adopt a sort of “too big to fail” doctrine; this doctrine, while not explicitly laid down in any form of statute or operating manual – as far as I know – is a rule that says that some institutions are so large, and the attendant systemic risks posed by their failure so catastrophic, that they should not be allowed to go out of business. The problem of course is that this rule of thumb is often arbitrary and subject to political horse-trading. To wit: the US government’s decision to let Lehman Brothers go down last September, followed shortly by the $85 billion bailout for AIG, showed a total lack of clear message to the markets, and to bankers, one way or the other.

Professor Dowd believes that banks should be allowed to fail and furthermore, if modern limited liability laws were weakened or abolished completely, then such massive conglomerates would be economically and legally unsustainable in the first place.

As a result, banks would probably be smaller, and there would be a lot more of them, so the failure of any individual bank, while unpleasant for some, would not wreck the system as could happen if a mega-bank goes wrong. Also, instead of wide-ranging and hideously expensive bailouts, Professor Dowd favours putting banks into administration, writing down, in full, the value of their loan books, and getting depositors to exchange their status as creditors for that of an equity holder.

This “debt for equity swap” arrangement, while it would anger depositors who lose money, would come with the promise, and hopefully the reality, of a rise in the capital value of their equity stake in a bank if confidence returns to a more robust banking sector, as the debt/equity swap recapitalisation is designed to achieve. And of course banks are entirely free, as are their clients, to take out deposit insurance in a commercial market.

The third leg of his solution is broader, and more long-term, although there are some immediate measures that could be taken. Professor Dowd is against fiat money – money not backed by actual commodities or real assets of any kind – and in moving to a commodity-based/asset-based system. He is not, by the way, necessarily arguing for the gold standard or some gold-based system, although he points out that in the 200 years up to the First World War, the UK enjoyed a remarkable period of stable prices, with the odd blip. What he is arguing, however, is that the message on a banknote that says “I promise to pay the bearer on demand the sum of X” should be an enforceable legal contract, not what amounts to the jeering joke that it now is.

In the subsequent Q&A session afterwards, one person made the excellent point that a simple reform would be to ban legal tender laws. Such laws currently require a person to accept as legal tender a currency that the state has mandated for a particular region. Instead, if a person wants to refuse to accept sterling and only wants to accept dollars, euros or Swiss francs instead, he can do so. He can also choose to trade in whatever medium of exchange he wants, and with whoever wants to accept it.

Inevitable questions arise. First of all, in thinking about free banking, private monetary systems and the like, the first objection will be is that this will be very messy; there has been no real experience of such monetary systems in the past, etc.

But this is incorrect. Free banking, as defined by Professor Dowd, in fact operated in Scotland, for example, up until legal changes in 1845. South of the River Tweed, the English system had operated under what amounted to state-controlled banking under the Bank of England, set up in 1692. In the 18th and 19th centuries, England saw a number of booms and recessions, such as the 1840s railway boom and the downturn of 1870s. One should remember that the BoE was established by the-then post-Glorious Revolution government as a way to raise money for wars without having to keep asking a fractious public for taxes, and without having to borrow at expensive rates in the money markets. N.A.M. Roger has explained this issue of financing for naval warfare brilliantly. Indeed, it reminds us that state monopoly money systems typically arose in order to finance wars, while the welfarist aspects came later.

There are also current, not just old, examples of banks that operate with unlimited liability partnership structures – Pictet, the Swiss bank, and Lombard Odier, are just two examples. There are dozens of such banks using these structures in Switzerland and by no coincidence; they have avoided the worst of the credit crunch. These banks are typically for the rich but it seems to me that there is no logical reason why such an approach could not be used more widely. So there are different ways of doing banking right now. And do not forget the humble UK mutual building society: they have their limitations, but as a business model they had a lot to recommend them.

Another objection might be that the debt-for-equity swap way of restructuring failed banks under bankruptcy protection laws would be politically unfeasible, since depositors would be hit. I understand that, but Professor Dowd is not trying to imagine what sort of reforms would appeal to David Cameron, say, but what sort of reforms would be workable. That is a rather massive difference, as I am sure readers will agree.

Another objection is that “real money”, as opposed to the state-arranged fiction that we have now, cannot work for as long as governments take such a large slice of GDP. That is probably correct. One of the reasons why so many advocates of Big Government regard “gold bugs” or free bankers as dangerous nutters is that they realise their welfare states would be unworkable under such monetary arrangements. The Ponzi schemes of most welfare states would not be able to function. Even so, as long as governments retain the ability to tax, they have the ability to raise debt in the financial markets in the knowledge that their collateral can be collected at the point of a gun. But a real-money system still hampers such activity considerably.

In the longest run, the best hope of avoiding such financial disasters in the future is to wean the public and policymakers off the seductive delusion that one can create wealth by turning on a printing press. Sooner or later, if you try to fake reality, it bites you hard in the arse. Of course, it is a mark of the kind of man Professor Dowd is that he is too polite to put it as bluntly as that.

I await comments!

Comments

It sounds all very interesting and I really wish now I had been there as the other event I was at did not afford me the opportunity I had hoped to grab my local Oxfordshire MPs and try and sell them my idea for a “Bank of Oxfordshire” using, believe it or not, partnerships and asset based scrip.

I particularly like his ideas about what to do now, practically speaking, because I guess I always focus on the “hereafter” policies of competitive currencies and so on which are probably still a bit far up the Overton window for most peoples’ comfort.

There was an interesting piece about C Hoare & Co in one of yesterday’s newspapers just so people recall that there is at least one UK based bank on an unlimited liability model.

Was any mention made of Gesell, WIR Bank and similar alternative structures that often started up in the Depression and some of which, such as WIR, are still going from strength to strength?

Posted by Jock at March 19, 2009 02:05 PM

Firstly thank you for organising an enjoyable evening and thought provoking talk.

One additional area that will be critical to moving in the direction of free banking is reform of the insolvency laws and procedures. However desirable it may be to put a bank into an enforced reconstruction the law, particularly in England, makes it impossible to complete in a realistic time scale. The timescale for advertising ceditor claims, the lack of sufficient powers of an administrator to cut a deal amongst creditors and make it stick without protracted legal action, and the absence of any legal recognition (in statute or precedence) of priority for the counterparties of many of the new financial instruments mean that any administration process under current law would take months or probably years to resolve. A bank will go under if the uncertainty lasts more than a few days.

Sorting out the legislation and enforcing the current competiton rule to break up the major banks into more managable units will be preconditions of Prof Dowd’s approach.

A further and slightly off topic thought. The Sarbanes-Oxley laws in the US require CEO’s and CFO’s of companies, including banks and other financial institutions, to sign declarations that their organisation has fully effective internal controls, the records are complete and accurate, and that the financial statements can be relied upon. Clearly these representation for AIG, Citibank and other were patently false. Why are there no CEOs and CFOs in handcuffs awaiting trial??

Posted by RobertD at March 19, 2009 02:16 PM

It certainly appears to have been an excellent talk; I look forward to seeing a video of it.

Johnathan’s summary mentions two points which I think could be implemented fairly quickly and do much to improve on the current system: repeal of “legal tender” laws and elimination of deposit insurance. The former is fairly straightforward and explained in the article. The second bears more discussion.

Deposit insurance (in the US, anyway) is an artifact of the Great Depression, installed to prevent catastrophic “runs” on banks, sometimes sparked by mere rumor. It was (and is) a legitimate concern, and while the problem is exacerbated by a fractional reserve system (as I’m sure Paul will interject here at some point), it would also be a problem even without fractional reserve lending. The US’s solution was to create a new federal agency (the FDIC) to run the insurance fund, and (not coincidentally) directly regulate most banks. Therein lies the flaw.

The FDIC is staffed by government bureaucrats with no personal economic stake in the game. They are, by and large, decent and well-meaning people, but they aren’t the “best and brightest” (such people don’t work for bureaucracies) and they are hampered by hidebound rules and a lumbering, ineffecient and inflexible system. Insurance “premiums” are not established on any actuarial basis, but are essentially identical for all banks, however well or badly managed [1], and setting the rate is quite politicized. The proper response should be to use private deposit insurance.

With private deposit insurance, banks could shop around for insurance companies with the best rates and service. The insurance companies themselves would more accurately and carefully assess “risk” than it would ever be possible for the government to do, and would price accordingly. They would set capital levels which make sense given the specific nature of the bank’s business (rather than one-size-fits-all rules), assess the true value of its assets and liabilities (including, where appropriate, off-balance-sheet contingent liabilities), and in general do a better job of assessing the because it is their (and their shareholders’) money which is at risk. If the FDIC misprices, the insurance fund gets depleted and they go to the government for more money. If a private insurance company misprices, its capital gets depleted and shareholders replace the management. Competition among insurance companies would keep any from becoming unduly risk-averse in their regulations or expensive in their pricing. It’s a true free-market solution, and would work.

[1] There has been a move in recent years to incorporate some sort of “risk-adjusted” element to the premiums, but if this has actually been implemented (I’m not sure about that) the differential was essentially nominal.

Posted by Laird at March 19, 2009 04:28 PM

RobertD, you make a good point about the speed of administration process under existing English law. Prof. Dowd made the point that the debt-for-equity swap and recapitalisation of a bank would have to be done very fast, over a weekend. A long delay would be a disaster, in particular, because of the need for businesses etc to make payments and handle invoices, etc.

Laird, thanks for the detail on the insurance angle.

Posted by Johnathan Pearce at March 19, 2009 05:01 PM

I am delighted to see articles like this posted on Samizdata Jonathan – excellent, more in this vein as and when you can please.

Posted by mike at March 19, 2009 05:19 PM

This is the problem I see with insurance: How can an actuarial table be constructed?

Do bank failures follow a known statistical pattern? Clearly not.

I wouldn’t believe any private agency offering deposit insurance. Gold reserves are all that can be believed. At least until an actuarial table can be constructed.

Posted by Current at March 19, 2009 05:23 PM

Two questions:

1. As Laird pointed out above, the bank guarantees were specifically made to avoid panics, wouldn’t the removal of these guarantees necessarily cause panics? With the advent of instantaneous communication available to even the stupidest among us, wouldn’t ‘runs on the bank’ become a regular event?

2. Fiat money v. asset backed currency -
With fiat money there is a good deal of leverage that is not possible with the asset backed. This seems to imply that under a asset backed regime the economy would be significantly less dynamic one, and growth could be curtailed. Yes, a blessing in the possible smoother booms and busts, but it would seem a curse in reducing growth, productivity.

Looking at the historical rates of inflation / deflation it really appears that prior to the 1930’s, this cycle was much more dynamic than after: (UK) Consumer Price Inflation Since 1750(Link)
I realize this study is a reconstruction and I have no way of evaluating the methodologies but it seems relevant.

Posted by Will Anjin at March 19, 2009 07:26 PM

This isn’t life insurance; there are no “actuarial tables”. That doesn’t mean that the risks can’t be rationally assessed. How do you think an insurance company insures any one-time event? Lloyd’s has known how to do this for centuries (even if they’ve fallen off course a bit lately). [I need help here from someone with better knowledge than mine about probability; is this a Bayesian analysis?]

Moreover, the real point isn’t whether there is going to be deposit insurance; that’s a given, after the experiences of the Great Depression. The only question is who provides it, and at what cost? I submit that government is the least qualified entity to do so, for a variety of reasons (some noted in my previous post). In a truly free market each bank would decide whether to offer it or not and the market would reward or punish that decision, but even in a regulated environment the government could simply mandate that banks carry some minimal level of deposit insurance as a condition to maintaining their charter. Banks could choose to carry more than the minimum amount, and again the market would determine whether or not that was a wise decision, but it’s still a market solution. (Probably a market would develop for banks with different insurance levels: minimal for those with relatively small balances wanting cheap banking services, higher for those with more money who are willing to pay a bit more for peace of mind. Let the market sort it out.)

Posted by Laird at March 19, 2009 07:36 PM

Right said Fred (in “Harriet Harman, British State-Lynch-Mobdriver v. Royal Bank of Scotland plc Contracts Department”)


David Davis

It says in The Landed Underclass that The Telegraph says that the “government” is “prepared to change the Law” to stop Sir Fred Goodwin getting his contractually-agreed pension. Just look at this terrifyingly dangerous utterance:-

But Ms Harman, Labour’s deputy leader, said that all necessary steps would be taken if the 50 year old would not do the “honourable” thing. (my emphasis – ed.)

“Sir Fred should not be counting on being £650,000 a year better off as a result of this because it is not going to happen,” she told BBC1’s Andrew Marr show.

“The Prime Minister has said it is not acceptable and therefore it will not be accepted. It might be enforceable in a court of law this contract but it’s not enforceable in the court of public opinion and that’s where the Government steps in.”

Ms Harman declined to say exactly what action could be taken but reports this week have suggested a special Act of Parliament was being considered by Downing Street as a last resort.

It is a dangerous thing, that any government, after Magna Carta, does not have respect for Law. Talk of “public opinion” and “The People” is always a dead-giveaway about Nazis lefty tyrannical tendencies.  All outfits that behave in this way should be treated as deeply suspect nasty fascist lefty Nazis.

Sir Fred Goodwin, although probably as culpable as any trough-pigging banker who dined out for years on States’ funny-money, is entitled, as a Sovereign Individual, to keep what free contracts have allowed to him. Specially as Guido has pointed out that Lord Myners knew about it in advance and the sums involved are nugatory.

This is a clear case of shamelessly but unjustifiably trying to take the high-moral-ground, but the thoughpiggers of ZanuLieBorg – who have pissed away the money, and also incidentally robbed millions of people of hundreds of billions of their own, fully-legally-obtained, and paid-for, “private pension pots”, to pay for a clientariat-votariat for themselves.

We all now have to work till we die. Sir Fred’s £700,000 is the least of our worries. I hope he gets a highly-paid job with the IMF and screws Harriet Harman (metaphorically – I for one would not even “escort”  her, if she paid me.)

Vaclav Klaus scragged by walk-outer-MEPs, while a guest in “his” own EU “parliament”


…amd a good plug for Sean Gabb’s speech to Conservative Future, from these good people over there.

There are no videos of Klaus himself being shouted at and with grasping, totalitarian, trough-pigging-socialist-scumbags walking out, but we’ll put them on as soon as possible if they appear.

http://blogs.telegraph.co.uk/daniel_hannan/blog/2009/02/19/meps_walk_out_when_vaclav_klaus_questions_european_integration

The NHS … “avvin-a-luff” at your expense, at a PCT (whatever that might be) near you, now.


David Davis

I just found this idly while trawling The Devil for fun stuff,  (as you do)  at the Ferret-Fancier.

Some of the job titles are so divinely and frankly arch, as to have to have been deliberately conceived witht he aid of management consultants and screenlay writers, and thus in a spirit of supercilious condescension towards real people, who pay the salaries of these collaborationist EUGramscian bastards, by force.

For example, what would an intelligent space-alien from Tharg make of “Head of Cancer Commissioning”, if he/it fetched up in the forecourt of an oncology hospital (if we have any left)? (Space aliens are never female, sorry.)

I also shudder to think what a “Tobacco Control Worker” actually does, and what equipment he/she/it deploys.

TESCO, government and markets: two (2) cheers for Sir Terry Leahy


David Davis

I am not in the pay of Tesco – really I am not – honest, guv.  But it deserves two cheers or at least its CEO Sir Terry does (not three  –  for reasons I will explain, and which Sean Gabb has explained below) for his spirited defence of Markets discovering the best way to allocate resources, as opposed to governments decreeing (see Sean again.)

I expect this piece by him was absolutely as far as his own “in-house” Communications Department apparatchiks would allow the poor bugger to go. Everyone knows of course that, to a first approximation, 99% of all “communications executives”, which is to say PR girls people, are left-leaning graduates of things currently called “universities”, who have studied “journal-ism” or “media studies”. There will be enough exceptions to prove me almost not quite totally right, so I await brickbats, but I feel that Sir Terry’s private views on these matters are stronger than he was allowed to express.

Because Tesco, and its plans for giving people what they want to buy, is the prime target for assaults by greenies and anti-shopping Stalinists (who like “local” shops and “car free town centres” – an oxymoronic position if ever I saw one) it falls to poor Sir Terry to do the defence. I urge you all of you who appreciate crypto-Stalinist circumlocution, to read the whole thing here about why the local Stalinists bureaucrats don’t want Tesco to expand an already successful store where parking is free – but want it to take a site nobody wants (it’s been empty for three years!) in a town centre nobody can park in except for money to the Soviet.

Sir Terry does not get the full three cheers, for he tries to defend Government’s action in propping up a gasping banking system, which, like Hitler’s Generals who first shunned him – then lauded him – then were in hock to him, ought to have seen through this government’s debauchment of money earlier. Then, they should of course have opposed it in the first instance – but they didn’t, so here we now are. (Like Hitler’s generals in the Bunker.)

Sean Gabb: Another Rant about the Recession


Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 179
28th January 2009
Linking url: http://www.seangabb.co.uk/flcomm/flc.179

The Car Industry Bail Out:
Are There no Politicians Now Who Understand Economics?
by Sean Gabb

The British Government has just announced what may be £2,000 million of subsidies for the car industry in this country. Responses to the announcement range from gratitude that jobs and manufacturing capacity are to be saved to complaints that the subsidies do not go far enough. My reading and viewing may not be comprehensive, but I have seen nothing in the mainstream media denouncing the subsidies as at best politically motivated – much of the car industry being located in constituencies held by Labour – and at worst economically illiterate. Since the first grounds of denunciation ought, after nearly twelve years of these people, to be self-evident, I will devote myself here to the second.

We are continually told at present – which is somewhat more than usual – how government spending had created, or will create, so many jobs. Therefore, the immense expansion of the British State since 1997 has created three hundred thousand jobs or whatever. Some deplore this because most of those employed can be expected to vote Labour. Hardly anyone denies there has been a net addition to the number of employed. The same reasoning underlies all discussion of how we are to get through the recession on which we have now started.

The truth is, however, that government spending does not so much create as displace employment. Every pound spent by the Government must first be taken from the people, who cannot then spend it for themselves. If the money is taken is taken through taxes, it exactly reduces the ability of the people to spend or invest it for themselves as they wish, or to save it for transfer, via the banking system, for others to spend or invest as they wish. If the money is borrowed, it again exactly reduces the amount of money that the people can borrow to spend or invest.

It is more complex if the money is printed by the Government – or, more likely nowadays, borrowed from the banks in a fractional reserve system. But if its effects are often hard to trace until after the event, inflation is no less a tax than any other means of providing money to governments. It may reduce the actual purchasing power of money left in the hands of the people. Given the downward pressure on manufacturing costs we have seen during the past generation, inflation will at best reduce the potential purchasing power of money that already exists.

This being so, the argument that government spending creates employment relies on a blindness to the concept of opportunity cost – that every pound spent on paying one salary is a pound less to spend on another salary. Put more simply, it is a case of what Bastiat described as “what is seen and what is not seen”. We see the jobs created by the Government in it “regeneration” projects. We do not see the jobs that would otherwise have been created to supply things that people actually would have bought had the money been left in their own pockets.

For the past six months, the argument has been reinforced by the claim that government spending is needed to make up for a disinclination by others to spend or invest. This being so, it will not be a zero sum game, but will create net employment. There is no doubt that there has been a deflation. People are borrowing less and saving more. The banks have been increasing their financial reserves. But it does not follow from this admission that government spending is needed to make up the deficiency. The fall in spending is not the cause of the problems we face, but is a symptom.

For perhaps the past decade, many central banks in the rich world have kept interest rates below the level needed to balance the supply of savings and the demand for loans. When other prices are forced below their equilibrium – rent control, for example – the result is shortages. In the fractional reserve system that we nowadays have, however, pushing interest rates below their equilibrium has simply enabled the commercial banks to create money out of nothing. In the past, this would have led almost at once to price increases. This time, with most consumer goods made in countries where supply curves are very elastic, and with exchange rates only loosely related in the short term to the financing of foreign trade, and with financial and property markets able to absorb what long seemed to be limitless amounts of money, the result was a speculative bubble, in which consumer prices hardly rose, and in which most of us were persuaded that we were growing richer.

These bubbles never last. The new money is brought into being through bank lending that cannot continue forever. There comes a point where people have taken as much debt as they can service, or  where they have invested on the basis of trends that stop rising. It is then that some event that would otherwise have been overlooked becomes the excuse for a panic. The bubble bursts. Net borrowing turns negative. Prices of overbid assets fall. Prices of securities fall to the value of their underlying assets – assuming there are any that can be identified. Much investment in new capacity is shown to have been unwise.

On this reasoning, the present fall in spending is not an event in itself that needs to be and can be cured by higher government spending. What we now have is really part of a cycle that began with the artificial lowering of interest rates, and that will end with the liquidation of the unwise investments and the correction in asset prices. The British Government’s policy of trying to halt the deflation with higher spending and even lower interest rates cannot do better than lengthen the cycle during its unpleasant phase. It also increases the size of the State – which already takes far too much of our money and spends it on things we would never buy given a free choice.

But I return to the bail out of the car industry. This is not a case of limiting collateral damage. The car industry is not a fundamentally sound victim of circumstances. It is instead one of those sectors in which unwise investments were made. There is no shortage of finance for businesses that really are considered sound. Even I still receive one or two pre-approved loan offers from banks I never knew existed. If the car companies cannot borrow to maintain their working capital, it is because no one believes in their fundamental soundness. Even at the height of the boom, it was claimed that there were too many car makers, given present and future demand for cars. There will now be several years when hardly anyone with an ounce of common sense will spend money unless he must on a new car. No one seems to care if estate agents all over the country are losing their jobs. If car workers are now to lose their jobs, it is for the same reason.

Of course, there are things the Government could do and ought to do to help the car industry. These are all negative. For the past twelve years, it has been running propaganda campaigns and piling taxes and regulations that have tended to make driving less attractive than it might otherwise have been. These propaganda campaigns should be ended. The road excise and petrol duties should be cut. The cameras and yellow and red lines should be taken away. The police officers now deployed to harass drivers should be dismissed – there being, in any event, more policemen than needed to enforce the laws of a free country.

I move back now to the general difficulties we face. With increasing desperation, Gordon Brown is denouncing anyone who questions his policy of inflation as wanting to do nothing. Well, doing nothing at all would be an improvement on what he has been doing. However, there are things the Government could do. None of it would take us back straightaway to the prosperity we have lost. But it would shorten and moderate the pain that stands between us and recovery. I suggest the following:

  • The Government should balance its budget – and do so not by increasing taxes, but by spending less. This would tend to restore confidence to markets that are presently working on the assumption of a soft pound, and where default on the national debt is no longer thought impossible.
  • The Government should force all banks that have limited liability to reveal their true financial position. This would not be an interference in their private affairs, as limited liability is a privilege bringing responsibilities that may be varied as thought reasonable. This would again tend to restore confidence, and it would do more than printing money has to persuade the banks to start lending to each other.
  • The Government should return to a fully convertible gold standard. Unless otherwise contracted, it should be regarded as fraud for a banker to take a deposit and not have sufficient reserves to redeem it at once on demand. This would prevent the periodic explosions of credit that are behind the trade cycle.
  • Of course, the Government should also abolish income tax, valued added tax and excise duties. If this does not cut the tax burden by three quarters, it should abolish some other taxes. To keep the budget balanced, it should also cut spending.

I could go on, making more and more claims unlikely ever to be conceded by the British Government or any other. But the first two, plus a few cuts, would go far to shortening the recession. Sadly, even these will not be tried – not at least until the Keynesian remedies everyone wants have been tested to destruction.

Further Reading:

Murray Rothbard, America’s Great Depression
Henry Hazlitt, Economics in One Lesson
Hans-Hermann Hoppe, Credit Creation or Financial Intermediation?: Fractional-reserve Banking in a Growing Economy

NB—Sean Gabb’s book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, can be downloaded for free from http://tinyurl.com/34e2o3

Fake Charities and the British “New Labour” State; now for a real one instead.


David Davis

A couple of days ago, The Devil (bless him, and may God’s Face shine upon him with radiant mercy and goodness for all ways) brought this to all our attention. For those busy chaps who have not time to click the link, it transpires that the British State under the Stalinist Gramsco-Marxians in Westmonster is setting up what appear to be “charities”, and which are accountable under Charities Commission rules, but which use treasury money, extorted by taxation, to achieve Stalinist Gramsco-Marxian lobby-goals laid down by the Westmonster-Gramsco-Marxians themselves.

That’s the kindest and most euphemistic way I can think of, to put across what they do.

I came across this just now, and I think all us here-buggers ought to give them at least £2 each at this address. This guy is exactly not like the bastards who cream off taxpayers’ funds in quangos, shagging and being shagged by their nasty Gramsco-Marxian friends in the UN, the EU, governments and “aid agencies”. I did not realise that about £9 would feed a poor Nyasaland child, who has nothing, for about a year. So I think we all ought to help him feed these poor buggers.

It is the business of libertarians to promote the growth and scope of private charity.

You can take comfort that none of it, God willing, will go towards Mercs-4-Jerks (like the jerk Mugabe for example, or many many others, some in “aid agencies”):-

We’ll do the Lifeboat people too in a minute or tomorrow, as that’s also a proper Charity, one of the diminishing few, and we even have one (a lifeboat) here. But ours is paid for entirely out of private subs, and although credited to the RNLI does not have to be subbed by them. Hat tip to the RNLI stuff  landedunderclass.

Really, this stuff ought to put ZanuLieborg to shame.

But I guess it won’t.

USA: more on bailouts. Mattlb2000 is sceptical


David Davis

So he is, to-be-sure, to-be-sure.

Darling prepares the printing press: watch out for rising inflation


Kevin Dowd

This has not been a good week for the economy. Yesterday, we had the announcement of another bank bailout, only three months after the Prime Minister’s famous boast about saving the financial system (”We now only saved the world”, he announced to amused MPs back in October. “Please not again”, would be my response.) This is bad news and confirms that the last one didn’t work.

The bad news today is potentially much worse. The UK Chancellor, Alistair Darling, has authorised the Monetary Policy Committee of the Bank of England to consider printing money. Mr. Darling prefers not to call it that – he prepares the euphemism ‘quantitative easing’; the difference between the two policies is however trivial, and both amount to debauching the currency. Mr. Darling dare not call it for what it really is, however, for fear that the public might realise what he really doing. They will, in time.

So the Bank of England is now authorise to (in effect) print up to £50 billion to purchase corporate assets. This might not sound much given the other numbers being bandied around these days, but this is in fact a great deal considering that it is the monetary base we are talking about. The  most recent figure for the monetary base is about £95 billion, so this amounts to an authorisation to increase the base by over 50%. (I suppose it could be worse – the Federal Reserve in the United  States has already increased the base by over 100% since the late Summer, but that doesn’t give any comfort.)

Why does the base matter? As any monetary textbook will matter, increase the monetary base, and in time all the nominal values in the economy – the other monetary aggregates and prices too – should all evenually rise in line. Other things being equal, a rise in the base of 50% means, in time, a rise in prices of 50%. (Unless the increase in the base is reversed before it feeds through the system, and I suspect there is little chance of that.)

The danger, now, is that the MPC will tire of relying merely on interest rates and bailouts, and then take the fatal next step that the Chancellor has authorised them to take.

Just because the frying pan is hot does not make it a good idea to jump into the fire – as the citizens of Zimbabwe will no doubt confirm.

So watch out for rising inflation.

Meanwhile, one shudders what they will come up with tomorrow.

LA News Release: Let Failed Banks Go Under


NEWS RELEASE FROM THE LIBERTARIAN ALLIANCE
In Association with the Libertarian International

Release Date: Monday 19th January 2009
Release Time: Immediate

Contact Details:
Dr Sean Gabb on 07956 472 199 or via sean@libertarian.co.uk

For other contact and link details, see the foot of this message
Release url: http://www.libertarian.co.uk/news/nr073.htm

“NO BAIL OUT OF THE BRITISH FINANCIAL SYSTEM” SAYS LIBERTARIAN ALLIANCE: “LET FAILED BANKS FAIL”

The British Government’s latest proposed rescue of the financial system is a fraud on the taxpayers and will fail, says the Libertarian Alliance, Britain’s most radical free market and civil liberties policy institute.

[The British Government proposes to spend up to £200 billion of the taxpayers' money on lending to the commercial banks in an effort to end the alleged liquidity crisis. This is in addition to the £600 billion already handed over.Full story at  http://news.bbc.co.uk/1/hi/business/7836259.stm.]

According to Sean Gabb, Director of the LA:

 

 

“Final responsibility for this crisis rests with the authorities. For at least ten years, the Bank of England – and the central banks in most other countries – has kept interest rates below the market equilibrium. The result has been an frenzy of credit creation by the commercial banks. This led to an asset price bubble that has now burst.

“The recession we now face cannot be avoided by pseudo-scientific manipulations of ‘aggregate demand’ It is the natural result of malinvestment and general speculation. A return to prosperity is best achieved not by trying to reflate the speculative bubble, but by allowing the liquidation of bad investments to proceed as quickly as possible.

“We agree that this will be painful to those who lose money or livelihoods. But there is no avoiding the aftereffects of an inflationary boom.

“Governments can stand back and let weak institutions fail. This will bring on the worst financial collapse since 1931, and be followed by a nasty recession. Or they can spray vast amounts of our tax money into the financial markets, which might briefly delay the worst financial collapse since 1931 and a nasty recession to follow.

“The only real beneficiaries of this rescue will be those working in the financial markets. They have spent the past decade stuffing our savings up their noses while telling us they were invested. Now their friends in government have come up with a scheme to use our tax money to pay next year’s bonuses.

“The Libertarian Alliance denounces this proposed rescue and predicts bad times for years to come.”

END OF COPY

Note(s) to Editors

Dr Sean Gabb is the Director of the Libertarian Alliance. His latest book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, may be downloaded for free from http://tinyurl.com/34e2o3. It may also be bought. His other books are available from Hampden Press at http://www.hampdenpress.co.uk.

He can be contacted for further comment on 07956 472 199 or by email at sean@libertarian.co.uk

Extended Contact Details:

The Libertarian Alliance is Britain’s most radical free market and civil liberties policy institute. It has published over 800 articles, pamphlets and books in support of freedom and against statism in all its forms. These are freely available at http://www.libertarian.co.uk

Our postal address is

The Libertarian Alliance
Suite 35
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Mayfair
London W1J 6HL
Tel: 07956 472 199

Associated Organisations

The Libertarian International – http://www.libertarian.to – is a sister organisation to the Libertarian Alliance. Its mission is to coordinate various initiatives in the defence of individual liberty throughout the world.

Sean Gabb’s personal website – http://www.seangabb.co.uk – contains about a million words of writings on themes interesting to libertarians and conservatives.

Hampden Press – http://www.hampdenpress.co.uk.- the publishing house of the Libertarian Alliance.

Liberalia – http://www.liberalia.com – maintained by by LA Executive member Christian Michel, Liberalia publishes in-depth papers in French and English on libertarianism and free enterprise. It is a prime source of documentation on these issues for students and scholars.

This news release will also be placed on the Libertarian Alliance blog – http://libertarianalliance.wordpress.com/

Libertarian Alliance home

Is this true?


David Davis

From The Remittance Man we learn this: householders will be visited by bureaucrats dispensing advice (here’s the original source) about cooking with leftovers…..

Sometimes we here, on whichever of the duty-typwriting squadrons is on “watch”, are tempted to emulate the language of Obnoxio The Clown, or the Devil himself. (He’s uncovered a previously unstudied State-Bogus-Charity in that one…Obnoxio’s latest just refers to some bureucrat or other as a c*** . )

But this is a family blog, so, apart from saying shit and crap which is rather weak playground stuff now, we only go so far as to merely write f*** (sometimes even c*** these days.) And also we only show pictures of Keeley Hazell wearing bras (until we get bored with her and we go and get someone else. Possibly Lucy Pinder – anybody got any preferences? See poll below. If in doubt, go here and select someone else.)

To get back to the point, the government is bust, the main world’s private banks have feverishly bought themselves into virtual bankruptcy by queuing for 15 years to buy each others “securitised” pigs-in-pokes, Gordon Brown is printing money….and then they all go and spend it on what? Food-police. Here’s an exerpt:-

Home cooks will also be told what size portions to prepare, taught to understand “best before” dates and urged to make more use of their freezers.

The door-to-door campaign, which starts tomorrow, will be funded by the Waste and Resources Action Programme (WRAP), a Government agency charged with reducing household waste.

The officials will be called “food champions”. However, they were dismissed last night as “food police” by critics who called the scheme an example of “excessive government nannying”.

WE MUST ALSO BEAR IN MIND THAT THIS IS ! “ALL ABOUT PROPERTY RIGHTS” !  People who have purchased food are entitled to dispose of it how it pleases them. The bought food DOES NOT become State Property: it belongs to the householder.

No bureaucrats yet come round to tell you not to throw a brick at your Wireless Tele Vision, thus rendering it at least partially if not fully unserviceable, whenever Jonathan Ross come on screen: why should they come and tell you what to do with food whiche displeases you?

It’s all very sad: it’s as if the poor government buggers just can’t kick the gravy-train (sorry) habit, even when there’s really no money, as opposed to just the appearance of no money.


Sean Gabb in German


Sean Gabb

Many thanks to Robert Groezinger for this most able translation:

http://ef-magazin.de/2009/01/11/883-neujahrsausblick-der-westen-kommt-glimpflich-davon

 

Neujahrsausblick: Der Westen kommt glimpflich davon

von Sean Gabb

Wenn ein Abgleiten in den Totalitarismus verhindert werden kann

Es besteht wenig Zweifel daran, dass überall dort, wo Politiker Einfluss haben, 2009 ein schlechtes Jahr sein wird. In England wird möglicherweise vor dem Sommer eine Wahl stattfinden. Wenn dies geschieht, und wenn die Stimmen ordnungsgemäß gezählt werden oder wenn die Polizei beschließt, nicht alle Oppositionsführer festzunehmen, werden Gordon Brown und seine Labour Partei aus dem Amt geschmissen. Im vergangenen Jahrzehnt hat er dazu beigetragen, dieses Land von einem von den Konservativen errichteten Polizeistaat im Anfangsstadium in einen wahrhaften Polizeistaat zu verwandeln, der nur aufgrund des Spotts gemäßigt wird, den wir auf seine Pläneschmiede noch häufen dürfen. Es wäre schön, diese Leute ihrer Ämter verlustig zu sehen – insbesondere, weil sie unmöglich wiedergewählt werden würden, und ein Amt das einzige ist, was sie im Leben jemals wollten. Aber es gibt keinen Grund für die Annahme, dass die Konservativen viel tun werden, um unser endgültiges Abgleiten in den Totalitarismus zu verhindern. Sie haben zu viele eigene niederträchtige Neigungen, um den riesigen Kontrollapparat zu zerschlagen, der von Labour nahezu perfektioniert worden ist. Selbst wenn dem nicht so wäre, sind sie entweder zu dumm oder zu faul um zu wissen, wie man ihn zerschlägt. …[More]

 

Very important


David Davis

Nuclear fusion possibly around the corner…a hundred years or so?

It’s soon enough but nowish would be better, to silence all the global-warm-Nazis… so they HAVE TO resort to their guns after all, and their open hatred of Mankind…..before they are really really ready and truly in charge.

Be of Good Cheer: Christmas Greetings from Sean Gabb


Sean Gabb

Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 178
25th December 2008

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Be of Good Cheer:
A Christmas Greeting
from the Director of the Libertarian Alliance
by Sean Gabb

There being nothing else on any of the channels we can receive, my wife and I have spent much of the day watching the various Christmas greetings from religious and political leaders from around the world. These range from the vacuous (Her Majesty the Queen), to the impressively malevolent, so long as the volume is turned down (the Bishop of Rome), to the plain stupid (the Archbishop of Canterbury). I will not bother with reviewing these utterances. Instead, I will issue one of my own.

There is little doubt that 2009 will be a bad year in every respect where the politicians have influence. In England, we may have a general election before the summer. If this happens, and if the votes are fairly counted, or if the police decide not to arrest all the opposition leaders, Gordon Brown and his Labour Party will be ejected from office. In the past decade, he has helped turn this country from the incipient police state established by the Conservatives into a true police state that is tempered only by the mockery we are still permitted to heap on its projectors. It would be nice to see these people out of office – especially since they could never be re-elected, and the only thing they have ever really wanted in life was to be in office. But there is no reason to suppose the Conservatives would do much to prevent our final slide into totalitarianism. They have too many nasty inclinations of their own to break up the vast apparatus of control brought near perfection by Labour. Even otherwise, I suspect they are too stupid and lazy to know how to break it up.

I would ignore political developments elsewhere in the world – only it would deprive me of the opportunity to feel sorry for the Americans. I saw their President-Elect in a newspaper the other morning. Posing shirtless, he looked for all the world like one of the more raddled black boys you see selling their bodies in Leicester Square. I think this says more about the tone of his coming leadership than his choice of Hillary Clinton and the usual neo-con suspects to run his foreign policy, or his having accepted the full climate change nonsense. I have no doubt the BBC will cover his inauguration as if it were the Second Coming. It will be watched in much of England, even so, with laughter and contempt. President Obama will be rather like Tony Blair, but without the taste or restraint which Princess Tony will, by comparison, be shown to have possessed.

Since they too are influenced by the politicians, 2009 will be a bad year in most respects economic. I am not sure when the present cycle started, but interest rates have, for many years, been manipulated by the politicians below the level needed to balance savings and loans. The resulting additional demand for loans was satisfied by creating new money out of nothing. This enabled a gigantic speculative bubble that sprang a puncture last year, and that has now burst. Recession is the natural result. The structure of relative prices has been distorted. Investments have been made that are now shown to be unwise. There must be changes. The beginning of change is to allow interest rates to rise and unsound businesses to go bankrupt. The faster this is allowed to happen, the sooner we can return to prosperity.

Sadly, the political response has been to look for any scheme to save or replace the speculative bubble. Interest rates have been cut in England and America. The taxpayers’ money has been lavished on propping up the more unsound banks. Governments are threatening to inflate without limit. The stated purpose of this is to avoid recession. The result will be to make the recession longer and deeper than it needs to be. The politicians tell us that Keynes was right after all. Perhaps that is what they believe. More likely,  they have been taken in by the bankers with warnings about total collapse of the financial system, and are now responding like the victims of those Internet frauds run from Nigeria. I see the car makers have taken up the bleat for subsidies. I suppose they will be joined soon enough by the coffee bars and every other business that overexpanded.

2009, therefore, will be a bad year in the economic sense. If it is not, the pain will only have been delayed until 2010, when it will be felt with compound interest.

Here, though, is an end of my gloom. Much is bad now, and will get worse in the next few years. So long, however, as we can avoid a collapse into totalitarianism, the future is nowhere near so bleak as we are presently assured. Scientific and technical progress continue at the most wonderful speed. Sooner or later, there will be a renewed scramble to bring the results to market, and our lives will be still further enriched – and this time, I hope, considerably extended.

And there need be no relative decline of the West. We have been told for years – usually by self-righteous lefties, gloating over a fall that they assume they and their families can personally avoid sharing – that the coming economic giants of this century are China and perhaps India. This is as fatuous as earlier claims about Japan. If you type the phrase “population pyramids” into Google, the first result will be an American Government website showing how the population of every country in the world is, and will be, distributed by age. Until we know how to extend not merely life but also youth, the most dynamic people in any country will be aged between twenty five and forty five. In England and in America, this age group will predominate throughout the present century. In the Orient, every developing country is following the Japanese pattern of rapid ageing, followed by actual decline of population. The Japanese at least reached Western standards of living before they stopped having children. The Chinese may simply grow old before they get rich. After a fashion, China has been getting richer for about thirty years. We shall see how long that can continue once the majority of the population is over the age of fifty, and have neither savings nor children to support them in old age.

And China has been getting richer only after a fashion. About thirty years ago, its Communist rulers decided to turn the country into one big sweatshop, supplying the West on razor thin profit margins. They managed this by unlimited force. Ordinary working people in China have been ruthlessly exploited. With the banning of real trade unions, and with generally oppressive contracts of employment, labour there is free only in the nominal sense. Otherwise, costs have been socialised for favoured companies; and competitiveness has been maintained by an undervalued exchange rate. Look beyond those glittering towers built for the ruling class and its foreign partners, and you find endless and increasing misery.

Even without the start of demographic crisis, this may now be ending. We are told about the huge scale of the foreign currency reserves maintained by the Chinese Government and its banks – as if money were the same as riches. At least the mercantilists in old Europe wanted their governments to accumulate gold and silver. These could eventually be made into imports. What the Chinese Communists have done is to send us a continuous stream of manufactured goods, accepting in exchange a mountain of dollars – and at an undervalued rate – that are only worth anything if they are not spent. The moment these reserves are used for imports, or switched into more stable currencies, their value will collapse.

The Americans have had the main benefit from this fraud. But so far as the Orientals have had an insatiable hunger for dollars, and the rest of us have had no trouble in getting dollars to hand over, all other Western peoples have benefitted.

This brings me to the supposed crisis of our national debt. The English and American Governments have been borrowing for the past decade on a scale that would once have been thought reckless. Gordon Brown has already given this country the ratio of debt to output that we last had after the Second World War. This is without the further borrowing he has announced. The Americans are facing the same explosion of public debt. Some economists are telling us that we shall have to pay higher taxes for at least a generation to service these debts.

But this is not true. Our governments will borrow little from us – most of us having no savings to lend. They will instead continue selling bonds to the Arabs and the Orientals, and a few Russians if the price of oil recovers in time. The real value of these will then be inflated away.

None of this pleases me. Inflation harms us all, if in ways that are often hard to trace. But once the mess of the last boom has been cleared away, it will become plain that the chief victims of that boom were the very countries everyone thought were the chief beneficiaries. We shall have had our cheap notebook computers and our flat screen television sets. We shall have increased our wealth in the present, and increased our abilities to grow wealthier in the future. Those who screwed their peoples to the edge of destitution to make this possible will find themselves holding our increasingly worthless paper. Chinese growth will grind to a halt. India will break up. Eventually, the Arabs and Russians will learn that we have discovered some cheaper source of energy than their carbons. All we need to do is somehow bring our politicians under control, and we shall enjoy a most agreeable twenty first century.

And so I wish all the lucky members of my mailing list a Happy Christmas, and – if the coming year will be dreadful – the prospect of much better times to come.

NB—Sean Gabb’s book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, can be downloaded for free from http://tinyurl.com/34e2o3

Liberty and tyranny: what non-violent and legal things could everyone do, every day, to upset and rile bureaucrats and “big-States”?


David Davis

I confess: the idea is not mine. Sean Gabb and I were discussing, in our inimitably pessimistic way, earlier this year, what kinds of things ordinary Subjects of the Crown could do, in their daily lives, to either annoy or make more difficult the lives of our political masters and their more lowly appointees.

The provisos were that:-

(1) We should try not to cause criminal damage. So 30,000 builders in 10,000 White Vans with 20,000 Stihl-Saws at 02.00 am GMT, all cutting down the posts of the speed cameras at one moment in time, will NOT do.

(2) We should not physically harm or otherwise assault bureaucrats, Ministers, MPs, their families, and the like. I recall that we could not decide what to do about “Traffic Wardens” or “Artificial Policemen“.

Please could ALL readers suggest something in the comments. Some things I can think of:-

(1) ALWAYS be seen to be filming the officers of the State, or else pretend to photograph them, while they are going about their “business” – even if you are not so doing. We all now carry little peanut-sized-thingies that not only film stuff but phone people, make tea, tell you whree you are etc. It is not (yet) a crime to make privaye movies in public places. this will increase their “workplace stress”, and with a bit of luck some of them will clock off “sick”. We will not be any the worse thereby, even though they still cost us.

(2) Place “Britain is leaving the EU: it is inevitable” stickers on State notices of all kinds. Also on the rear number plates of “official cars” and the like. Or, over the bar-code on their tax discs. This will cause inconvenience when the vehilces pass through ANPR camerae (now believed to be live) and does not cause any damage as they wash off.

(3) Place small but ostensibly accidental amounts of the wrong recyclable material (such as a large rusty steel automotive pressing like a flywheel or a Brake Disk,  into a plastic box for beer cans) into any State Receptacle designed for another sort. If what they say is true, this renders the entire bulk amout later, useless.

(4) ALWAYS ( or affect to ) smoke in the presence of a State Employee, ideally inside a building or a car (it becomes a “workplace” if there are 2 or more of you in it!) or if not, then in your house or on the street.

I would welcome lots more suggestions. I want 100 good ones by Christmas, to cheer you all up with on a special “ANNOY A BUREAUCRAT FOR THE CHILDREN AT CHRISTMAS” post………………..

“Tell you what, guv! We’ll ruin Sterling for you, while pretending to be prudent, and then we’ll pretend you’re rescuing us by letting us in!”


UPDATE: Perhaps…the EU really IS the problem? And its presence merely encourages our own home-grown Nazis to behave even more Sovietically than they would naturally – which is not very natural to them, being British as they are…..(or perhaps I am being too charitable towards them.)

David Davis

The pound is heading towards the Euro as we speak. I do not care, really: so what? They’re all false “FIAT” type toilet paper anyway, so it does not matter what value each unit (not) has, so long as the (not) value is known.

But perhaps this was all engineered a long time ago. For the defining event to be so, so long after the actual battle which the Euro lost, which was to engulf Sterling, that enough “Big Brother” and “X factor” episodes have taken place for “the people” to have forgotten what this was all about in the first place.

BBC TV licensing tax threats Nazis Charles Moore Ghandi liberty poor people


David Davis

I had never thought I’d see Ghandi as a hero, but if you take one act he did in context (rejecting the Salt Tax) then Guido is totally right that the TV License “Fee” is an unjust and forcible protection of a state-monopoly, and is against the interests of everyone. It is even against the interests of talented tV producers, programme-makers and technicians, many of whom could probably be better employed in other broadcasters, or even totally outside the industry!

Here, you can go sign the NO to TV licensing thingy.

Here also is their blog.

Charles Moore has been going on about this terrible, evil thing for some time – at least three years to my certain knowledge. Now that momentum has been picked up by his campaign, it is hard to see how one of two things can avoid happening:-

(1) The BBC will get nasty, turn up the flame-wick of horror, and start prosecuting thousands and thousands and thousands of people, the whole thing possibly ending at gunpoint,

(2) its income will fall off badly, possibly to zero as Rupert Murdoch picks up the trail, and The Sun starts to flag up the opportunity to not pay and get away with not being scragged by fake detector vans and paramilitary “License Fee Collectors”.

Option 2 is more likely I think. I haver long suspected that “detector vans” either contain nothing at all, or else are unable today to “detect” a modern TV, as it has no powerful “line timebase”, emitting bags of RF at multiples of the horizontal timebase frequency – it is of course “flat screen” which needs none of that old rubbish… (actually it was not rubbish but very cleverly optimised to to what it had to do, although megalithic by comparison with today’s electronics.)

We at the Libertarian Alliance have long advocated closing down the BBC. Fully. That’s it. A State Broadcaster can have no purpose to serve, in a State which is minimalist and liberal. There is no need for one, if the barrier to braodcasting for anyone who wishes to, in a technological civilisation, is low enough – and it now is.

That’s it.

I don’t sadly really know if other nations have a compulsory, criminally-driven TV licensing scheme for their State borat-caster – but I’d love to know.  Please write in. I guess ShootinPutin has put one in even if it’s only run by the KGB against liberals and dissenters: and I expect that the pigs Kim Jong Il and Castro have got one, and also that other pig in ByeloRussia, can’t rememebr his name, all pigs are the same really.

Pity really that I have to so traduce such a useful animal as the pig here. Henceforth, all socialist scumbags will be called cockroaches – such as those who are bureaucrats, or whose Police kill people, or who dispense State welfare, or who ban smoking or displays of tobacco.

Gordon brown will “give back” some of our money with one hand…


…but take it back with the other. And Gerald Warner gets it quite right here.

David Davis

Spotted here about five seconds before I was going to write about it. But perhaps I don’t really need to convince people on here that the modern British State is a giant money-hoover, attached to a shredder, which then blows your money out again at you, prior to resucking it in for “recycling”.

It would be a fine day when “the masses” wake up and spot how they have been had all along, by Fabian tax-grappers and redistributionists. But I guess it won’t be that soon. Here’s the Westminster Waltz, by Russ Conway, then:-

Some of that will be nice too:-

Well, the Guardian is happy, anyway, that “top earners” will be clobbered for another seven-and-a-half-grand…I wonder how many of the really milkable ones will simply, er, go away…..again.

Spending Our Way to Economic Collapse


Sean Gabb

Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 177
24th November 2008

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The British Government’s Tax and Spending Proposals:
Testing Keynes to Destruction (Again!)
by Sean Gabb

Tomorrow afternoon, all the journalists have been primed to say, the British Government will cut taxes and increase spending. The alleged purpose of this is to prevent a deep recession. The real purpose, there can be no doubt, is to win the next general election for Labour – and, since the Conservatives remain as useless as ever, it may well work. I will, however, discuss the alleged purpose. Politics aside, it will be about as catastrophic a response to our current troubles as can be imagined.

The politicians of every party, and every journalist I have read, are agreed on the nature of these troubles. The crises of the past year in the banking sector have caused investment to fall. Consumption is now beginning to fall. To use the Keynesian jargon, aggregate demand has fallen, or is falling, below the level needed to keep national income at its full employment level. The answer is for the Government to cut taxes, thereby encouraging people to spend, and to increase its own spending.

It is also agreed by all that interest rates should be cut, thereby encouraging people to spend still more and encouraging firms at least to go back to investing as much as they were until the troubles began. It is admitted that doing all this might cause other problems. But this admission is followed by warnings about the horrors of the deflation we otherwise face.

This kind of economic reasoning is not as worthless as some of my friends believe. In countries as heavily regulated and corporatised as modern Britain and America, an increased preference to hold cash will not be balanced in the short or medium term by changes in the structure of relative prices. Firms will cut production rather than prices. Trade unions will prefer job losses to wage cuts. This can mean a very long and severe recession. There can be little doubt that, regardless of whatever would have followed, even without the Second World War,  the currency debasement of 1931 moderated the effect here of the Great Depression.

However, while not entirely worthless in certain conditions, what we are now being told is entirely worthless now. There is no doubt that people are spending and investing less than they were, and that they will continue to spend and invest less for some while to come. But, before agreeing that the politicians should be allowed to do what they most enjoy – namely, spending money that is not their own and that often does not yet even exist – we need to ask why we are in such trouble. The answer will explain why the proposed response will be catastrophic.

For many years, interest rates have been held below the sort of level needed to balance the supply of savings and the demand for loans. The result has been inflation. That many consumer prices have been falling is no argument against this proposition. Inflation is best seen not as price increases but as monetary expansion. There was a time when monetary expansion led fairly soon to price rises. Where at least Britain is concerned, though, most consumer goods are imported. So long as foreigners are willing to finance a growing current account deficit without devaluation, demand for imported consumer goods can expand rapidly and for years without any increase in prices.

The new money will therefore be used partly for investments in new production that may or may not be wise in the long term – and also to bid up the prices of property and of paper assets.

These bubbles never last. There comes a point where people lose faith in a currency, and where the upward spiral of asset prices is checked.  The fall in the currency will push up consumer prices. Overvalued assets will fall in at least real terms. Many other investments will be shown to have been unwise. The immediate reasons for their bursting are less important than that they always will burst. This has now happened. There is no definite rule in these matters. But it seems that the length and intensity of the boom is roughly in proportion to the scale of the recession that follows.

The financial collapse we are now witnessing, therefore, should not be seen as some autonomous fall in aggregate demand that can be offset by increasing other variables in the national income income equation. It is instead part of the unavoidable correction to past experiments in demand management. All the clever people disagree. They do believe that playing with aggregate demand can avert, or at least moderate, the coming recession. Now, these people are often very clever – most of them more so than I am. They are still wrong.

Cutting taxes is always a good idea. Not balancing them with spending cuts is not so good. If the British Government will do tomorrow what the journalists say it will, the inflation will be continued, though now without the confidence in sterling that allowed it before last year to create the illusion of prosperity. Taxes will fall. Government and other spending will rise. Interest rates will be cut. In the short term, this may be enough to win the next election for Labour. It not even before, though, the pound will collapse shortly after. Interest rates will then need to rise sharply, if the Government is to continue selling its bonds and if consumer prices are not to rise sharply and continuously.

There is no reasonable chance of deflation. For the next few months, while the collapse of sterling is only gathering momentum, firms will be able to reduce prices to keep up demand for their products. This will give the appearance of deflation. Eventually, though, their margins will not be further reducible, and the collapse of sterling will raise costs that must be handed on. This will happen even without further action. The bank rescues of last month were financed by money creation that will, sooner or later, find its way into circulation. Deflation is the last of our worries.

I have no professional expertise in finance, and so give no warranties of any kind. This being said, I think it a good idea for anyone who has a mortgage to get the best fixed rate he can between now and Easter, and otherwise to avoid saving money at any rate fixed longer than six months ahead. If he wants to buy imported consumer goods, he should do so now or, at latest, in the sales after Christmas.

Beyond this, I have no advice. Just because I do not believe in the solution that everyone else is urging on us does not mean that I have any alternative solution to offer. We should never have got ourselves into this mess. Failing that, the recession should have been allowed to hit last year. Since it was then deferred, it should be allowed to hit now. It will do nothing to moderate the inevitable recession. But there is a good case for cutting taxes and government spending now by at least a third, and then by five per cent a year every year for the next decade. And there is a case for returning to a fully convertible gold standard.

Of course, no politicians will take my advice. If any do read what I have just said, they will at best laugh with contempt. But I am right, and I feel some grim satisfaction in being able, come 2010, to send this article out again under the heading “See – I Told You So!”.

NB—Sean Gabb’s book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, can be downloaded for free from http://tinyurl.com/34e2o3

Barnyard animals and tyranny: the role of the British State in the downfall of liberty.


David Davis

(1)

Did they turn us into barnyard-animals by public-culture-degradation and removal of schooling, in order to be able to tyrannize us overtly with our consent, so as to show that the idea of wanting Liberty can then be destroyed inside a Free People?

Or…

(2)

Did they destroy the idea of Liberty, in order to turn us into their barnyard-animals because they are pre-capitalist-barbarians, and wanted to have some animals to shag?

The question does vex me often. Either way they are wicked. here’s a poll:-

Useful advice from the UK Libertarian Party….


…about the current mess.

Bush should stride down Pennsylvania Avenue with a goodish bayonet, and…..


…knife both Clintons in the chest. The Spectator takes apart the world’s monetary crisis, in spades, kicks arse, and names names.

David Davis (annoyed even more than usual with barbarian, bleeding-heart, fascist murdering GramscoMarxiaNazis.) (so I’m purple today instead.)

Found a new MUST-READ blog, re global warm-mongering and lefty Goracle lies


David Davis

…..here. This is especially good. Tipped via Bishop Hill, who did a good bit on demolishing the tree-ringy-thingy.

Crime and punishment in the 21st century British Socialist paradise


David Davis

I am not a cruel man. No, not at all. I am merciful. I do not kill. I would not. I want to educate and to make-better. I only want to explain to our enemies the meaning of Hell. Before it is too late to not send them there, after their dangerous intellectual and real isolation from other humans is exposed for the hideousness that it is.

Truly, I say, that I would be willingly personally to take their surrender, now, and march them into the prepared-cages, and give them MRE’s. But I just have not the facilities here in Lancashire for all the millions of prisoners. So I can’t.

The freezing and dying leftie stalinists who are going to inhabit the Udenopticon, and while collapsing from gangrene and frostbite, will, later, just have to sit (or cower) shivering in the freezing howling rain and darkness of a Hebridean night. Or indeed for many mights. It is very sad.

While sitting, they can be explaining to the hoodies who have been suddenly put with them (there are not many, less than a few hundred thousand I think) the reason why they (the hoodies) were brought into being as “barnyard-animals” by the lefties, and how this was a tactic in the overall strategy of destroying Western Civilisation.

The reaction of the hoodies, to the real reason for their creation (like as of orcs, by Morgoth) will be interesting. I wait with interest to see how many “principal-lefties” will be unkilled and uneaten by morning.