I have left instructions that Paul Simon’s song “the Boxer” should be played at my funeral. Apart from the bit about “the whores on Seventh Avenue” I think it’s a good broad brush account of how my life has felt to me. It contains remarkable wisdom in the line;
A man hears what he wants to hear and disregards the rest.
That a 16 year old Jewish kid from Queenswas wise enough to know that still surprises me. I first heard the line when I was about that age myself and it should have been a helpful gift, but I was never able to internalise it usefully. I only ever remembered it too late; when my desire to believe something had led me astray.
One of my daughters once told someone “People have Dad wrong. He’s not a cynic. He’s a disappointed idealist.”Time after time I have trusted when I shouldn’t and ventured where angels fear to tread because I was not as wise as young Mr. Simon. The will-o-the-wisps of my hopes and dreams led me through Life's swamp. I’ve been lucky and have no complaints. My regrets, such as they are. are actually about my more cautious moments. Inspirational hopes and dreams lead men where dry calculation never would and – up to a point – that may be a good thing.
in my brief career in student politics, I heard wise old sorts in the Conservative Party say things like “the facts of life are Tory” and “Tory at 20, you have no heart. Labour at 30, you have no brain.” Slightly advanced by Ricky Tomlinson*, my own trajectory confirmed the latter at least. My career as a business lawyer certainly confirmed the former — at least when the Tory Party was still Conservative and based its policies on the facts of economic life.
So it’s not surprising that wave after wave of youngsters falls naively for the puffery of the snake oil salesmen of the left. Why, however, are there mature individuals who can’t see what poison Socialism is?
Partly it can be accounted for by the wisdom of the young Paul Simon. No-one wants to hear that the "facts of life are Tory" – especially if life is not going well for them personally. If the market values your labour less than you do yourself, it's obviously easier to believe that the market is wrong than to do something about improving your value to it. If you've trained for a dead industry, it's easier to demand that the state keeps it moving – zombie like – than to accept your mistake and retrain. Yet there is so much evidence that Socialism doesn't work. More than half of mankind lived under Socialist planned economies in the 20th Century. The empirical results of this monstrous experiment were uniformly terrible. Tens of millions died. Billions were impoverished economically, morally and in terms of liberty.
This is recent history. Many of the people who lived through it are still alive. As this article shows, (behind a pay-wall but you can still read a couple of articles a month for free) young people who listened to their family's experiences learned the ideological lessons. They did so even when they belonged to identity groups courted by the left in its attempt to foment divisions and hatreds to be "resolved" by their panacea; state violence to constrain free choice and free expression.
My childhood was awash with my family’s forlorn recollections about the hardships they endured under communism in Poland: the chronic scarcity of food, medicine and other basic necessities; outright hostility to basic liberties. And if we didn’t like it, too bad: they killed anyone who tried to leave.
Yet there are leftists in Poland today. Indeed there are statist authoritarians of both right and left who believe (though their grandparents are there to tell them otherwise) that an inexplicably virtuous state directing the masses will make them more moral, more patriotic and more productive than they would choose to be themselves. It would be funny if it were not so damned tragic. I lived in Poland from 1992 to 2003 and delighted in the fact that I met no-one, ever, who was inclined to believe such nonsense. In what is, perhaps, another example of my "hearing what I wanted to hear and disregarding the rest", I told myself the Polish nation was inoculated forever against the virus of statism. I was wrong. The ideological hog cycle may be even shorter than the economic one.
Confirmation bias is another explanation of people's ability to ignore evidence. We are seeing it daily in the never-ending national shouting match over Brexit. Every twist and turn just leads each side to exclaim "See! I told you so!!" It is all (even for someone so enthusiastically anti-EU that his late wife once demanded he make a New Year's resolution to shut up about it for 12 months) so damned boring that I have stopped watching the news or reading my daily newspaper.
Not too long ago, we saw the British Left praise Hugo Chavez's socialist experiment in Venezuela as an example to us all. Now it has ended, as all previous experiments did, in shortages, hardship and oppression, the very same people "hear what they want to hear and disregard the rest". It wasn't socialism after all. Mistakes were made. There was external interference by agents of capitalism. There was sabotage. All the excuses, in fact, that the Stalinists used to explain the stubborn divergence of tractor production statistics from reality.
It seems that every fact is Janus-faced to those informed by ideology or faith. The closest the left has come to acknowledging this was in developing the doctrine of post-modernism, This denies the very existence of truth and argues that all "facts" are mere social "constructs" shaped by the class, ethnic or other identity of the people positing them. How that can be true, when there is no "truth" is a question for longer-lived humans than I expect to be. I need time to have some more fun before I die, thank you very much.
Jeremy Bentham, perhaps the most pragmatic of all English philosophers, is said to have died regretting the great error of his life. which was to assume that it was only necessary to show Man what was right in order for him to embrace it. We who aspire to be rational must learn not to despair when Man cleaves to the irrational. In winning people over to the cause of Reason we must work with, and not merely scorn, their foibles. Were any religious people persuaded to renounce their faith by the late, great Christopher Hitchens' (probably correct) characterisation of their views as the product of "wishful thinking" for example? I have a close friend who is religious and, when I fear he is making a mistake, I rack my brain for the teachings of my long-ago Sunday school to construct a theological argument for him to act differently. Sometimes it works – at least a little better than telling him his faith is "wishful thinking" would! I care about him enough to shape my arguments to his beliefs when I want to help him. Perhaps I should extend that courtesy to others? How far though can I extend a courtesy that costs little when dealing with a kind and (mostly) rational man before I am respecting the monstrous views of barbarians?
If there is no Truth, life is just a pointless frolic. Yet, as Professor Peterson tells us convincingly in his books and videos, all the research suggests that the search for meaning is what makes us happy, not (pace the Founding Fathers) "the pursuit of happiness" per se. We don't need there to be Truth or Meaning to be happy, but we do need to be looking for both. Post-modernism is quite literally a counsel of despair and I suspect is only meant to dispirit most of us into inactivity while its hypocritical proponents get on with their quest to rule the world.
Where, gentle reader, do you stand? Is there truth? Should it be sought? Can it be found? To the extent that it requires others to accept it in order to improve the world, how best can one persuade them?
*In the linked post, I said I couldn't be sure that it was Tomlinson. My father has since read that post and confirmed that it was.
I am ideologically attracted to any alternative to fiat currency, which gives far too much power to the state. It's a power that has been ruthlessly exploited to steal (at least that's what it would be called if anyone else did it) from savers, investors and lenders by debasing currency through inflation. As Professor Philip Booth points out in the introduction to this book, the current pound coin when introduced purchased just 20% more than the "threepenny bit" from 1937 that it resembled. Under the "wise stewardship" of HM Government, the pound sterling has lost 98% of its value over the last century. The good old greenback that replaced it as the world's reserve currency has lost 85% of its value since 1971!
These losses are not caused by stupidity, but malice. Abandoning the gold standard and moving to currencies backed only by trust in the state gave untrustworthy states (that is to say all of them) the chance to tax secretly via inflation. So I would just love there to be a private alternative.
Currency serves three purposes. It's a means of exchange, a store of value and a unit of accounting. Historically it was either made of or linked to a substance (like gold or silver) that had an intrinsic value and a limited supply. Professor Kevin Dowd does a good job in this little monograph of explaining both how private currencies, including such cryptocurrencies as Bitcoin, work and why governments hate them so much.
He tells the story of two alternatives to the US dollar introduced by businessmen there; 'the Liberty Dollar" and "e-Gold". The Liberty Dollar was an actual coin (technically a medallion, because it didn't meet the legal definition of coinage) that was denominated in dollars and periodically revalued against them. People could exchange them for goods, hold them as a more reliable store of value because they were made of silver or gold, but couldn't really account in them because the relevant authorities wouldn't recognise them. The inventor, one Bernard von NotHaus, was trying to make a point about the US Government's abuse of its powers by providing a private, voluntary barter currency as an alternative. Liberty Dollars were not forgeries. They didn't pretend to be dollars. Indeed the whole point of them was that they were NOT dollars. They were something not merely different, but in key respects better.
By the time the US authorities stamped out the scheme and secured a 22 years sentence (vastly reduced on appeal) for Bernard, the people who held Liberty Dollars ended up richer than if they had held the "real" ones. He had made his point – in practical if not legal terms the authorities were the thieves – but he paid a heavy personal price to do so.
e-Gold went a stage further. Notes were issued against an actual reserve of gold held in London (to be beyond the reach of the US authorities). Doug Jackson, an American libertarian, came up with the idea – again neither to defraud nor even for personal gain – but to make a politico-economic point. Though holders of e-Gold again did better financially than if they had kept the dollars with which they bought it, he met the same fate. As Professor Dowd observes;
If one compares this case with the Liberty Dollar, one immediately notices worrying parallels: two decent businessmen operating out in the open, operating under the rule of law but trying to offer alternative monetary systems in one form or another, and both taken down by government agencies that were arguably operating outside the law themselves and have never been held to account – in essence, the victims of arbitrary government attack.
The ferocity of the government's response in both cases can only really be explained by its fear of citizens getting too close to a dirty secret. Economics is famously dull and few can be bothered to study it. Governments have, by the introduction of fiat currency, been able to hoodwink even quite intelligent citizens. We have accepted inflation as a fact of life (even though there was none for 300 years in the UK until we came off the High Gold Standard) and have somehow failed to connect it with the immorality of government policy. A couple of clever gents had to be "taken down" not for any actual threat they posed to the US dollar, but because their educational projects might just have succeeded in revealing the ethical horror at the heart of the Fed.
Hence Bitcoin, not actually the first cryptocurrency and now only one of many, but so far the best known. The ferocious use of state power to suppress earlier private currencies made it necessary for this new one to be utterly anonymous. Again, the motives were ideologically libertarian.
the designers of cryptocurrency sought to create not just a new currency, but a new anarchist social order
In the words of Wei Dai, the inventor of a Bitcoin predecessor,
the objective is to have a crypto-anarchy in which the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It's a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.
Bitcoin has succeeded so far because even its inventor is anonymous, known only by the nom de guerre "Satoshi Nakamoto." It is completely decentralised. There is no central authority or organiser whatever. The "coin" is digital and uses public key cryptography. Authorising and tracking of transactions in Bitcoin is monitored by the community collectively. Before a coin changes hands, it is checked by the network to ensure that the user hasn't already spent it. As "Nakamoto" explained on its launch in 2009;
The root problem with conventional currency is all the trust that is required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust ... A generation ago, multi-user time sharing computer systems had a similar problem ... Users had to rely on password protection to to secure their files, placing trust in the system administrator to keep their information private. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible to access, no matter for what reason, no matter how good the excuse, no matter what.
It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions complete.
The other ingenious innovation is the way in which the money supply is limited. This it too technical for me to explain here without re-typing large parts of the book, but if you are interested (and by now I hope you are) you can read the whole thing in PDF format here.
Professor Dowd doesn't think Bitcoin will endure but he is confident that one of its competitors will and he believes it will not be possible for governments to suppress it. Paradoxically, given that the whole purpose of a crypto-currency is to evade state control, the more powerful the oppression, the more valuable it becomes!
A state can be defined as a "regional monopoly of violence" but if Wei Dai's dream of making violence impotent comes true, at least in this respect, it will no longer be of use. As Professor Dowd says;
If the state really wants to get rid of Bitcoin, it should eliminate the state controls that feed it, for example, if the state ended the wars on drugs and terror, reduced taxes, ended policies of financial repression and re-established the privacy of individuals' personal financial information.
We all know, whatever our views on the value of statism, how little any state wants to do that! In the end the value of a functioning crypto-currency beyond the reach of state violence may be to restore honest money in general. That, gentle readers, is a consummation devoutly to be wished.
For the last four years, the Institute of Economic Affairs (IEA) has held a conference targeted at students under the banner THINK. Despite my age and my not being in formal education, I attended the first in 2015. I felt a bit out of place but enjoyed it thoroughly. In particular, I have been thinking, talking and writing ever since about a speech by the IEA's Director of Education, Dr Stephen Davis about medical advances to extend human life, driverless cars and vertical horticulture.
When I saw that Dambisa Moyo, author of Dead Aid, would speak at this year's event, I signed up to go again. Yesterday morning I went to the Royal Geographical Society in London and, despite the bright sunshine (thank goodness the hall was air conditioned) spent an enjoyable Saturday. Quite apart from the content, I loved being in the company of so many earnest and intelligent young people interested in the key ideas of economic liberty. In my circle of contemporaries, discussion can sometimes be a Pessimism Olympiad driven by an economically-illiterate media and a governing elite whose hostility to liberty is played upon by parasitical, rent-seeking toadies. It was refreshing to be among youngsters full of hope and ambition. Even their naivety is not a bug, but a feature. It will lead them into areas of research that the cynical would dismiss too soon.
The full programme can be seen here. After introductions by the organiser Christiana Stewart-Lockhart (coincidentally a school friend of Miss Paine the Elder, whom I have known since she was a teenager) there was an amusing welcome speech by Mark Littlewood, Director General of the IEA. He referenced the late, great Hans Rosling's Ignorance Survey, which demonstrated that chimpanzees out-perform humans on multiple choice questions about key facts, because (as Rosling said) "Chimps don't watch the evening news". Fake news is not a new phenomenon. Mark quoted Gladstone as saying
Men are apt to mistake the strength of their feeling for the strength of their argument. The heated mind resents the chill touch and relentless scrutiny of logic.
Anyone who has ever attended a political debate in a calm state of mind will recognise the truth of that.
The next presentation was by Tim Harford. His book, Fifty Things That Made the Modern Economy, was in the goody bag and I will review it here when I get around to reading it. Given all the other books I picked up yesterday, that might be a while!
He made an interesting point about why the economic future is so hard to predict. As Galbraith said
the only function of economic forecasting is to make astrology look respectable
Tim put up a still from the original Bladerunner movie of Rachael, the "replicant" with whom the hero falls in love. He then showed the pay videophone in a bar on which the hero calls her to ask for a date and we all laughed. We often fail to understand that new technologies will not just slot into the familiar world but will change it and us. We also often think the dramatic, expensive innovation is the most important, whereas often it's the simplest and cheapest. While we all think of the invention of the printing press as the disruptive technology that gave us the modern world, he argued the invention of paper was more important. The Chinese circulated many scribe-written books on paper centuries before printing. Had all Gutenberg Bibles been printed on animal hides (as some were) a modest print run of 3,000 copies would have required the slaughter of half a million beasts! It wasn't the press that made mass literacy possible, but a cheap medium on which to print.
He gave several examples of new technologies that had no marked effect on productivity when first introduced. Decades later, when people worked out their possibilities, the real change came. Replacing the huge steam engine that drove a 19th Century factory with an electric one had only marginal effects at first in the US. Many industrialists that retained their old steamers probably thought themselves wise not to waste capital. It was only when the government cut off the supply of cheap labour by restricting immigration that manufacturers realised they could put small engines on every workbench to maximise productivity. Tim suggested we may see similar effects with the "IKEA-isation of solar power", for example, as the technology becomes "cheap enough to change the world."
Roger Bootle then gave us his "positive view of Post-Brexit Britain". As I am always trying to explain to friends who oppose it, Brexit doesn't guarantee anything good or bad. It only brings the levers of policy-making back onshore. If Corbyn's Labour wins the next election, our post-Brexit future will be dire. If future governments decide to regulate commerce in the same way as the EU or worse, then it will also be dire. The positive is merely that we now have the option to aim for freer trade, less discriminatory immigration that allows talent from anywhere in the world to come to our shores and more economic and social liberty. He believes, as do I, that this is more likely outside the EU, but we can – and may – screw up our own future. There are no guarantees. After all, we have often screwed things up for ourselves in the past.
As evidence of the EU's propensity to screw up, he cited "the greatest self-inflicted wound in all of economic history", the Euro. Since its introduction, the UK's economy has grown 40%, versus results in the Eurozone ranging from 30% growth in Germany (in whose interests it was designed) through economic decline in Italy to catastrophe in Greece. By allowing Germany to run huge trade surpluses without its currency rising in value, it has disturbed the balance of international trade and inflicted pain on every other EU state. The Euro is one of the main reasons for the "populism" that has given us not just Brexit but Trump, Orban, PiS in Poland etc. The gains of globalisation are now under threat because of a piece of political idiocy from France and Germany.
He urged his audience to push back against the myth that the EU promotes freer trade. It is in fact a protectionist customs union, with over 1000 tariffs; 12 for coffee alone. I have long argued that it is a racist institution because, as he said, the tariffs are structured to reduce competition from the Third World. For example they penalise coffee-producers who try to add value by processing their beans instead of just selling them as good little peasant farmers to the First World. The massive corporate lobbying business in Brussels (of which the pan-European law firm in which I used to be a partner was part) is there to ensure the interests of European corporations (and rich white Europeans like the French and German partners in my old firm with hobby farms to exploit the CAP) are protected, while Asian and African farmers stay dirt poor.
Dr Linda Yueh spoke about her new book The Great Economists: How Their Ideas Can Help us Today. I downloaded a copy as she spoke and will review it when I finish reading it. After lunch the IEA's current media star, Kate Andrews debunked the Gender Pay Gap and told us how delighted she was to walk past the new statue of Millicent Fawcett in Parliament Square. Much has been made by militant feminists of the fact that she is the first woman to be honoured in this way, but they are too ignorant to realise that she was a free-marketeer economist and an individualist. She is by far closer to my own economic and political views than any of the men represented there. She would have been contemptuous of their distortion of statistics in a rent-seeking frenzy to keep alive a movement that has served its purpose.
The most difficult part of the day for me was a discussion between Chris Snowdon, Head of Lifestyle Economics at the IEA for whom I have a lot of time and Raj Chande of the Cabinet Office Behavioural Insight Team (aka the Nudge Unit) for whom I have none. Behavioural Psychology is fascinating and useful stuff. I learned a bit about it acting for retailers when I practised law. They use lighting, music, architecture and interior design to play with our minds and encourage us to spend more. In my case, they were never a match for my mother's frugal teachings, but I have smiled when walking around shops to recognise the games they play. I am using it on myself to change my habits for healthier ones and reached my target of losing 40 kg this year yesterday morning. It's all good stuff but both those examples are voluntary transactions. I don't need to go to a supermarket or shopping mall. I didn't (for 60 years) play mind games on myself to control my appetites. It's very different when government – funded by force with our money – uses it on us, its masters. There are now over 150 people in the Nudge Unit and it is exporting its programme of manipulation to the US and Singapore.
Mr Chande talked of the government respecting our liberties, while nudging us to behave "better" (as defined by it) and Chris Snowdon seemed prepared to accept that this was at least better than authoritarian regulation. I beg to differ. Law is the removal of liberty (for good cause one hopes). In our Common Law tradition the legislature is required to justify every new law precisely because it doesn't grant rights, but removes them. The state has become so huge and out of control that the debate each time has become perfunctory and too many laws are made, but at least there is a theoretical possibility of opposing them. There's no such democratic accountability for "nudges". They're tools of policy and wonderfully deniable if they go wrong. They are part of a trend for an over-mighty apparatus to become impatient with democracy and find ways to by-pass it. Over a thousand local electors in my London Borough have submitted protests over a new parking scheme for example, but the Council tried to sneak it through without any discussion at all. Only vigilant citizen journalists using local social media brought it to the attention of that thousand voters and made the bloody Council discuss it. They are clearly peeved at having to do so.
The bouncy, impertinent arrogant Mr Chande reeks of this attitude of contempt by the governors and their rent-seeking hangers-on like him for the people they are meant to serve. He told us that he was "a libertarian until I went into government". Power corrupted him and he's happy about it. I am very much not and for me he can stick his condescension where the sun don't shine.
The most disappointing part of the day was that Dambisa Moyo couldn't make it in person. She spoke to us over a dodgy Skype link from NYC and all credit to her for getting up so early to honour her commitment to speak. After the game-changing radicalism of Dead Aid, I was rather disappointed with just how orthodox her thinking is in other respects. She cited the fake Oxfam statistic of 8 billionaires owning more wealth than half the world's population (debunked later, see below). She expressed concerns over income inequality as a problem in its own right. She spoke of her concerns for the future of democracy because 138 people contributed half the money spent by candidates in the US Presidential Election, without noting that they mostly gave to Clinton and might be repenting the money wasted. She spoke of "populism" and declining turn-outs for elections in the West. In the typical style of the global elite, she seemed to think that was a failing on our part, as electors. We are not reading the right books or listening to the right experts, apparently. I asked her if she couldn't see that, as voters were not being offered real choices, their disillusionment and disengagement might be rational? I said
I have voted religiously all my life but will face a choice at the next election between two parties, both of whom want to steal more of my and my childrens' money and indebt still further my grandchildren yet unborn. Why is it wrong if I reject both?
This was the only question of the day to raise a cheer and a round of applause. She sympathised politely with my concerns but essentially restated her opinion unchanged. I am afraid she is not the ally friends of Liberty might have hoped for.
Tom Standage of The Economist (which has also lurched to the authoritarian left of late, leading me to cancel my subscription of 15+ years) spoke enthusiastically and knowledgeably about self-driving cars (or Autonomous Vehicles - AV's, as they have become known). Moving on from the naive enthusiasm for them expressed at the first Think conference I attended, he has given a lot of thought to their possible social and economic effects. As Galbraith's quote above makes clear, this is a thankless exercise in forecasting. As Tim Harford's talk illustrated such a technology will probably have more effects we don't expect than those we do. He told us that he expects the first driverless zones to be entire city centres like Seattle or entire cities like Singapore. The cars will probably be owned by the cities themselves and therefore integrated into public transport systems. Otherwise robotaxis are likely to continue the trend begun by Uber in taking as many people off buses and trains as they do out of private cars.
He waxed lyrical about the "opportunities" for governments to raise revenue from them. The technology requires them always to know – and signal – exactly where they are, so congestion charges can become far more localised and sophisticated. Surge pricing on the Uber model can control peoples decisions to use them so as to keep traffic flowing smoothly. A "zombie" tax on empty vehicles will stop operators keeping them on the road to avoid parking costs. He went on, chillingly, to outline some of the uses totalitarian governments might make of the technology. Ultimately it will allow government to control who goes where. China is currently engaged in herding a particular ethnic minority into an area which is "effectively an enormous concentration camp", he said and he can visualise a future in which AV cars, buses and trains simply refuse to take them anywhere else. In freer societies, he said it was as likely that AVs would generate "exurbs" (burbs beyond the burbs) by making transport very cheap ($0.70 a mile vs $1.50 for a private car and $2.50 for an Uber) as that they would lead to people living more densely in traffic-free cities. All would depend, as he had the audience repeatedly call out, "on pricing". To be more precise, on the pricing of such externalities through taxation.
In an afternoon session, Dr Vernon Smith – winner of the Nobel Prize for Economics and long associated with the IEA – was interviewed by Professor Philip Booth and fielded questions from the enthusiastic young audience. He was scornful about the very idea of using economics to predict the future and, as you would expect, enthusiastic about the approach that won him his prize; constructing practical experiments to test economic theories. I was very envious of the silver Western-Style bolo tie he wore; a gift from an academic friend when he won his Nobel, which featured the profile of Adam Smith.
The most elevating speech of the day was from Dr Jamie Whyte on "The Economics of Oxfam and Inequality". He thoroughly debunked the Oxfam statistic uncritically quoted by Dambisa Moyo. Yes, 8 billionaires have as much money as 3.5 billion people because those people have nothing. Divide the 8 billionaires' money amongst them and they would get a one-off $118 – hardly world-changing. A more valuable measure, never mentioned by Oxfam and their ilk is that in 1980, 40% of the world's population lived in absolute poverty defined (in today's numbers) as living on less than $2 per day. Only 8% still do. That's arguably the best progress in human history and it is ongoing.
Oxfam's numbers are systematically rigged to produce the most socialism-inducing envy. For example, a graduate of Harvard Law with a debt of $250,000 will feature in that bottom half of the world alleged to be victims of economic injustice, despite possessing a qualification guaranteed to make him rich. He or she is not a member of an impoverished class. He's just at a different stage of his life and will end in the top half or higher. The stats also ignore non-private income and benefits. "If I earn £200 per year and you earn £100, then I am only twice as rich as you if you ignore the value we both receive from the NHS, the state education system etc." Oxfam and other purveyors of fake statistics are in favour of redistribution, but never account for it in their figures.
He argued persuasively that if you look at individual welfare (in the broadest sense) you would be celebrating the achievements of capitalism in raising the living standards of us all. Equality of welfare matters, not equality of income or of wealth. He also gave a name to the phenomenon that led me to quit work at 54 - the diminishing marginal utility of income. I could earn more, but it wouldn't make my life appreciably better, so I stopped. More dramatically (I assure you) if Jeff Bezos lost half his wealth, or if his income halved, tomorrow his life would not be appreciably worse. The money in the hands of billionaires can't buy them more happiness and most of it is deployed in investments to try to make the world a better place for all of us. Do you pity George Soros for his massive income disparity with Jeff Bezos? No you don't because in practice it makes no difference to their welfare as human beings either way. A young questioner suggested that envy about income inequality was natural and that it caused real discomfort. Dr Whyte was too polite to tell him that was a choice. I was too polite to shout out that the problem would go away when his expensive degrees earned him some money.
The conference ended with a closing keynote from Dr Steve Davies of the IEA under the title "Dissecting Corbynomics" but he was in no way partisan. He was equally scathing about Theresa May's weak grasp of economics and said the next election would be (as I expressed it to Dambisa Moyo in my question) a contest between two economic idiocies. That was not particularly uplifting but it did ease me back into my usual world of the Pessimism Olympics.
If you have the chance to go next year, I recommend it. It's a great event, with serious speakers and listening to the young audience talking among themselves during the breaks will kill your pessimism about the future. That's good value for £100.
Having cancelled my longstanding subscription to The Economist, which I used to love but which is now staffed by halfwit conventional thinkers aligned with the Leftist Establishment, I take The Spectator instead. Its Editor, Fraser Nelson, chaired the above event at the Southbank Centre this morning and I turned up because I was invited. I am a real estate man but always focussed on commercial property. Housing was not my thing professionally. In my personal life I take the view that much wrong with Britain can be traced to our weird relationship with it; seeing it as more than shelter to keep the rain off while we are eating, sleeping or watching TV.
It's a key political issue now. The Conservatives fear that if a way can't be found for twice as many young people to become homeowners as are managing it at present a generation of voters will be lost to them. That's probably true. I have heard some seriously stupid suggestions about solving that problem from Tories recently. I was hoping to hear more intelligent ones today*
I did. The Chief Secretary to the Treasury, Liz Truss MP, said some sensible things. She noted that housing in London now costs 12 times average salary. Given the UK's rising population (the only one in Europe) we must "let our cities off the leash" and allow them to expand. More importantly we must densify them. She noted that infrastructure was key to this and claimed that levels of infrastructure spending (as a proportion of GDP, the dubious way politicians always like to state such figures) is at its highest for 40 years. You could have fooled me but I suppose she would know.
She claimed, mystifyingly, that the Government was "generating more land". I assume she meant it is finding ways to encourage more of it (and Britain is only 8% built upon) into development. She said we need to overcome "the blob of vested interests" and "challenge the mentality of the comfortable" who would rather the fields near their homes stayed open while their children or grandchildren lived like students in grotty house shares.
She warmed the cockles of my old heart with talk of "streamlining the Byzantine planning system" and intervening if local authorities failed to implement their local plans to allow their communities to grow. All well and good and it was cheering to hear sensible talk emanating from the Treasury of all places. The problem is that key solutions are not in the hands of Central Government. Planning is a local competence and public opinion expects it to remain so. If a local council denied a planning permission only to be over-ridden by Whitehall, there would be hell to pay. Local electors (at least the kind inclined to make planning objections) are NIMBIES to a man and woman.
The most depressing work in my career was when I was a young lawyer in Cambridge. It's a beautiful city blighted by hordes of other-worldly academics with too much time on their idle hands. Any application for some sensible modernisation to make their medieval museum vaguely resemble a liveable modern town raises dozens of objections from such types. Some of them used to instruct me to lodge them with the Planning Committee. I vividly remember, for example, trying to stymie a slight increase in the size of the Cambridge bus station to accommodate vehicles that couldn't navigate the narrow medieval street without an increased turning circle. I was instructed to tell the planning committee that the tiny strip of land to be taken from "Parker's Piece" was sacrosanct because "WG Grace used to practice his cricket there".
In the recent local elections the Tories on my manor ran on a slogan of "keep Ealing low-rise". If London is to be more densely developed (and it's one of the least dense capital cities in Europe) then more multi-family housing is needed. Paris raises permitted building heights steadily the further one gets from the centre. At six to eight miles from Nelson's Column, Ealing would (if it were in Paris) be full of high rise buildings. The happy folk who would live here if there were a sensible planning policy, however, don't have a vote. The selfish incumbents who want to delude themselves that their pocket-handkerchief gardens make them heirs to the Romantic Poets do have a vote. They use it to ensure their grandchildren bicker over who nicked the milk in their student-style communal slums.
I am a radical on Town & Country planning as on other economic issues. I would abolish it. To me it is offensive that the value of a man's land is stripped from him by laws that deny him the right to put it to its highest and best use without grovelling to local politicians in thrall to his envious neighbours. If you fear the consequences, pray consider Prague. It's one of the most conserved and protected cities in the world. You can't move a brick without conservation types crawling all over it and – very often – bankrupting you by demanding you alter the scheme you spent millions on designing to make it a replica of some older structure, traces of which they have uncovered in their parasitical zeal. Yet almost nothing that is beautiful about that city dates from the era of regulatory prod-nosing. If a Prague building is worth conserving, it was built by free landowners who would have put any passing busy-bodies to the sword. If you want to see a screwed-up city, consider what was done to Birmingham in the 1960s by a massively empowered City Council.
Land is very valuable in cities and the people who own it are inclined to maximise that value. They may have bad taste or poor architects but some reasonable building regulations would be sufficient to ensure that whatever they build in their own interests is at least better than the sort of crap a planning authority would do.
The panel discussion that followed the Secretary of State's speech was depressing. Clive Betts MP, "token Bolshevik" and chair of the Housing, Communities and Local Government Committee in the Commons predictably denied that planning was in any way a problem. In fact he wanted more prodnosing because technical standards in the UK construction industry are low (sadly, true) and would be improved by pubic servants regulating and supervising them (sadly as false as Satan's smile).
The people on the panel from the productive sector were steeped enough in the way British planning is run to know that no radical solutions are on offer. They cringed to their public sector masters and blathered about new technologies and creativity and "careful thought". They didn't seem optimistic about technology however, For example, modular systems speed the process of housebuilding in other countries and reduce the cost but on the narrow, winding streets of Britain's cities (especially London) to deliver a house in three truckloads would involve taking down lamp-posts and other street furniture along the route. Because of traffic congestion such deliveries would even then only be permitted in the wee small hours when, of course, the local NIMBIES would raise hell at their sleep being disturbed (and to hell with their grandchildren in bedsits).
Successive governments' consistent failure to maintain and improve infrastructure to meet the needs of a growing population has created a bloody mess. It would take a generation to fix if we began now in earnest. We haven't and we won't. Hence the nervous looks as an enslummed millennial (who let him in?) asked "what can be done now to solve our problems?" The truthful answer (that nobody gave) was that what is needed to solve today's problems should have been done during the last twenty years. And wasn't.
Someone from the Adam Smith Institute suggested the "quick fix" of building on parts of the Green Belt around London based on such criteria as proximity to existing transport links. That would certainly help. The Green Belt was established in a different era for a smaller city and it's time for it to go. The city that has the most parks of any in the world is not going to choke if it expands onto that sacred turf. London is not a city in a bottle. It's surrounded by the lush, green Home Counties. The trouble with the idea (and it might have to be executed for lack of a better one) is that it involves London sprawling, rather than densifying when people increasingly want (and environmental factors suggest that they are right) to live in the cities and not outside them.
Another practical fix is to convert retail to housing. Shopping centres are emptying because of the ever growing online market. The representative of the Federation of Master Builders on the panel reported that the local authorities he works with think their high street shopping needs typically to be reduced "by half" to reflect this trend. But local busybodies will get sentimental about shopping centres they never use, just as they demanded that pubs be kept open whose doors they never darkened. Such people have votes that count disproportionately because of the low turnouts in local elections.
Market forces could sort all this more quickly than you imagine. I watched markets at work in in the post-communist capitals of the former Warsaw Pact, where things were screwed up by decades of Communism on a scale that Londoners could never imagine. My clients fixed things at an incredible pace because they could. The communist bureaucrats were banished to their dachas and there had been no time for the new democracies to build their payrolls. I remember telling an incredulous New York banker worried about where the "banking district" of the new Warsaw would be that "It will be wherever you put your building sunshine". He put one on the best site he could find and, sure enough, his competitors clustered around him.
But real estate is not a free market business in Britain or anywhere else with planning laws. Land worth X without a permission and worth 20 X with is a commodity whose true value is mostly in the public domain. Only investment in infrastructure and courageous deregulation can solve this problem in the medium to long term. Only the shattering of such shibboleths as the Green Belt can do some good in the short term. The current government lacks the political chutzpah, and I can't even blame it. Such are the demographics of its core voters that it would have to be more un-Tory than is survivable.
Which leaves Labour to "solve" it in catastrophic ways. Buckle up for a bumpy ride. And take your poor grandchildren out to a nice dinner from time to time to cheer them up in the squalor you've confined them to.
*Regular readers will have noted that, despite my advanced age, I am not so much a cynic as a very disappointed optimist!
Left and Right are not useful labels any more, if they ever were. They don't even mean the same things everywhere. I am “right wing” (I would just say right) when it comes to economics but a liberal in social respects. For example I literally do not care who does what to whom sexually as long as everyone involved is a consenting adult and I am left out of it unless I choose otherwise.
I would have tried to dissuade a partner from aborting our child had the case arisen. If she’d insisted I doubt I would have ever been able to get over it — or stay with her. Yet to avoid criminalising women and / or driving them into the hands of backstreet charlatans, I would not legislate on the subject. I would leave it to their consciences. In my heart I am pro life. In my head I accept a woman's right to choose. Am I left or right? No answer to that question will inform our discussion so why ask it?
On Continental Europe and in America there is a "religious right". I have no truck with that. Many Continental friends quite wrongly think themselves leftists because neither do they. Their calling themselves leftists tells us nothing useful about them.
I am a reluctant atheist who would love there to be a just God. If there is I am damn sure He has all necessary tools at His disposal to smite or forgive sinners as He sees fit. It's a blasphemous insult to offer Him the puny help of Parliament, Congress, National Assembly, Duma, Sejm or Bundestag. He would find it hilarious I suspect. But then if He’s not laughing at His various churches generally, He’s not the superior Being of my imaginings.
A legal system to my taste would therefore have literally nothing to say about marriage, abortion or sexuality in general. If it's a sin, brother and sister, the Lord will deal with it. All we can do is try to follow His will and hope He understands our choices. Dear fellow atheists, you should have enough principle in you to allow believers to follow their Lord as best they can without interference from a state many of you are currently urging on like a bully's lickspittles.
For religious and non religious alike marriage is principally an agreement between adults as to how to live together and raise children. Nothing could be more private and so it should be left to them. If they're religious then their God will be the third party to their agreement. He needs neither legislator to set the terms nor lawyer to litigate them. The law need only specify the minimum responsibility of parents to the children born into the contract without their consent. Everyone but the child is — after all — a volunteer.
In truth I think very few things are the legitimate business of the state. That's lucky because the state is a flawed human institution almost inevitably staffed by the least appropriate people — the ones attracted to lording it over their fellow humans while living at their expense. A drooling idiot is likely more often to do the right thing than a government agent.
I express it colourfully but in essence that used also to be the stance of the Conservative Party in Britain. Back in my student politician canvassing days I remember a Tory MP, when asked whose permission a constituent should ask to fell a tree in his garden, replying "It's your bloody land you fool. Do as you damn well please". The question itself was in his view the pathetic weakness of a submissive serf.
By those robust yeoman standards the party led by Mrs May is not worthy of its name. Few Conservative Parties in the West now are. If you think tax avoidance “costs” Society, then you believe all wealth belongs in truth to the State and the individual is just its creature. If you think it’s a good idea to take money by force from those (based on past performance) most likely to generate more wealth and give it to those (ditto) least likely then you are a Socialist — an adherent of the most comprehensively tested and unquestionably failed idea in human history — wherever you place your X on Election Day. That goes for you, Prime Minister.
When the Euro was about to be launched a colleague and I were in Germany on business. Over drinks with our German business partners they teased us about it. In all previous such conversations with them we had been primarily concerned about the impact of EU policy on the UK's interests. As a global trading nation, we argued, these often diverge from those of the more parochial economies of mainland Europe. To their surprise, on this occasion we were more worried about Germany for whom we predicted the Euro would be a disaster.
I told them of overhearing the then Finance Minister of a less wealthy EU country explaining to a group of Economics students how he proposed to 'pump up' their currency in advance of joining the Euro. Once in, he told them, the marriage to the Deutsche Mark would give his citizens high purchasing power and increase their ability to borrow. My colleague pointed out that, because of their history, Germans are averse to debt and afraid of inflation, while other Europeans are not. They - and their governments - rather like the idea of large debt paid back in bad coin.
They scoffed, but history proved them wrong. The Greek government, for example, had lied through its teeth in the run up to joining EMU and has been officially criticised for continuing to do so in the years following the adoption of the Euro. They statistically masked the effects of their orgy of spending and debt until there was nothing to do but prop them up if the currency was not to be jeopardised.
Our German business-friends were man enough to call my colleague last year and tell him that we had been right. I take no pleasure in that. History continues to vindicate commonsense over voodoo economics, without ever teaching the 'something for nothing' crowd to adjust their expectations to reality. I also feel no glee at the stirrings in the French Establishment about 'Frexit.' I would rather be rich than right. I would rather be free than either. This mess is going to hurt me in the end, however right I was.
Just look at the views of François Heisbourg, as reported in the linked Telegraph Blog. He is a Knight of the Legion of Honour and holder of the French Order of Merit. He is also Chairman of the International Institute for Strategic Studies and an insider Énarque par excellence. You will find little sign in his words of a new dawn of commonsense in the European élite.
The dream has given way to nightmare. We must face the reality that the EU itself is now threatened by the euro. The current efforts to save it are endangering the Union yet further
The retreat he proposes is merely tactical. He is still locked into the mad meme of 'ever closer union.' His only concern is that introducing the Euro too soon has threatened that objective.
In my view, the introduction of the Euro was a misjudged attempt to bounce Europe into political union. The federalists knew that a currency crisis would happen. If two middle-aged English lawyers could predict it over beer in Frankfurt, how could the great minds of the Énarques fail? I believe they anticipated the current crisis (or something like it) and believed it would force a concentration of political power, however little European citizens might want it.
It never made sense for nations with different economies, fiscal policies and approaches to state expenditure to be locked into a single currency without a single government. The crisis turned out to be a bug, but it was meant to be a feature. Even now most federalists, disappointed though they must be that Europeans' appetite for union has diminished in its wake, are still claiming all is well. Those, like Heisbourg, who say that;
God knows denial has been for a long time, by default, the operating mode of those in charge of EU institutions.
are simply concerned that the political miscalculation of premature currency union is now threatening the success of the whole project. None of them have learned a thing.
No less predictable, but far more chilling, are these words;
Money has to be at the service of the political structure, not the other way around
He says it to oppose those federalist politicians who, he claims, are trying to shape political structures to prop up the Euro. He is right to oppose that and might say, I suppose, that I am taking his words out of context. Still I think, in a Freudian way, they are incredibly revealing of the attitudes of our political elites.
Until our mad masters re-learn that money is a means of exchange at the service of the whole society there is no hope for our economic security. The users of a currency are the ones who matter, not the politicians administering it. We 'own' our money and the underlying value it represents, not them. The only true economic role of 'the political structure' is to ensure its soundness so that we can continue to trust it. That they now complain we don't trust them is very largely a product of their failure to perform that basic task. They have behaved like racketeers and cannot complain when that's how they are seen.
Political elites have got away so long with debasing money to serve their own ends that it now seems they have come at last to believe that this is its true purpose.
I am happy to be the source of Samizdata's quote of the day, but my own choice today is from this 1970s lecture by Milton Friedman at the University of Utah;
We had robber barons then and we have robber barons today. But there’s a big difference between the robber barons then and the robber barons today. The robber barons then primarily could get their money only if people freely gave it to them. They got their money by selling a service. And nobody had to buy it. And if people bought it it was because it was a better service than it was before. The robber barons today are in a large part able to get their money by sending a policeman to take it out of your pocket.
I commend Professor Friedman's speech to you. Even someone as opposed to current economic ideology as I am, still falls from time to time for some of its pervasive - and destructive - foundation myths.