THE LAST DITCH An Englishman returned after twenty years abroad blogs about liberty in Britain

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Work, apparently, is not the answer. Is it idleness then?

BBC News - Alan Milburn says child poverty 'no longer problem of the workless and work-shy'.

I am trying to stay positive in the face of a nation gone mad. I really am. I was much helped by a pleasant meal last night with a fellow-blogger and occasional commenter here whose views are relentlessly sane.

I even briefly managed to do it in the face of Alan Milburn's certifiable analysis of the woes of our poor. 
He thinks we need higher minimum wages to price more low-skilled people out of work and perhaps even make offshoring fashionable again. No trace of sanity there but still I managed to keep smiling.

Sadly, however I made the mistake of reading the comments on the linked article at the BBC website. The drivel there is enough to make the brightest optimist despair.

Try this for size;
The real reason why poverty is increasing is that we have had government after government making public sector cuts. This has led to more expensive services and unemployment which forces wages down. And all this has been done in the name of tax cuts for the rich. 
or this
Rent and utility bills are killing everybody including business, they must be capped and energy re-nationalized. I don't care if people think it's socialism because at what point do you say capitalism with no rules or morals has to stop and isn't working?
or this
So much for our government's claim that work is what stops poverty and benefits is (sic) what keeps people in it
or even this
I couldn't care less how well the banking sector is doing or what the GDP is or the UK's position in wealth tables is so long as I can turn the lights and heating on and eat decent food without worrying about the cost. [my emphasis] MAJOR wealth distribution needed
Yes, of course. That will all work in Britain. After all remember how well it worked in China, the USSR, Eastern Europe, Cuba and - oh wait - here.

Was ever any man as wrong as Francis Fukuyama? Despite the comprehensive proof of its failure when tested disastrously on more than half of mankind in the 20th Century, it seems the cancerous doctrine of socialism will never die in Britain until the government's cheques actually start to bounce. Not while the state's employees, corruptees and other dependents retain the vote. This despite their conflict of interest, not just with taxpayers, but with the fabric of reality itself.

Limiting the power of government - money [Guest post by Mark]

Since the 17th/18th century capitalist seizure of government power, and specifically following from the 1694 creation of the Bank of England, the government's debt has been the basis of our monetary system. This combination of government power and capitalist credit money made possible a broader based integration between government and the economy - contributing directly to the explosion of British economic, industrial and military power which later gave birth to the British Empire.

This system has obvious advantages with respect to the coordination of a mass economy but from the perspective of individual freedom it is deleterious.

Some argue that the private creation of government money is a separation of powers which itself limits government. In reality, the opposite is true. Finance is government and government is finance - and at the same time, if we wish to do business, we cannot help but be drawn into this government-private hybrid money nexus. The power of government is surreptitiously (or not so surreptitiously) extended to every aspect of economic life.

Not only is it nearly impossible to escape this system but also, if the government relies upon and controls the private money system, we face the twin dangers that (1) control of government/finance becomes the most profitable activity in society and (2) the temptation to raise revenue for government takes precedence over real economic considerations.

The Fred Goodwins of the world, or the trend for physicists to become bankers are a result of (1) while the austerity/ higher tax campaigns are a result of number (2).

Libertarians would generally seek to solve these problems by eliminating the government from money creation. There are a number of problems with this approach. Firstly, credit networks without government support tend to be either small and personal, or entirely unstable. Secondly, there is no evidence that pure "commodity money" has ever existed or that barter can be used to run a large scale economy. Thirdly, almost everyone agrees that there must be some role for government and if government must use private money we again run into problems (2) + (1) - because government relies upon private money it cannot be separated from private business.

Now, there may well be a trade off between the ability to run a mass economy and individual liberty, in order to be free we might have to accept fewer things. I'm relatively comfortable with that - from the perspective of libertarians the destruction of the mass economy may well be a feature rather than a bug. However, I do feel that, rather than eliminating government money creation, as libertarians suggest, (or eliminating private money creation as per the positive money proposal) - we should allow both systems to operate alongside each other, but to exist, entirely and conspicuously separately - in essence, make using government money and engaging in the mass economy a choice.

Government created money could be a form of virtual commodity, (with the function of gaining respite from the taxman - essentially a tax credit). If the government did not require private money, there would be no (revenue related) reasons for it to tax these transactions. Therefore, it would be relatively easy to eliminate VAT, income tax, capital gains tax and replace it with some form of flat tax on tax credits only. In this way, the ability to do business would be separated from the need to pay tax.

Personally, I would set up the system in such a way that it would be possible to choose through lifestyle to avoid tax entirely. (For example - we distribute 100 tax credits to each citizen every year and tax on the basis of natural resource consumption- 100 tax credits for every 10 squared meters of land - by making a lifestyle choice to consume fewer natural resources you could avoid taxation and then be free to engage in whatever other business you choose - obviously many people would insist that people did "work first" before they get credits.)

You could then choose to conduct business either using surplus tax credits (which would offer the mass stability of government money), private credit agreements or barter/commodity money. These entirely independent monetary systems would provide a *real* division of economic power and be based entirely upon voluntary exchange.

As I say, I don't know if this would be more efficient from the perspective of production or "raise GDP", but I do think it would be more conducive to personal liberty.


A tale of two public pension problems

America’s Urban Distress: Why the Public Pension Problem Is Worse than You Think | Zero Hedge.
The linked article is typical of two things. Firstly why I had to smile when, on my recent tour of their country, American Conservatives told me their country was turning "socialist." And secondly why that's unlikely ever to happen.

Pensionassumptionchart_thumb

As I understand it, the equivalent shortfall in the UK is near-total. There are no pension funds for most state employees (though the teachers do have one - massively underfunded, of course). No money has been invested to provide for the future pensions of most state employees, any more than it has for future state pensions for the rest of us. It's a pure Ponzi scheme. As Nye Bevan said in a rare burst of humour and honesty;
The great secret about the National Insurance fund is that there ain't no fund
Yes, America's pubic authorities have under-funded their employees' pensions, but ours have not funded them at all. They have simply expected from the outset to take the necessary money by force from future taxpayers. After all, what honest return in investment could possibly compete with the infinite return on money taken by violence at merely administrative cost? Our rulers have disregarded the Jeffersonian wisdom that has restrained American public spending for most of its history;
I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.
Hence the last Labour government's panic-stricken importation of millions of immigrants to make up for the declining birth-rate of the underpaid and over-taxed locals who have economised in the face of rising overt taxation and the relentless covert taxation of inflation by cutting back on the size of their familes. Hence also, perhaps, the oddly perverse incentives to breed - regardless of ability to pay for the resulting childrens' upbringing. A Ponzi scheme backed by violent force can last longer than a private sector version, of course, but it can still be brought down prematurely by demographics.

So why does the story suggest it's unlikely that socialism will ever arrive in the US of A? Because of the writer's delightfully thoughtless assumption that future obligations should be funded. Of course there are economic idiots everywhere (and dishonest self-serving rascals too) but there are fewer people in the US prepared to dispute Adam Smith's truism that; 
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom
America's free speech is constitutionally entrenched - as witness the delightful puzzlement of American tech companies such as Google and Twitter when European authoritarians demand they censor their services. The media (particularly local media) routinely use their freedom to challenge particular line items of public spending, even if lax in holding politicians to account for the overall ballooning of the American state and its various extortions.

Again, their failings pall into insignificance compared to ours. Here, a multi-billion pound hole in the Ministry of Defence's budget didn't even pass the Alistair Campbell "crisis management" test of remaining in the headlines for more than ten days. The public sector incompetents who lost billions down the backs of their ministry's sofas faced - as far as we know - no consequences at all. This, though whole cities of taxpayers will have to work for years to meet the shortfall.

I am optimistic enough to believe that America's good sense will one day benefit us too. The statist tide is turning there, as was clear from my conversations with many people on my tour. In recent press reports I have even read the words "libertarian populism" - a phrase as unexpected and delightful to me as was "the fall of communism" two decades ago. If the state can be scaled down in the United States and the resulting economic benefits compared and contrasted with the moribundity elsewhere, that will arm lovers of freedom everywhere.

Burning our money

Burning our money.
Mike_DenhamI have missed "Wat Tyler's" old blog, which has been silent for two years. It was the one to which I always referred sceptics about blogging. "Wat's" alter ego was the perfect person to counteract the stereotype of bloggers as opinionated idiots writing from their mothers' basements. Mike Denham is a professional economist who has worked both at the Treasury and in the private sector. He is erudite and thorough in his research and considered in his conclusions.

The good news is that the Burning our Money blog is back. The better news is that Mike has written a book with the same title. True to his diligent nature he has not just recycled his six years of blogging but has researched and written it from scratch.

I met Mike once before at a bloggers' party where we were the only two present of any reasonable vintage. I was happy to see him again this evening at the launch party for his book. Here he is (click to enlarge), holding up the copy he kindly signed for me. I can't wait to get stuck into it and, knowing his writing so well, I confidently commend it to you. I also recommend you subscribe to the revived blog. On past form, it will be a good source of hard data with which to smite the dishonest rascals in power.

The book is available from BitebackAmazon,Waterstones, and all good booksellers and the blog, of course, is here.

Of poverty and privilege

After less than two years back in Britain I am bored of the first world problems of this plump and pampered land. I am particularly tired, for example, of the overused word "privilege". To me, the great enemy of mankind is not privilege but poverty. Those of us who are not poor represent a problem solved. The question is how to increase the wealth of those who still are. As a purely economic issue, that's a question long since answered.

History shows us that free markets cure poverty fastest. History also shows us that socialism increases poverty. Ask the millions of people in the former Soviet Bloc. It is a stupid, nasty, hateful doctrine; the moral equivalent of deliberately infecting the healthy with disease in order to reduce health inequality.

Socialism's obsession with material goods ignores the fact that the ability to accumulate wealth, important though it is as an engine of economic development, is not that big a deal at a personal level. Faced with my late wife's cancer, our life's savings could ultimately only buy her more comfortable surroundings in which to die. Material rewards for a life of hard work are all very well, but any sane person knows that true happiness comes from things that have little or nothing to do with money; health, culture, education. recreation and family. 

There's a wonderful passage in one of Billy Connolly's shows where he talks of a man at a dinner party who, asked what he did, said "I am a tobogganist". Connolly has much fun imagining what his Glaswegian working class father would have said if he had told him that's what he wanted to be. I have recently been reading about the famous photographers Henri Cartier-Bresson and Robert Frank. Both came from rich families. Both walked away confidently from their material comforts (although Frank occasionally took money from his parents to help him along) in order to embark on artistic careers. Their equivalent, if you like, of tobogganing.

The confidence, perhaps even arrogance, of such people about the importance of their life choices derives from the fact that, unlike Billy Connolly (and most working-class children) they have no practical-minded parents telling them, with their best interests at heart, to "get a real job" The confidence, or indulgence, of their parents is helped by money, of course. If you can't support your child for ever, you are understandably more anxious to see him support himself. But their "privilege" was more complicated than that. Their parents did not laugh at them when they aspired to be "tobogganists". Rather, they expected of them, if that's what they were going to do, that they should head for the highest Alp. That expectation is the true nature of privilege.

Yes, it's easier with money but it's also possible without. Chinese children do not do best in Britain's schools because Chinese parents are, on average, richer. They do better because their parents, on average, value education more highly and expect more effort. A "tiger mother" may not feel like a privilege when you are under her care and control, but she is worth more than all the money in the world. Any parent, rich or poor, educated or not, can be a good parent - with better effect on their child's ultimate happiness (and, incidentally, the nation's prosperity) than any redistribution of wealth.

I remember two long-lost school friends in my scruffy home town up North. Their father was a dustman devoid of all aspiration. Their mother, however, had a dream. Both arrived at infants school able to read because she had pushed them around town in their prams teaching them to do so from the road signs. Unashamedly eccentric herself, she empowered them to be different from their contemporaries and not to give a damn about the relentless peer pressure to be stupid at our bog-standard comprehensive school.

She wasn't Chinese. She was from the white working class; now the second-worst performing ethnic group in Britain's schools. She did nothing any parent, grand-parent or aunt - rich or poor - could not do. I wish all the whingeing envy-ridden half-wits banging on about "privilege" would shut up and be like that scruffy, oddball, utterly splendid mother. She refused to be defined by her circumstances. So - if we have any dignity - should we all.

If you have economically under-privileged kids, if you teach them, are related to them or even just have them as neighbours don't tell them they are doomed. Don't encourage them to hatred and envy. Encourage them to dream of "tobogganing" and lend them the occasional book. Let them see you reading for pleasure (pretend if you have to) so they think of it as normal. Then they will be privileged kids too.



Spending isn't good; what's good is producing

“Pure fallacy from beginning to end” at Catallaxy Files.
 
In this video, Milton Friedman deals with the left's eternal favourite, the broken window fallacy. When I was a student politician, there was a Trot called Andy on the NUS executive. After every conference motion, he screwed up the papers and threw them on the ground exclaiming "more jobs!" His stupidity was rather funny then, but when it dominates economic thinking it's less amusing.

Money is a token. It has no intrinsic value. It's only useful as a means of exchanging goods and services. The measure of our wealth is the quantity of goods and services available to be exchanged and therefore our ability to produce them. Money should, if properly managed, track the value of that wealth, but that doesn't mean it's the same thing - as witness the fact that making more of it simply reduces its purchasing power.

Government jobs are overhead. Almost every business has to have some overhead, but business people understand that it must be kept to the necessary minimum. All libertarians ask is that voters understand that at a national level as well as they do in their everyday dealings. 

h/t razor-sharp ozblog Catallaxy Files

These are entirely useless idiots - unless you are a politician

Britain could end these tax scams by hitting the big four | Polly Toynbee | Comment is free | The Guardian.
UK-Uncut-at-Vigo-Street-o-008Ignore Polly. She's just writing her usual hypocritical twaddle. Read the comments. They would be hilarious if they did not so clearly reveal the depths of ignorance, prejudice and hate-addled envy that now characterise most of the British people.

Any reference to tax structuring by Socialists (Margaret Hodge or the Guardian Media Group, say) is dismissed as Tory Propaganda while they rant on about taxing turnover, FFS.

Do they even know what turnover is? Do they understand it's perfectly possible (and indeed quite common at present) to suffer losses on substantial turnover? They either don't or more likely they don't care.

The sad fact is that they just hate (a) the productive and (b) the rule of law. They want their leaders to be able to grab any damn thing they want from anyone they dislike regardless of whether their victims obey they law or not. Due process of law is not the keystone of civilisation to them; it's a loathed obstacle to visiting their mindless hatred on their enemies. It's all (as they keep saying amusingly in demonstrating their entire ignorance of life's complexities) "very simple"

The companies they are attacking and others like them do all the innovating that makes our lives better (who really wants to live now without Amazon or Kindle?) and pay the wages taxed (directly and indirectly) to pay for all the "social goods" these retards lust over. I read recently that entrepreneurs take only about 3% of the value they deliver as their own reward. Their customers get 97%. Compare and contrast with the massive losses on "fiscal churn" involved in delivery of social goods by the retards' beloved state.

Corporate taxes are a joke anyway. The true economic cost falls on individuals (customers, employees and shareholders in varied combinations). There is no point at all in corporate taxation except to disguise the true level of personal taxation. These idiots are being taken for a ride by politicians, as usual. I predict, not a riot, but further punishment and demonisation of the productive in order to win votes from the envious, hate-ridden, feckless readers of that Cayman Island-based model of fiscal rectitude; The Guardian.

I, Pencil

I, Pencil | A Project of the Competitive Enterprise Institute.
 
Anyone who thinks politicians can ever make things better should consider this; everything they do obstructs the beautiful process illustrated in this movie. A process that is breathtakingly complex, even in relation to one of mankind's "simplest" products. So they had better have a damn good reason for every such obstruction. Not just one they can "sell" to the lazy, the greedy and the downright wicked in return for votes.