LibertyPosted by David McDonagh Wed, April 25, 2018 14:06:49
The Libertarian Alliance [LA].
This is an alliance between classical liberals and anarcho-liberals. It uses the longer word of "libertarian" in its title as the word, "liberal", has been largely taken over by statists, ironically the very opposite of the free traders they replaced, as the statists are protectionists, ipso facto.
The new statist liberals arose within the UK Liberal Party, from about 1870 onwards and by the 1930s they were, by far, the great majority in the Liberal Party. The statists, who want more state activity, as they feel there is not enough politicians or enough politics in society but the traditional, or the pristine, liberals always felt was way too many politicians and far too much state activity and that it was actually dysfunctional for both individual and for social welfare.
So today's Liberal Democrats, whom are nearly all statists, seek yet more state control but the LA members seek far less; or even none at all if they happen to be anarcho-liberals.
This is because the LA members find the state to be both uneconomic and anti-social too, as politics both wastes the money it taxes off the public and it also fosters a dependency culture that tends to sap all individual responsibility. This personal responsibility, that arises from liberty, is held by LA members to be vital to the good society.
So the main aim of the LA is social liberty; i.e. the full individual liberty that also respects, and fits in with the liberty of one and all. The means to this is both by reducing taxation and whatever the state provides, replacing it with free, or freer, institutions, to be achieved by persuading the general public, of the value of social liberty though free discussion with anyone who wants to discuss those matters with LA members but maybe more so with keen intellectuals or with outgoing extroverts who will be keen to freely discuss those matters. Thus the LA aims at repealing most of the current statutory law. It expects social liberty to allow most people, if not one and all, to flourish to the extent that they can do so as a result a freer society, if not immediately of a completely a free one. The more liberty we have the better for all people.
The LA holds public meetings, that are recorded and then placed on YouTube and the LA members take part in its own and in other Internet discussion groups to that end.
PoliticsPosted by David Ramsay Steele Thu, February 22, 2018 06:31:41
How I Could Have
Made Hillary President
his book Win Bigly: Persuasion in a World
Where Facts Don’t Matter, Scott Adams analyzes the formidable persuasion
skills of Donald Trump and the comparatively feeble persuasion techniques of
the Hillary Clinton campaign of 2016.
The book is very funny, full of insights, and well worth reading. For those who haven’t read it, what I’m going
to talk about here is a tiny sliver of the richly entertaining material in the
book, but it does illustrate Adams’s approach.
Adams compares what he calls Trump’s
“linguistic kill shots” with the attempted kill shots of the Hillary campaign,
and he compares Trump’s slogan, “Make America Great Again” with the numerous
easily forgettable slogans considered or actually employed by the Hillary
Here are the more powerful of
Trump’s linguistic kill shots:
analyzes these in detail to show exactly why they’re so effective. They all appeal to the visual and they all
plan for “confirmation bias.” Probably
the best of them is “Low-energy Jeb.”
The very day this nickname came out of Trump’s mouth, Scott Adams
blogged that Jeb was finished, as indeed he was, though no other commentator
saw what had just happened. Recall that
Jeb Bush had a war chest of many millions and spent far more than Trump. He was a natural for traditional Republican
voters and for the fabled “Republican establishment,” as yet another dynastic
Bush but a more likeable personality than the preceding two Bushes.
Even after Trump had released his kill
shot into what we can call the rhetorosphere,
most seasoned pundits were still naming “Jeb!” as the most likely nominee. Yet, Trump had given Jeb Bush what Adams
calls his “forever name,” and it was henceforth to be altogether impossible for
anyone to see Jeb or think about him without instantly thinking Low-energy. His presidential ambition had been killed
stone dead, not just for that electoral cycle but for all time, in a fraction
of a second, by the Master Persuader, Donald Trump.
Adams offers similar analyses for
the other nicknames. “Pocahontas” was
the name given to Elizabeth Warren, one of the leading Democratic Party
politicians and a likely future Democratic presidential candidate. Warren, a blue-eyed blonde, had claimed to be
of Native American, specifically Cherokee, ancestry and had gotten an academic
job by impersonating a “minority.” The
Cherokee Nation, which has a database of everyone they have been able to find
with Cherokee ancestry, has repeatedly protested against Warren’s claim. Warren also once contributed a “Native
American” recipe to a book of supposedly Native American recipes called . . .
wait for it . . . Pow Wow Chow. It turns out that Warren is not Native
American, the recipe was not Native American but French, and the recipe itself was
plagiarized from another source.
A look at this book on Amazon shows
that Warren is in even deeper trouble.
The subtitle of Pow Wow Chow
is A Collection of Recipes from Families
of the Five Civilized Tribes, and the book is published by Five Civilized
Tribes Museum. This blatantly insinuates
that the Apache didn’t routinely solve quadratics or use trig to calculate the
circumference of the Earth, and this is indisputably the filthiest kind of
I would be
irresponsible if I didn’t point out that this kill shot illustrates Donald
Trump’s disgraceful carelessness with facts.
The Cherokee belong to the Iroquoian group, whereas the historical Pocahontas
belonged to an Algonquian-speaking tribe.
How low have we sunk when our president tells such appalling lies?
could see that Trump’s nicknames were effective, and so the Hillary campaign burned
the midnight oil to come up with an effective nickname for Trump himself. They tried three in succession:
● Dangerous Donald
Duck” is obviously the sort of thing a committee would come up with. “Duck” tries to make the point that Trump was
“ducking” various issues and various criticisms, including releasing his tax
returns. But of course, associating
Trump with a beloved if distinctly ridiculous cartoon character doesn’t mesh
well with the idea that Trump is a fearful Hitler-like menace.
Donald” doesn’t really work, especially because a large portion of the
electorate positively wanted someone “dangerous,” someone who would go to
Washington and break things.
the real surname of Trump’s Austrian immigrant ancestor, a perfectly
respectable German name which isn’t so congenial to Americans, so it was
changed to “Trump.” This idea that
having a non-Anglo-Saxon name in your family tree is a dirty little secret is
not a winner, for several obvious reasons.
As everyone knows, Trump’s election
slogan was “Make America Great Again.”
This is a brilliant slogan which can hardly be faulted. Adams lists its strong points (Win Bigly, pp. 155–56).
As against this, the Hillary
campaign considered eighty-five slogans (yes, 85!, according to Scott Adams, p.
157, citing the New York Times) and
eventually ended up with “Stronger Together.” Here are the ones which were actually tried
Love Trumps Hate
I’m with Her
I’m ready for Hillary
Fighting for Us
Breaking Down Barriers
These all have the flavor of
mediocrity and ineffectiveness that comes out of committees, and especially committees
of bigoted leftists. “Love Trumps Hate”
literally begins with “Love Trump,” and as Scott Adams points out, people’s
attentiveness declines steeply, so they often pay more attention to the
beginning than to the end of a sentence.
“I’m with Her” and “I’m Ready for
Hillary” both have a patronizing tone, as though you can prove yourself by
being open to a female candidate, just because she’s female; that kind of thing
is off-putting to some voters. And as
Bill Maher pointed out, “Ready for Hillary” evokes the resignation of being
“ready” for that uncomfortable tetanus shot from that possibly sadistic nurse.
“Fighting for Us” makes you wonder
who the “Us” really is. During World War
II, George Orwell pointed out how a British working man might interpret the
government poster that said: “Your
Courage, Your Cheerfulness, Your Resolution, will bring Us Victory” (the first three sets of
italics in the original, the fourth definitely not!).
“Breaking Down Barriers” has good
rhythm but an uncertain appeal because most people feel strongly that they
really want some barriers between them and some kinds of other people.
“Stronger Together” was the final
throw, and it came just as voters could hardly ignore the fact that violence
was coming from the left. Some of Hillary
supporters were bullies, and bullies are always stronger together. The news was already out that the “violence
at Trump’s rallies” was deliberately engineered by paid agents of the DNC.
Scott Adams Doesn’t
Give His Alternatives!
Scott Adams does an excellent job of identifying the strengths of Trump’s
slogan and nicknames for opponents, and the weaknesses of Hillary’s, he doesn’t
come up with his own, better proposals for Hillary.
This is a bit of a disappointment, and a surprise,
as he emphasizes that it’s all a matter of conscious technique, not instinct.
And so, I decided to cook up my own
suggestions. Here goes!
My proposal for the nickname Hillary
should have given Trump is:
Here’s how this works. Before Trump announced for president, he was
often called “The Donald,” a phrase which usually went along with either patronizing
amusement or mild and grudging admiration.
Use of “The Donald” died out, presumably because the US population was
mobilizing into two great camps, one of which viewed Trump as a satanic
monster, the other of which saw him as the nation’s redeemer, and neither of
these would perceive “The Donald” as entirely apt.
My plan would be for Hillary supporters
to refer to him several times as “The Don,” and just occasionally, for those who
might be a bit slow on the uptake, “The Godfather” (or variations like “The
Godfather of Greed”). Hillary would then
take up “The Don,” as an already established nickname for Trump.
Trump has many of the popular
attributes of the Mafia boss: a commanding presence and a weakness for vulgar
display (his golden toilets). All the
points actually made against Trump’s character by Clinton could have been given
a slightly different coloration. Thus,
when making the allegation that Trump had stiffed some of his sub-contractors
(which the Hillary campaign did), this would be described as “making them an
offer they couldn’t refuse.” You could
throw in a reference to one of Trump’s business dealings with someone who has
since passed on, and add the jocular remark, “He now sleeps with the
fishes.” When complaining about the fact
that Trump wouldn’t release his tax returns, this could be framed as “the Trump
Family [Family, get it?] has sworn the oath of Omertà never to reveal their sources of income.”
But aren’t mafiosi supposed to be
Italian? Yes, but now they’re often
Russian too. Hillary’s campaign promoted
the story that Trump had “colluded with the Russians.” This appears to have been a pure fabrication,
simply made up (no one has ever faulted Hillary for being over-scrupulous or
excessively candid) but it would have been so much more believable if
associated with the Russian mafia.
It’s a self-evident truth that every
Russian has “ties to Vladimir Putin,” and this can always be asserted of any
Russian without fear of rebuttal. Similarly,
it’s a self-evident truism that every Russian businessman has “ties to the
Russian mob.” It would have been a
simple matter to dig up every occasion when Trump did business with a Russian,
call that Russian an “oligarch” (who could deny it?) and declare that this
Russian oligarch had ties to organized crime (or deny that?). In this way, it would have become impossible
for voters not to think of Trump’s business activities as steeped in
Now, what about a campaign slogan
for Hillary? This is quite difficult,
because of the fact that Hillary had spent the previous eight years as
Secretary of State within the Obama administration. She could not therefore put any emphasis on
“change,” and it would be hard to imply anything radically new. But anything that looked like a defense of
the last eight years could only run the risk of implying that “the status quo
is fine and we just want to keep things the way they are.” This is a disadvantageous position to be in.
A slogan that goes negative and tries to focus on
the evil of Trump is liable to boomerang—remember that meeting of Democrats, where
a speaker referred to Hillary using the word “honest,” and the entire room
spontaneously erupted into laughter?
As Scott Adams hilariously points
out (p. 159), a rather different kind of boomerang was a major feature of the
campaign. One of Trump’s problems, as a
former reality TV host, was to get voters to take him seriously as a real
president. Hillary continually urged voters
to “imagine” Trump as president, and thus provided Trump with exactly what he
needed. He needed people to imagine him
as president, and Hillary did an excellent job of helping voters to do just that.
The Hillary campaign slogan has to
have the following qualities:
It mustn’t directly mention the rival product.
It mustn’t be easily interpreted as merely a response to Trump’s slogan or
It can’t, unfortunately, make a bold plea for change.
It can’t, unfortunately, make a bold claim for Hillary’s trustworthiness or
other personal virtues.
It must have rhythm.
It mustn’t allow the interpretation that some special interest will be
It must take the high ground.
So here’s my proposal:
● A Win-Win for
This slogan would occasionally
follow the words “Hillary Rodham Clinton.”
(It’s bad luck that “HRC” doesn’t trip off the tongue like “LBJ” or even
“JFK.” There is no other memorable
version comparable with “Doubleya”.
“HRC” might evoke “hardcore,” but we probably don’t want to go there.)
The slogan is positive and inclusively
patriotic. It therefore crowds out the
undesirable thought that Hillary appeals chiefly to welfare recipients,
criminal aliens, and billionaire hedge-fund managers. “For America” takes the high ground and
crowds out the thought that Hillary’s election would be a win for Hillary, an
undesirable thought because Hillary might be considered a loser, and also because
we don’t want voters thinking about any personal advantage Hillary might reap.
The term “Win-Win” has several
functions. Literally it refers to a
situation where we win, whichever of two alternate possibilities occurs. There would have to be a story about this,
ready for those times when Hillary or her henchmen were directly asked about
the meaning. But that’s
unimportant. We could even come up with
a dozen different stories and get people arguing about which one was true. Really the term is simply a repetition of the
positive word “win,” and gives the slogan distinctiveness and rhythm.
It also has something which Scott
Adams has talked about on a number of occasions: he has pointed out how
President Trump utilizes the tried and tested marketing ploy of putting slightly
“wrong” formulations into his tweets to enhance their effectiveness. A slightly doubtful formulation or a feeling
that something is not quite conventionally correct helps a phrase to lodge in
the memory. “Win-Win” therefore gains
something from the fact that what it means is slightly obscure and off-key,
while its emotional associations are entirely positive.
So there we are, Trump is The Don and Hillary’s slogan is A Win-Win for America. This would have been enough to give her the
electoral college, though it wouldn’t have hurt to have also done a bit more
campaigning in Michigan and Wisconsin.
Hillary threw tens of millions of
dollars at various “consultants” who were out of their depth and out of touch
with public feeling. As I’ve just proved,
I could have gotten Hillary elected by a few commonsense marketing touches. Given my unpretentious proletarian origins
and unimpressive net worth, I would have done it for, say, half a million
dollars. That would have been a terrific
deal for Hillary, and would have enabled me to pay off a good chunk of my
But, I can already hear you saying,
you’d be enabling this disgusting warmonger, purveyor of PC bigotry, and
criminal sociopath to take power. Could
you really live with yourself?
Yes, I have to admit, I would feel
bad about that. So, make it a round
EconomicsPosted by Lee Waaks Wed, March 01, 2017 22:29:23
The following is a reply by David McDonagh to Robert Henderson's blog post "Public and private confusion (and, yes, there is an alternative)", in particular, section 15 on "Public service inefficiencies and politicians". It was edited by Lee Waaks.
Robert Henderson believes that the state is inefficient owing to the irresponsible behaviour of politicians rather than to their access to taxation; and that it enables the state to rule, or govern, the people rather than to serve them, as firms set out to do. He believes that the politicians pass too many laws, or that they introduce other measures not requiring legislation, but that demand such action as the meeting of “targets”, which he thinks are simply beyond the state ever meeting. But the Libertarian Alliance [LA] case against the state is that it seeks to rule by flouting our liberty as well as using taxation to be indifferent to efficiency; but, out of the two, it is the flouting of liberty that is mainly illiberal.
There is no real incentive for politics to be efficient. The political projects even have incentives to be inefficient for if they make savings in their allowance, then they usually get less funds as a result the next financial year, so they need to spend what they have been granted every year to maintain their income. Therefore, they are rewarded to stay still and often punished by having less income for their departments for any economising. Firms, by contrast, gain funds for other things by economising. When firms fail to attract customers by serving them, they lose the money they might have earned from the customers. State projects are not automatically affected by any public neglect.
We are told that there are too many laws and he gives tax law as a prime example, as there is just too much of it for anyone to master; even the best experts know only a small part of the law relating to taxation. Many of the laws themselves are not very clear, leaving it open to cogent new innovations of interpretation that can show up bureaucrats at the Inland Revenue as incompetent or unreasonable, and that can be the case at the Customs and Excise Office too. The ordinary bureaucrats are not trained well enough to cope with the obscurely written laws as they stand, says Henderson, and he thinks this is why the state is inefficient. But the reality seems to be that the state (and politics) is fundamentally negative sum in nature and the authority to tax the public leads the state to rule rather than serve the public.
He believes the lack of consideration on the part of politicians in framing laws to be used practically is a problem and many neglected laws that should be repealed are simply left on the books. But those that are used need a great deal of common sense to enforce as literally written or they would not be practical, so they are only partly enforced.
Even then, the gaols are overcrowded owing to politicians being too careless in passing laws and those in charge of the Home Office calling for longer sentences. If they ensured gaol places beforehand, then what the politicians do might be more viable, or at least more acceptable to Henderson. But liberals will ponder that responsibility needs liberty to be fostered, so any time in gaol is highly likely to diminish responsibility, and thus social liberty; so liberals will look for a
limited use of gaol, if they allow any use at all. Weekends in gaol, with the offender remaining in his job during the week and paying for his weekend gaol stays, as well as for some compensation to the victim of his crime, is in the way of liberal thought on crime and punishment. This might allows prisons to pay for themselves or, at least, cost the general public way less. Remaining in work will also foster more responsibility in the offender.
I think Thomas Szasz was basically right in his myth of mental illness thesis. I have seen some criticism from LA members that there might be some mental illness, despite what Szasz said, but in hearing some of this criticism, especially in the talk on Szasz by David Ramsay Steele on YouTube, it did not seem to discount the fact that what Szasz said still seemed to apply to the overwhelming majority of those classified as mentally ill. The recent drive to care for those with mental illness by the political elite, over the last five years or so, is in the direction away from Szasz, and it looks like the sort of kindness that messes lives up. The earlier “care in the community” seemed to be, at least, going the right way. But Henderson seems to think that many should be locked up for life and he regrets that a few have found their way into gaol. But as Szasz repeatedly suggests in his books, that is where some of them were more fitted to than in the asylums.
Henderson gets the Community Charge, that its opponents called the Poll Tax, completely wrong. It was an attempt to foster active local government by making them responsible for the setting of the Community Charge and by competition between such areas to put it up or down as the voters saw fit. It was a long shot, as voters tend to forget to bother much at the voting polls to make an instrumental use of elections and they use them for voter loyalty instead.
Anyway, it was not given the coup de grace by a violent protest in Trafalgar Square, as we were told by Henderson; it fell only after Mrs Thatcher fell; and she fell mainly owing to her opposition to the EU, not owing to the attempt she made to foster an active local instrumental electoral system relating to the Community Charge. That was slowly settling down, after the opposition to it had been largely seen off. It took former MP Michael Heseltine about a week to think it might be good propaganda to repeal it, and then he was eulogised by many Tory MPs, who had forgotten all about it.
To truly cost the medical services in the UK, the National Health Service [NHS] would need to be privatised completely. Only then will the real anarchic price system price things. It is not practical to simulate the price system. That is to say there is no way that the state projects can get realistic prices to rival those set by the price system. Henderson errs badly if he imagines there was a time since 1948 when the NHS was trouble free. It never can deliver what it is supposed to deliver. It will always fall short of that.
Henderson imagines that schools in the UK are more than child minding centres. He believes that the educational aims have only recently been lost.
EconomicsPosted by Lee Waaks Sun, February 26, 2017 19:06:58
The following is a reply by David McDonagh to a blog post by Robert Henderson. It has been edited by Lee Waaks.
Firms do serve the public when they seek to get customers for what they produce. But maybe Robert Henderson means providing uneconomic services, like running empty buses on a regular and frequent timetable just in case a few might need them. The fact is that this sort of "public service" is clearly very wasteful. It means there is a need for taxation to subsidise it, or a high ticket price that most people might well shun. Such "services" are intrinsically inefficient, as few want the services currently provided.
We are told that a monopoly is needed to run an uneconomic "public service", but that is not right (though it might help a bit), as competition might otherwise remove some income by cherry-picking off the parts that might be economic. But the mere monopoly would not usually bale out the universal service as a whole even with a no cherry-picking; instead it is taxation that is vital to this wasteful activity. Contrary to Henderson's claim, a monopoly cannot ensure such universal services that are often bound to be uneconomic.
We are told that "no private company would ever provide a universal one-price service without massive public subsidy", but that is false, as we can see with the usual prices of commodities, for we pay the same price for most of them whether they are in Cornwall, Warwickshire or Antrim. Most wares sell at the same price throughout the UK. The mass urban sales do allow ordinary firms to charge the same price for the same goods in largely rural areas as they do in the big cities.
The Post Office cut the second post as it wanted to cut the subsidy. Ditto, it has put the last post earlier in the day. A monopoly might ease it, but it is taxation that alone allows it to exist.
It is not clear to me what Henderson imagines is the public service aspect of the BBC. Whatever he thinks it is, he says it would ebb if the licence fee were to go and the BBC went more, or completely, state free. It would become more like the other TV channels, he says, but it looks rather like them anyway, accept that its adverts do not interrupt the programmes, but they do look abundant enough between the programmes, even if they are not commercial.
Henderson sees, or he says he sees, a clash between profit and public service in providing things like the National Health Service (NHS), but the NHS deliberately flouts economic viability in that it attempts free access paid for by taxation. A private insurance policy also might provide free access, but only for those who took such a policy out by paying for it. Such a policy might well make a profit.
If work is subcontracted out then the main contractor usually needs to see it is done to the extent that would have been the case had it not been subcontracted out. Henderson wants to deny that normality.
EconomicsPosted by Lee Waaks Sun, February 26, 2017 18:23:00
This post is a response by David McDonagh to Robert Henderson's blog post on efficiency. It was edited by Lee Waaks
Robert Henderson asks "what do we mean by efficiency?" We need to note that there are at least two vitally different but germane meanings that we need to consider here: economic and technological efficiency. These two distinct meanings produce the interesting fact that they often clash. If we have to produce what might be technically efficient, but what we cannot really afford, then that is to be saddled with what is called a white elephant. A good example of a white elephant is Concorde, the supersonic jet aircraft. It was only viable with support from tax payers and even even then most could not afford to use it.
Society is organised by firms needing to make a profit. Profits are earned by gaining the patronage of customers by competition for their customers as against all other firms. The entrepreneur attempts to guess what the customers will buy. His costs will include wages, rent, interest on any loans and other costs relating to supplying the good or ware. Anything earned by the project over and above all the costs will then be the earnings of the entrepreneur as profit, but he also risks making a loss in this competitive quest. This is the small competitive section of the market economy where entrepreneurs rival each other and it is zero sum, insofar as the total amount of customers out there only have so much at any one time to spend. The rest of the market economy is co-operative and, like all trade, it is positive sum.
The state depends on successful economic activity on the market for taxation. No state can earn its own way for politics is negative sum, and thus wasteful, from an economic point of view. But nationalists ususally look at the state as a grand collective end or consumer good. Robert Henderson is clearly a nationalist rather than a liberal.
Profit shows that what the customers want has been successfully produced by the firms that make a profit. This is a way of rejecting most of what we technically might have done but is actually very uneconomic. The range of what is rejected as uneconomic is very wide and to go down any one of those wasteful uneconomic paths would be to enter a metaphorical crushing stampede of wasteful white elephants. Profit mainly allows us to dodge that stampede but the state is always there to tax the public in order to rescue some unprofitable projects, thereby saving the odd white elephant from the metaphorical stampeding herd. Profit is a good sign of successful economy in the mass urban society.
Henderson imagines the state gives public service but the reality is that it sets out to govern the public. Profit is feedback that the customers have been served but the state never truly serves. We are told that firms merely get lucky when they make a profit, but that such luck runs out. This account is very unrealistic. It is more likely that firms ebb not owing to bad luck, but due to all who wanted the good having already purchased it, with the result that not enough new customers prevent the firm from making a loss. The firm then either produces something else that some customers will patronise, or it ebbs away to go eventually defunct. By contrast, state projects like NATO rarely go defunct, but continue to draw taxpayers money and to look around for new ways to continue their wasteful spending.
There is no general boon that allows all firms to make a profit, but Henderson tends to imagine otherwise, and he believes there are periods when profits are easy to make. The reality is that at all times firms have to provide wares or services that customers will value more than the price the firm puts on the wares. They may always prefer to spend their money on other goods.
Henderson thinks some goods are so vital that it is hard not to make large profits regularly. He gives the banks as an example. But if things were left to the market in 2008, then a lot of banks would have been replaced by new banks. He pushes the dogma that monopoly is emerging, once again, but there has been no percentage increase in monopoly since about 1800. Growing monopoly is a mere myth rather than a growing problem. For example, we are told that the march of Tesco supermarket is relentless but then we might have said the same of Mac Fisheries
supermarket in the 1960s. Only Sainsbury's amongst the 1960s rivals among the then big supermarkets has made it into the 2010s. This will most likely be the case by the 2060s, too, but which one it will be is far from clear. Tesco has certainly had a lot of trouble in the last three years, so it may not survive far into the future.
What metaphorically "destroys" firms is not their rivals but the their lack of customers. Stores that do serve the customers well can continue indefinitely. The customers always have a superabundance of other things that they can buy with their money. They never lack lots of choice in the big city but they might in a small village because it might be more costly to drive beyond other than local stores. But the Internet cuts that cost somewhat even in a village in the last decade or so.
Firms pretending to be more successful than they are does not affect the public very much. Their ebbing is largely their own private affair.
Henderson thinks it is debatable whether profit is a good yardstick of efficiency in any case, but even if it true in some cases, he still believes it is not true in all cases. He believes universal public services need a lot of unprofitable work to be done. But in what sense are such things efficient in any sense whatsoever? He says the Post Office makes a loss on delivering posts to rural areas because it charges the same price as those posted within the city. But this means rural service is aided by taxation. However, universal prices can be achieved by the market (e.g. Mars bars) without state aid from taxation. In such cases, city buyers pay the costs of transportation to rural areas in order for firms to maintain a cheap universal price. We are told the state aids private firms by its Post Office prices because, they too, pay the universal price. But this is hyperbole, as firms can charge customers for delivery.
Henderson thinks that two criteria can replace profit as a sign of efficiency: "(1) is the service being delivered to all who need it? and (2) is the cost reasonable in comparison with equivalent operations in other countries?" But neither criteria indicate any economic efficiency whatsoever, as (1) allows no economy at all because it cuts out germane input from the needy; and (2) other nations are not likely to be efficient in state projects because they are bound to be wasteful, as all the state does is negative sum. Judging by his criteria, Henderson thinks the National Health Service (NHS) looks efficient. However, since 1970 the NHS has been a hospital closing programme and it is no more clear that the 1940s fad of nationalisation has done better there than elsewhere, such as the railways or in coal mining. People love the NHS only as they fear free trade in health care. But that is public fear and corruption rather than a sign of any actual economic efficiency. The NHS exists only owing to general taxation.
PoliticsPosted by Lee Waaks Sun, February 26, 2017 17:11:57
The following is a response by David McDonagh to blog post by Robert Henderson on the Libertarian Alliance (not to be confused with this blog of the same name). Because Mr. McDonagh's response strictly follows the outline of Mr. Henderson's post, there is some repitition. The context of the reply can usually be gleaned from the comment, but it may be useful to read Mr. Henderson's post first. (Mr. McDonagh's response was casually edited by Lee Waaks.)
The politically correct [PC] ideal of equality and democracy, like politics and the state itself, has never been popular with the masses; and they haply never will be either.
Free trade boosts all incomes by boosting greater output than we would otherwise have.
The Navigation Acts held progress back, as politics and the state always does.
Liberal ideas are hardly unquestioned but then Henderson seems to get nearly everything wrong about liberalism.
While the state exists, the market will never quite be free. The state needs to tax the market just to exist.
Adam Smith hardly needed his metaphor of the invisible hand for the division of labour, as, clearly, it gears self-interest to serve others by specialisation, or by learning a trade. Almost any job requires some expertise.
Socialists are just statist Tories. Fascists are also Tories. Bolsheviks are Russian Tories. Collectivists are Tories. Liberalism is anti-politics, so it is against democracy and the state.
The state is anti-social. Its aims usually tend to mess up society.
Henderson is not wise to call the liberals dishonest. I think he is very ignorant and thoughtless, but he is most likely not dishonest. He loves the state so much that he cannot credit that it is sincerely rejected by the liberals.
Monopoly is almost impossible to obtain, as it is not easy to stop new firms from entering any market. But the idea that the market ends in a monopoly is a long-standing folk dogma, and the main hope of Marxism, but the idea is way older than Karl Marx. However, monopoly did not increase in Marx’s lifetime, nor has it increased since his death.
Liberalism is about repealing laws not passing them; not on monopoly or on anything else.
Free markets are what emerge when the state has been totally rolled back to non-existence, or to anarchy. Liberals are against the state, not monopoly per se. Henderson loves the state so much that he doubts that there are some that hate it. But, yes, the state is the only institution that can enforce a monopoly, but that is not why the liberals reject it.
The market is not natural, but it is anarchic. It does not need the state.
The liberal idea of no state is not empty-headed. Politics is anti-social and negative sum, i.e. wasteful. It is what looks like support for what is wasteful that is nearer to being empty-headed but, presumably, it is down to mere ignorance.
The market fits humans as they are, though they prefer to be consumers rather than producers. But the state is at odds with humanity, as people do not like being bossed bout.
Protectionism is no more natural than is smuggling (black markets) that, nearly always, flout it.
No one owns markets. It is just where people freely trade with each other.
Lower prices are clearly better for the customer.
The mass urban society gives rise to potential jobs being infinite. A village often lacks jobs, but never does a big city. Employment becomes a function of pricing ourselves into work rather than there being a lack of jobs in the big city.
Society is polycentric, and it is never a whole. If you hear the bell toll, then it tolls for another person. Economic interest groups related to the factors of production are as mythical as the supposed inexorable movement of free trade to monopoly theorized by Marxism, and both are clearly bogus. The idea of the class struggle is about as unrealistically Romantic as one can get. There never was anything like it in the past, which is why E.P.Thompson's 1963 book, The Making of the English Working Class, mentioned not even one example of it in more than 900 pages of his book.
Liberals claim that any trader gains, in his own estimation, from trade. The liberals do not postulate society, as a person, or as a quasi-person, who gains from trade. Both the consumer and producer surplus resulting from any trade is subjective to each trader. Trade is a positive sum transaction.
Liberalism is anti-politics, not a recipe for a type of politics. The anarcho-liberals that make up most of the active Libertarian Alliance [LA] are never happy with any state activity; none whatsoever. But the alliance in the LA is with minimal statists, who do accept a vital need for the state.
Liability is going to be limited in any case. The 1862 Act just spared a bit to settle for what traders chose to risk. Having all at risk would not be much more actual liability, in most cases. Limiting what is put at risk, to what we freely want to put at risk is not, somehow, unfree in some way. To say that only a claim to all a person owns must be involved if ever one is to invest is not more free, or more honest, but just a sheer stupidity.
A free market is the market free of the state. Yes, that means no taxation, no state money, indeed, no politics whatsoever.
Henderson seems not to know that the LA is against the state. The active LA members hold that the state has no business at all but, indeed, that it is immoral. The LA most of all opposes taxation, which the LA has often called theft. But Henderson imagines the LA endorses taxation and that it is only really against monopoly (or something else). Liberals do not care much about monopoly as such, for most of them hold that the market can sort it out by new firms starting up to exploit the monopoly price that the big firms might charge. Liberals only essentially hate the state and taxation -- taxation because it aids the illiberal state activity.
Liberalism is not particularly fussed about monopoly, but we might still note that the daft dogma that competition leads to it is clearly false. It is clear that it is not easy to keep new firms out of most trades, especially if the big firms are charging high prices. Henderson believes roads are an exception, but they have substitutes like air, rail and sea travel. In any case, there can be efforts to buy up particular roads on the market.
No, there is haply not fewer firms in the car industry than there were 40 years ago. British firms have declined but Japanese firms have emerged since then. Chinese firms are now emerging.
No, free-trade liberals do not want a single market but only no states. The market will never be a whole and there will never be “a level playing field” (to cite a statist metaphor from sport), but liberals, as such, do not seem to care much about that. The economists recommended the statists to allow free trade to exploit comparative advantage, which thrives on inequality and any unequal advantage that we might find. However, the state cannot completely indulge free trade, as freedom needs to be trade free of the state, ipso facto.
The EU aims at being a super-state, not a free-trade area. It seeks power and influence in the world. It aims to be the number one state no less.
What classical liberal ever complains about dumping? I have seen no pristine liberal complain against cheap goods.
Henderson says free trade does not mean free immigration, as, logically speaking, trade is made for humans, rather than humans for trade. But free trade usually does tend to mean a free flow of immigration too.
Henderson claims we can exchange goods and services without allowing free immigration if society does not want to, but there is no such person called society. However, in a liberal society no one needs to accept immigrants, to give them jobs, lodgings, etc. if they do not wish to do so, as social liberty is liberty on both sides. Society cannot decide but any person can decide for himself.
Yes, taxation scotches free trade, as does any state.
Democracy is not liberal but an attempt to govern: voting is illiberal, gratuitous, coercion against others.
Henderson says that comparative advantage has little reality to it. But it is very clear that some parts of the world (e.g., South America) grow bananas, say, way more easily and more cheaply than can be grown at other places, say, Northern Europe. They expoit the uneven playing field. He believes that as this may change, so it does not matter, but that is not germane, not even one iota. Every person does what he does best at any one time. That the comparative advantage can change, in some cases, hardly means it is not important at any one time.
Higher tax regimes and higher welfare provision tend to lower real wages, but Henderson writes as if he thinks they can boost them. Only greater output can do that and the state hampers output by taxing it to pay for services that no one wants but the rulers think is vital to civilisation. So, for example, we have the spectacle of subsidised, often empty, buses circulating around UK towns and cities to maintain an alleged social service on a regular timetable.
As we have had the modern state since the rise of the modern market, we have never had completely free trade. Henderson believes it was reckless to go in for freer trade in the nineteenth century. He believes industrial dominance, primitive transport
levels, and the slow industrialisation of the USA and other European lands, allowed the UK to dodge the hazards. But after 1870, that was not the case any longer and the British market was then flooded with food and wool. Many states then went protectionist, but Britain failed to do so. It paid the price for this folly of freer trade, he argues, as the industrial predominance it had once enjoyed was soon lost. The UK's agricultural markets were destroyed and new industries (e.g., chemicals) soon arose that left the UK behind. In contrast, Henderson argues, the protectionist policy of the USA and Germany enabled both states to exceed the UK’s GNP. But there was no need for the UK to retain the lead in any industry. The fact that other places were catching up and then overtaking the UK boosted wages even in the UK. Henderson seems to think the object is for the UK to forever lead the world in this or that sector, but the objective of economic activity is to boost the standard of living, not to dominate the world. He overlooks that state protectionism is very wasteful and seems to think that there is a clash of interests on the world division of labour, but very little of the market is in competition. Firms compete for customers but most of the market, as Alfred Marshall pointed out in 1890, is the result of cooperation. Even the competition, he noted, was within a cooperative framework.
Bismarck seemed to overlook the wastefulness of protectionism and of politics in general.
What he thought was wrong is hardly anything to do with the truth. Trade is to do with firms, not nations; still less to do with the wasteful state. Trade aids both a producer and a consumer surplus, so both sides gain by trade but taxation is negative sum, so we all lose out, on the whole, from any political action; and maybe both sides do too; though the
politicians act as if they gain from what they do.
It was not protectionism that made the first industrial “revolution” but the flourishing of science, technology and business. Henderson overestimates bias to home trade and he writes as if the EU and the WTO aid free trade rather than hindering it, ipso facto, by their very existence. The idea that free trade needs to be mitigated is on par with the idea that economic growth or increased income needs to be mitigated. Henderson also overrates the British Empire in trade, even though he is explicitly cautious about that. He believes free trade was a risk in 1850 for Britain, and that it is for all nations now, but he
overlooks that it is the best way that firms can do well. Politics is wasteful, by contrast, but Henderson believes that the state is a boon. He tells of free trade as idiocy, but it is clearly politics that is perversely negative sum and thereby clearly wasteful idiocy.
It is not clear that Henderson fully understands free trade, let alone the history of it, but he loves the state and the state-imposed wasteful problem of defence, that he believes the nineteenth century liberals were careful about, but the truth is that the liberals hated warmongering. Liberals, like Richard Cobden, were out to stop the backward state courting war. But it is true that the pristine liberals of the LA are more against the state than the Manchester School ever was.
Henderson postulates that complete free trade today would be dangerous for the West. He believes no firm can compete with low wages around the world. But this wage gap with what they call the "Third World" was caused by the backward rejection of free trade after 1914 and after the war that ended in 1918. Why would the wage rates on the other side of the world affect most of the trade in Britain? Could it affect local plumbers, carpenters and the like? Most trade will remain local but given free trade, then international wages will soon even up around the world anyway owing to the export of capital.
We are told by Henderson that experience tells us that industrialisation is best achieved by protection but that is wasteful, ipso facto, as all politics is. He overlooks that, or, more likely, he has never yet quite realised it.
Henderson tells us “the most lethal ammunition to discharge at free traders is the fact that no country in the history of the world has industrialised successfully without very strong protectionist measures being in place”, but this is a mere fallacy of post hoc; ergo propter hoc and it overlooks the cost of such protectionism in every case. The point is a brutum fulmen. However, it haply is about the best any protectionist can do.
The spread of British capital overseas would have haply stopped the "Third World” from arising, thereby dodging the current problem of mass immigration to where the capital, and thus the higher wages, are to be had. Nationalist measures “distort” the world division of labour. Free trade (or freer trade) did/does aid economic development everywhere, including in pre-1913 Germany. Henderson should note that the protectionism imposed after 1914 created the main problem that seems to concern him today, viz. the existence of lower wages in the Third World that threaten to pull down wages in the First World. Athough an increase in world production would likely lead to higher real wages for the First World, his protectionist “solution” would not remove this problem, but rather prolong it. As previously mentioned, freer trade was evening up wages around the world before 1914.
Protectionism did not aid the UK to recover after 1931. Henderson fails to explain this beyond his aforementioned post hoc fallacy, as there is nothing to aid economic development in protectionism. It simply allows firms to be free from competition from abroad. As free trade is basic economics, there is no need to call it a "secular religion", as there is nothing whatsoever religious about it. Firms need to keep up to date with all other firms under free trade, but they can become stagnant with protectionism. There is always free trade within a nation, and as the EU was attempting to become a super-state (or a new nation), then there would be free trade within the nations it was attempting to make mere provinces.
Protectionism always taxes the economy. Henderson argues that free trade is not necessary for rapid economic growth; that state regulation of the domestic market and international trade is not a recipe for disaster; and that being a “free trader” when the rest of the world is not reciprocating is a mug’s game. But some liberty is vital to economic growth and politics taxes the public, so even when it dodges being a total disaster, the state never dodges imposing extra costs. Anyway, one-way free trade is fine as there is no need at all to respond to tariffs of others with those of your own, as that will only increase the dysfunctional politics. Contrary to Henderson, it is politics that is the mug’s game, as it is always negative sum. Trade, by contrast, is always economic, so it is always positive sum. Henderson imagines we do not know whether protectionism is dysfunctional or not, but it always costs extra taxation; thus, it is always uneconomic or negative sum. So we do know that it is wasteful.
Free trade is the same as the free market. In the colleges since about 1900, they have attempted to define laissez-faire as trade within the state's domain and free trade as between states, but this distinction is not very realistic because states do not trade, only firms and customers.
Governments are not the natural suppliers of health care; or, indeed, of any good.
Trade results in gains to the customer and producer immediately, not later. The gains may not be uniform but they are immediate surpluses to both traders. In what way do the later generations thereby lose out? As for politicians, they live off taxation, thus they make the public poorer to the extent that they tax them.
The fact that many lands are poor today is the result of the interruption of free trade by the 1914 war, which Henderson argues was a distortion of domestic trade. But this idea that domestic trade should be separate from the worldwide division of labour is an arbitrary idea. Free trade would soon iron out the Third World, such that there would be soon no longer a massive advantage in mass immigration to seek jobs elsewhere, though some competition in a more even world would continue. The capital would go to the workers rather than the workers emmigrating for better pay.
Most of the jobs out there need no skills. Former Prime Minister Tony Blair was utterly deluded with his “education, education, education” idea, viz. the popular idea that education was investment rather than being just sheer consumption, as it usually is. But increased output from successful new capital investment (including human capital -- but that is usually mustered by on the job learing rather than at college) means all wages are higher as a result of extra innovation that, if successful, increases total output.
Henderson believes that nitpicking over how exact are measurements of wealth might aid his case against liberalism. But the fact that the "poor" today are rich in absolute terms is clear no matter how useless the means of wealth measurement are.
Why does Henderson call council housing “social housing” when it is clear enough that it is very anti-social and, indeed, that it is a recipe for thugs? The popular press in the UK calls council housing "CHAVs", i.e. council house and violence.
What is called the welfare state is a public menace. That it has been rolled back a little bit since the 1960s is a social boon.
Why was unemployment so low till about 1970? It was obviously owing to the cleared labour market, but the media, falsely, held that to be a thing of the past in the 1970s and since. But we can always clear the labour market whenever the price, or the wage levels, are right. In the 1960s, the dole was taboo, as only a few workers, when exchanging jobs, would ever go there; it was a sign that a worker did not really want a job. By the
1970s, however, many thought that full-employment and the cleared labour market had naturally broken down, so from then on many accepted the need for the dole. The story put out by the media obfuscated the fact that only the dole allowed mass unemployment to ever be mustered in the mass urban society.
In absolute terms, it is easier than ever to support a family on a single wage today. But people want to do all the other things too. It is false that the mother does better for the family by taking a job. It is also false to say there is no choice involved. We do not need to conform to social norms.
A bigger state clearly needs to tax more.
Most people never did think much of state provision, falsely called social provision, although Henderson ignores the fact that it is anti-social. It is very clear that most in the UK are better off than in 1960, especially the poorest third, who are today fairly rich, with all the modern conveniences. In 1960, most households did not have running hot water, phones, or most other modern conveniences. The market, which needs to be free to some extent, and was so even within the late USSR, is alone responsible for progress since 1750. At no time has the state done other than impose a cost. Henderson does not seem to grasp that fact; he thinks it is something to do with elite ideology.
If people buy things then they usually want them more than they want the money they need to pay to obtain them.
People often fail to provide many things in computers and elsewhere.
Few things are truly necessities.
Brainwashing is a mere myth.
Henderson absurdly says people do not really want computers, but then he tells us why they want them. He says we all need computers today; so we want them as a means. As Thomas Hobbes said, we choose to do all we do, either as a means to an end, or as an end in itself.
Free trade ebbs power, so all lose power whenever trade gets freer. But then power is a certain evil and, as Lord Acton famously said, it tends to corrupt.
The poor are not subordinated to the rich on the market. The market lacks any power as, qua market, it is free.
I have never met anyone who loves equality and I tend to think that no one does. It is a silly, unexamined, school teacher dogma, worthy only of contempt.
The gains of trade are immediate; they do not trickle down.
No society is truly more than economic relationships. That is a mere misunderstanding of economics. Any desire for certainty will be for an aspect of the standard of living.
There has never been a working class. That is a myth of college sociology and politics departments. The Labour Party would win every election, hands down, if there were a UK working class interest, but rather than see the plain truth of very diverse economic interests, the backward academics hold those who voteTory are fooled in some way. But the workers are not the only ones who cannot see this purely imaginary proletarian economic class interests, for the sociologists cannot see it either.
People rarely notice where things are made.
It is no absurdity that free trade tends to crowd out war. Firms cannot afford to fight wars and the state can only afford to fight them owing to taxation.
Yes, the illiberal coercion of crass democracy is hostile to free trade, as it is an attempt at government, thus it is against liberty.
Henderson imagines democracy is a boon to the masses, but it never was. Nor was it ever popular. Protectionism is credited with this and that, but no explanation of how it does what he imagines it to do is attempted. Similarly, he gives no detailed charge against free trade apart from his fallacy of post hoc.
Similarly, he assumes a movement towards monopoly but he seems not to know this dogma was around before Marx was born in 1818 and it is not greater today than it was, say, in 1800.
The actual reality of things is that total output determines what wages can buy and, thus, their value.
Immigrants may destroy a nation by destroying the idea that it is a large family, thereby making many natives no longer feel they have a homeland. Nevertheless, immigrants do, boost output, which leads to rising real wages. The same is true for “exporting jobs”, which also boosts real wages. But Henderson thinks the value of wages are lowered thereby and he adds:
“Those whose jobs opportunities have been degraded have suffered a form of theft. Had mass immigration and the export of jobs been prevented, the wages for the jobs taken by immigrants would have been higher than they are when subjected to the additional competition of immigrant labour and the exported jobs would not have been exported, which in itself would have tightened the labour market. In societies of rising aspiration, this could result in jobs considered menial being better rewarded than those which enjoy high status under 'free trade' circumstances. It might be necessary to pay a sewage worker as much as a doctor. Doubtless many would throw their hands up at this. But there is no logic to such a response, because in a society with a large private enterprise component a wage is simply a response to the value the market puts on a job. Unskilled workers may not earn as much as the average doctor or lawyer at present, but skilled tradesmen such as plumbers and builders often do.”
But workers can only be paid from total output and that would be way lower in the set-up that Henderson imagines here. But it is true that supply and demand (i.e. free trade) tends to equalize wages and salaries. Free trade would end aristocracy rather than fostering it, as Henderson imagines. “Class” is just a bogus idea of the PC religion of Sociology. Anyone who talks class thereby talks crass stupidity. Democracy never did give the masses any control and the masses hate voting anyway. Participation is a waste of their time. It is boring at best and they want to be free of it. As the saying goes: “Committees take minutes but waste hours”.
Henderson repeatedly imagines that there is something social about the state, but the plain fact is that the state is intrinsically anti-social.
Democracy was an elite fashion, not something the masses ever wanted or needed; it thrived only on elite thoughtlessness. But Henderson tells us that, in fact, it was originally oligarchy, not true democracy. But then he absurdly adds that it nevertheless brought with it a lot of control by the masses. His contradiction is self-refuting. The true half of the contradiction is that it was oligarchy; the false half is the claim that democracy brought any real control by the masses.
The urge towards the EU was one for a successful warmongering super-state not a stand against democracy. It was for power and influence in the world. There is no effective democracy to oppose. Nor is it going to be more popular in the future, and ditto politics and religion. They never were popular but the acme of what little popularity they
ever had is, now, well in the past.
Henderson imagines this class interest of the elite is unconscious! It all arises from psychological and sociological forces; forces arising from PC religion, or from the anti-social sciences or the unnatural sciences.
A lot of wastage in any nation is owing to measures taken just in case of war, and the whole lot tend to foster war rather than to deter it. Free trade tends to crowd war out. But Henderson seems to welcome war. It is silly to call free trade a religion, but a bit less silly to call liberalism one, as it is a creed rather than mere phenomena. But state worship seems to have something nearer to the God worship of many religions, so religion is more to do with the immoral state.
Henderson is a fine one to write about the ignorance of others.
Smith was not quite right to say that the state was needed to do certain things. As the economist Milton Friedman said, anything the state can do the market can do better, but he overlooked that war was an exception.
Current AffairsPosted by Nico Metten Sun, September 20, 2015 12:51:34
The long anticipated 17th September final came. A lot of people thought that this would be the most important date of the year. The FED suggested that on this day they might final start raising rates from its 0-0.25% range by 25 basis points. And unfortunately, many people still take this committee of central planners seriously. They didn't raise, in case you wonder. And I doubt that they will be able to raise in the future.
The reality is that the FED is trapped. The keynesian claim that it is possible to print an economy to prosperity simply is not true, in other words it is a lie. This lie however is so sweet that many people just really want to believe it. But the difference between reality and the keynesian model is slowly getting so absurd that even the biggest dreamer cannot ignore it anymore. And so this Thursday was probably a big steps towards waking people up.
The fact is that the US government has to cook the books to even make it look like there is a mild recovery going on. The measure of inflation is constantly redefined, to make it look lower than it is. This is done for example by so called Hedonic Adjustments. If a product in the basket of goods that is suppose to measure inflation is getting more expensive, it is simply being replaced by another that has not gone up in price and that the government thinks is equally good. So if for example beef is in the basket and goes up in price, but chicken is not in the basket and does not go up, then beef is replaced by chicken in the basket. The idea is that consumers can then substitute chicken for beef and therefore do not experience inflation. So you better like chicken! A cheeky trick to get a lower inflation rate. And that is just one of them.
The unemployment rate is another important statistic that is manipulated. If someone hasn't found work in one year he is simply kicked out of the statistic as if he is no longer looking. That way the US now has an official unemployment rate of 5.1%. This, by historic standards is a really low rate that suggests that almost everyone who wants a job will find one. A good statistic to show how absurd this number is, is the labor participation rate, that means the rate of Americans in employment. That rate is at an almost historic low of 62.6%. How does that go together? The answer is that 5.1% unemployment is a fantasy.
Remarkable is that despite all the manipulation going on, the official growth of the US economy is only about 2% per year. That is of cause measured in GDP, which is a completely useless unit of measurement in itself. GDP does not measure the productivity of the economy. All it measures is the amount of money that is circulating. That means that if for example the government spends money, even borrowed money, it will show up as GDP growth, independent of how productive the money is spend. The government could employ people to dig ditches and others to fill them up again. The productivity of this work would obviously be negative, but GDP would still go up. GDP also goes up when unproductive asset prices like house prices go up. Amazingly, even though GDP can be manipulated, all the intervention by the government have not managed to get this statistic significantly up.
The FED is trapped. The interest rates in the US have been at 0% for over 80 month. In addition to that the FED has pumped over 3 trillion Dollars of printed money into the economy. And all that has done is to create official growth number of about two percent. The only effect it really had is the inflation of huge bubbles in bonds and equities. The reason for that is that the economy is simply at peak debt. Even at these low interest rates, people and companies cannot borrow more money, because they already have too much debt. The only people who can still borrow money are the financial sector who really gets this money for free and of course the government. Since they cannot kick start the economy again, the official line has been that as long as the stock market is OK, the rest of the economy cannot be too bad.
The trouble is that these bubbles are dependent on cheap money. In order to keep them inflated not only do interested rates have to stay as low as possible, they will soon have to start a new round of money printing. That is a problem, because in the long run, printing money will undermine the trust in the US Dollar. So far that has not happened, because the FED could make everyone believe that it has an exit strategy. Once the US economy is growing, it will hike rates again and buy back all the printed money.
But as I explained above, the US economy is very weak and based on debt. Therefore, if debt gets more expensive the rest of what looks like a productive economy will simply implode. If however they do not hike rates, then more and more people will realise that the exit strategy is not real. Therefore it will undermine the confidence in the Dollar. That way the US economy will also implode. So no matter what they do, it looks like that keynesianism has finally checkmate itself. With this month FED decision to rest rates at 0%, more and more people will realise that the economy is worse than it seems and that the FED is not really in control of the markets.
My guess is that they will not hike rates voluntarily. Eventually of course the market will force them to. There is a small possibility that they will raise rates by 25 basis point in the next few month, but even that is unlikely. The reason is that if they do raise rates, the economy will implode and they will immediately have to reverse the rise. That will make it look like they do not know what they are doing and undermine their credibility. And they cannot really raise rates without a really strong economy, because the US government is highly indebted too. That is the difference to 1981, when then FED chairman Paul Volcker raised rates to 20%. At that time the US government did not have a debt problem. Now they have one and if the economy implodes, tax revenues will go down and dept/GDP numbers will rise, making the debt situation of the government worse. If simultaneously interest rates go up, the government will quickly have to declare bankruptcy. And since the government has more guns than anyone else, they will get the policy that is best for them, that is low interest rates and lots of money printing. So hold on to your hats, there is an inflationary storm coming.
Current AffairsPosted by David McDonagh Mon, August 24, 2015 20:40:09
July 2015 in The New Statesman John
Gray wrote about “The Friedrich Hayek I knew and what he got right.” He has
written many books since he publically announced that he was no longer a
libertarian when he got to rather like New Labour in the 1990s. He has since
become an admirer of James Lovelock, and so become keen on Green ideas. None of
the books he has so far seem to be first rate. Many of them even seem
incoherent and rather like rushed hack writing, but the author seemed to find
his changes of mind rather productive.
criticise a recent New Statesman
article of his where he, once more, has attempted to assess the liberal idea
and why it was so inadequate. What seems to be truly inadequate is the account
that Gray has given in his articles and books on pristine or classical
liberalism. His latest account reviewed below is no better than what he said on
the topic in his many books but seems, nevertheless, to be worthy of comment,
as do Gray’s books.
sees Hayek to be of the “New Right” of the 1980s but he called it classical
liberalism at the time of his enthusiasm and that was the historic old left.
Gray had been a Labourite earlier, which sprung from a tradition that owed a
lot to the statist sea-change that began to emerge in the Liberal Party in the
1860s and had almost totally taken over
by 1900, before which we might refer to that Party as still largely classical
liberal as opposed to statist modern liberalism that was dominant amongst the
leadership, as well as amongst the younger members, by the great free trade
election victory in 1906, making it something of a swan-song for free trade;
though the actual leader, Henry Campbell-Bannerman, was still mainly a pristine
liberal. What revived in the 1970s was the pristine classical liberalism.
says that many of those libertarians, called such to distinguish themselves
from the statist modern liberals, said that Hayek only valued the state for
three things: national defence, law and order and opera. So Hayek was an
economist and philosopher that stood for a freer market, if not quite complete
free; where freedom was simply freedom from the state. But he was not an
anarchist, so Hayek did not see the state as an unnecessary evil. Like the
early Tom Paine, Hayek saw it as a necessary evil. Most classical liberals were
like that. With Locke, they realised that we could have civil society without
the state but they thought that because of crime, the state could be a boon. So
reluctantly, they thought that the state was a good thing but only owing to the
problem of criminal activity being almost certain to emerge. Since the liberl
revival that Gray joined, many have thought that the state is not so good at
countering crime. The anarchist contingent is a significant part of the
Gray feels that this pristine liberal paradigm
came to power in 1979 but the reality is that it was the Conservative Party
that came to power at that time and about half in that organisation did not
like pristine liberalism one bit, and the people who liked it, like Mrs
Thatcher and her mentor, Keith Joseph, they were flirting with it rather than
seeing it as the main thing; but many both in the Conservative Party as well as
in the mass media and the rival political parties rather feared they did take
it as the main thing. However, pristine liberalism was a factor. It has
remained one since.
feels it is important that Hayek was an Austrian, despite him becoming a
naturalised British subject. Hayek was born in Vienna, where opera was
all-important, in 1899. His father was a medical doctor and his mother came
from a wealthy family. Gray seems not to know that liberalism was in decline
from about 1860, and that, thereafter, statism was the new fashion. The
inter-war years would become nationalistic as a result, for, in practice,
socialism was mere statism thus usually more nationalistic. Socialists do not
always agree and protest quite the contrary but in 1914 quite a few such
socialists, including Prince Peter Kropotkin, largely shed socialism to support
the nation state they denied they had owed loyalty to for decades. This was a big shock to those who remained
anti-nationalist but they were a minority.
says that Hayek saw the civilisation he grew up in collapse, but it was the war
that removed the form of state, and liberalism had been ebbing for over fifty
years before 1918. Hayek’s homeland was on the losing side of the war but that
is a bit different from a collapse, as Gray imagines, or at least says, as it
was not owing to the sort of imaginary perennial fragility that he refers to;
which is a major Tory idea and one that looks clearly false to me. I think the Whigs were right that society is
far sturdier than the Tory meme has it, such that a great war, like the 1914
war, could cause it to collapse. War does change society but it is not likely
to end it.
was right to hold that civil society was almost perennial being in place long
before the rise of the state even if he errs, as David Hume made clear, on
social contract theory. The usual respect we show others in society, that we
peacefully pass them in the street, do not bother them if they do not bother us,
form what the sociologist might call the norms of civil society, and those
basic norms are not far off the liberal norms as well as being those of civil
society. As Adam Smith said, there is a lot of ruining in a great society. It
is not fragile.
says he first became interested in Hayek in the early 1970s. It was owing to
his interest in pre-1914 Vienna as much as in the rising paradigm of pristine
liberalism in the 1970s UK, he says. He met Hayek at the end of the 1970s and
asked him if he knew Karl Kraus, a famous journalist of Vienna before 1914. He
was told that Hayek had seen him but that he did not really know Kraus.
says that Hayek had independence of mind and this allowed him to face up to a
lot of opposition and criticism including big changes of fashion. Gray feels
the paradigm of Woodrow Wilson’s national self-determination imposed by the USA
after the war on Europe was one that posed problems for Hayek for the rest of
his life. He died in 1992. But he never could see how liberal values got on
with tribalism, says Gray.
fall of Wilson, the USA, wisely, went back to political isolationism [with free
trade, the liberal meme on international relations].
ideas on evolution and on the ideal liberal constitution were not germane to
that main problem, Gray says. Hayek had dropped his early socialist ideas owing
to the economic calculation argument [eca] put to him by Mises. This seemed to
Hayek and many others to be an effective refutation of socialism so he ceased to
be a socialist. He afterwards adopted liberalism, and Gray said he made it into
a sort of scientism; this is most ironic as Hayek was a major critic of
scientism, Gray openly admits. It was held by Hayek to be the inept attempt to
apply science to the human world. It was an example of Hayek often called a
mere pretence of knowledge when he was looking at the socialists. However, Gray’s
account looks weak there, as it so often does elsewhere.
sense did Hayek lose the debate with Keynes? Did Keynes win it? Keynes rejected
equilibrium but, as he was a coward, he did it by picking on Say’s Law, which
few had heard of, and he gave an inadequate account of it, and Keynes also gave
an inadequate account of the orthodox economists in general, calling them “the
John Hicks, who thought he was going over from Hayek to Keynes and who won the
debate by a de facto rejection of
both of them, had found fault with the fact that Hayek scotched the meme of a
self-adjusting economy by ignoring it with an hypothetical lag owing to
malinvestment that Hicks held was unrealistic. The Hicks version of Keynes,
adopted by all the textbooks, had the meme that Keynes was out to dump at its
heart viz. equilibrium. The equilibrium so obvious to Hicks that he never seems
to have realised that Keynes was out to reject it, was, of course, just an account
of self-adjustment by the market.
is lost on John Gray. It was enough for him that Keynes rather than Hayek or
Hicks was the nominal victor. Gray has most likely not read Keynes’ 1936 book
anyway. More oddly, it would seem that
Hicks never did either.
was rejected as an economist after leaving the LSE [owing to irrelevant personal
reasons, rather than to economics] as a result. At Chicago, he was allowed in
only as a moral philosopher. A version of Keynesianism had won, Hicks version,
but it was not anywhere near what Keynes had wanted. He wanted to reject market
adjustment but Hicks largely retained that. Keynes had wanted it to be the rule
that the market did not clear, as had Malthus tries to defend against Ricardo
in the first decade of the nineteenth century but Hicks innovated a version
that suggested that Keynes should have called his book The Special or
Particular Theory rather than his actual title of The General Theory of Employment, Interest and Money (1936).
I see no
sign that Hayek ever believed that he had lost a debate, intellectually, to
either Keynes or to Hicks. Hayek saw the LSE go over to what was called
Keynesianism, of course.
did go somewhat statist owing to emotional pressure, I suppose, but not ever
did he become Hicksian or, still less, Keynesian. Keynes truly remained out on
a limb as regards his hated equilibrium, that remained as strong as ever, even
if a version of Keynes was adopted, and what was called Keynesianism was
granted lots of rather incoherent lip service based on supposed rejection of the
still largely unknown Say’s Law. Indeed, Keynes caricature of that was accepted
completely by the 1950s.
Hayek did recommend a safety net and it was the state’s safety net that alone
caused the mass unemployment of the 1930s, not the supposed lag that malinvestment
caused that somehow suspended Keynes hated equilibrium, as Hayek had held. The
unemployed adjusted to the dole rather than to the market. We might say they
joined the sinecure section of the state sector, only they did not, as in the late
USSR, pretend to work. Indeed, the few who took a black market job pretended
they were not working.
took the economic calculation argument [eca] from Mises but later found it in a
few nineteenth century authors like Baggage, so Hayek made no pretensions to
being “most original” in the knowledge finding function of the price system, as
Gray has it. But Gray knows the eca, if not all its implications. However, he
nevertheless is still silly enough to say it also applies to the free market.
“The trouble is that it also applies to unfettered market capitalism. No
doubt markets transmit information in the way that Hayek claimed. But what
reason is there to believe that – unlike any other social institution – they
have a built-in capacity to correct their mistakes?”
applies to unfettered market, says Gray, yet they do find viable prices as Hayek
said too. That is “no” yet also “yes” too; or P&-P too. Gray is being quite
then asks how can the market self-adjust, unlike any other institution [is
there a tacit “except the state” assumption there?] overlooking that the answer
is by the ever adjusting price system. The market is dynamic as it is always
adjusting by the price system.
History itself supports no supposition or
obfuscates prices? How? Gray has adopted mere bluff from backward Keynes. There
never was any irrational exuberance but there has been exuberance but it has
not stopped the market from clearing. Why should it?
is content to say, to the backward readers of The New Statesman, founded by backward Keynes himself, that:
hardly supports the supposition. Moods of irrational exuberance and panic can,
and often do, swamp the price-discovery functions of markets.
considering how to overcome the Great Depression, Hayek opposed Keynes-style
fiscal stimulus for the same reason he opposed monetary expansion of the sort
later advocated by his friend the American economist Milton Friedman
(1912-2006). In attempting to generate recovery by macroeconomic
engineering, both monetarism and Keynesianism required a knowledge of the
economy that no one could possess. Unlike monetarism – with which it has sometimes
been confused – the Austrian school of economics that Hayek promoted insists
that the quantity of money cannot be measured precisely, and that
expanding the money supply cannot reflate the economy in a sustainable way.”
adopt aspects of Keynes, as did Hicks, but they did not reject what Keynes
detested: equilibrium. Gray continues:
“For Hayek, the causes of the Depression lay
in earlier central bank policies of cheap money, which resulted in large-scale
misallocation of capital. Because no central authority could grasp the shifting
pattern of relative scarcities and prices, only the market could determine the
right allocation. Accordingly, believing that misguided investments had to be
liquidated, Hayek argued in the 1930s for policies that were more
contractionary than those that were actually pursued. The task of government
was to get out of the way and let the process of adjustment run its course.”
was right there but he thought a lag might be created but he erred there as the
market is a non-stop process of adjustment; Gray says it yet he also wants to
deny it too; again P&-P too.
to see how the market adjusts but he still perversely wants, or he writes as if
he wants, the state to stop it. Then he, rather stupidly, denies that the
market even can adjust.
“If they had
been adopted while the crash was under way, Hayek’s prescriptions would have
made the Depression even worse than it proved to be – a fact he later
He did not
admit anything like that, which I can recall. New buyers would have come in and
the readjustment would have been fairly rapid.
thought the depression would have been worse, if not for the state, why did not
Keynes win him over? Anyway, it seems that the state prevents rather than aids market
readjustment and that stagnation is alien to it. As Gray says of Hayek:
“But he never accepted Keynes’s core insight
that large-scale economic discoordination could be the result of the workings
of the market itself. For him it was always government intervention that
accounted for market disequilibrium. More sceptical as well as more radical in
his turn of mind, Keynes questioned the self-regulating powers of the market.
His work on the theory of probability disclosed insuperable gaps in our
knowledge of the future; all investment was a gamble, and markets could not be
relied on to allocate capital rightly.”
the market is fine but the price system is clear enough there as a
self-adjustment process to fresh conditions, so any serious questioning might
have led Keynes to realise that. It might also lead Gray to do so too. He
“There were booms and busts long before the
emergence of modern central banking. Left to its own devices, the free market
can easily end up in a dead end like that of the 1930s.”
market does not stagnate. The dole was needed for mass unemployment to muster
in the mass urban economy, and it is true that Hayek did go statist enough to
agree that the masses would need a safety net, the very thing that stops the
market from clearing. Freedom or liberty means we all need to be responsible
and for us all to have savings, that Keynes repeatedly made a very poor case
against, for some savings are vital to tolerate the intrinsic self-adjustment
of the market.
feels that Keynes knew more about markets than did Hayek, as Keynes was a
practical and successful investor for his college. Indeed, he claims that Keynes was one of the
most successful investors in the twentieth century! So he knew about the
uncertainty of markets in a way that Hayek did not, says Gray. He was aware of
how the misguided economic policies might upset society in a way that Hayek did
not, for Hayek ignored all those hazards. Here Gray seems to have lapsed into
imagining that it is Hayek advocating state control by political policy rather
that Hayek’s blindness on politics was all too clear when he advised Margaret
Thatcher to cut the state sector, that Gray calls public services, and to cut
inflation so that the state budget might be balanced. This was exactly as he
had advised in the 1930s, says Gray. He told Gray, in private conversation,
that Trade Union power might be broken if the state made cuts. Gray thought Hayek was indifferent to mass
unemployment that then, in the 1980s, stood at over three million. Gray does
not realise that cuts might get rid of mass unemployment, as he never seems to have
seriously thought much about such problems. Instead, Gray said that cuts would
increase unemployment. But it is only the dole, paid for by the state from taxation,
which can do that.
“Fortunately Hayek never had any influence on
Thatcher’s policies. (Her chief economic adviser in these years was Alan
Walters, a Friedman-style monetarist.) Equally, and perhaps also happily,
Thatcher had no understanding of Hayek’s ideas.”
she haply never read the stint at the end of
The Constitution of Liberty (1960), where Hayek explains “Why I
am not a Conservative” for he rejects because conservativism rejects
progress, says Gray. “Unlike Hayek, Thatcher understood and accepted the
political limits of market economics” Gray says, but Gray and Margaret Thatcher
never saw how damaging the state was to society. The main fault with Hayek is
that he too had too much tolerance for backward politics. Politics is perverse
wastage that needs rolling back, or cutting out completely, by tax cuts and
went out of fashion around 1860 but Gray imagines it actually collapsed, a very
Romantic idea that is utterly unrealistic, given the nature of civil society.
War would not have set liberalism back so much had liberalism remained the
fashion, but socialism/collectivism was, by then, the fashion. War did end the
empire that Hayek grew up in but nor was that particularly liberal in itself:
no empire ever, quite, can be. Civil society, that is the basis of liberty, is
not one whit fragile and it is very stupid indeed to imagine that it is fragile.
No wonder they called the Tory Party “the stupid party”. This idea that society
is fragile is about as unrealistic as one can get about civil society. But Gray
simply does not see the pounding the backward state hands over to society every
single day, thus showing it to be very durable.
But Gray is
right that Hayek badly over-rated the law. It never could be the basis of civil
society as so many, with Hayek, imagine. Like the state itself, law is at the
periphery of society. Nor can it really protect liberty from the state. Gray is
right there. Indeed, statutory law is a
tool of despotism and privilege. Liberalism
is about repealing illiberal laws rather than establishing new statutory laws.
values, if fostered amongst the public, can see off war. Private property is a
problem solver. The state, by contrast, is a trouble maker. So the less we have
of the state, the better.
Why Gray imagines the political
entity of the Austro-Hungarian Empire kept politics at bay is not one iota
clear. Gray is right that the European Union is not going to aid liberalism as
it is a warmongering pact, despite the pretense it has of being for peace. The
EU is out to be top dog superstate, but it is taking its time. It is almost as slow as the progress towards
full liberalism itself. But all societies, even the backward late USSR, had the
liberal civil society in their practical everyday life. In any society most
members respect the liberty of others. But also all allow the state to scotch
liberty at will; that privilege granted to the backward wasteful state by the
people is the main problem. They give up this liberty to form state privilege by
suspending normal moral values in its favour. As Edmund Burke said: “The people never give up their
liberties but under some delusion.” The
delusion here is that the state is a boon. Even John Locke thought so.
to reproduce Popper’s attack on Hayek and Michael Oakeshott saying that Hayek’s
spontaneous order as “rubbish” is no explanation of its faults whatsoever but
Gray says it is exact!
However, Gray witnesses civil society every
day in which strangers in the mass urban society freely pass him in the street,
which is done as part of what Hayek would say is a spontaneous order. My guess
is that Gray has no case against civil society; nor any good case against
of fashion away from liberalism towards socialism after 1860 seems to have been
flimsy, though it was aided by some haziness amongst the liberals as well as some
youthful charismatic dash as well as sheer ignorance amongst the rising statist
liberals, like Joseph Chamberlain and Charles Dilke in the UK’s Liberal Party.
The pristine liberals were aging and pragmatic anyway. That there was a generational difference
greatly aided the change of fashion. Gray
makes the quip that there is nothing liberal about the mafia, and that is quite
right but that is also true of the state too, but despite Chamberlain’s talk of
public service it was more like rule than
service that the new man management and more state control of the new fashion was
Gray has the
idea that a mafia would arise spontaneously, even though he also wants to be
sceptical about that meme from Hayek, to say it was exactly rubbish in fact. .
However, the culture developed over a long process of real full privatisation,
designed to shed government and all government policy rather than as a mere new
way to further state policy by political use of the market, as that called
privatisation has been since the 1980s, would result in security services that
would have had lots of time to crowd out the mafia problem.
Spencer was right that there was a social movement towards liberalism before
1860 but he also saw the fashion change towards socialism later on too. He
argued against socialism. But he ironically had a holistic meme that the
socialists used to even a greater extent than they used Marx. Just look at
almost any Jack London novel to see a socialist in love with Spencer. William
Hurrell Mallock saw such faults in Spencer, who later admitted to Mallock that
he was too collectivist, though he never met Mallock. But pristine liberalism
lost out to the new fashion of statist liberalism; and to socialism generally.
It revived a bit in the 1970s when Gray joined it. But Gray always did love
errs left right and centre in his rather silly ideas about alternative economic
systems and choice. The USSR never was non-capitalist, for example. An increase
of the state ownership is not an alternative economic system but the
enlargement of a sort of quasi-dole or semi-dole; the rise of where, in the
late USSR, they said the workers in the state sector pretended to work and the
state pretended to pay them. Many thought that in the UK this was “mixed economy” but in reality it was just an
over-taxed market economy that supplied some job security. The mixed economy is
a mixed up idea. There is only the market economy. The state sector just means
a myth, not a real rival to the price system, and the late USSR did not even
claim to be communist but rather it claimed to be socialist, that Lenin said, a
few times, was state capitalism. It
would be clearer to just call it capitalism. But it was anti-liberal. Gorbachev
tried to reform it but Yeltsin got rid of it. No collapse in sight.
The idea that the Afghan war brought it down
is an example of Gray’s inability to judge actual events. There is no choice of
economic systems. It is either capitalism or capitalism. But we can always have
a bit more of the wasteful state.
Hayek and Spencer had a lot in common as Gray said. They were both liberals.
was capitalist, if statist too, under Mao. Deng Xiaoping simply freed it up a
bit. Pristine liberalism will free it up yet more.
banks go under would not have been all that bad from liberal point of view. The
fresh banks that would have emerged to replace them would have most likely be
in better shape today had the state allowed that to happen back in 2007, as Hayek might well have recommended.
on the fairness of the market. He thought it was wise to say it is unfair, but
few people in the larger society have ever thought that. Most people think it
is fair enough, but no end of fools in colleges think they know better; so do
schoolteachers but not most students in the colleges or most pupils in the schools,
even though they may be usually a silent majority. Hayek thought that the idea
that the market was unfair had something to it, but it looks to be merely a perverse
all his silly cynicism and pessimism still has not realised how unpopular the
college/mass media sacred cow or ideal of democracy has always been, and always
will be. The “anarchic energies of
global markets” clearly serve the public way better than democracy ever