Oh God! He's Off On One Again, Please Someone, Tell Him How it Works...

I listened, no, I couldn't avoid hearing, Brown banging on again in Davos. The BBC have an article here.

Basically he is saying that we need a whole load of new 'regulations' that set out how we should all deal with each other, and that all the old models have failed.

Now listen you gormless git, the old ways have not, repeat not failed. What's failed is government. Your government for one. You have failed to uphold the basic responsibilities we have entrusted you with. You have failed to run sound money. You have failed to keep taxes low. You have failed to properly supervise banks (NOT regulate - simple supervision) of the most dangerous, irresponsible and incompetent institutions in free market capitalism. You failed to stop meddling in things that are beyond your comprehension. You have failed to engender free trade, resorting as ever to lefty mercantilism. You failed to provide moral leadership. You failed to uphold the rule of law.

All we need you to do is do what has always worked. There is no need at all to invent new ways to control us. We are all free men. We can sort out our own lives as long as the government, your government stops meddling and just does the things that are your responsibility.

Update

Seems that I am on the same sort of wavelength as the Adam Smith Institutes Dr Eamonn Butler.

Green Tory's? How Exactly?

Conservatism, well my sort of compassionate free market anglo saxon libertarianism, is green. I know that'll wind many of you up, but let me explain:-

1. The Trabant. The product of leftyness. Crap car. Really a sort of death trap pollution machine. Still produced in the 1990's. No significant development for 30 years.

2. The Ford Cortina Mk 1 and The Ford Mondeo. The lineage of the current Mondeo can be traced back to the Mk1 Cortina - the first true repmobile / family car. The Cortina was launched in 1962 and ended its production run as the MK4 version in 1982. Replaced by the Sierra which in its turn was replaced by the Mondeo. The modern Mondeo is efficient, safe, recyclable, low emmitting, economic, reliable (my 1996 version is still going strong at 160,000 miles with no major component change - cross fingers) engineering marvel. Luxury and comfort at low cost. The product of capitalism.

So, working on the evidence it is clear that capitalism conserves resources. It developes efficient products and solutions. That's the point efficient. Driven by competition and ingenuity.

Banks? They are good for what, exactly?

Classic snippet from a Money Marketing leader that I cannot resist sharing with you:

No-one is phoning their bank to get an opinion as to whether their IFA will survive. As any adviser will tell you, it’s the other way round.

Ha! Ha! Ha!

Lay off State Workers and Save Money

A headline I read somewhere recently, said that public spending would rise this year since the tax take from employment taxes would reduce as layoffs increased and consequentially benefits payments would increase.

In the recession of the early 80’s unemployment rose to at least 3 million. These mostly represented redundancies from the old model state supported industries. These industries were inefficient, overmanned and produced products that no-one wanted to buy, or simply rationed supply to sustain employment, hence suffering endemic producer capture. In other words the jobs occupied by the redundant workers were not wealth creating jobs at all. The workers were already redundant, they just didn’t know it.

The result of this forced (and painful) restructuring was that most of the UK’s manufacturing sector and private business generally became efficient and not over-manned.

This time the same failed quasi socialist policies have created the same approximately (probably at least) 3 million non-jobs in the direct public sector. The client state has been transferred from non-jobs hidden in inefficient uncompetitive industrial organisations to equally, or more probably even more inefficient and overmanned, direct public employment. The workers are still not gainfully employed, and again they just do not yet know this.

This time, laying off these already redundant public sector employees will not increase the visible costs to the state. It could well reduce them.

If we assume that each of the 3 million public employees is paid at the NAE rate of approximately £24,000 per annum and that total on-costs are factored at 3* times pay the total costs to the taxpayer is £216 Bn. Once these workers are laid off we can assume that the total benefits may well equal NAE plus an administration cost of say 25%. This gives a cost of £90 Bn. In other words a saving of £129 Bn. per annum. (I accept that these figures are approximate, but it is the case that the costs of benefits are less than the costs of employment).

Furthermore many non-jobs are sustained on the taxpayers purse through the vehicles of alleged charities and Quangos. More of the same savings are available here.

Every way I look at this current crisis I see two complimentary factors. One massive over-employment in state bureaucracies and their associated tame charities and Quangos funded by confiscatory levels of taxation which deprives private individuals and business of spending power combined with a complete absence of responsible fiscal management resulting in massive increases in money supply, that is inflation.

If these factors cause the problem, the correction of them will by definition cure the problem. That is massive reductions in public expenditure brought about by releasing millions of state employees to find more productive wealth creating jobs in private business resulting in massively lower taxes on private business and individuals.

* I realise that the income tax notionally paid by public employees nets out but I have added back a factor of 30% for pension costs.

Enemies of Freedom and Markets

Another excellent piece from the Mises institute. Will expand this post later.

Later:

Reading the above took me to a piece by Mises himself. I quote:

There is no use in arguing with people who are driven by “an almost religious fervor” and believe that their master [Keynes] “had the Revelation.” It is one of the tasks of economics to analyze carefully each of the inflationist plans, those of Keynes and Gesell no less than those of their innumerable predecessors from John Law down to Major Douglas. Yet, no one should expect that any logical argument or any experience could ever shake the almost religious fervor of those who believe in salvation through spending and credit expansion.

The highlighted last sentence says it all really. Why, just why does Brown and New Labour think it'll work this time, when all the evidence of history denies it?

'Oh My Good Gawd' - Arthur Daley

Quote from BBC website from Andrew Marr Show:

"Speaking on the same programme [as Ken Clarke], Lib Dem leader Nick Clegg said there was a "crisis of confidence in Britain PLC". Nick Clegg: 'We must retain optimism'. He said the economic model of the past 20 years, driven by minimal regulation and subservience" to financial markets, had been swept away and only the Lib Dems could offer the radical changes needed to address these problems. "The future is going to look dramatically different than the past in terms of how we run our economy," he said.

What a complete plonker. Listen and learn Cleggy.

1. Financial regulation has become over-weening and burdensome. It looks, is implemented and managed like nationalisation lite. The FSMA 2000 is the problem, not the solution.

2. There is no need to 'run' the economy. The economy can 'run' itself. As long as it gets the rule of law, government as umpire not player, sound money, the right to enjoy private property, freedom.

3. The 'crisis in confidence' is in inept and nannying and interfering government.

4. We, the people, just do NOT need YOU to RUN anything.

Bugger That...

Excellent Matthew Parris piece in Sunday Times here.

I agree with all of it except the last paragraph. There absolutely no reason at all why the UK should slip quietly into the second league of nations. The 'managed decline' so beloved of post war civil servants.

All countries can avoid this. All of them. But we are better placed than most with our outward looking history and a proclivity for trading.

All it needs is the energy, and the absence of politicians and crucially the removal, or at the very least the severe reduction, of the welfare state. If people have some fear they will try. Pay people to do nothing and they will do nothing, it's rational and I for one would join them if the pay was high enough. So would you. I'd get bored though and go and do something. Now, when I do that something, I am coerced into paying tax at confiscatory levels to support (I calculate) about 12m people either doing bugger all or not more than 25% of what they are capable of. Remove that dead weight overhead and our costs would reduce and we will be able to compete with anybody. Our workers (anyone at any level who turns up and does something productive, whether managing director, dustman or even a merchant banker) are as good as anybody's and work just as hard, but those in the private wealth creating sector are burdened with a huge overhead to support.

Managed decline. Pah!