Salon vs Hayek & Mises

A tweet from Tom Paine brought me to a Salon article by Tom Watson: Don’t ally with libertarians: Ideologues co-opt an anti-NSA rally

Watson quotes an earlier, 'must read' Salon article by Michael Lind :

Friedrich von Hayek, who was, along with von Mises, one of the patron saints of modern libertarianism, was as infatuated with the Chilean dictator Gen. Augusto Pinochet as von Mises was with Mussolini.

My initial reaction was the same as Tom's: LOL. But I hadn't heard these accusations before, so I couldn't resist some digging.

Lind's claim about Mises was staggeringly dishonest, as Jeffrey Tucker explained at the time:

The passage from Mises as selectively quoted:

It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.

And that’s where Lind ends it, failing to add Mises’s actual conclusion:

But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.

The passage was part of Mises’s book that was published in 1927, just after Mussolini took power. Mises could easily discern that many people regarded Fascism as a savior, and this passage is merely acknowledging that common view. This view lasted for many years. For example, fully six years later, the New York Times Magazine published (March 19, 1933) a massive tribute to the glories of Professor Mussolini ...

The NYT was hardly alone in singing hymns to Mussolini. Nearly the whole establishment was fooled by this blowhard.

Mises, on the other hand, was not fooled. He was a prophet in understanding the evil of fascism – and six years before everyone else was still heralding the glories of this Italian FDR (which is how people saw Mussolini). Yes, evil. That’s the word Mises uses, which you can easily see from the entire section, which you can and should read. The Fascists and Communists use the same “unscrupulous methods…. Still others, in full knowledge of the evil that Fascist economic policy brings with it, view Fascism, in comparison with Bolshevism and Sovietism, as at least the lesser evil. For the majority of its public and secret supporters and admirers, however, its appeal consists precisely in the violence of its methods.”

It seems there's a slightly stronger basis for Lind's claim that Hayek respected Pinochet, but this too is disingenuous. Wikipedia has a section devoted to Hayek's views on Pinochet's Chile

Hayek is translated from German to Spanish to English as having said, "As long term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. [...] Personally I prefer a liberal dictator to democratic government lacking liberalism.

Is this really so controversial? Democracy, famously, is "two wolves and a sheep voting on what to have for dinner". It is the tyranny of the majority. Strength of numbers does not imply moral weight. Can we conceive of a democracy so brutal that Salon would not support it?

Google also turned up an article by George Reisman, setting Pinochet's legacy in context:

On Sunday, December 10, General Augusto Pinochet of Chile died, at the age of 91. General Pinochet deserves to be remembered for having rescued his country from becoming the second Soviet satellite in the Western hemisphere, after Castro’s Cuba, and, like the Soviet Union, and Cuba under Castro, a totalitarian dictatorship.

The General is denounced again and again for the death or disappearance of over 3,000 Chilean citizens and the alleged torture of thousands more. It may well be that some substantial number of innocent Chilean citizens did die or disappear or otherwise suffered brutal treatment as the result of his actions. But in a struggle to avoid the establishment of a Communist dictatorship, it is undoubtedly true that many or most of those who died or suffered were preparing to inflict a far greater number of deaths and a vastly larger scale of suffering on their fellow citizens.

Their deaths and suffering should certainly not be mourned, any more than the deaths of Lenin, Stalin, and Hitler, and their helpers should be mourned. Had there been a General Pinochet in Russia in 1918 or Germany in 1933, the people of those countries and of the rest of the world would have been incomparably better off, precisely by virtue of the death, disappearance, and attendant suffering of vast numbers of Communists and Nazis.

The whole article is well worth reading.

Reisman concludes:

General Pinochet was thus one of the most extraordinary dictators in history, a dictator who stood for major limits on the power of the state, who imposed such limits, and who sought to maintain such limits after voluntarily giving up his dictatorship.
...
Dictatorship, like war, is always an evil. Like war, it can be justified only when it is necessary to prevent a far greater evil, namely, as in this case, the imposition of the far more comprehensive and severe, permanent totalitarian dictatorship of the Communists.

I'll leave you with an image tweeted by Daniel Hannan amidst the ridiculous furore over Ralph Milliband:



... and these fine words from Russell Taylor:

Eric Hobsbawm, the acclaimed Marxist historian and friend of the Miliband family, claimed that the tens of millions killed by communist regimes would have been justified had the Red utopia been realised. This astonishing admission should have lost Hobsbawm his membership of the human race, but his reputation was unharmed – at least in left-wing circles. A similar sentiment from a Nazi sympathiser would have been rightly taken as proof of their depravity, but from a Marxist it’s nothing to get excited about. One can only conclude that in the topsy-turvy world of socialism motive is everything. There is something so noble about the egalitarian ideal that nothing committed in its name, no matter how abominable, can call its validity into question.

Topsy-turvy indeed. I stand for voluntary relationships, and sleep soundly.

Have legislators gone mad?

From the Institute for Energy Research:

The Drax plant in Yorkshire, England is one of the biggest coal-fired power plants in the world with an almost 1,000 foot-tall flue chimney, 6 boilers, and 12 very large cooling towers. It consumes 36,000 tons of coal each day, providing 7 percent of the country’s electricity. Starting next month, the plant will be converted to burn millions of tons of wood chips a year, costing £700 million ($1.085 billion).

Most of the wood chips will travel 3,000 miles across the Atlantic Ocean, coming from trees downed in the United States. Drax is building 2 plants in the United States that will turn the wood from trees into chips that can be transported by ship to Yorkshire and then hauled to the power station by railway trucks. In order to prevent spontaneous combustion, the wood chips must be stored in domes where the humidity is controlled before they can be pulverized into powder. (Wood is 1,000 times more prone to spontaneous combustion than coal.)

Despite the fact that coal is the least-expensive source of electricity generation in England, the owners of the Drax plant realized that a recently instituted carbon tax on fossil fuels would put them out of business if they continued to burn coal eventually making their electricity become twice as expensive. The political incumbents in Britain decided last year to give any coal-fired power station that switched to ‘biomass’ the almost 100 percent ‘renewable subsidy’ that owners of onshore wind farms get.

The authors ask: have legislators gone mad?

With credit to Sir Bernard Ingham, we might recast that as: cock-up or conspiracy? Are our legislators so utterly inept that they think converting Drax to burn wood chips is a good idea, or are they so corrupt that they knowingly put the corporate interests of the 'green' lobby before the interests of British citizens.

I have a hard time believing that the ministers are quite so incompetent, so I must assume they are corrupt. MPs at large may well be so stupid as to think this policy is sane. Or, more likely, they haven't bothered to consider the question at all.

Whichever way you look at it, it's a damning indictment of our representatives, and the fools who elected them.

Self-determination in the Falklands

BBC News:

The people of the Falkland Islands have voted overwhelmingly in favour of remaining a UK overseas territory.

Of 1,517 votes cast in the two-day referendum - on a turnout of more than 90% - 1,513 were in favour, while just three votes were against.

Referendum results don't get much more decisive than that. 99.74% of Falkland Islanders want to remain British - even more than the 98.48% who made that choice in Gibraltar in 2002.

Argentina's response?

Argentine President Cristina Fernandez de Kirchner has maintained that the Falkland islanders' wishes are not relevant in what is a territorial issue.

So far, so predictable. But what about the response from a government that claims to respect the principle of democratic self-determination?

we take note of the results of the recent democratic referendum in the islands, where the residents voted to retain the islands’ current political status as a British overseas territory. The residents have clearly expressed their preference for a continued relationship with the United Kingdom. That said, we obviously recognize that there are competing claims. Our formal position has not changed. We recognize the de facto U.K. Administration of the islands, but we take no position on sovereignty claims.

That's Victoria Nuland, speaking on behalf of US Secretary of State John Kerry. The full transcript and video is available here.

The US has no qualms about taking a position on sovereignty claims elsewhere, in situations where the wishes of the local residents are far less clear-cut.

Nevertheless, as @GittleBos notes, the US position seems consistent with their Monroe Doctrine, established in 1823:

The occasion has been judged proper for asserting, as a principle in which the rights and interests of the United States are involved, that the American continents, by the free and independent condition which they have assumed and maintain, are henceforth not to be considered as subjects for future colonization by any European powers.
...
We owe it, therefore, to candor and to the amicable relations existing between the United States and those powers to declare that we should consider any attempt on their part to extend their system to any portion of this hemisphere as dangerous to our peace and safety. With the existing colonies or dependencies of any European power we have not interfered and shall not interfere. But with the Governments who have declared their independence and maintained it, and whose independence we have, on great consideration and on just principles, acknowledged, we could not view any interposition for the purpose of oppressing them, or controlling in any other manner their destiny, by any European power in any other light than as the manifestation of an unfriendly disposition toward the United States.

It is of course right for nation states to look after their own peace and safety.  Indeed, I would prefer if they did that and little else.  But it is 6361 miles from Port Stanley to Washington DC - far more than the 3663 miles from London or the 351 miles from Toronto.  If the British Empire posed a threat to the peace and safety of the United States, an attack from islands in the South Atlantic was unlikely.  Today it is inconceivable that the United Kingdom would mount an unprovoked attack on the US, but if it did, a nuclear submarine off the US coast would provide a better attack platform than RAF Mount Pleasant.

The British Government has never 'oppressed' the inhabitants of the Falkland Islands, nor sought to control their destiny against their will.  A British expedition reached Port Egmont, West Falkland, in 1765 and "took formal possession of it and of 'all the neighbouring islands' for King George III", apparently unaware of an existing French settlement, Port Louis, on East Falkland at Berkeley Sound.  The French settlement was handed over to Spain in 1767 and renamed Puerto Soledad.  In 1770, Spain attacked Port Egmont with a force of with five armed ships and 1400 soldiers, forcing the British settlers to withdraw.  The attack risked war with Britain, and lacking French support the Spanish consented to the re-establishment of the British settlement in 1771.  Without good economic reasons to stay, the British and Spanish withdrew from their settlements in 1776 and 1811 respectively, but neither party relinquished their claims to the islands.

In 1816 the state that was to become Argentina, The United Provinces of the River Plate, declared independence from Spain. In 1820 they laid a claim to the islands, but it wasn't until 1823 that they made any attempt at settlement. Their chosen man, Luis Vernet was a merchant from Hamburg with purely commercial interests, and he sought British permission for his venture from the outset. Vernet's claim to a monopoly on seal hunting, however, was disputed by both Britain and America. In 1831 Vernet attempted to enforce his monopoly by seizing American ships, prompting a raid by the USS Lexington that destroyed the settlement. In 1833 Britain reasserted sovereignty, and the islands have been in British hands for 180 years (except for 74 days in 1982). Such are the facts as I've been able to determine them from Wikipedia.

The British settlements from 1833 onwards did not represent the "future colonization" opposed by Monroe's 1823 declaration. It's not at all clear, from what I've been able to discover, that the newly independent Argentina could rightfully inherit Spain's claim to the islands, but that claim was disputed in any case.

In practice, the Monroe Doctrine has less to do with the benevolence of the American people towards the "free and independent" nations of South America, and more to do with the interests of a powerful minority of US citizens who benefit from the right of unilateral intervention within their "sphere of influence".

Even so, considering how little influence Britain gains from possession of The Falklands, I doubt the Americans feel their interests are directly threatened. It is true that the US has a large hispanic population, but they care more about Cuba, Mexico, and Puerto Rico than Argentina. Most likely, America's refusal to acknowledge Britain's sovereignty is based on a desire to appease South American governments, who represent potential markets far larger than our own.

The notion of self-determination is an interesting one, which I will have to return to in a future post. How long does a population need to be established before competing claims are dismissed. Where are the boundaries drawn? Later in this century, if a combination of immigration and procreation pushes certain British cities to a Muslim majority, would they be entitled to declare independence? What about the rights of the large minority who may wish to remain British? All interesting questions.

But this post has focused on the Falklands and the US attitude towards them. The most interesting question here is why Tony Blair supported George W's "war for democracy" in Iraq without first securing recognition of the rights of the British inhabitants of the Falkland Islands.

Time to give up?

Over at The Last Ditch, Tom Paine is in a despairing mood:

the British public frankly deserves servitude because it does not value freedom. I am now bitterly convinced that nothing but the crushing misery of totalitarianism will wake them. Provided that their freedoms continue to be removed slowly, slice by salami slice, they will probably claim even then that the state is their friend.

Schadenfreude is not my bag, but I would find it hard not to smile at the thought of them in some future gulag, were I not likely to be sharing their cell. They are a sad shaming remnant of a once great nation.

When I started this blog from Russia, I was angry with British politicians and felt sorry for the British people, thinking them ill-served. Now that I live amongst them again, my views have reversed. The British masses are a shiftless, ignorant, nastily-envious bunch who believe above all in the arboricultural nature of money, the desirability of the free lunch and the infallibility of the state. I now feel sorry for those few politicians who would like to do right, but are restrained by their electorate's vile inclinations.

Though I haven't yet accumulated Tom's wealth of experience, what he says here rings true.

Even so, I'm not quite ready to give up.

I'm conscious that I don't meet a representative sample of the British population in my daily life, nor do I see the British public accurately reflected by the media. The views of vocal minorities are given undue prominence, and the 'ordinary people' selected for display by the BBC are anything but.

Our electoral system was always vulnerable to what we have seen - a gradual slide to the left, with a small number of voters in marginal seats deciding the course of each election.

But there is some hope. Norman Tebbit often writes about the millions of voters who have gone missing. Unimpressed by the options on offer, they simply stay at home.

We need politicians who will unapologetically set out a radically different alternative, as Thatcher once did. Sometimes people need to be led. Speak plainly and honestly, and the public may yet awake from their social democratic slumber.

Today I think UKIP are our best hope. We'll see in 2014 and 2015. Losing Scotland would probably help too, though I doubt they'll have the courage to go it alone.

The EU-funded Duchess

There's plenty of serious stuff on my list of things to blog about, but I can't really face it, so here goes ...

Last night I saw The Duchess for the second time. And I confess that for the second time, I enjoyed it. I guess I'm a sucker for period dramas.

There was a sinister surprise in the credits, though.  Apparently the film had been funded by the EU's "MEDIA film support programme". A 2009 article on their website proudly elaborates:

Seven films funded by the EU's MEDIA film support programme have been nominated for Oscars at this year's Academy Awards: Der Baader Meinhof Komplex (Germany, Uli Edel), Entre les murs (France, Laurent Cantet), Waltz with Bashir (Israel/France/Germany, Ari Folman), Happy Go Lucky (UK/Mike Leigh), The Duchess (UK/France/Italy, Saul Dibb), Slumdog Millionaire (UK/US, Danny Boyle) and the award-winning documentary, Man on Wire (UK/US, James Marsh) (for synopses, see annex).

The EU's MEDIA programme provided significant financial support to these films figuring high on the nominations list of the Oscars Ceremony. The total contribution from the EU's MEDIA programme for these films alone amounted to € 3,028,000, with even more support likely to follow for distributing the film to cinemas.

It's been running for a while ...

The MEDIA 2007 programme will provide €755 million to Europe's film industry from 2007-2013 (IP/07/169). This January the Commission also proposed a MEDIA MUNDUS programme (IP/09/26) that will provide another €15 million of funding from 2011-2013 for projects submitted by audiovisual professionals from the EU and third countries. A clear priority of both the MEDIA and the MEDIA MUNDUS programme is the distribution and promotion of European films outside their original country, across Europe (almost 65% of the total MEDIA budget) and the globe.

The MEDIA programme's overall objectives are to strengthen the competitiveness of the European audiovisual sector by facilitating access to financing and promoting use of digital technologies, to reflect and respect Europe’s cultural identity and heritage, and to increase the circulation of European audiovisual works inside and outside the European. In 2008 the MEDIA programme supported over 1,800 projects with a total €107 million.

Few things are more subtly sinister than government meddling in 'cultural identity'.

Both times I watched this particular film, I watched it uncritically, for escapism and eye candy, but perhaps it's worth revisiting.

There are two main themes in The Duchess: men had extreme and unjust power over women in the 18th century, and the aristocracy likewise had unreasonable and unsustainable power over the ordinary man.

As a libertarian, I don't really dispute either of these points. But I can't resist a couple of observations.

Whereas men once had significant state-granted power over women, the pendulum has swung back the other way. Men and women are not legally equal. Women are entitled to generous maternity benefits. They benefit from positive discrimination in the form of diversity quotas. They fare unreasonably well in custody and divorce settlement decisions, and they are granted absolute power over the lives of unborn children.

If a man gets a woman pregnant, and decides that it would be better to abort the child, he is powerless. He's not even free to walk away. He will be held financially accountable for many years to come.

By contrast, a woman can choose to terminate the pregnancy - to take the life of an innocent proto-human - even if the father is willing and able to take on sole responsibility for raising the child. How do 9 months of discomfort, and a few hours of extreme discomfort, compare with 18 years of financial enslavement?

Of course, I feel that fathers ought to care for their children. I am a father myself. And I don't believe that abortion should be illegal (though he case for state subsidised abortions is questionable).  But there is no disputing the fact that women today are in a legally favourable position. Do we really need to keep harping on about past injustices? A certain group of EU bureaucrats with their hands on your money think so.

Then there's the question of the aristocracy. Despite all their anti-democratic moves, the EU would have you believe that democracy is an unalloyed good. They pay lip service to this grand ideal, which supposedly prevents exploitation.  But look at what's happened to individual liberty as suffrage has widened, eventually becoming universal.

I haven't yet read Hoppe's Democracy: The God That Failed, and for now I'm still inclined to think democracy is the least bad option, but the tyranny of the majority does not deserve to be celebrated.

Mencken on government

Two quotes from H.L. Mencken featured in the latest issue of Edelweiss Journal:

All government, in its essence, is a conspiracy against the superior man: its one permanent object is to oppress him and cripple him. If it be aristocratic in organization, then it seeks to protect the man who is superior only in law against the man who is superior in fact; if it be democratic, then it seeks to protect the man who is inferior in every way against both. One of its primary functions is to regiment men by force, to make them as much alike as possible and as dependent upon one another as possible, to search out and combat originality among them. All it can see in an original idea is potential change, and hence an invasion of its prerogatives. The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is very apt to spread discontent among those who are.

Democracy is a pathetic belief in the collective wisdom of individual ignorance.

Hayek on democracy

I've finally found some time to make progress with The Road to Serfdom. This paragraph from the end of Chapter 5 (Planning and Democracy) seemed worth highlighting:

It cannot be said of democracy, as Lord Acton truly said of liberty, that it "is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for the security in the pursuit of the highest objects of civil society, and of private life".

Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom. As such it is by no means infallible or certain. Nor must we forget that there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies -- and it is at least conceivable that under the government of a very homogenous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship.

Time will tell what sort of democracy results from the "Arab Spring". We'll know the result of the Egyptian presidential election soon.

Minimum price? Yes, Sir Jeremy.

Charles Moore writes:

the government wants to impose a new and oppressive tax on the poor — a minimum price for alcohol. It is always in the name of health that the working class are attacked. But what struck me most about the story was how the decision was taken. According to the Sunday Times, ‘The decision to go ahead was made at a meeting chaired by Jeremy Heywood, the cabinet secretary, and attended by [Andrew] Lansley, Theresa May, the home secretary, and Vince Cable, the business secretary … it was not put to Cabinet.’ This is yet another example of the unacknowledged change in our constitution by which civil servants are put in charge (see also Crown appointments, honours forfeiture, IPSA, the Information Commissioner etc) of their elected political masters. ‘During the meeting,’ the report went on, ‘Heywood is said to have overruled Lansley’s objections.’ By what right?

I hadn't heard of Heywood until last Thursday, when I read a Spectator article by Quentin Letts: Sir Jeremy Heywood is the man who really runs the country:

Sir J. Heywood is a backstairs Bertie, a smudger, a whisper-in-the-PM’s-ear sort who shrivels from public view. The worry for Conservatives, and the rest of us, is that this shrewd murmurer, this eminence grease, has acquired unprecedented power over not only the Prime Minister but also Nick Clegg, Cabinet, the coalition and much of the rest of the state apparat. There is talk of Heywood obstructing secretaries of state, shafting Cameroons and organising Downing Street to his own convenience. We have gone beyond ‘Yes, Minister’ and now have ‘Yes, Sir Jeremy’. Worryingly, no one seems more in hock to him than our soigné, someone-take-care-of-that PM.
...

When Heywood sat before the Public Accounts Committee it was striking that he had acquired many of Clegg’s vocal tics — repeated ‘y’knows’ and ‘sort ofs’ and stuttering checks of a metallic voice. Yet he was unable to disguise entirely the self-satisfaction when he detailed his new responsibilities. ‘Cabinet agenda, Cabinet sub-committees, Cabinet sub-committee membership, Cabinet sub-committee minute-taking — all that falls under me,’ he said. ‘I am in charge.’

Indeed he is. Much though we mock the Greeks and Italians for being run by unelected technocrats, can we truthfully say that we are any better?

Tom Paine despairs

A characteristically brilliant, if melancholy post from Tom Paine:

When I lived in Russia and China I kept quiet about local politics out of courtesy to my hosts. I seem to have fallen into the same approach here under the sheer weight of apathy. The neglect of their civil rights by the British - who only ever seem to get excited when demanding others' freedoms be repressed - is an insult to the brave peoples I once lived among.

I miss the hope of the Labour days. Not the hope that they would ever cease (they won't) to be freedom-hating miserablists, but the hope that one day change might come. The only change provided by the current government is in the tone of Polly Toynbee's screeching.

He elaborates in the comments:

Once you start dealing with rational men and women on the basis that they are acting under the influence of their "lizard brain" (however interesting that might be to help understand themselves in therapy) you are in trouble. All laws should assume us all to be rational actors (unless actually proved insane).

Statists love to think of us as automota acted upon by the forces of history or psychology; the hapless products of our background, environment or society. Both disciplines are important means of analysis and understanding of human actions, but should neither be instruments of control nor excuses for wrongdoing.

Accept the view that we are not rational, independent actors in relation to the rest of society and you open the door for the all-wise and all-knowing state to answer all your (imagined) problems. Of course, the human actors who make up that state have neither lizard brains, nor social/historical determinants. They are the perfectly rational beings they deny we can be. Funny that, eh?

In reply to MickC, he writes:

It's not ennui on my part. It's despair. When I thought we had the wrong politicians, I could hope to change them. What hope is there if (after years of indoctrination) we finally have the wrong voters?

What hope indeed?

Who's to blame for the Greek tragedy

I don't ordinarily read The Sun, but I recently followed a retweeted link to a truly absurd article:

Greek diplomat Leonidas Chrysanthopoulos is near tears as he watches neatly dressed but hungry citizens scavenging the city's garbage bins.

For the ambassador, this is the ruination of all he has worked for since, as a young official, he helped his country sign up to the European dream.
...
Hatred seethes against Germany, which in 1942 reduced Greece to starvation and slavery during its brutal Nazi occupation.
...
Germany and France, who must accept the blame for allowing Greece into the euro at all, are terrified of contagion. So they are forcing this humiliated nation to slash pay and pensions to starvation levels.

I don't know how bad things really are in Greece (early reports of Greek 'austerity' involved pension terms that would seem generous to anyone in Britain), but however bad it is, we must ask who's really to blame.

I'm not suggesting that France and Germany behaved admirably, but their role has been more that of a drug dealer or loan shark, rather than thief or torturer. Nobody forced Greek politicians to run deficits.

Detlev Schlichter's latest article perfectly captures my thoughts on the matter:

There is no alternative to shrinking the Greek state drastically. It may not be nice for the Greeks to get told so by the Eurocracy – who run equally unsustainable models in their respective home countries, even if they have not been found out by markets yet – but that can change quickly....

That the coming shrinkage of the Greek state – and it will happen, one way or another – will cause hardship to many ordinary Greeks, nobody can deny. But what are the realistic alternatives and who is to blame? I see no alternatives and as to the blame, this falls squarely on the modern social democratic welfare state, a model that is now collapsing everywhere around us under the weight of its own economic absurdity. Large sections of Western society have for decades been lulled into accepting as a fact of modern life that the state would always look after them, that politicians could offer them secure employment, high and rising living standards, secure pensions and top-notch yet affordable health-care – all delivered by an ever-expanding state bureaucracy funded through rising taxes on productive activity, cheap money from the fiat money central banks and ever more debt. The final bill was supposed to be deferred forever. This irresponsible political theatre is coming to an end. Greece is just the first domino to fall.

And what does it mean for democracy? – This is a well-meaning question but do those who ask it imply that tough measures would be more acceptable if they came from local politicians, or do they imply that the Greeks could vote themselves a less harsh reality?

The whole article is well worth reading.

Ireland vs Greece

Detlev Schlichter writes

Although it just defaulted on €107 billon of private credit, Greece immediately gets another €130 billion taken from taxpayers in other countries. And these new loans plus the ones that were agreed at the time of the last bailout were just made cheaper. They now only cost 2 percent per annum after 3.5 before the restructuring...

It defaulted on its ‘private’ lenders and got more money at lower rates from its official lenders.

I seem to remember that the terms imposed on Ireland were not so favourable. If I were Irish, I'd be none too pleased.

Let's see how they vote in the upcoming referendum.

Democracy and property rights

An email reached me today from Detlev Schlichter, who had some frighteningly insightful comments on democracy and property rights:

The way modern democracy has developed, it is entirely incompatible with any notion of property rights. Property rights today are never absolute, they are conditional. All property in our society belongs ultimately to the state. You are simply allowed to use some property as long as you keep paying whatever fees and levies the state imposes on you, and as long as you conduct yourself according to what the state deems appropriate. The moment you fall behind paying your dues, any and all your property is at risk of confiscation.

As Doug Casey says: Try not paying your property tax for a year or two and you will find out who really owns your house.

Already more than 160 years ago, the German philosopher Max Stirner wrote that the existence of a state and the notion of private property are incompatible. The state has the monopoly on legalized violence, on taxation and on legislation, and those who run this monopoly have no interest in protecting your property but every interest, and every means, to invade it. While that was also true of monarchic states, at least there it appears that the inherent class chasm between rulers and the ruled encouraged some restraint: kings and dukes were afraid of the mob. In democracy, the state represents the mob. It could well be the fate of every democracy to ultimately descend into mob rule, and no environment is more suitable for this than a prolonged economic crisis.

I've been reflecting recently on how a stable, minimal state could be maintained without the injustice of an aristocracy.

The universal franchise does seem to be a large part of the problem. As a believer in meritocracy, I couldn't countenance any sort of caste system, but it cannot be right, or sustainable, for net beneficiaries of the state to vote for increasingly generous payments from a wealth-producing minority.

Rothbard argues quite convincingly that there is no such thing as a just tax. For now, though, I'm still inclined toward minarchism rather than anarcho-capitalism, so I seek a tax regime that is

• cheap to enforce
• cheap to comply with
• minimally invasive
• minimally distortive [1]

The best I've been able to come up with so far is a system that taxes passports, and nothing else.

Passports would not be required to leave the UK, though other countries may still require one for entry. The passport office would require no more personal information than at present. Overall, the government would need to know much less about us. How you make your money, for example, would be no business of the state.

Passports would come at a cost sufficient to fund a police force, courts, and a military capable of defending us against credible threats.

Passports would also entail voting rights. Those unable or unprepared to meet the fee would be disenfranchised, but it hardly seems the right word in this context. Anyone would be free to vote, provided they fund the (minimal) services they enjoy, and the cost would hopefully be less than is currently collected through council tax.

As I wrote in 2010:

In 1900 the government spent £265 million, equivalent to £24 billion today. If spending had been kept at those levels, council tax would suffice to cover it.

In 30 years' time, the world will be a very different place. It seems unlikely that a welfare state on current lines will exist. Sooner or later, we shall all have to live within our means. The buck cannot indefinitely be passed to the next generation. We can only hope that there is not too much bloodshed in the transition.

[1] I remember a good article on the deadweight costs of taxation that Jamie Whyte published with The Times. It is currently stuck behind a paywall that libertarians can't begrudge, however much we may lament the passing of free linking.

Clegg: treaty change does not require referendum

From this morning's Andrew Marr Show ...

ANDREW MARR:

Angela Merkel is right, isn't she, when she says that there has to be fiscal union if the Eurozone is going to hold together? ... Which in turn will mean a treaty change.
...

ANDREW MARR:

It would also trigger a referendum in this country about our relationship with Europe, so my next question is: Could the coalition survive a referendum on our relationship with Europe?

NICK CLEGG:

Well I don't think there needs to be a referendum for the simple reason that the change …

ANDREW MARR:

(over) The Prime Minister's promised one. If there is a treaty change, he's promised a referendum.

NICK CLEGG:

No, the referendum will only take place if there is an additional surrender of sovereignty from us to the European Union, to Brussels.

ANDREW MARR:

(over) I thought any substantial treaty change will trigger a referendum. That's what David Cameron said.

NICK CLEGG:

(over) No, no, no. Let me be very clear. The test, which we've legislated on, is if we, the United Kingdom, give up more sovereignty in a big way to the European Union …

The truth, of course, is that any moves to eurozone integration would fundamentally alter the nature of the European Union. As Lord Tebbit noted recently, "the eurozone group can always outvote the remaining member states".

In an article for the Mail on Sunday, Daniel Hannan wonders why we would pass up this golden opportunity to extricate ourselves from a declining regional trading block:

Is it, perhaps, that the Coalition is determined to avoid a referendum? Sources around the Prime Minister are briefing to this effect but I hope they are wrong: few things are as degrading as the sight of an administration that distrusts its own electorate.

Or maybe it is fear of being left out of a Franco-German plan. In truth, though, a regulated Continental bloc offers us huge opportunities. We would be the offshore haven, Hong Kong to their China.

This was the model that Winston Churchill proposed at the outset. In 1946, he called for a United States of Europe comprising France, Germany and their satellite countries.

The full text of that speech, given in Zurich on the 19th of September, is available from the Council of Europe.

Personally, I'm not entirely comfortable with the idea of an anti-democratic Franco-German union on our doorstep, but I don't think today's ordinary Frenchmen and Germans want war any more than ordinary British people do, and the EU doesn't afford any protection beyond what we already enjoy through NATO.

Equally, to the extent that it may be in our national interest to undermine continental moves to full political union, I'm not convinced that our politicians are committed to this goal, nor that the task is easier within in the EU.

We should get out, wish them well, and watch vigilantly.

Democratically elected Islamofascists

BBC News reports:

Latest results from the Egyptian elections indicate that Islamist parties are likely to have a strong majority in the new parliament.

The political wing of the Muslim Brotherhood and a more conservative Salafist Islamist party are leading, while secular liberals are behind.

...

the Salafists, who could take second place, have made no attempt to soften their uncompromising views. They want to ban alcohol, segregate men and women, impose full shariah law, and are openly contemptuous of democracy.

Democracy is not an end in itself. It is only a good thing to the extent that it protects individual freedoms.

We'll have to wait and see how Egyptians enjoy tyranny of the Islamist majority.

Gerald Warner on forced funding for political parties

A good article from Gerald Warner for Scotland on Sunday:

‘IT IS difficult to conceive of a more difficult climate in which to propose any increase in public support for political parties.” Those insightful words came last week from Sir Christopher Kelly, chairman of the Committee on Standards in Public Life.
...
Unfortunately, despite delivering himself of this common-sense verdict, Sir Christopher’s committee recommended exactly the suicidal course of action he had just identified: taxpayer subvention of the predatory gangs that call themselves political parties and have brought Britain to its knees over recent decades

Warner concludes:

Party politics is not about “public service”; it is about egomaniacs attempting to impose their views on society or, less harmfully, good old-fashioned self-seekers looking for a cushy billet. If they cannot find backers willing to support their mostly unhealthy ambitions, it is in no way the duty of normal people to part with their dwindling cash to support them. Any attempt to impose such a burden on taxpayers, as even the parties seem now implicitly to admit, would provoke a tsunami of resentment.

We are the 60%

In countries in which the poor have the exclusive power of making the laws, no great economy of public expenditure ought to be expected; that expenditure will always be considerable either because the taxes cannot weigh upon those who levy them or because they are levied in such a manner as not to reach these poorer classes. In other words, the government of the democracy is the only one under which the power that votes the taxes escapes the payment of them.

In vain will it be objected that the true interest of the people is to spare the fortunes of the rich, since they must suffer in the long run from the general impoverishment which will ensue.

— Alexis de Tocqueville, 1835 - Democracy in America, Volume I, Chapter 13

Yesterday I discovered a BBC News article entitled Tax: Do you give more than you get?

Though my household is by no means rich, it seems we are in the top decile. It turns out that a childless couple with both partners earning £32000 before tax is enough. To count among the 9th decile, all you need is £24000 each; for the 8th decile: £19000 each; for the 7th decile: £16000 each. All of these deciles are net contributors, according to the BBC (to the tune of £27221, £12433, £5457, and £1900 respectively).


There are a few things to note here. Firstly, £16000 isn't a huge salary. I'd wager that almost everyone of working age could manage it, if they tried hard enough. According to my calculations, you could achieve it by working 53 hours a week at the minimum wage [1], for 50 weeks. A hard life, but nothing like what our ancestors had to face. On the other hand, you have to ask why people would bother — all that work for the privilege of contributing £1900 (6 weeks of labour) to those who aren't inclined to work as hard.

Secondly, only the top 4 deciles are net contributors; 60% of households are net recipients. In a democracy, we should not be surprised that taxes "are levied in such a manner as not to reach these poorer classes".

Thirdly, the BBC calculator understates the weight of tax-eaters. As Rothbard puts it

The tax consumers consist of the full-time bureaucracy and politicians in power, as well as the groups which receive net subsidies, i.e., which receive more from the government than they pay to the government. These include the receivers of government contracts and of government expenditures on goods and services produced in the private sector. It is not always easy to detect the net subsidized in practice, but this caste can always be conceptually identified.
...
it is inherently impossible for bureaucrats to pay income taxes uniformly with everyone else. And therefore the ideal of uniform income taxation for all is an impossible goal. We repeat that the bureaucrat who receives $8,000 a year income and then hands $1,500 back to the government is engaging in a mere bookkeeping transaction of no economic importance (aside from the waste of paper and records involved). For he does not and cannot pay taxes; he simply receives $6,500 a year from the tax fund.

So we have at least 60% of households as net recipients of taxes. Are they grateful? On the contrary, many of them are are disappointed that they haven't succeeded in screwing more money out of the top 1%. Such is the tyranny of the majority.

[1] From 1 October 2011, the minimum wage for those 21 or older is (£6.08 for those 21+, from 1 October 2011)

Euro or democracy

Daniel Hannan writes:

So this is what 'the full Monti' means. As well as being prime minister, the Brussels placeman has appointed himself finance minister. And how many elected politicians has the EU's Governor of Italy put in his cabinet? You guessed it.

It does sound quite dodgy, but I felt I had to ask the obvious question:

What percentage of Italian cabinet ministers are normally elected?

In our own cabinet, we have two unelected members: Lord Strathclyde and Baroness Warsi.

http://en.wikipedia.org/wiki/C...

In the US, "no person holding any office under the United States, shall be a member of either house during his continuance in office."

http://en.wikipedia.org/wiki/C...

And many in the current US cabinet (including Timothy Geithner, John Bryson, Shaun Donovan, Steven Chu, and Eric Shinseki) have never been elected.

This is generally considered a feature rather than a bug.

Of course, it seems likely that this particular cabinet will have European rather than Italian interests at heart.

The Guardian has published profiles for "some of Monti's technocrats":

The former European commissioner, Mario Monti, has unveiled Italy's new government. A distinguished liberal economist, he kept for himself the finance ministry. The list is stacked with academics, who will take more than a third of the seats in the new cabinet, and most will be unknown to members of the Italian general public.

It's not that I have any great love for politicians, or democracy. aureliusmarcus did a good job of outlining the flaws of our present system in a comment on that same Daniel Hannan article:

It seems to me that this crisis has served to expose some fundamental flaws in democracy, at least the form of representative democracy we practise in the west, as a system of government.

The first flaw in a representative democracy is that politicians tailor their policy agendas to whatever will attract the most votes, and then the electorate generally vote for the policies that garner unto then the greatest largesse form the treasury. This has progressively been the case across Europe from the end of WII onwards as countries have saddled themselves with increasingly unsustainable social contracts, widening public sectors (of which the EU itself is a perfect example) and productivity throttling employment laws.

The second flaw is that everyone has an equal vote, whether they are a wealth creator or a wealth eater. Eventually the wealth eaters reach a critical mass or tipping point, and begin to outstrip the ability of the wealth creators in society to continue to support them. After this point the likelihood of radical political reform dwindles and eventually vanishes. Again, we have seen this across Europe in recent years.

Finally, the third flaw in a representative democracy is that the turkeys will never vote for Christmas, even if the alternative is that they all die anyway, and no politician can ever get elected or survive on a platform that requires them to do so. So when faced with a situation such as we have at present, it simply cannot function as an effective form of government

So what happens? Exactly what we have witnessed. The situation remains increasingly untenable until eventually there is some sort of revolution, violent or otherwise. In this case a coup d'etat by the EU, but I am not convinced that it will be able to resolve the problems or even contain them for very long.

Unlike Daniel Hannan, I'm sympathetic view to the view (attributed to Churchill) that

The best argument against democracy is a five-minute conversation with the average voter.

The point is illustrated well by a recent YouTube clip that I discovered through Tom Paine: Obama Is Not A Keynesian, He's An American!

However, as Churchill also famously said:

All this idea of a group of supermen and super-planners, such as we see before us, “playing the angel,” as the French call it, and making the masses of the people do what they think is good for them, without any check or correction, is a violation of democracy. Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time; but there is the broad feeling in our country that the people should rule, continuously rule, and that public opinion, expressed by all constitutional means, should shape, guide, and control the actions of Ministers who are their servants and not their masters.

The whole Parliament Bill debate from that day, 11 November 1947, makes interesting reading. 64 years later, the supermen and super-planners are on the march.

MEPs insist on above-inflation budget increase

Just for a change ...

MEPs have insisted on an above-inflation increase in the EU's budget, despite opposition from national governments.

On 26 October 2011 the European Parliament held its final debate on the draft budget for 2012, before final negotiations begin with the Commission and the Council of Ministers.

MEPs broadly followed a recommendation by the Budgets Committee to back - and exceed - the Commission's proposal for a 4.9% increase in the EU's 2012 budget compared with the 2011 budget.

This would give the EU a budget of approximately €132bn and the proposed rise is above the rate of inflation.

Read the rest of the sorry story at the BBC's ironically named Democracy Live site.

UPDATE:

What the BBC doesn't tell you is that no British MEPs supported the increase:



53 British MEPs voted against; 8 abstained.

In Germany, 61 voted for the increase; 9 against.

In France, 44 voted for the increase; 8 against.

Overall, 430 voted for; 122 against.

For the record, here are the British MEPs who shamefully abstained (5 Lib Dems, 2 Greens, 1 Plaid Cymru):

Referendum retraction?

Only yesterday, the BBC's Gavin Hewitt quoted George Papandreou as follows:

"We will not implement any programme by force," he said, "but only with the consent of the Greek people.

"This is our democratic tradition and we demand that it is also respected abroad."

Today it seems that he has been beaten into submission.


Finally, the Greek people have a good reason to riot. It will be interesting to see how they react.

Hannan: Eurocrats are terrified of democracy

An excellent article from Daniel Hannan:

Shall I tell you the truly terrifying thing about the EU? It’s not the absence of democracy in Brussels, or the ease with which Eurocrats swat aside referendum results. It’s the way in which the internal democracy of the member states is subverted in order to sustain the requirements of membership.

George Papandreou, the luckless Greek leader, is the latest politician to find himself being chewed up because he stands in the way of the Brussels machine. On Monday afternoon, Papandreou announced a referendum on whether to accept the EU’s bail-out terms. He had evidently had enough of the antics of the opposition party, New Democracy, which kept insisting that Greece remain in the euro, while opposing all the austerity measures necessary to that end – an outrageous stance given that New Democracy ran up the deficit in the first place. Papandreou hoped to force his opponents off the fence: in favour of the spending cuts or against euro membership. Perhaps he also hoped to put pressure on the EU to offer more generous terms.