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Archive for November, 2012

Hayek and Mrs Bunch: The Irregularity of Individuals

Thursday, November 29th, 2012

Marshalled by Mark Rogers

It is perhaps not surprising that the English Common Law presages so much of Hayek’s understanding of how law underpins economic life, particularly as it is so heavily concentrated on property. Common Law has another importance, however, in an Austrian, Misean sense in that it is founded in human action, not in abstractions – which tend to the fiat diktat sense of “law” – that is,  in the ordinary practicalities of everyday life. Judges are often to be found revelling in them, as in this glorious example from the late nineteenth century. The judgment is taken from Not In Feather Beds, a collection of essays and speeches by Lord Radcliffe (Hamish Hamilton, London 1968). The essay is entitled “How a Lawyer Thinks”, and Lord Radcliffe has chosen this particular judgment as being an apt specimen of that thinking. The opinion was delivered by Lord Macnaghten, “one of the greatest exponents of the legal art that this country has known,” in an appeal to the House of Lords.

“The period 1888; the setting a late-Victorian, foggy, lamplit Christmas Eve at Paddington; the subject a Gladstone bag lost at the station by a certain Mrs. Bunch. Mrs Bunch is now at grapples with the Great Western Railway as to which of them is to bear the burden of the loss. This is how Lord Macnaghten deals with the problem.” [I should add that it is beautiful specimen of English prose: and, not least, pay attention to the punctuation!]

Your Lordships are familiar with the evidence in this case, and I do not propose to repeat it. It is enough to say that on the 24th of December 1884, at 4.20 p.m. Mrs Bunch came to Paddington with a Gladstone bag and some other luggage, meaning to travel with her husband by the 5 p.m. train to Bath, that on her arrival at the station her luggage was received by a porter in the employment of the company, and taken by him to the platform for the purpose of the journey, and that the Gladstone bag was last seen on the platform with the same porter a few minutes afterwards. From that time all trace of the bag is lost. The porter and the bag both vanish from the scene. It was suggested by the learner counsel for the appellants, by way of explanation, that the porter was possibly one of a number of men picked up by the company for the day to meet the pressure of Christmas traffic. But I may observe, in passing, that so far as the public was concerned, there was apparently nothing to distinguish the casual helper of whom little, if anything, was known, from the regular and trusted servants of the company.

            On these bare facts standing alone it seems to me that there would be evidence upon which the County Court judge might reasonably find for the plaintiff, even if the company were not under the liability of common carriers as regard the lost bag.

            But then it was contended with much earnestness that it ought to have been inferred from the circumstances of the case and from Mrs. Bunch’s conduct that at the time of the loss the bag was not in the custody of the company for the purpose of the journey. It was said that Mrs. Bunch came to the station too soon – that she came before the train was drawn up – that she broke the journey, if the journey is taken as having begun – and left the bag in the charge of a porter who was then not acting as the servant of the company within the scope of his authority as such, but acting as her agent in his individual capacity, and that if this was not what she meant, it was an attempt on her part to saddle the company with a liability which they were not bound to undertake.

            It seems to me that there is no substance in any of these objections. Mrs. Bunch, no doubt, came to the station somewhat early. But the one thing that railway companies try to impress on the public is to come in good time. And considering the crowd likely to be attracted by cheap fares during the Christmas holidays, and the special bustle and throng on Christmas Eve, it does not seem to me that Mrs. Bunch came so unreasonably early as to relieve the company who received the luggage from the ordinary obligations flowing from that receipt. It is impossible to define with the extreme limits on both sides the proper time for arrival. Everything must depend upon the circumstances of the particular case. But, among those circumstances, the least important, as it seems to me, is the time when the train is drawn up at the departure platform. That is, as everybody knows, a very variable time. And it is a matter over which the passenger has no control, and of which he can have no notice before he comes to the station.

            Then I think that there is nothing in the conversation which took place between Mrs. Bunch and the porter. Mrs. Bunch’s question was a very natural one. The answer which she received was just what might have been expected. Nine women out of ten parting with a travelling bag on which they set any store would have asked the same question. In ninety-nine times out of a hundred the same answer would be returned. I do not think that this conversation altered the relation between the parties in the least degree. It seems to me almost absurd to treat it as a solemn negotiation by which the lady abdicated such rights as she possessed against the Great Western Railway Company and constituted this ephemeral and evanescent porter in his individual capacity the sole custodian of her Gladstone bag.

            Nor can it, I think, be said that Mrs. Bunch broke the journey by leaving the platform to meet her husband and get her ticket. To take a ticket is a necessary incident of a railway journey. It is, at least, a very common incident in railway travelling for persons, who intend to travel in company, whether they be members of the same family or not, to meet by appointment in the railway station from which they mean to start, and it is certainly not unusual in such a case for the purchase of tickets to be deferred until the meeting takes place…

            It was said that if everybody acted as Mrs. Bunch acted in this case, railway companies would require an army of porters, and that it would be almost impossible for them to carry on their business. I quite agree, but I am not much impressed by that observation. I apprehend that if all travellers acted precisely alike, if everybody arrived at a station for a particular journey at precisely the same moment, though the time of arrival were the fittest that could be imagined, there would be no little confusion, and perhaps some consternation among the railways officials. Whatever may be the result of your Lordships’ judgment, there is no fear that it will have the effect of making everybody act alike. Things will go on just as usual. The fidgety and nervous will still come too soon; the unready and the unpunctual will still put off their chance of arrival till the last moment, and the prudent may have their calculations upset by the many accidents and hindrances that may be met with on the way to the station. And it is just because of the irregularity of individuals that the stream of traffic is regular and easily managed.

Lord Radcliffe justly comments: “the style is very nicely fitted to the subject. It is grave, without being portentous; it is admirably detailed, without being finicky; and at the same time there is, I think, at the back of it a gleam of decorous amusement that these sober legal propositions have to be marshalled and weighed to solve the problem of Mrs. Bunch and her Gladstone bag. Next, these paragraphs which seem to be no more than a recital of facts, or a rather quizzical glance at certain arguments, do in fact contain an exposition of legal principles – so much so that Mrs. Bunch’s case has become a leading case determining for good the kind of considerations that are to govern the loss of Gladstone and other bags at railway stations and the weight to be given to some of those considerations. But the legal principles are, as it were, built into the factual structure of the story itself, not imposed upon it, so that the story seems to arrange itself naturally around them and to take its form and order from their intrinsic logic… And, lastly, the whole passage, though the careful simplicity of it is to some extent delusive, is irradiated by a vivid common sense.”

It is the last paragraph of Lord Macnaghten’s opinion that sums up the whole problem of economic planning and direction; it is this quality of the Common Law that fits so neatly and substantively with the analysis of human affairs that distinguishes the work of Hayek and Mises.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

Gold Banking: news item

Wednesday, November 28th, 2012

In recent posts we have looked at the Utah Sound Money Scheme and the Utah Gold and Silver Depository, where a local return to precious metal backed currency is successfully under way. Other States of the Union are watching.

The story which this article links to shows that the legendary investor Eric Sprott has made a drive for the same kind of banking in Canada, expected to start operations next year. We shall watch this space.

Go to this link for more.

THOUGHTS IN SEASON

Tuesday, November 27th, 2012

By Mark Rogers

Stating what ought to be the obvious

As long as governments are producing money out of thin air, what is called quantitative easing, the financial crisis has not ended. It can only be “eased” for the present working generation insofar as we can continue to withdraw money from our bank accounts – perhaps I should say currency notes, because they are not really money. But by wiping billions off pension funds, and ensuring ever mounting debt, retired people will be impoverished and our children will struggle to pay off the debts incurred today.

Once the world’s money was taken off the gold standard, the coins and notes in circulation became, effectively, a form of credit. So borrowing is taking out credit on credit.

As long as most houses are bought with a mortgage the housing bubble has not ended. We have discussed here, here and here, why the modern mortgage is not a mortgage – it is indeed the most spectacular form of the above type of borrowing.

So that is two important assumptions about how our economy works that are false: money is not money and mortgages are not mortgages. No wonder we lurch from crisis to crisis, from promise of recovery to disappointment of that promise. If politicians and bankers are conjuring with illusions, what price the promises?

Money isn’t money

An obvious riposte to this assertion is that if we agree that something is money, then surely it is… This assumes that the only thing needed to underpin monetary value is trust. But that trust is so easy to abuse: quantitative easing is the result of that abuse. Besides it is generally thought that politicians are not trustworthy, so a contradiction lies at the heart of our assumptions about how modern politics works. I frequently ask people whether they trust politicians, and the answer is invariably, no. Why, then, do we allow politicians to run our healthcare and the education of our children, let alone dictate the money supply?

We cannot simply say that anything we choose to be money is money: it has to have a value. Given that money is: a store of value, a unit of exchange, and a commodity in itself, while value in the market place is nothing more than an agreement, money must, in spite of the first and third aspects and because of all three, be more than an agreement. Which is why a return to the gold standard is essential.

Any more bubbles?

One that grows larger and larger and larger, driven by national and local government policy, is: education. The mania for driving teenagers into tertiary education may be seen as the inevitable consequence of, amongst other things, Harold Wilson’s decision to lower the age of majority to 18. This was done to capture the vote of ignorance for the illusory promises of socialism. However, it now causes a problem for the unemployment statistics, so to disguise the fact, more and more youngsters are persuaded to go to university. A means to this end is grade inflation at every level of education: the easier it is to pass exams, the easier it is to qualify for university entrance.

This, though, has the further consequence that many, many graduates cannot find work at their supposed degree level. In turn, this leads to the expansion of local and national bureaucracies as make-work is invented to take up these over-qualified graduates. Job markets become distorted by “degrees” in hair-dressing and the like, which used to be taught on the job. Apprentice masters have been replaced by academics.

A novel solution to this problem of the education bubble has been suggested to me. That school-leavers from the age of 16 should be incentivised to work, even start their own businesses, by being kept out of the tax system until they are 26. This would include not having to pay business rates. That is, 10 years to qualify in the real commercial world, and learning through trial and error how businesses function and prosper. It would also help to destroy the benefits system.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

ADAM SMITH’S ERROR (Part One)

Friday, November 23rd, 2012

By Mark Rogers

In my review of The Mess We’re In, amongst the many admirable qualities of the book I drew attention to is the way in which the author traces the evolution of the idea and meaning of value from Adam Smith to the Austrian School (see section headed “Value”). Rather than finding fault with Smith’s original conception, the author rightly contended that an idea of such complexity would go through several major evolutions before all the streams of thought that went into it would produce a meaningful and useful concept . Indeed, here I point out that there is growing realisation amongst some economic thinkers that we are only just beginning to come to an understanding of what money itself is.

In this spirit I offer some very interesting observations by Jane Jacobs in her book The Economy of Cities (I have already cited the work of Jane Jacobs here and here).

The Division of Labour

“Adam Smith, who identified the principle of the division of labour and explained its advantages, seems not to have recognized that new work arises upon older divisions of labour.” She analyses Smith’s famous description of the divided labour in a pin factory, and goes on to comment that Smith, having described the processes visible in the contemporary factory, drew a fundamentally inaccurate conclusion: he “assumes that this same principle also accounts for the existence of pin making itself. He called pin making simply a larger division of labour.”

However, the type of pins that Smith was observing had originally been manufactured as part of the task of making carding combs. The wire bristles for these combs were occasionally made in the same manufacturies as the frames, but often they were made in independent shops which sold them to the cardmakers. “Bristle makers, engaged in making a tool for the textile industry, were almost making pins. But when some of them actually did so, they were not further dividing the labour of making carding combs. Nor were they further dividing the labour of making bristles. They were not dividing at all. They were adding a new complexity, pin making, to an older simplicity, bristle making. From this addition came the rest of the divisions of labour in pin making” that Smith then went on to describe.

Smith’s Mistake

This unwarranted inference from observation she calls a mistake that was “subtle and casual”: “Smith gave to division of labour unwarranted credit for advances in economic life.”

Note that the mistake takes the form, not of misdescribing what he saw, nor of being inaccurate about what it could achieve, but rather of giving it an exaggerated influence in the rest of economic life. Yet, “[d]ivision of labour is a device for achieving operating efficiency, nothing more. Of itself, it has no power to promote further economic development.” She goes on to point out that this being so, it is even limited in its scope to improve this operating efficiency because further developments in efficiency, after extant work has been suitably divided into separate functions, “depend upon the addition of new activities”.

Another interesting observation is that division of labour is by no means a hallmark, as so many thinkers have assumed, notably Karl Marx, of an advanced economy. A moment’s reflection will show this to be true. But here one must defend Smith because it must be remembered that Smith was describing a developing economy in The Wealth of Nations, something new in economic life in the wake of the industrial revolution, which may explain why he made the incorrect inference: so much was new and unexpected as those in the extra-legal economies of the time were forcing the old medieval guilds onto the back foot.

How Jane Jacobs arrived at her conclusions in the light of her study of cities will be examined in Part Two. Suffice to say here that this work of hers is able to throw considerable light on the problem of the division of labour, and if in this instance we can say that Smith was mistaken, rather than simply incomplete, in the hands of Jane Jacobs the mistake turns out to be a fruitful one. It is also important to note that the complexity involved in the idea of value is of a different order from a mistaken assumption about how economic activity comes about: the latter is amenable to empirical observation, while value, though having intrinsic empirical implications, is also a complex philosophical issue.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

THE MORAL DILEMMA AT THE HEART OF TAXATION

Friday, November 9th, 2012

By Mark Rogers

Why is it anyone’s public duty, the richer they are, to assist the government in squandering their own money?

In low tax regimes, charitable giving is at a premium.

And yes, there is an equation there.

These contentions fundamentally summarise the argument  made on this site on the pernicious and avoidable effects of high tax regimes and big government welfare states. These articles are (in order of composition):

Diddling While Taxes Burn

Tax: After the Diddlers the Dodgers

Tax, Debt and the Price of Welfare Democracy

Jimmy Carr and His Terrible Error

Cowboy Accountants – Or Lone Rangers?

Punish Benefit Cheats

Starbucks and All That Tax

The Tax Moan

For a look at a very low tax regime, read Confessions of a Law and Order Anarchist, which also contains reflections on the present writer’s political and moral convictions as a consequence of his having spent his childhood and youth in Hong Kong.

And for a long review of an important book on the financial crisis, please read: The Mess We’re In.

HORRIBLE HISTORY?

Tuesday, November 6th, 2012

By Mark Rogers

Does History Matter?

Consider gold. If the first nugget had been discovered only yesterday, we would not know what it was; weeks, months, perhaps even years of analysis; it’s place in the Periodic Table to be decided; its worth to be discovered, perhaps taking decades; what is it good for – currency? jewellery? craftsmanship?

We simply would have no idea until perhaps many years had gone by what this newly discovered metal might be for and what its value could be. Other precious materials – diamonds, perhaps – already have a known value, perhaps a “diamond standard” has been tried…. It might even be that gold, only just discovered now, would be difficult to place in the hierarchy of already established precious materials.

Fortunately, we have six thousand years’ worth of history that enable us to judge gold properly; through that history we can see how and at what times it has been valued. Its capacity to be in turn a precious material valued for its beauty and malleability by craftsmen down the ages; a currency unit; a standard with which to back currencies, the remarkable qualities that make it the ideal storage of value, all this we know from our ability to study its history. We can examine its impact on societies at different epochs; the desire for it that has driven men and nations to desperate measures; the careful regard in which it was once held resulting in the gold standard.

Gold’s place in human affairs is well measured by these millennia of history.

History is People

On Friday, September 28th, 2012, the author of a series of undeservedly popular books, The Horrible Histories (History with the Nasty Bits Left In, History with the Boring Bits Left Out), published an article the vacuity of which takes the breath away. History is about people, not 1066 and all that, by Terry Deary, may be found here.

He takes a knowing and devoutly populist line (we’ll discover why later): “First, it’s worth posing this question: what is the point of history tests? If education is about preparing for ‘life’, then knowing that Magna Carta was signed at Runnymede doesn’t really pay the gas bill, does it?” He goes on to assert that practical matters, cooking, driving, parenting, don’t really depend on one’s being historically literate.

Wrong, Mr Deary. If an education is more, in fact, than a mere preparation for life, then broadening one’s range of knowledge is a good in itself. If mental alertness and intellectual discipline, being able to think things through, are necessary talents for and valuable consequences of the human condition, then there are many “purely” intellectual aspects of life that help fill that life out, and indeed, having a deal of historical knowledge can throw light on contemporary affairs, in a way which the ignorance that Mr Deary appears to be recommending cannot. So yes, in a roundabout way, using one’s mind in the pursuit of apparently “useless” knowledge may make one a more complete parent, a more careful driver, even a master cook if one takes the history of food and its preparation into account.

The Flippant Community, of which Mr Deary is naturally one, despises “dead” languages: but consider, as software developers devised ever more complex processing algorithms there was a sudden realisation in the 1990s that mathematics wasn’t enough. The cry went out from Silicon Valley for – Latinists: the “fuzzy logic” that mathematical computing had approached required not more mathematics but the linguistic flexibility of that most logical of languages. Do you use a computer Mr Deary? Then you are using a modern technology that delved into the ancient past to solve some of the most important problems that its development had thrown up.

What Mr Deary wants from whatever he conceives of as history is “stories about people”. And he gives an example of a person who died 100 years ago whom he considers a hero (I do not actually dispute that judgment, it’s the ideological use that he makes of his hero that is being considered here): go to the link above and read about Harry Watts, someone who felt no hesitation in rescuing people from drowning in conditions hazardous to himself.

Deary is almost papal in his disdain for what we, hoi polloi, need to know: let us be left in ignorance and merely emulate the lives of his chosen secular saints. “What would Harry Watts have done? History provides role models and prompts the great question, ‘Who am I?’” This is history as psychoanalysis, as therapy – which is not history.

If, as the example he gives and the reasons for it, suggest that in remembering the humblest we are acknowledging that the great chain of being depends on every one of its links, then that is all too the good: but it is not in fact what he is doing. He has his own hierarchy of values, as demonstrated by his discussion of Harry Watts.

But how does Deary know about Watts at all? To know him, and recognise what he did, we need to know his context, which is of course, from today’s vantage point, historical. Is Pope Terry offering himself as a latter-day Samuel Smiles, with, at least as far his example goes, his heroes belonging to Smiles’s epoch and earlier rather than his own (we are already in fairly deep historiographical waters here, and they just get deeper)? In order to understand the Smilesian Watts and to be able fruitfully to compare him to today’s paucity of Wattses (which in itself is making an assumption that is on a short-term historical view false), we need the entire arsenal of historical method and research in order to unearth him: how do we know that Deary hasn’t just invented him – we would need considerably more than Deary’s mere assertion to be objectively certain that Watts existed. We need that arsenal to compare him and explain why this matters.

Historical Inexactitude is Horrible

Now in the course of his article, Deary takes a good long sneer at an “indignant Welsh professor” who protested: “One student thought Martin Luther was an American civil rights leader!” Deary’s parenthetical comment: “(He was, but we’ll let that one pass.)”

No we won’t Mr History-is-People. Martin Luther was an Augustinian monk, dates November 10, 1483 – February 18, 1546, who was one of the great reformers of the Church, whose influence in the creation of Protestantism is one of the influences that shaped the following centuries down to our own.

The civil rights leader that the ignorant student was groping for was Martin Luther King, Jr., dates January 15, 1929-April 4, 1968. To quote the Nobel Prize website: “Martin Luther King, Jr., was born Michael Luther King, Jr., but later had his name changed to Martin. His grandfather began the family’s long tenure as pastors of the Ebenezer Baptist Church in Atlanta, serving from 1914 to 1931; his father has served from then until the present, and from 1960 until his death Martin Luther acted as co-pastor.”

The Boring Bits Left In

Historians, even those who lived in the past, are also “people”, so why not take them seriously? If it wasn’t for the techniques of sifting, objectifying, understanding the amorphous records of the past that have come down to us and which historians have laboured to authenticate and qualify perhaps Terrible Terry would never have found Harry Watts.

And those techniques inevitably require patience, which is the quality of being able to tolerate boredom in pursuit of a valuable end. History requires the “boring bits” if only to help fill out the authentic nature of the persons and events under discussion, and the methods of history were honed by, to name just a few of the greatest, Gibbon, Ranke, Mommsen, Macaulay.

However, Deary is not an historian, as he explained to The Guardian on Saturday 14 July 2012: “I don’t want to write history … I’m not a historian, and I wouldn’t want to be. I want to change the world. Attack the elite. Overturn the hierarchy. Look at my stories and you’ll notice that the villains are always, always, those in power. The heroes are the little people. I hate the establishment. Always have, always will.”

Terry Deary’s notion of history is, therefore, patently Marxist, the point being not to understand the world but to change it. His notion also brazenly complements the web of impatience that the internet has thrown over human knowledge.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

PUNISH BENEFIT CHEATS

Sunday, November 4th, 2012

DO DEALS (IF YOU MUST) WITH SO-CALLED TAX EVADERS

By Mark Rogers

After all the froth over tax evasion, in a remarkably short space of time the taxman is doing a deal: “Hundreds of tax evaders … will escape prosecution and keep their identities secret under immunity deals offered by Revenue & Customs,” reported The Times on Friday, 2nd November, in a front page story. The idea is not to waste Court time and further expense if so-called “secret account-holders” simply stump up their taxes and pay penalties. There has already been one prosecution for “serious fraud” and there will be a select few more.

The newspaper also quotes a former taxman who now works for a law firm as saying: “It is those at the lower end of the social scale who go to prison. There is no immunity for benefit cheats.”

In a development in Greece, a journalist who published 2,000 names of Greek “secret account-holders”, which include industrialists, financiers and politicians, was acquitted of breaching privacy laws, after the prosecution offered no witnesses. The journalist Kostas Vaxevanis is quoted, in a separate story on page 8, as suggesting that the list detailed “groups of people stealing from the Greek state”.

The HMRC deals are being offered to those British people who turned up on a list of account holders at a Swiss branch of HSBC, which list was stolen two and a half years ago by an employee of the bank – thus violating bank-client confidentiality – which was given to the then French Finance Minister, Christine Lagarde (now head of the IMF). She in turn gave HMRC 6,000 names of UK citizens (500 of whom have so far been investigated for fraud).

HMRC, Evasion and the Mis-spending of Savings

Before looking at the moral dilemmas of what has recently happened, and in particular the unfortunate view of Mr Vaxevanis, let us look at some of the more straightforward economic practicalities.

HMRC is assuming that the Lagarde list contains people who do not have a cash flow problem i.e., the deals, which as noted save precious court time, are possible because both the tax and the fines are assumed to be achievable. A deal, to work, requires the agreement of both parties as to what is feasible, whereas justice demands that one party has justice visited upon it in the name of the law, as pursued by the aggrieved party.

As it is deals that are being offered, the back taxes and the fines must come out of savings. This gets to the heart of the problem, which is that among the reasons for the evasion in the first place is the perception that the state misapplies resources, and therefore the taxing of successful businessmen is to mis-spend savings which would otherwise have been applied as investments. This is also another reason, of course, for not sending the majority of these so-called evaders to jail: they are after all a productive element in any economy, producing goods, services and jobs. The problem of UK taxpayers’ assets being held abroad is the simple recognition that the tax regime is too onerous in the UK and that government wastes money.

Deals and assets

So there is at least a tacit recognition that these individuals play a productive part in economic life. What is required is the further recognition that when a tax regime becomes too complex, and the welfare state, which inevitably requires big government, is all-pervasive, then the problem is the government, not the so-called evader.

But these deals usher in another confusion. Hitherto, most of the fuss has been about legal tax avoidance (as discussed for example here, Cowboy Accountants – or Lone Rangers?). Now it transpires that the Lagarde list exposes the problem of hidden assets. This is indeed only, from an anti-Keynesian point of view, the reverse side of the problem of the initial evasion, the hidden assets being on the Keynesian view “hoardings”.

This is the operation of Gresham’s Law in the welfare state economy: bad money/bad monetary policy driving out good money, either into Swiss bank accounts, or, as another aspect of the tax furore initiated by the Chancellor revealed, into good works – this was the attempt by the Chancellor to cap charitable giving; this attempt revealed that many rich donors, who use the tax exemption schemes drawn up by HMRC, actually give more to charity than the exemption is worth!

Whistleblowing? Accountability?

The term “whistleblower” entered the political lexicon largely to describe a civil servant who has come across corruption and incompetence in government and decides to risk all by exposing it – the biggest two in the UK in recent years being the utter incompetence of the immigration department and the corruption of the MPs’ expenses scandal.

So why is the private employee of a private institution being called a whistleblower for sneaking on his employer’s clients? The answer lies in the vexing view of Vaxevanis, the Greek journalist who believes that asset hiders are “stealing from the Greek state”.

That is the welfarist assumption in a nutshell: that private citizens’ money actually belongs to the state. However wasteful the state, and however much that waste prompts the operation of Gresham’s Law, those who avoid taxes, in the hope that more productive times might return (after all, with interest rates so low, why invest?), are branded thieves – for hanging on to their own money.

This view of the vexing Vaxevanis reverses the idea of accountability – as I have remarked before, the state needs to be very sure that taxpayers are getting value for money before accusing citizens of being in effect criminals (and see here for further implications for constitutional government).

Real cheats

Which brings us back to the idea that there are two modes of justice: one for the rich, even when they save their money against government waste, incompetence and malfeasance, and another for those poor who cheat on the benefits system. It is however, wholly commensurate with the idea of justice that the latter are punished: they have devised ways to make claims on hardworking taxpayers’ money to steal what does not belong to them. As the actions of HMRC have implicitly acknowledged, all that “evaders” and “hoarders” have done is to hang on to more of what is actually theirs.

A benefit cheat is breaking the criminal law, a long-sanctioned element of the English Common Law. A tax avoider is simply breaching legislation, often passed in fits of class antagonism “against the rich”, that allows the state to snatch a portion of his wealth, that allows the state to believe that all our incomes belong to it – see the Orwellian notion of “the taxpayer’s allowance”.

This is a morally corrosive view, which leads to constitutional vandalism. That, not tax evasion, is the real problem of our times.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST