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Archive for December, 2012

STATE WORSHIP AND THE ANTI-GLOBALIZATION MOVEMENT

Friday, December 28th, 2012

By Mark Rogers

Globalization: what is it but an activity that is as old as civilization – simply a modern name for trade? Joseph Addison’s paean to its virtues stresses the civilizing effect it has, bringing together merchants from every clime and culture, who, in furthering their own mutual interests, enhance everything from landscape to palates to manners and morals.

So why is it scorned and despised by so many, especially in the rich west?

Martin Wolf in “Why Globalization Works” (first referenced here) provides a useful list summarising the attitudes of the anti-globalizers, the first three of which I will deal with in this article. His summary is an accurate one of these views, so equally accurately does he indicate their incoherence.

“The critics make the following more or less specific charges against market-driven globalization.

“It destroys the ability of states to regulate their national economies, raise taxes and spend money on public goods and social welfare.

“In the process, it undermines democracy, imposing in its place the rule of unaccountable bureaucrats, corporations and markets.

“It amounts to an abdication of power by benevolent democratic governments in favour of predatory private corporations.”

Underlying assumptions

The first thing to notice about these attitudes is the underlying assumption that the modern democratic state is benevolent and rational and that its primary function is the regulation of the economy in order to tax the productive and furnish what are laughably known as “public goods and social welfare”.

The second underlying assumption is that modern democracies are accountable, and that it is corporations and markets that somehow are not. On the contrary, the collapse of accountability is manifestly evident in the euro crisis and the concomitant collapse of the European project, yet far from behaving in a responsible, accountable manner, the politicians are desperately trying to cling onto their power and privileges.

In the U.K. we have seen how politicians brazenly justified their expenses, in the process demonstrating their ignorance of the legal system. In one of the more scandalous moments of that preposterous saga, when one of the overtly criminal M.P.s was on trial and facing the prospect of jail if convicted (which he duly was), more than one hundred M.P.s wrote the judge a letter to try and influence the outcome of that trial, pleading with the judge not to sentence him to prison. One simply does not do this to an English common law judge: he duly ignored them, but that it was possible for so large a number of M.P.s to bring themselves to behave in this way shows a sorry disregard for our constitution – but then, at least since the Second World War, that disregard has become increasingly the parliamentarians’ mode of proceeding.

Markets, on the other hand, are engines of accountability, through bankruptcies and competition. That we may not see those who run companies, and anonymity is largely how free societies function, they are nevertheless under the remorseless pressure of their customers and competitors to provide the goods and services desired.

State Worship

The most important thing about these assumptions is that they amount to an unquestioning assumption that the state is the proper director of human affairs, and that ordinary humans are not – the ordinary person is not trusted, and the greater his wealth, the less trustworthy he is deemed. This is a preposterous view, and a dangerous one. I have quoted before Paul Johnson’s dictum that the ability of the state to wreak great evil has been amply proved; whether it is capable of good is open to considerable doubt.

Take two recent stories in the press. I have dealt with the first already in several articles about tax avoidance, the latest twist to which is the transformation of a parliamentary committee, the Public Accounts Committee, which is meant to hold the government to account, the proper function of M.P.s, instead turning on taxpayers and in accusatory mode devising ways to hold the public to account. We had also earlier seen how H.M.R.C. was devising means to use schools to snoop on tax avoiders.

A yet more recent story of the government turning on the people is the revelation this week of a costly scheme to monitor every child taken to an A. & E. Department for signs that its parents are trying to hide evidence that it is being abused. The National Health Service, that is, is being turned into a Stasi-like instrument to intrude into family life. This gross violation of privacy is based on an illusion. After the prominent publicity given to the deaths of battered children such as Jasmine Beckford, Victoria Climbié and Baby P, public inquiries were held. In spite of the detailed evidence in the findings of specific neglect at best, malign acquiescence at worst, combined with ignorance and lack of care, on the part of the social workers, each inquiry came to the same conclusion: that there had not been sufficient sharing of information between the relevant branches of the state.

So now in the fullness of time, some bright spark in the government has seen how the NHS can be turned into an information gathering and disbursing scheme – entirely neglecting two essential facts: the male abusers of infants are not the children’s natural fathers (mothers may hide the evidence of abuse, but this is because they are either mentally deficient, as Baby P’s showed every sign of being, or simply scared) – this is common knowledge, but is routinely overlooked. The second is that a highly abused child is more likely to be imprisoned at home than be taken to hospital. When a social worker did manage to get Jasmine Beckford and her sister into hospital, the police were adamant that they should not be returned. The social worker over-ruled them, and the police acquiesced (why they didn’t take advantage of that hospitalization to arrest the step-father I have never understood).

There is ample evidence that when the state reaches a certain size, and has acquired powers of intrusion into daily life by nationalizing health and education, its functionaries become a coterie, acting in their own interests at the expense literal and figurative of the general public. That the state in this form should be trusted with our welfare is belied by history, the same history that shows the most dangerous religion ever invented is the cult of the state.

Re-inventing the wheel

The present writer indeed agrees with those who object that globalization “destroys the ability of states to regulate their national economies, raise taxes and spend money on public goods and social welfare” and hopes that destruction proceeds apace. To quote the American commentator Michael Ledeen: “Faster please!”

Joseph Addison was right to see in the mercantile classes of his day the great benefactors of mankind: we in our day have seen the “benevolence” of the state in action, not least in those developing countries the anti-globalizers weep for where state aid has created destitution, and where restoring trade and expanding markets have repaired the ravages of that aid.

Not for the first time in the late twentieth and early twenty first centuries have we been required to re-invent the wheel – under the baleful glare of those who think it shouldn’t have been invented in the first place.

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

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GLOBALIZATION: A VIEW FROM THE EIGHTEENTH CENTURY

Wednesday, December 26th, 2012

THE ROYAL EXCHANGE by Joseph Addison (1672-1719)

There is no place in the town which I so much love to frequent as the Royal Exchange. It gives me a secret satisfaction, and, in some measure, gratifies my vanity, as I am an Englishman, to see so rich an assembly of countrymen and foreigners consulting together upon the private business of mankind, and making this metropolis a kind of emporium for the whole earth.

I must confess I look upon high-change to be a great council, in which all considerable nations have their representatives. Factors in the trading world are what ambassadors are in the politic world; they negotiate affairs, conclude treaties, and maintain a good correspondence between those wealthy societies of men that are divided from one another by seas and oceans, or live on the different extremities of a continent.

I have often been pleased to hear disputes adjusted between an inhabitant of Japan and an alderman of London, or to see a subject of the Great Mogul entering into a league with one of the Czar of Muscovy. I am infinitely delighted in mixing with these several ministers of commerce, as they are distinguished by their different walks and different languages: sometimes I am jostled among a body of Armenians, sometimes I am lost in a crowd of Jews, and sometimes make one in a group of Dutchmen. I am a Dane, Swede, or Frenchman at different times, or rather fancy myself like the old philosopher, who upon being asked what countryman he was, replied that he was a citizen of the world.

Though I very frequently visit this busy multitude of people, I am known to nobody there but my friend Sir Andrew, who often smiles upon me as he sees me bustling in the crowd, but at the same time connives at my presence without taking any further notice of me. There is indeed a merchant of Egypt who just knows me by sight, having formerly remitted me some money to Grand Cairo; but as I am not versed in the modern Coptic, our conferences go no further than a bow and a grimace.

This grand scene of business gives me an infinite variety of solid and substantial entertainment. As I am a great lover of mankind, my heart naturally overflows at the sight of a prosperous and happy multitude, insomuch that at many public solemnities I cannot forbear expressing my joy with tears that have stolen down my cheeks. For this reason I am wonderfully delighted to see such a body of men thriving in their own private fortunes, and at the same time promoting the public stock; or, in other words, raising estates for their own families, by bringing into their country whatever is wanting, and carrying out of it whatever is superfluous.

Nature seems to have taken a peculiar care to disseminate the blessings among the different regions of the world, with an eye to this mutual intercourse and traffic among mankind, that the natives of the several parts of the globe might have a kind of dependence upon one another, and be united together by this common interest.

Almost every degree produces something peculiar to it. The food often grows in one country, and the sauce in another. The fruits of Portugal are corrected by the products of Barbados; the infusion of a China plant sweetened with the pith of an Indian cane. The Philippine Islands give a flavour to our European bowls. The single dress of a woman of quality is often the product of a hundred climates. The muff and the fan come together from the different ends of the earth. The scarf is sent from the torrid zone, and the tippet from beneath the Pole. The brocade skirt rises out of the mines of Peru, and the diamond necklace out of the bowels of Hindostan.

If we consider our own country in its natural prospect, without any of the benefits and advantages of commerce, what a barren, uncomfortable spot of earth falls to our share!

Natural historians tell us that no fruit grows originally among us besides hips and haws, acorns and pig-nuts, with other delicacies of the like nature; that our climate of itself, and without the assistance of art, can make no further advances towards a plum than to a sloe, and carries an apple to no greater perfection than a crab; that our melons, our peaches, our figs, our apricots and cherries, are strangers among us, imported in different ages, and naturalized in our English gardens; and that they would all degenerate and fall away into the trash of our own country if they were wholly neglected by the planter, and left to the mercy of our sun and soil.

Nor has traffic more enriched our vegetable world than it has improved the whole face of nature among us. Our ships are laden with the harvest of every climate: our tables are stored with spices and oils and wines; our rooms are filled with pyramids of China, and adorned with the workmanship of Japan; our morning’s draught comes to us from the remotest corners of the earth; we repair our bodies by the drugs of America, and repose ourselves under Indian canopies.

My friend Sir Andrew calls the vineyards of France our gardens, the spice-islands our hot-beds, the Persians our silk weavers, and the Chinese our potters. Nature indeed furnishes us with the bare necessaries of life, but traffic gives us a great variety of what is useful, and at the same time supplies us with everything that is convenient and ornamental. Nor is it the least part of this our happiness that while we enjoy the remotest products of the north and south, we are free from those extremities of weather which gave them birth; that our eyes are refreshed with the green fields of Britain at the same time that our palates are feasted with the fruits that rise between the tropics.

For these reasons there are not more useful members in a commonwealth than merchants. They knit mankind together in a mutual intercourse of good offices, distribute the gifts of Nature, find work for the poor, and bring wealth to the rich and magnificence to the great. Our English merchant converts the tin of his own country into gold, and exchanges his wool for rubies. The Mohammedans are clothed in our British manufacture, and the inhabitants of the frozen zone warmed with the fleeces of our sheep.

When I have been upon the change, I have often fancied one of our old kings standing in person, where he is represented in effigy, and looking down upon the wealthy concourse of people with which that place is every day filled. In this case, how would he be surprised to hear all the languages of Europe spoken in this little spot of his former dominions, and to see so many private men, who in his time would have been the vassals of some powerful baron, negotiating like princes for greater sums of money than were formerly to be met with in the royal treasury!

Trade, without enlarging the British territories, has given us a kind of additional empire: it has multiplied the number of the rich, made our landed estates infinitely more valuable than they were formerly, and added to them an accession of other estates as valuable as the lands themselves.

AN OBITUARY FOR THE LEFT

Wednesday, December 19th, 2012

By Mark Rogers

Perry Anderson, editor of The New Left Review, wrote an editorial for the January-February 2000 issue, in which he looked at all that had happened over the previous twenty years, and what it meant for the Left: the collapse of the Soviet Union, the resurgence and resilience of capitalist market economies and the emergence of “New” Labour. The piece contains a remarkable acknowledgement of two of the strengths of the market idea as they had emerged in that time:

“The only starting-point for a realistic Left today is a lucid registration of historical defeat. Capital has comprehensively beaten back all threats to its rule, the bases of whose power – above all, the pressures of competition – were persistently under-estimated by the socialist movement. The doctrines of the Right that have theorized capitalism as a systemic order retain their tough-minded strength; current attempts by a self-styled radical Centre to dress up its realities are by comparison little more than weak public relations. Those who always believed in the over-riding value of free markets and private ownership of the means of production include many figures of intellectual substance. The recent crop of bowdlerizers and beauticians, who only yesterday deplored the ugliness of the system they primp today, do not.”

The first of those strengths he identifies percipiently as the pressure of competition, that creative pressure that stimulates prosperity by weeding out bad, corrupt, or ineffectual ideas and practices. His recognition that the machine-like description of capitalism that pervades socialist writings from Marx onwards was an inadequate base from which to understand just what drives markets is a welcome change from denunciations of markets in terms of conspiracy theories, which is often the revolutionist’s bolt-hole when confronted with matters he cannot comprehend or which have actually defeated him. Anderson’s realism is based on an actual understanding of what had been happening.

This is reinforced by the second strength that he describes, that “tough-minded strength” of those “doctrines of the Right that have theorized capitalism as a systemic order”. This is the source of capitalism’s resilience, and his phrasing suggests that it is, amongst others, Hayek that he must have in mind, which in turn underpins his acknowledgement that those “who always believed in the over-riding value of free markets and private ownership of the means of production include many figures of intellectual substance.”

Anderson had looked defeat in the face and realized that it came about in part through treating arguments for the market as being merely those of vested interests, and in doing so failed to acknowledge the real strengths of what socialists thought they were opposing. While his pessimism is to be understood, his clarity in perceiving that there is integrity amongst his opponents and any future discussion is going to have start from there is a real measure of how comprehensive the Left’s defeat on these questions has been.

An adequate gloss on those pressures of competition and what they mean in practice, both politically as well as economically, is found in Martin Wolf’s Why Globalization Works (Yale Nota Bene, Yale University Press, New Haven and London, 2005).

In stating that a market economy is a necessary condition for a stable democracy, he goes on: “The market may not be a sufficient condition for such a democracy. But it was a necessary one, because the concentration of power inherent in a planned economy was incompatible with effective pressures from below.”

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

POLITICS CORRUPTS PARLIAMENTARY DEMOCRACY

Monday, December 17th, 2012

By Mark Rogers

In one of my earliest articles for this website, I broadly condemned the corruption of the British political elite and centred that attack on the professionalization of Members of Parliament and delegated legislation. The irony of these two assaults on our constitutional liberties is that at the same time as recognizing membership of the House of Commons as a paid profession, Parliamentarians ceased to be Parliamentarians and instead delegated their responsibilities to the government. The latter sits in Parliament as of right as being composed of elected MPs, and the upshot of this is that the ancient privileges of the House, which one protected it from the executive, are now used to protect the executive from the House!

Geoffrey Wheatcroft, in his book The Strange Death of Tory England (first referred to here), puts some numbers of these derelictions.

He quotes the Tory grandee Julian Amery: “When I was young, a man would go into parliament because he was somebody. Now a man goes into parliament to become somebody.” That this is not a nostalgic grouse is borne out by some significant points. There are fewer by-elections, which means that MPs hang on to their seats. “During the parliament of 1918-22 there were108 by-elections, in 1931-5 there were sixty-two, in 1992-7 there were seventeen and in 2001-5 there have been six, which is to say the number has plummeted from a yearly average on twenty-seven to fifteen to three to one and a half.”

There is the failure to use Commons procedure to bring down governments or throw out Prime Ministers. Wheatcroft comments: “Every British government between 1837 and 1874 fell following a vote in the House of Commons, a golden age when parliament really was master of the executive. During the twentieth century that happened just twice. … By the late twentieth century, politics had become a trade, and a well-rewarded one; being an MP was a nice little earner.”

The salary of an MP, as I argued in the article linked to above, is the original source of the corruption. At one time parliament was full of people who had outside interests in many fields, and therefore the House of Commons was truly representative of the electorate. While a Register of Members’ Interests exists, that register is a farcical indication of where we stand now: members should have outside interests, in the real economy, deriving their income from those interests and not in an underhand way (which the register is designed to forestall). They would then have a better grasp of the likely impact of the legislation they so sloppily pass on the wider economy. With universal franchise, the House ought to be full of plumbers and electricians, booksellers and oilmen, housewives and chocolate factory owners et al… Instead we have, by and large, a dreary litany of lawyers and trade unionists.

The other source of the “nice little earner” are the expenses MPs may claim, both legitimately and as well as illegally, even criminally as the expenses scandal revealed. These are accompanied, in Wheatcroft’s words, by “perks, handshakes or severance pay [severance pay!] for MPs who lost their seats, and pensions, which would once have been considered a grotesque idea but which were now an accepted mark of that professionalization. If MPs acted as they had so often in the past, and voted openly to bring down a government, it would be likely to precipitate a general election, when many of them might lose their seats and no longer be able to pocket those expenses.”

An interesting gloss on this problem is Wheatcroft’s comment on a puzzlement that Roy Jenkins voiced in his biography of Gladstone. In the nineteenth century prime ministers found it difficult to keep their Cabinet ministers who kept resigning for apparently trivial reasons, but in the twentieth century, when a minister should clearly go, it is hard to persuade him to. This, says Wheatcroft, is simply another manifestation of the professionalization of political life. Cabinet ministers in the nineteenth century had lives beyond politics with other sources of income (even though MPs were not paid, ministers were handsomely emolumated).

With nothing else to do, the modern MP sits in Parliament, incompetently overseeing the drafting of legislation that is incoherent and unnecessary, unaware of the impact of such legislation because only tangentially connected to the world outside politics, and unwilling to hold the executive to account for fear of losing pay and perks. A sorry but true description of the Mother of Parliaments in her descent to being the whore of a venal democracy.

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

PAUL SAMUELSON ON SELF-INTEREST

Friday, December 14th, 2012

By Mark Rogers

In Paul Samuelson on the Trouble with Economies, I suggested that Samuelson’s understanding of self-interest was bizarre; this is what he said:

“The self-interest that the early economists counted on as a balance leads, in a modern economy, to collusion among the self-interested groups.”

It is a little difficult to fathom quite what Samuelson understands either by self-interest or what he thought the “early economists” meant by it on the basis of this assertion. After all, Adam Smith’s description is unambiguous – that it is not from any eleemosynary impulse that the baker and the butcher put bread and meat on our tables, but the pursuit of their self-interest. That self-interest is coterminous with providing customers with what they want, just as the self-interest in appeasing our and our families’ hunger leads us to pay the baker’s and the butcher’s prices: mutual benefit naturally flows from the self-interest on both sides.

And nor was Smith blind to the fact that those in business enter into collusions that may not be in the public interest; he was quite clear that whenever two or three are met together, they conspire, for example, to force prices up. This was the basis of his criticism of the medieval guild system. But such conspiracies in a free economy are by their nature limited; in such an unchecked economy they may cancel each other out. It is precisely in an economic system based on Keynesian arrangements, with the government being a central and distorting player in and above the market, that “collusion among the self-interested groups” becomes more widespread and entrenched, and therefore morally and economically damaging.

The extremes of this entrenchment are discussed in Hunter Lewis’s Where Keynes Went Wrong (discussed here and here), where he points out that when an industry or service is top-heavy with regulation, those who are regulated gradually subsume the regulators and co-opt the regulations to suit their own purposes, which is what happened with the banking crisis, and in an earlier epoch with the Trade Unions – indeed, in the latter case, the politicians simply threw in the towel. In The Mess We’re In this problem of banking regulation is dealt with in an illuminating way, as discussed in my review. It is almost inevitable that this should happen as businessmen actually understand economic realities in ways that most academics and civil servants are incapable of, an elementary point that ought to have sounded the alarm over regulation.

Calvin Coolidge in his Autobiography affirmed that nine-tenths of those who called on the President at the White House “want something they ought not to have. If you keep dead still they will run out in three or four minutes.” (Quoted in Paul Johnson, A History of the Modern World from 1917 to the 1980s.) Would that the political classes on both sides of the Atlantic study the Coolidge presidential style, to our profit…

Perhaps Samuelson’s puzzlement is that a Keynesian system was meant to sweep away the habits of the period in which the early economists wrote, self-interest, collusion and all. But how on earth is it possible to believe that, with the government being courted on all sides, collusion should somehow fade away? This is just one of the many ways in which a Keynesian lens distorts the observation of what is actually taking place, in both an unregulated economy as well as a Keynesian one; the latter distorts information in such a manner that even the Keynesians themselves cannot read it!

Artistic Integrity?

A useful way of looking at Keynesian economics is as a branch of aesthetics, a subject to which I shall return. It was aesthetic distaste, after all, that inspired Keynes against the “early economists”, as I pointed out here. He inveighed against them thus: “When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years.”

During the Thatcher years this disapproval of “self-interest” induced a very peculiar species of posturing amongst the aesthetes. In his book The Strange Death of Tory England (Penguin Books, London, 2005), Geoffrey Wheatcroft dissects this disdain.

“The novelist John Fowles complained about ‘the self-centred notions of the new conservatism’. He was shocked by ‘this rightward and selfward tendency in most of the electorate since the 1950s’, a cult of personal advantage made worse now by ‘the ethos of the grocer’s daughter’.” These sentiments were generally echoed and endorsed by the artistic elite throughout the 1980s; for the novelist and playwright Michael Frayn the free trade Tories were “barbarians”; the philosopher A. J. Ayer voted for the SDP on the grounds that they were not “philistines”, and the novelist Julian Barnes echoed Fowles in thinking that Thatcher’s achievement had been “the legitimization of self-interest as a public and private virtue”.

How amiable, then, of these people to claim to have political motives loftier than “the ethos of the grocer’s daughter”. Wheatcroft quotes the composer Sir Michael Tippett on his voting intentions: “As an artist I’m impelled to vote Labour, since it’s the only party committed to doubling the arts budget.” And actor Antony Sher: “As a member of the arts [sic] I am heartened by [Labour’s] pledge to double the arts budget.”

Perhaps artistic self-interest takes place on a more exalted plane than the base motives of those who merely wish to feed their children.

What these variously fatuous “members of the arts” fail to see, or perhaps wilfully ignore, is that state subsidy of the arts inevitably means a very obviously self-interested transfer of wealth from the poor to the rich, another of those moral grotesqueries of the Keynesian and welfare state.  (It should be remembered that Keynes was Chairman of the Arts Council, overseeing such transfers.) Not only are they driven by self-indulgence but also by self-interest – but then, as the “early economists” and the Austrian School understood, we are all driven by self-interest, it cannot be otherwise.

The plea is often made that human life is more than just survival, that we are cultural and intellectual beings with other than literal hungers to assuage. I agree – it is hardly difficult to do so, the facts being what they are – but not by taking the bread out of the mouths of our children.

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

PAUL SAMUELSON ON THE TROUBLE WITH ECONOMIES

Tuesday, December 11th, 2012

By Mark Rogers

Hagiography

“Rare is the opportunity to see, much less own, an original. Economics by Paul Samuelson is the classic textbook that gave birth to modern economics, and sold millions of copies in more than 40 languages. Now, in this unique and carefully crafted reproduction edition, Samuelson’s original words, text, and layout are recreated from the original classic edition. More than just a historical curiosity, however, this book’s power to explain economics to both the expert and the novice shines on every page. As fascinating now as when they were first published in 1948, the wisdom and applicability of Samuelson’s words remain vital in today’s turbulent economic world.”

(Publisher’s description on Amazon for new edition (1998) of the 1948 edition, McGraw-Hill

“Samuelson’s text was first published in 1948, and it immediately became the authority for the principles of economics courses. The book continues to be the standard bearer for principles courses, and this revision continues to be a clear , accurate, and interesting introduction to modern economic principles. Bill Nordhaus is now the primary author of this text, and he has revised the book to be as current and relevant as ever.”

(Publisher’s webpage for the 2010 edition.)

“It is difficult to exaggerate the world-wide impact of Mr Samuelson’s Economics.”

(The Economist)

Samuelson’s textbook has been one of the most influential sources of Keynesian ideas ever since it was first published.

Samuelson meets “Adam Smith”

George J. W. Goodman writing under the pseudonym “Adam Smith” published Paper Money in 1982 (Macdonald & Co. (Publishers) Ltd, London & Sydney). Amongst many other activities business as well as journalistic and academic, by the time he published this book he had been serving on the Advisory Council of the Economics Department of Princeton University.

Paper Money is an investigation of the financial crises of the 1970s and their unravelling. It is also an attempt to discover why so much of the economic orthodoxy was unable to explain what was happening or offer cures and preventatives. This may sound familiar.

Chapter 2, “Why Not Call Up the Economists?”, is his account of some of the economists he paid visits to in order to answer that question. He interviewed Paul Samuelson, and posed the question: “Is Keynes really dead?”

Samuelson’s answer somehow seems to encapsulate the air of unreality fostered by Keynes and the Keynesians:

“The fact is that what we’ve got, a Keynesian economy, is economically stable. It’s just politically unstable. The self-interest that the early economists counted on as a balance leads, in a modern economy, to collusion among the self-interested groups.” He further conjectures: “The malaise just isn’t in the figures. Something else must be going on.” Though what, he didn’t know. (That “just” is an emphasiser, he doesn’t mean that the malaise is elsewhere too; he means that the “malaise” (whatever he means by that – the general sense of economic disorder that is somehow not disorder?) isn’t recorded in the figures at all.

“Adam Smith’s” gloss:

“We have an economic system that works, except for the people in it? But the people are in it.”

Samuelson’s bizarre understanding of self-interest will be the starting point for further discussion…

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

AMAZON, GOOGLE AND TAXES FOR AID

Thursday, December 6th, 2012

By Mark Rogers

In the wake of the concerns raised here, it appears that The Times has a few readers who are more analytical than some of its editorialists. The day after the somewhat sententious leader about the moral duty of multinational companies, the Letters to the Editor pages carried some very sensible observations.

First, Amazon’s sales to UK customers are made by a Luxembourg based company, and all buying and selling and pricing decisions are taken there. All that is operated in the UK is a delivery system, and, comments the writer of the letter, Heather Self, a chartered tax advisor based in Cheshire, “it is not surprising that profit margins are small”. As one who knows the publishing industry, I know exactly what she means.

She goes further: “The report [“Taxman targets Google”, The Times, December 3] also refers repeatedly to ‘revenues’ (ie, turnover), when – as every small business knows, this is a very different number from profit, on which tax is charged.”

As another reader points out, corporation tax is only one of a host of taxes that corporations pay, none of which are avoidable and so no-one tries: “VAT, excise duties, business rates, PAYE, employers’ and employees’ national insurance,” Julian Pilcher, Hampshire. While the PAYE is tax taken on behalf of the taxman from the employees, this is done so at the corporation’s expense.

WIND FARMS IN AFRICA – AT BRITISH TAXPAYERS’ EXPENSE

As if the hollow moralising of MPs was not enough, on December 4, the Telegraph ran a story on how delighted Nick Clegg, the Deputy Humbug, I mean Prime Minister, is that £2 billion pounds of British aid money is finance Third World “green” projects, including wind turbines in Africa. This, says Clegg, is fantastic news.

Just the week before, some industries had some “fantastic” news: they are to be shielded from green energy costs, while households are not.

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

STARBUCKS AND ALL THAT TAX

Monday, December 3rd, 2012

By Mark Rogers

[As I shall be referring to past articles on taxes, here is the link to a short summary of their argument with an index of all those other articles: The Moral Dilemma at the Heart of Taxation.]

Before examining the latest round of political opportunism and hypocrisy on the subject of taxation, as well as the moral earnestness of a certain newspaper, I propose two new words: should what companies such as Starbucks, Google and Amazon and individuals who engage in protecting their wealth from the ravages of the state be accused of tax evadance or avoision? It used to be the case that “evasion” was illegal while “avoidance” was legal. While this was a definition that depended mostly on bad legislation and even worse Bill drafting, even these distinctions are now lost. Politicians and journalists alike will use both words to describe the perfectly legal activity of avoiding taxes [see above mentioned articles].

The Public Accounts Committee has just published a “damning” report on its interrogations of representatives of Starbucks, Google and Amazon. The Chairman of this committee is Mrs Margaret Hodge. More on her later.

Both the Committee’s report and today’s Times of London lead editorial make much of the morality or otherwise of the companies’ behaviour. We shall address that later too, but first must note that The Times makes a very peculiar distinction:

“When a corporation seeks to reduce its tax bill, it does so with a veneer of self-justification. … An individual, meanwhile, may legitimately seek to manage his or her own taxes out of sheer prudence.”

First, in common law, a corporation is a legal person. Second, is The Times saying that corporations do not act out of “sheer prudence”? Third, the Chancellor, George Osborne, was recently reported as making much the same points, when, in a preliminary outline of his Autumn Statement to be delivered on December 5th, having once more [see above articles] denounced “aggressive” avoidance, as an afterthought he hoped that the Starbucks review of its U.K. tax position would not lead it to conclude it should shut up shop and retire from these shores. Exactly!

Government sneaks

The government is pursuing tax avoidance schemes and threatening legislation that will compel providers of such schemes to expose their clients, even though none of these people, providers and clients alike, are criminals or engaging in practices that are illegal – unlike the MPs who are condemning them, those MPs who thought nothing of hoodwinking the public with their illegal manipulation of their expenses schemes, with all the lying and dishonesty that involved. The providers and clients of avoidance schemes are not even being dishonest. And the government that is threatening them is the same government that taxes the poorly paid, even those on the minimum wage, squanders vast sums on benefits, squalid hospitals and lousy schools, etc… a very long et cetera, as the singer Adele noted [see Jimmy Carr and His Terrible Error in the index of tax articles].

And it gets worse: “Up to two million people are to have their credit files secretly checked under a crackdown on tax evasion to be unveiled by George Osborne to help raise another £10 billion.” This is from a report in today’s Telegraph. It goes on: “Credit reference agencies will cross-check details of the income people declare on their tax returns against their spending patterns to identify ‘high’ and ‘medium’ risks of both illegal and legal tax avoidance.” This is shocking, but doubtless HMRC will reward the credit ratings agencies handsomely having co-opted them into its Stasi-like operation. This is a very serious corruption of the body politic. And I wonder what exactly is implied by “risks”?

Morality?

Kelvin MacKenzie, also writing in the Telegraph, makes this point: “Sick and tired of subsidising folk from the rest of the country? You belong to a select club – the club of the hard-working, clever and creative people living in London and the South East who single-handedly are giving the rest of the nation a standard of living they can’t, or won’t, create for themselves.”

That seems a good enough place to start examining why this issue has suddenly been turned into a moral one.

The Times leader quoted above goes on: “Lower tax bills, [the corporation’s] officers may argue, mean lower bills for its customers and higher returns for its shareholders – who in turn ought to be paying tax. The reasoning, invariably, is false, for even corporations have moral duties.”

This is sheer intellectual, and moral, incoherence: first, the leader does not even mention the huge swathes of job creation, both directly in the form of, say, Starbucks’ own employees and indirectly through the supply chain – which explains Osborne’s concern that paying more tax may shut a multinational company down. And of course it should be noted that throughout that chain of employment, taxes will be being collected.

The most incoherent aspect of that statement, though, is that a true reasoning along economic lines of the effect on jobs and prosperity is viewed by The Times as immoral, as “a veneer of self-justification”. But that is just how companies, big and small, operate. And why shareholders should be pilloried in this way reveals further moral and economic confusion; they are after all the people who invest their money and, quite rightly, expect a return – or why invest? And amongst those profit-seeking shareholders in major corporations are many of the big pension funds – those same pension funds which have been despoliated by the state: first by Gordon Brown’s so-called windfall taxes, and more recently by the millions wiped off their funds by QE.

But let us consider morality and taxes in one of the most shocking exposures of state corruption, the grooming for sex by Asian gangs in the north of England of underage girls. This was going on in the full knowledge of the agents of the state, the social workers who had responsibility for these girls, many of whom were in care, and the police, and all this while these agents of the state were, and still are (heads have not rolled), drawing their pay – from the public purse funded by the taxpayer. Morality anyone?

And what about that Chair of the Public Accounts Committee, Margaret Hodge? While we’re on the subject, this is that same Margaret Hodge who, as Leader of Islington Council, covered up homosexual grooming by some of her own social worker employees of boys in Islington care homes (and who, in the full knowledge of this failure to protect the vulnerable on her watch, Tony Blair, sickeningly, appointed Minister for Children).

Margaret Hodge was also one of the more exploitative manipulators of her expenses as revealed in the MPs expenses scandal. Morality, forsooth! Why should Starbucks subsidise her with its taxes??

“The Barking and Dagenham Sentinel – being delivered free to all homes in Barking – has dealt a crushing blow to the hopes for re-election of Margaret Hodge. Hodge stands revealed for her record on the Iraq war, her expenses claims and her failure to deal with serious child abuse when she was Head of Islington Council. The paper suggests that the ‘hold your nose and vote Labour’ approach would be immoral and inappropriate  in this instance. Many principled anti-racists are rejecting Hodge and instead intend to vote for the Green Party. Other committed Labour supporters are deciding to stay at home as no  genuine, principled Labour candidate is standing in the Constituency.” This is part of a report on Chairman Hodge, which can be found here; other reports here and here.

So morality is a mug’s game in politics; as Harold Macmillan once said, if the public wanted morality it should get it from it bishops, not its politicians.

Paul Johnson in his book A History of the Modern World from 1917 to the 1980s, makes the cogent point that the evidence that the state can do great evil is the history of the twentieth century; whether the state can act for the welfare of its citizens is dubious – evidence for this is not encouraging.

Starbucks and Amazon, shopkeepers both, are of immense benefit to the nation: Margaret Hodge and her ilk are not. The Public Accounts Committee, a spending committee, should revert to its proper parliamentary and constitutional function of keeping the government accountable, not assist it in its raids on private and productive wealth.

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

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