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Destructionism – with a few British examples

The last part of Ludwig Von Mises great work Socialism is entitled “Destructionism” and is not, formally, about socialism at all.

In the main body of “Socialism” Ludwig Von Mises proves that it is impossible (yes impossible) for socialism to equal capitalism economically, let alone to exceed capitalist economic performance (as socialists had been promising for over a hundred years) socialism must always produce inferior results. Now the language of Ludwig Von Mises may sometimes suggest that he believes that socialism can not function AT ALL (i.e. that it can produce nothing – no goods and services), but that is a misinterpretation of the position of Mises (which is partly the fault of Mises himself – who sometimes lets elegant language get in the way of fully stating the correct position, as I detest such things as “grammar” I do not make this mistake). By copying the prices of the capital goods in “capitalist countries” socialist countries can make a crude approximation of “capitalist” economic activity – never very good, but certainly not no economic activity at all.

However, in the last part of his work “Socialism” Ludwig Von Mises turns to “Interventionism” government spending, taxes and regulations which (supposedly) improve on the work of voluntary cooperation. “Market forces”, of supply and demand, are as my friend Mr Ed often points out – partly a matter of physical reality (weather and so on), but mostly a matter of human choices (voluntary interaction).

Government intervention (by spending, taxes and regulation) far from improving economic and social outcomes can (as Herbert Spencer pointed out in “Man Versus The State” in 1883) only make things worse than they otherwise would be. Ludwig Von Mises takes great pains in “Destructionism” to show that the fashionable polices of his time (and our own time) of government spending, taxes and regulations make things worse, not better, than they otherwise would be. And that the supposedly new idea of interventionism – is, in fact, a return to the absurd fallacies of past centuries that the Classical Economists of the had exposed.

Has the penny dropped, do politicians (and the public) yet understand that government spending, taxes and regulations make things worse (not better) than they otherwise would be? Sadly no – most politicians and most of the public do not understand.

For example, even after hundreds of deaths at North Staffs hospital and hundreds of deaths at Gosport hospital (and so many other examples), the religious faith in the National Health Service remains devout – all problems are blamed on (mythical) “cuts” in spending, and politicians (of all political parties in Britain) compete with each other to promise even more government spending – financed by even higher taxes (although British taxes are already crushing). The same for “Adult Social Care” and on and on – more government spending and higher taxes are considered the only alternative in Britain, and many other nations. For example the President Elect of Mexico wants to double government paid pensions of the elderly – nice till one starts to think of the vast harm, in terms of unemployment and so on, that the higher taxes will create.

Good intentions leading to bad policy are also clear in terms of regulations. For example, the British government has decided that three year tenancies (for all) would be nicer than six month tenancies – which some people have to settle for now. Would it not be nicer for tenants, all tenants, to not worry about eviction for three years not six months? Surely only flint hearted “nasty” people could oppose government passing new laws to help the poor? And the Prime Minister, an admirer of “Radical Joe” Chamberlain of 19th century Birmingham, is well known for calling the Conservative Party the “nasty party” – full of people supposedly far too interested in liberty, such Conservatives were strongly condemned by the manifesto of the Prime Minister in the general election where the Conservatives, unsurprisingly, lost their majority in the House of Commons – it is difficult to win a majority in an election when the Leader of your party, and the manifesto produced on her orders, is hostile to the party membership and their beliefs. Ancient Kings of Spain had much the same idea – but they did not settle for three years, if a tenant pays the rent why should they EVER be evicted? Perpetual tenancies – how compassionate! One in the eye for “nasty” people with their “fetish of market forces” (Freedom of Contract) – of course this meant that Spain did not have an agricultural or industrial revolution (and nether did most of Latin America), but as long as government means well who cares about the results of a policy? So property owners will not risk having unsuitable tenants fixed in place for three years – and so these people will end up sleeping on the streets, but the intentions of the government are compassionate.

Ditto with endless other regulations, in Britain and most other nations, the “fetish of market forces” (i.e. freedom – freedom of contract) is in retreat in many countries. – so what if the consequences of the regulations will be terrible, as long as the intentions of the rulers are compassionate! Thus Destructionism does its terrible work.

9 comments to Destructionism – with a few British examples

  • Nicholas (Unlicensed Joker) Gray

    This is one of the inherent weaknesses of Democracy- that politicians claim a mandate to increase government control over one part of the economy, and other politicians win power by promising to fix something else, and thus extend the state, elsewhere. If a politician doesn’t claim to fix a problem, then another politician will do so, and likely win power, and thus feel emboldened to pass more laws, etc.
    The other dangers are the urge to enforce equality for all, and the belief that a majority vote is always correct- The General Will fallacy.

  • Nicholas (Unlicensed Joker) Gray

    And I’m not just a mindless critic of Democracy- I can suggest an alternative! I call it Meridocracy, meaning ‘Share power’. If a person chooses to be a citizen of the local county, then the price of citizenship would be that you would serve eleven months of the year in some branch (part-time) of the public service (fire-fighter, patroller, cleaner, militia, emergency services, etc.) and then have one month when you, and all the other citizens who joined in the same month as you, are the Government of the county. No professional politicians would be needed. You could send delegates to conferences with other counties, but their decisions would not be binding unless your county approved it in a referendum. So that is my improvement on representative democracy, time-share government.
    If a person chose to not be a citizen, then you would be subject to all the laws, but have no vote on the laws.

  • The Pedant-General

    “Would it not be nicer for tenants, all tenants, to not worry about eviction for three years not six months? ”

    Scotland has just enacted exactly this type of lunacy with the new Private Residential Tenancy (PRT) that came into force late last year. This abolishes the assured shorthold tenancy – with understood, pre-agreed fixed terms – and shifts the balance of power hugely towards the tenant.

    The consultation leading up to this legislation was dominated by the do-gooders who were essentially insisting that private landlords are constantly on the lookout for ways to kick out their tenants and hence tenants need much stronger security of tenure. This is particularly true for tenants at the lower end of the scale etc etc.

    As a private landlord (and you can take that as a declaration of interest), I went to a briefing on the impact of the new legislation and the room was properly actually stunned at this point. I think one very polite gentleman did actually raise his hand at this point and say “WTF???”. The reality is that landlords are extremely keen to find tenants who will look after their property so that they don’t churn, they don’t incur marketing fees to find new tenants and – vitally – you don’t have a void. There is a MASSIVE incentive for landlords to ensure that their properties are reliably let all the time. The very idea that landlords actively seek to keep properties empty is such self-evident nonsense that the failure of the relevant politicians to throw out the entire corpus of evidence of those proposing it let alone adopt it into their thinking raises very, very worrying questions about how we are governed.

    There is now the startlingly obvious perverse incentive: Previously, if you were a bit worried about tenants trashing your property, you would just elect “not to renew” the lease. As you must now actually find grounds to evict and go the First Tier Tribunal to do so and demonstrate that the tenants fall into one of a very small and very tight list of grounds to take back the property, you just will not agree to a tenancy if the prospective tenant does not look absolutely squeaky clean. If you can’t get rid of them, you won’t take them on in the first place.

    But the lunacy does not stop there.

    Students – and there are a lot of students in the main cities of Scotland – only want a fixed term. In Edinburgh in particular, there is was a healthy market for “festival lets”, where students let for the academic year, vacate in early July so the property can be spruced up and let out during the festival for a much higher rate. Students aren’t on the hook for rent over the summer, the landlord gets a really great rate over the festival, the city can accommodate the million or so visitors in August and the media types have somewhere to stay. Everyone wins.

    The PRT prevents this.
    It is not possible to write a contract for a 10 month let. The student could elect not – or just forget – to give notice to quit.
    Worse still, the landlord cannot market the property in January to ensure s/he has the next set of students in September because the property is already let.

    However, as is often the case, the market has a funny way of sorting things out. A solution has appeared: before actually entering into the lease – note that this is not a condition of the lease, obviously – the student gives notice to quit….

  • Rob Fisher

    And a bit of Googling finds ample evidence of rental shortages in Scotland. Who’d have thought it?

    Then again, there were also such shortages back in 2015 when a Scottish government spokesperson said, “”We have also recently consulted on a new tenancy system to improve the private rented sector for both tenants and landlords.” Now we see how that worked out…

  • Sam Duncan

    “The very idea that landlords actively seek to keep properties empty is such self-evident nonsense that the failure of the relevant politicians to throw out the entire corpus of evidence of those proposing it let alone adopt it into their thinking raises very, very worrying questions about how we are governed.”

    We’re governed by people who got their ideas about how the world works from the Beano. And I’m barely exaggerating. They go into politics in their teens, work their way through a party, get themselves a safe seat in their 20s (or earlier), and never see the real world in their lives. Her Majesty’s Minister of Justice in Scotland is 35 years old, and has never known life outside SNP politics.

  • bobby b

    I don’t know your tenancy laws. With a three-year term, can tenants get out early? Or does the law just bind landlords?

    Because I know that tenants aren’t usually any more eager to commit for three years than are landlords.

    This looks to be a regulation that is going to displease everyone except one specific small constituency. Who knew the social grouping of “bad tenants” had so much power?

  • Paul Marks

    bobby b – so far tenants can walk away, but (logically) the doctrine of “fairness” would bind them to. Then one would have an Emperor Diocletian situation – people bound to where they live. I am sure an admirer of “Radical Joe” Chamberlain could be convinced that this is an excellent idea.

    As for blaming democracy……

    Dear people – our rulers do not need democracy, they do not even like democracy. One does not need democracy to follow a policy of SOCIAL REFORM – the Emperor Diocletian has already been mentioned, but there are many other SOCIAL REFORMERS.

    Did people miss my point (taken from Mises) about “modern” ideas actually being a return to the ravings of past centuries – the “Social Reforms” that the Classical Economists exposed as terrible fallacies. These past centuries were not known for democracy.

    Wild government spending, price controls and other insane regulations, and so on, do not need democracy – countless rulers have tried this stuff.

    All one needs is a powerful government that believes its role is to “promote the happiness of the people” – then all Hell is let loose.

  • The Pedant-General

    bobby b,

    Two things going on here.

    1) Scotland
    Lunacy already in force.
    – Tenants can give one month’s notice at any point, without warning or reason
    – Landlords can only take the property back with reference to very specific grounds.
    Previously, if you had a bad tenant, you could invoke a 6 month break clause or just “not renew” the lease. Now you actually have to prove that the tenant is continuing to damage the property after several formal warning letters have been issued etc etc. The process could take months and you have to go to court to do so. Net result, incentives for tenants to behave are very very much reduced.

    2) England
    Lunacy only being proposed currently. 3 year min term clearly completely bonkers for students or people relocating (rent in short term whilst you find your feet and work where – or even if – you want to buy).

  • Paul Marks

    Yes indeed P-G.

    Scotland tends to lead the way when it comes to statist lunacy (in many areas) – but England soon tends to follow.

    The core problem is the education system – what the establishment elite are taught, both in Scotland and in England (and elsewhere in the World).