Etiam pulvinar consectetur dolor sed malesuada. Ut convallis
euismod dolor nec pretium. Nunc ut tristique massa.
Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan.
Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem,
suscipit in posuere in, interdum non magna.
Discovered Joys – if we had independence rather than “Brexit” then European Union regulations would no longer have been law in this country, but, as we had “Brexit” rather than independence, all existing E.U. regulations were “incorporated” into British law (there was a short Act of Parliament to do this – ironically pushed for by Sir William Cash, who supported getting out of the E.U. but said there would be “chaos” if the regulations were no longer legally valid) – so we did not get a 1660-1661 type event where many “laws” were declared void. There was also a tacit understanding (pushed by Prime Minister May) that FUTURE E.U. policies would be followed in the United Kingdom – after all (argued Mrs May) we had not voted for independence, we had voted for “Brexit” (a meaningless made-up word).
Roue le Jour – it may be so, although the victory of the right at a future election now looks unlikely, due to the three way split between Kemi Badenoch, Nigel Farage and Rupert Lowe – on the ground the left (Labour, Green, Lib Dem) parties are cooperating (they do not split the vote in local council by-elections and so on) whereas the parties of the right are tearing each other to pieces.
Governments should not run “the economy” – part of the problem is the word “economy” which comes from the Greek word for “household”.
Millions of people engaged in voluntary commercial interaction (work and trade) is not a “household”, and nor, contrary to that cretin Tucker Carlson, it is not a “system called capitalism” – it is not a “system” at all, it his human-freedom, liberty.
As for politicians being awful – it was ever thus, Disraeli put unions partly above the law (legalizing paramilitary tactics – such as “picket lines”) and thus created Institutional Unemployment and the relative decline of British industry, he also undermined local democracy by mandating that local councils undertake about 40 functions – whether local taxpayers wanted the council to do these things or not.
Disraeli is summed up by his housing Bill – when questioned it became obvious that he had no idea what was inside his proposed statute, he just insisted that government must “do something” (like Dick Dastardly talking to Muttley) as part of his “two nations – the rich and the poor” tap-dance. It shows the intellectual bankruptcy of the study of history now that this novelist turned politician is presented (in the history books) as a “great Prime Minister”.
Before Disraeli we have the “Liberal” leader – Lord Russell who, as a minister, agreed to the proposal of Lord Stanley (later the Earl of Derby) that a system of state schools be set up in Ireland (after 1831), and later (as a minister and then Prime Minister) Lord Russell first imposed a Poor Law Tax on Ireland (1838) and then massively increased it (late 1840s – with areas of Ireland that were not bankrupt being forced to pay for areas that were bankrupt) – thus destroying the Irish economy, with around a quarter of the population either dying or fleeing the country in only a few years.
I will type that again – a quarter of the population of Ireland either dying or fleeing the country in only a few years, that is what happened under Prime Minister Russell – not because of “laissez faire” (as the lying history books claim) – but under a policy of crushing taxation – all taxes are passed on, there is no such thing as a tax that just hurts land owners. J.B. Say and the other great Liberal French economists would have been horrified by the English usage of the term “laissez faire” to mean just “no tariffs on imports” – with every other form of statism, such as crushing domestic taxation, being considered just fine.
“Andy” Burnham and his band of cretins (or worse) would have to work very hard to beat what Lord Russell did.
As for Credit Money and bailing-out-the-banks – yes Lord Russell did that to, the ink on Peel’s Banking Act was barely dry before Lord Russell suspended it – so the Bank of England could bail-out banker Credit Bubble antics.
Even in the Tudor period the government (staring with Henry VIII – Henry VII and his ministers were not much interested in creating a new-society) endlessly meddled – and all the ideas pushed were demented.
However, back then England lacked a Civil Service or police forces – so the ravings of the government tended to stay in Westminster, certainly up in (say) Lancashire or the West Riding of Yorkshire – edicts (“laws”) from London were wildly, and correctly, ignored.
Had the mass of Tudor legislation (and by the last years of the first Queen Elizabeth the edicts and statures were going full Emperor Diocletian – price controls, demands that men follow the jobs of the fathers, and so on) been enforced – the later industrial revolution would have been impossible.
Liam Halligan is correct – the media, and the education system, call a gigantic government – out of control government spending and taxation “laissez-faire”, “austerity”, “Neo Liberalism”.
Their lies are so wild, they picture they present is so much the OPPOSITE of reality – that they could get away with an insanity defense.
Again – this has long been the case. Thomas Moore and Thomas Cromwell (wildly different theologically) were both wildly misguided on economic policy matters and the 16th century economist John Hales was just as plain nuts as John Keynes centuries later – John Hales blamed inflation on “greedy” landlords and merchants – he was a “moral economy” nutcase who the government found useful in distracting attention from the policy of debasement (which Keynes would have loved – gold being a “barbarous relic”). By the way – “enclosure” does not steal land, you do not pay RENT for land you own, the peasant farmers did not own the land in question.
What is different now is the sheer size of the government – the government of the United Kingdom, and other Western nations, has grown to a size that boggles the mind.
By the way – I think Liam Halligan is mistaken about it being unthinkable for the “sixth largest economy in the world” (Britain is NOT really the 6th largest economy in the world – “GDP” is a stupid measure of an economy) to default on the government debt.
By his own presentation – the government debt in Britain is impossible to maintain, it is just too large. And the United States is worse in this – its debt (however measured) is a worse burden – and the United States is rather more than the 6th largest economy in the world, yet its government debt is going to have to go.
Something that is impossible to maintain is not going be maintained.
Perhaps the ugly word “default” can be avoided – but, one way or another, that debt is going to go – perhaps massive inflation will be used to “pay” the debt.
So people who hold “government bonds” (“securities” or whatever name you want to use for government IOUs) had better sell them – and not sell them for fiat money.
To me this discussion sounds like arguing about the price of farm labour in the 1750s. I mean I agree with what he is saying for sure. And increase in the civil service of 35% in ten years. It is hard to countenance such an utter disgrace and abuse of the public’s money.
But it was fiddling around with the details while the tsunami of the industrial revolution was about to hit. AI and robotics are going to turn the world upside down and what economists should be talking about is how to adapt the British economy to most effectively profit from it, how to arrange the British economy so that it dramatically enhances the lot of British people rather than utterly ruining them. But they are not. They aren’t talking about it at all really.
And one reason why they are not doing so is that Net Zero makes it utterly impossible for Britain to get anything except the short end of the stick.
I’m afraid you’re going to be coming with your begging bowl to the United States in the next decade because of your utter lack of preparation. Though, on the other hand if the Left and some of Bernie and the DSA’s crazy ideas take root, you’ll have to take your begging bowl to China instead.
On the other hand, even if Britain is doomed to this disaster, there is no reason individual Britons need to do so. If you are still working and not scrambling to be an expert in applying AI, and latterly robotics, to your field of expertise, you are making a big mistake.
For example, one thing they could do would be to start building data centers in the Orkney Islands, a place with abundant non hydrocarbon energy and masses of freely available water. But I’m sure someone would complain about scaring the beautiful island’s landscape with such an abomination.
Fraser Orr – you believe that technology can save Britain and other Western nations.
I, respectfully, disagree.
With a government of this size and scope, and a monetary and financial system this corrupt (indeed it is nothing-but-corruption – it is not corruption on top of a basically sound monetary and financial system – there is only corruption, that-is-the-system now) no level of technology can save the situation.
As for “when will it become obvious” – I see the decline on the streets (and elsewhere) every day, and it has got worse and worse – regardless of official statistics about “GDP per capita”.
@Fraser Orr – I disagree. Without substantial changes to the UK is governed and an even more substantial reduction in the size and cost of the state, we can guarantee any advances from AI and robotics will pass us by. Britain is still governed by people who think like their EU equivalents, the type of people who came up with regulations for an AI industry which does not exist.
Were you joking about the data centres? Data centres on the Orkneys wouldn’t be the slightest use: they’d cost a fortune to build, they’d need lots of diesel back up for their spectacularly expensive wind power and they would only be useful for applications where latency is not an issue.
@Marius I disagree. Without substantial changes to the UK is governed and an even more substantial reduction in the size and cost of the state, we can guarantee any advances from AI and robotics will pass us by.
Well then you don’t disagree, you agree. I don’t think AI and robotics will save Britain, not because it can’t but because the government is not preparing for it, and in particular because NetZero makes it impossible. The United States is a different matter. They do have a chance to see a world of abundance brought on by AI and robotics. All it needs is a stable governing environment for a few more years to allow the track the existing tech is on to mature. Of course if idiots like Bernie and the DSA take control then they will not have that.
To be clear, this revolution WILL take place, it is a matter of who leads it. Britain is far past the ability to participate, even though they have many smart people who could do a lot, for example the guys at ARM. But there is a reason Demis Hassabis doesn’t live there anymore. But if the United States does not take up the mantle China certainly will, they are already biting at our heels.
Which, FWIW, is why I am coming more and more to the conclusion that the Iran war is perhaps one of the most catastrophic political decisions in American history. By engaging in yet another unwinnable middle east war rather than maintaining Iran in a box as we did ante bellum, we have allowed the resurgence of a terrible left wing party in the United States that will steal away this technological revolution which would bring so much abundance and liberation, and hand it instead to one of the most tyrannical regimes in human history. The consequences of this are so extreme because the changes AI and robotics are so extremely transformative, and to loose that to China is a real disaster for humankind.
It is worth saying that the true tragedy of Britain and AI is that the modern revolution in AI actually started in Britain with Hassabis’ DeepMind. This was a remarkable produce that transformed how AI was understood and what its capabilities were. It was then purchased by Google where it was nurtured (in California), and when Musk understood the danger of Google being the only AI company he started OpenAI specifically to counterbalance it — which ultimately lead to Anthropic and xAI.
Which is to say Britain is where the whole thing started, but in was only by leaving Britain that AI could succeed. Which is a poor testimony indeed to a country that has been the mother and the matrix of so much of modern civilization and science. Once again, it will have to sit this one out because of insane government policies, and particularly to the one to which they seem most attached — NetZero.
Fraser Orr – thank you for explaining your position.
Yes, I agree – even if new technology is capable of bringing about the abundance you mention (which I doubt) there is no chance whatever of prosperity in the United Kingdom.
Like Tucker Carlson the British government regards economic life (liberty) as “a system called capitalism” which they are hostile to.
Net Zero, and the rest of the endless regulations, and crushing levels of government spending and taxation, mean that is no chance for this nation – even if we wish away the demographic mess (as the French used to say, before they were sent to prison for saying it, “demography is destiny”) where the British are not having babies to replace themselves – and hostile populations (hostile to the West) are expanding in this land.
Of course, the United States has its own demographic mess, and its government spending is also crushing, especially in “Blue States” such as New York and California.
But there is some hope for the United States – there is, alas, no hope for the United Kingdom.
As for the parties of the right in the United Kingdom – Rupert Lowe will not work with Kemi Badenoch because Restore Party activists do not regard her as British – according to them both your parents have to be British born for you to be British.
I actually pass that test – but King Charles (father born in Greece and of originally Greek nationality) and Winston Churchill (mother American) fail it – and so does Kemi Badenoch.
And Nigel Farage will not work with Kemi Badenoch because he is still furious that he was cheated by Mr Johnson – and Johnson did cheat Nigel Farage, he treated Mr Farage like dirt – not giving him a peerage (that would have knocked Mr Farage out of front line politics, as one can not govern from the House of Lords – but Mr Johnson was too stupid to see that), indeed not even giving him a knighthood (“public servants” are given knighthoods for, basically, nothing – yet Nigel Farage was not given one). Mr Johnson is not in politics anymore – but Mr Farage is still furious with him (and understandably so)
As for Kemi – she says that she does not care that Rupert and Nigel will not work with her, because she does not want to work with them anyway.
It is a bit like dealing with three young children – who have been out in the sun too long and have eaten too much ice cream. All three are in a mood.
@jgh Every time I use Google Gemini it “thinks” for three to four seconds, so any latency to Orkney is going to be imperceptable.
Which is also, among other reasons, the vast majority of compute in the future will end up in orbit.
As to Orkney, maybe I am wrong, but that place is both the windiest place, and the place with the strongest tidal currents anywhere in the world (or close to it anyway.) And also one of the wettest places and the place with masses of unused land. Maybe all that non hydrocarbon energy is not enough, but it does seem like they have much more than they can use, and data centers will consume all the excess capacity that can be generated. I haven’t done the math though.
It is funny that there is no way it could happen since the idea of an icky data center blotting the beautiful landscape is beyond the pale, but the utter destruction of the countryside everywhere with these ugly as sin windmills, along with the ongoing massacre of some of the most beautiful birds, is perfectly ok.
Steve D – I agree that governments should not “run” “the economy” – and have explained why above.
On “running the nation” – we are given two bad choices, either government by legislation (contrary to historians such as the distinguished historian David Starkey – government by Parliamentary legislation is a BAD system of government, as the rise of the state from the 1870s onwards showed – although legislation long before this was often horrible, such as the Statute of Labourers all the way back in the time of Edward III – and most other Parliamentary statutes) – or, EVEN WORSE – government by the whims of officials, “experts” and judges.
Yes judges as well – as the old judges, of the Chief Justice Edward Coke and Chief Justice John Holt sort (both of whom were AGAINST the idea of “Parliamentary Sovereignty” as Dr Starkey understands that term), who came from a background of deep understanding of traditional jurisprudence, founded in Common Law – in turn founded in Natural Law as-traditionally-understood, are long gone.
Instead we have the “new Judges” (and Dr Starkey is correct about them) – whose ideas on jurisprudence (legal philosophy) are from deeply perverted “modern” fashions – which come, if traced back, from Rousseau and other horribly mistaken thinkers.
The nation should be governed by its traditional law – but neither Parliament nor the judges (and officials and “legal experts”) believe that any more.
Liam Halligan is horrified by the idea of a British government default on its debt.
However, the American Federal debt (even excluding the unfunded “Entitlements”) is now over Forty Trillion Dollars.
Forty Trillion Dollars (even excluding the unfunded “Entitlements”) – the mind can not grasp such as large number.
It is obvious that such a debt can not be honestly financed – there will either be open default, or the debt will be “paid” by massive fiat money inflation.
There is no reason why funny money should only be created by the Federal Reserve – indeed the Federal Reserve is not mentioned in the Constitution of the United States and did not exist till 1913 (the year my father was born).
If fiat money is Constitutional (“Article One, Section Ten, only applies to the States” and the rest of the obscene, despicable, justifications) then there is no reason why the U.S. Treasury (which has far more Constitutional standing than the Federal Reserve system – which has no Constitutional standing at all) should not create 40 Trillion “Dollars” from nothing – WITHOUT letting the Wall Street welfare recipients (in their expensive suits) “wet their beak”.
The present system of the government (via the Federal Reserve) creating “money” and lending it out to financial sector types, and then borrowing-it-back-again at a higher rate of interest – is utterly insane.
“But doing away with the system would destroy Wall Street” – Wall Street (and the general “financial industry” – including in Britain) is going to be destroyed anyway, its last link with sanity (the link between the Swiss Franc and gold) went 30 years ago.
Again – the present government debt (in Britain, the United States and so on) is just too large to be honestly financed over the next few years, so the present monetary and financial system is going to go.
You are indeed right. A debt of $40 trillion is indeed an obscenity, and can never be repaid.
I believe it took the USA 200 years to borrow its first trillion, now it adds a trillion to its unpayable debt every three months.
Of course, since the dollar is backed by nothing, the US Treasury could in theory print $40 trillion Treasury dollars and pay it off overnight. But that would reveal to the world the dark secret that the dollar is backed by nothing, which would tend to make confidence in the dollar, which for some reason still exists, disappear.
Thus, the US Treasury goes through the charade of “borrowing” non-existent money from the Federal Reserve, which then issues Federal Reserve notes as if that actually meant something.
President Kennedy was the last man to issue Treasury dollars which were backed by silver. No-one has bothered since, and since 1971 all US dollars are a legal fiction, backed by nothing at all, apart from men with guns.
Obviously, this system will not last forever. But it might go on for much longer than we think. It suits a lot of people. It enables the USA to have a welfare state and a warfare state, for just so long as foreigners accept the dollars it creates as if they were real money. Bretton Woods ended when De Gaulle insisted on being paid with gold rather than dollars. I wonder what will precipitate an end to the fiat dollar?
“men with guns” is what “Nobel Prize” winner Joseph Stiglitz said the modern financial and monetary system was based upon, not gold, not silver – not any commodity, just the threat of violence. And the swine (and he is a swine) was PROUD of that – he was happy.
The Federal Reserve creates “money” from nothing and lends it out to the financial players – who then lend the money (at a higher rate of interest) to the U.S. Treasury.
Little Real Savings, the actual sacrifice of consumption, no real (commodity) money that is valued before-and-apart-from its use as money, no real financial or monetary system – just fraud and violence. That is the filthy system of the modern age.
When will it finally go? I do not know.
The Roman Empire reached its final insane (and obscene) stage under the Emperor Diocletian – crushing taxation, state factories, most men tied to the jobs of their fathers, spies and secret police everywhere. It was no longer a society worth defending.
Yet it staggered on for another century.
Constantine did not tackle the real problems – but he did plunder the pagan temples, in order to have the gold to have real money again. And he did abolish the price controls of Diocletian.
It always amuses me when people say that the government (ours or America’s, it doesn’t matter) borrows money from the bond markets. Where do they think the “bond markets” get this money from? No-one has trillions of dollars hanging around waiting to lend to governments. The dollars (or pounds) do not exist. They are lent into existence by the central bank, which “lends” the dollars or pounds it has just created to the government, at interest. The government could just as easily create its own pounds or dollars out of thin air, and pay no interest. They don’t, because they have to pretend that the system represents something real, as opposed to something imaginary.
The system is thoroughly decadent. Governments borrow trillions in money which did not exist until it was borrowed, all to finance their day to day operations. The idea that if you can’t afford something you can’t have it is an alien concept. Our government is now borrowing money to pay the interest on the money it has borrowed. When an private citizen or a company does that, they are close to bankruptcy. The same may not be true of governments. They can always issue their own currency, since it is backed by nothing. The problem will be that it will also be worth nothing. Then people might begin to notice.
@JohnK You are indeed right. A debt of $40 trillion is indeed an obscenity, and can never be repaid.
It is certainly an obscenity, and one year ago I would agree that it could never be repaid, but I think differently now. If the new industrial revolution produces massive growth and massive deflation as I am pretty sure it will, then that debt can be eaten up pretty quickly. That’s assuming we aren’t taken over by the crazy left who want to stop it all and instead give all the success and wealth to China. And that is certainly a viable scenario. But if that happens a large national debt is the least of our problems.
Of course, since the dollar is backed by nothing
This is a myth. The dollar is backed by the full faith and credit of the United States, which sounds very nice, but in practice what it means is that it is backed by the guarantee that the government will continue to tax the crap out of its citizens, their children and grandchildren to continue floating the Ponzi scheme for the foreseeable future. So it is backed by the value produced by the hard working taxpayers of America, enslaved to their government masters.
the US Treasury could in theory print $40 trillion Treasury dollars and pay it off overnight. But that would reveal to the world the dark secret that the dollar is backed by nothing, which would tend to make confidence in the dollar, which for some reason still exists, disappear.
Except in the scenario I mentioned above with massive deflation (because goods and services and massively less expensive to make). Economists all agree deflation is bad, though FWIW I don’t agree with this, though I think massive inflation and deflation are both bad since we need a stable currency or operate in a predictable economy. Anyway the solution economists and government have to deflation is printing of money to cover the gap, money that could be used to pay the debt. It’ll be a bonanza for which ever government is in charge since they will spend a lot of it rather than paying off the debt. But the deflation is surely going to be large enough that even our “put a drunken sailor to shame” government can’t piss it all away.
Of course if you are not part of the revolution in technology, which is to say you aren’t the USA or China, all this redounds to your destruction. And, if Bernie and the DSA take us out of the running, we are far more screwed than we are today. Which again is why I am more and more convinced that the Iran war and its political consequences is perhaps one of the most cataclysmic mistakes in our history, something that has potential terrifying consequences for humankind.
I understand the “full faith and credit” business, I just don’t think much of it. $40 trillion is never going to be repaid, just rolled over for as long as possible. Of course, anyone who lends the US government a million dollars will always get it back, it’s just that it might only be enough to buy a loaf of bread.
Economists all agree that deflation is a bad thing. Personally, I quite like the fact that £500 buys me a computer which would have cost £5,000 ten years ago.
Anyway, I hope you are right about AI, but sadly I agree that the UK will not be benefitting from it, not as long as we are consumed by fear of carbon dioxide.
@Paul Marks Johnk – BAD economists all agree that deflation is a bad thing, good economists agree with you about cheaper goods being a good thing.
Sure, but if everybody holds off buying the computer, the people who make the computer won’t have the resources to build that cheaper computer next year. Inflation encourages consumption, deflation encourages saving. An economy, same as a family, needs a mix of both.
Inflation and deflation each have pros and cons. What we really need is a stable currency so people can plan for the future.
@JohnK I understand the “full faith and credit” business, I just don’t think much of it. $40 trillion is never going to be repaid
Question for you, if you will allow me a hypothetical, currently the US collects about $5 trillion dollars in tax revenue. What would happen if, and here is my hypothetical, if these new technologies accelerated the economy so that the US collected $50 trillion dollars in tax revenue (or the equivalent because dollars don’t mean the same in the two scenarios because of the aforementioned inflation/deflation.) What would happen?
I understand everyone’s skepticism about this, but I can give you my own lived experience as someone working in software. New AI tools like Cursor and Claude have completely changed the game. Programmers are 5 to 10x more productive, even mediocre ones. Some are 100x more productive. What does that mean? Software is VASTLY cheaper to produce, and that means both that the cost is dramatically decreased and the types of software that can be produced is dramatically expanded. Things that in the past were economically not viable, now are straightforward and achievable. Software is leverage to the rest of the economy. This has happened suddenly, in the last 6-12 months so it is not so obvious in manifestation, but these are definitely the facts. I see it every day. I could talk a lot about what this means but I won’t bore you all with inside baseball.
But these same tools are just as applicable to other forms of digital activity. And with the arrival of robots (which will really hit big time end of next year would be my guess) that same sort of productivity will hit the physical world.
I live this every day, most of my day is spent talking to AIs, so perhaps you can accuse me of projecting. But I find it hard to see how the results I am discussing cannot come about. Who knows, no one can know the future for sure, and maybe Skynet will take over. But, like I say, I live this every day, and that is what I see.
Fraser Orr – a “stable currency” has historically been used as an excuse for creating funny money (money from nothing) and dishing it out to the politically connected.
It was the excuse behind the monetary policies of mid to late 1920s – when Benjamin Strong of the New York Federal Reserve did this, and created the massive Credit Money bubble that collapsed in 1929.
“Price stability” is the wrong aim.
Let prices gradually fall over time (as people find better ways to make goods and services) – do not increase the money supply.
Irving Fisher (and his much later follower Milton Friedman) was wrong – indeed the policy of increasing the money supply to create “stable prices” is a disaster.
I certainly hope you are right about AI. Sadly, if it generated the tax revenues you suggest, do you think politicians would use the money to pay off debt, or just spend it on their clients?
Still, I hope good things happen. In Britain the governing blob is obsessed with the threat of a trace atmospheric gas. Until that changes, we are stuffed.
@Paul Marks Fraser Orr – a “stable currency” has historically been used as an excuse for creating funny money (money from nothing) and dishing it out to the politically connected.
Of course, but “National Security” has also been used to justify all sorts of terrible things, but that doesn’t mean “National Security” isn’t a legitimate goal.
Fraser Orr – Credit Money is, by its very nature, an evil – it is not abused, it is itself an abuse.
It is not a matter of whether it will be used to benefit the politically connected at the expense of everyone else – of-course-it-will-be, that is what it is for.
This Richard Cantillon understood – three hundred years ago.
Let prices gradually decline over time – as people find better ways to produce goods and services.
And money needs to be a commodity that people choose to value, before-and-apart-from, its use as money.
All content on this website (including text, photographs, audio files, and any other original works), unless otherwise noted, is licensed under a Creative Commons License. Powered by WordPress & Atahualpa
If only Brexit had been done properly.
It’s almost as if the state is operating a scorched earth policy against the advance of the right.
Discovered Joys – if we had independence rather than “Brexit” then European Union regulations would no longer have been law in this country, but, as we had “Brexit” rather than independence, all existing E.U. regulations were “incorporated” into British law (there was a short Act of Parliament to do this – ironically pushed for by Sir William Cash, who supported getting out of the E.U. but said there would be “chaos” if the regulations were no longer legally valid) – so we did not get a 1660-1661 type event where many “laws” were declared void. There was also a tacit understanding (pushed by Prime Minister May) that FUTURE E.U. policies would be followed in the United Kingdom – after all (argued Mrs May) we had not voted for independence, we had voted for “Brexit” (a meaningless made-up word).
Roue le Jour – it may be so, although the victory of the right at a future election now looks unlikely, due to the three way split between Kemi Badenoch, Nigel Farage and Rupert Lowe – on the ground the left (Labour, Green, Lib Dem) parties are cooperating (they do not split the vote in local council by-elections and so on) whereas the parties of the right are tearing each other to pieces.
Governments should not run “the economy” – part of the problem is the word “economy” which comes from the Greek word for “household”.
Millions of people engaged in voluntary commercial interaction (work and trade) is not a “household”, and nor, contrary to that cretin Tucker Carlson, it is not a “system called capitalism” – it is not a “system” at all, it his human-freedom, liberty.
As for politicians being awful – it was ever thus, Disraeli put unions partly above the law (legalizing paramilitary tactics – such as “picket lines”) and thus created Institutional Unemployment and the relative decline of British industry, he also undermined local democracy by mandating that local councils undertake about 40 functions – whether local taxpayers wanted the council to do these things or not.
Disraeli is summed up by his housing Bill – when questioned it became obvious that he had no idea what was inside his proposed statute, he just insisted that government must “do something” (like Dick Dastardly talking to Muttley) as part of his “two nations – the rich and the poor” tap-dance. It shows the intellectual bankruptcy of the study of history now that this novelist turned politician is presented (in the history books) as a “great Prime Minister”.
Before Disraeli we have the “Liberal” leader – Lord Russell who, as a minister, agreed to the proposal of Lord Stanley (later the Earl of Derby) that a system of state schools be set up in Ireland (after 1831), and later (as a minister and then Prime Minister) Lord Russell first imposed a Poor Law Tax on Ireland (1838) and then massively increased it (late 1840s – with areas of Ireland that were not bankrupt being forced to pay for areas that were bankrupt) – thus destroying the Irish economy, with around a quarter of the population either dying or fleeing the country in only a few years.
I will type that again – a quarter of the population of Ireland either dying or fleeing the country in only a few years, that is what happened under Prime Minister Russell – not because of “laissez faire” (as the lying history books claim) – but under a policy of crushing taxation – all taxes are passed on, there is no such thing as a tax that just hurts land owners. J.B. Say and the other great Liberal French economists would have been horrified by the English usage of the term “laissez faire” to mean just “no tariffs on imports” – with every other form of statism, such as crushing domestic taxation, being considered just fine.
“Andy” Burnham and his band of cretins (or worse) would have to work very hard to beat what Lord Russell did.
As for Credit Money and bailing-out-the-banks – yes Lord Russell did that to, the ink on Peel’s Banking Act was barely dry before Lord Russell suspended it – so the Bank of England could bail-out banker Credit Bubble antics.
Even in the Tudor period the government (staring with Henry VIII – Henry VII and his ministers were not much interested in creating a new-society) endlessly meddled – and all the ideas pushed were demented.
However, back then England lacked a Civil Service or police forces – so the ravings of the government tended to stay in Westminster, certainly up in (say) Lancashire or the West Riding of Yorkshire – edicts (“laws”) from London were wildly, and correctly, ignored.
Had the mass of Tudor legislation (and by the last years of the first Queen Elizabeth the edicts and statures were going full Emperor Diocletian – price controls, demands that men follow the jobs of the fathers, and so on) been enforced – the later industrial revolution would have been impossible.
Liam Halligan is correct – the media, and the education system, call a gigantic government – out of control government spending and taxation “laissez-faire”, “austerity”, “Neo Liberalism”.
Their lies are so wild, they picture they present is so much the OPPOSITE of reality – that they could get away with an insanity defense.
Again – this has long been the case. Thomas Moore and Thomas Cromwell (wildly different theologically) were both wildly misguided on economic policy matters and the 16th century economist John Hales was just as plain nuts as John Keynes centuries later – John Hales blamed inflation on “greedy” landlords and merchants – he was a “moral economy” nutcase who the government found useful in distracting attention from the policy of debasement (which Keynes would have loved – gold being a “barbarous relic”). By the way – “enclosure” does not steal land, you do not pay RENT for land you own, the peasant farmers did not own the land in question.
What is different now is the sheer size of the government – the government of the United Kingdom, and other Western nations, has grown to a size that boggles the mind.
By the way – I think Liam Halligan is mistaken about it being unthinkable for the “sixth largest economy in the world” (Britain is NOT really the 6th largest economy in the world – “GDP” is a stupid measure of an economy) to default on the government debt.
By his own presentation – the government debt in Britain is impossible to maintain, it is just too large. And the United States is worse in this – its debt (however measured) is a worse burden – and the United States is rather more than the 6th largest economy in the world, yet its government debt is going to have to go.
Something that is impossible to maintain is not going be maintained.
Perhaps the ugly word “default” can be avoided – but, one way or another, that debt is going to go – perhaps massive inflation will be used to “pay” the debt.
So people who hold “government bonds” (“securities” or whatever name you want to use for government IOUs) had better sell them – and not sell them for fiat money.
To me this discussion sounds like arguing about the price of farm labour in the 1750s. I mean I agree with what he is saying for sure. And increase in the civil service of 35% in ten years. It is hard to countenance such an utter disgrace and abuse of the public’s money.
But it was fiddling around with the details while the tsunami of the industrial revolution was about to hit. AI and robotics are going to turn the world upside down and what economists should be talking about is how to adapt the British economy to most effectively profit from it, how to arrange the British economy so that it dramatically enhances the lot of British people rather than utterly ruining them. But they are not. They aren’t talking about it at all really.
And one reason why they are not doing so is that Net Zero makes it utterly impossible for Britain to get anything except the short end of the stick.
I’m afraid you’re going to be coming with your begging bowl to the United States in the next decade because of your utter lack of preparation. Though, on the other hand if the Left and some of Bernie and the DSA’s crazy ideas take root, you’ll have to take your begging bowl to China instead.
On the other hand, even if Britain is doomed to this disaster, there is no reason individual Britons need to do so. If you are still working and not scrambling to be an expert in applying AI, and latterly robotics, to your field of expertise, you are making a big mistake.
For example, one thing they could do would be to start building data centers in the Orkney Islands, a place with abundant non hydrocarbon energy and masses of freely available water. But I’m sure someone would complain about scaring the beautiful island’s landscape with such an abomination.
Fraser Orr – you believe that technology can save Britain and other Western nations.
I, respectfully, disagree.
With a government of this size and scope, and a monetary and financial system this corrupt (indeed it is nothing-but-corruption – it is not corruption on top of a basically sound monetary and financial system – there is only corruption, that-is-the-system now) no level of technology can save the situation.
As for “when will it become obvious” – I see the decline on the streets (and elsewhere) every day, and it has got worse and worse – regardless of official statistics about “GDP per capita”.
The decay will continue.
@Fraser Orr – I disagree. Without substantial changes to the UK is governed and an even more substantial reduction in the size and cost of the state, we can guarantee any advances from AI and robotics will pass us by. Britain is still governed by people who think like their EU equivalents, the type of people who came up with regulations for an AI industry which does not exist.
Were you joking about the data centres? Data centres on the Orkneys wouldn’t be the slightest use: they’d cost a fortune to build, they’d need lots of diesel back up for their spectacularly expensive wind power and they would only be useful for applications where latency is not an issue.
@Marius
I disagree. Without substantial changes to the UK is governed and an even more substantial reduction in the size and cost of the state, we can guarantee any advances from AI and robotics will pass us by.
Well then you don’t disagree, you agree. I don’t think AI and robotics will save Britain, not because it can’t but because the government is not preparing for it, and in particular because NetZero makes it impossible. The United States is a different matter. They do have a chance to see a world of abundance brought on by AI and robotics. All it needs is a stable governing environment for a few more years to allow the track the existing tech is on to mature. Of course if idiots like Bernie and the DSA take control then they will not have that.
To be clear, this revolution WILL take place, it is a matter of who leads it. Britain is far past the ability to participate, even though they have many smart people who could do a lot, for example the guys at ARM. But there is a reason Demis Hassabis doesn’t live there anymore. But if the United States does not take up the mantle China certainly will, they are already biting at our heels.
Which, FWIW, is why I am coming more and more to the conclusion that the Iran war is perhaps one of the most catastrophic political decisions in American history. By engaging in yet another unwinnable middle east war rather than maintaining Iran in a box as we did ante bellum, we have allowed the resurgence of a terrible left wing party in the United States that will steal away this technological revolution which would bring so much abundance and liberation, and hand it instead to one of the most tyrannical regimes in human history. The consequences of this are so extreme because the changes AI and robotics are so extremely transformative, and to loose that to China is a real disaster for humankind.
It is worth saying that the true tragedy of Britain and AI is that the modern revolution in AI actually started in Britain with Hassabis’ DeepMind. This was a remarkable produce that transformed how AI was understood and what its capabilities were. It was then purchased by Google where it was nurtured (in California), and when Musk understood the danger of Google being the only AI company he started OpenAI specifically to counterbalance it — which ultimately lead to Anthropic and xAI.
Which is to say Britain is where the whole thing started, but in was only by leaving Britain that AI could succeed. Which is a poor testimony indeed to a country that has been the mother and the matrix of so much of modern civilization and science. Once again, it will have to sit this one out because of insane government policies, and particularly to the one to which they seem most attached — NetZero.
Fraser Orr – thank you for explaining your position.
Yes, I agree – even if new technology is capable of bringing about the abundance you mention (which I doubt) there is no chance whatever of prosperity in the United Kingdom.
Like Tucker Carlson the British government regards economic life (liberty) as “a system called capitalism” which they are hostile to.
Net Zero, and the rest of the endless regulations, and crushing levels of government spending and taxation, mean that is no chance for this nation – even if we wish away the demographic mess (as the French used to say, before they were sent to prison for saying it, “demography is destiny”) where the British are not having babies to replace themselves – and hostile populations (hostile to the West) are expanding in this land.
Of course, the United States has its own demographic mess, and its government spending is also crushing, especially in “Blue States” such as New York and California.
But there is some hope for the United States – there is, alas, no hope for the United Kingdom.
As for the parties of the right in the United Kingdom – Rupert Lowe will not work with Kemi Badenoch because Restore Party activists do not regard her as British – according to them both your parents have to be British born for you to be British.
I actually pass that test – but King Charles (father born in Greece and of originally Greek nationality) and Winston Churchill (mother American) fail it – and so does Kemi Badenoch.
And Nigel Farage will not work with Kemi Badenoch because he is still furious that he was cheated by Mr Johnson – and Johnson did cheat Nigel Farage, he treated Mr Farage like dirt – not giving him a peerage (that would have knocked Mr Farage out of front line politics, as one can not govern from the House of Lords – but Mr Johnson was too stupid to see that), indeed not even giving him a knighthood (“public servants” are given knighthoods for, basically, nothing – yet Nigel Farage was not given one). Mr Johnson is not in politics anymore – but Mr Farage is still furious with him (and understandably so)
As for Kemi – she says that she does not care that Rupert and Nigel will not work with her, because she does not want to work with them anyway.
It is a bit like dealing with three young children – who have been out in the sun too long and have eaten too much ice cream. All three are in a mood.
This nation is doomed.
“datacentres in Orkney… would only be useful for applications where latency is not an issue.”
Every time I use Google Gemini it “thinks” for three to four seconds, so any latency to Orkney is going to be imperceptable.
@jgh
Every time I use Google Gemini it “thinks” for three to four seconds, so any latency to Orkney is going to be imperceptable.
Which is also, among other reasons, the vast majority of compute in the future will end up in orbit.
As to Orkney, maybe I am wrong, but that place is both the windiest place, and the place with the strongest tidal currents anywhere in the world (or close to it anyway.) And also one of the wettest places and the place with masses of unused land. Maybe all that non hydrocarbon energy is not enough, but it does seem like they have much more than they can use, and data centers will consume all the excess capacity that can be generated. I haven’t done the math though.
It is funny that there is no way it could happen since the idea of an icky data center blotting the beautiful landscape is beyond the pale, but the utter destruction of the countryside everywhere with these ugly as sin windmills, along with the ongoing massacre of some of the most beautiful birds, is perfectly ok.
Governments should not run “the economy”
More importantly, governments should not run “the nation” either.
The economy is an emergent feature of people interacting with each other. You can no more “run” the economy than you can “run” the weather.
Steve D – I agree that governments should not “run” “the economy” – and have explained why above.
On “running the nation” – we are given two bad choices, either government by legislation (contrary to historians such as the distinguished historian David Starkey – government by Parliamentary legislation is a BAD system of government, as the rise of the state from the 1870s onwards showed – although legislation long before this was often horrible, such as the Statute of Labourers all the way back in the time of Edward III – and most other Parliamentary statutes) – or, EVEN WORSE – government by the whims of officials, “experts” and judges.
Yes judges as well – as the old judges, of the Chief Justice Edward Coke and Chief Justice John Holt sort (both of whom were AGAINST the idea of “Parliamentary Sovereignty” as Dr Starkey understands that term), who came from a background of deep understanding of traditional jurisprudence, founded in Common Law – in turn founded in Natural Law as-traditionally-understood, are long gone.
Instead we have the “new Judges” (and Dr Starkey is correct about them) – whose ideas on jurisprudence (legal philosophy) are from deeply perverted “modern” fashions – which come, if traced back, from Rousseau and other horribly mistaken thinkers.
The nation should be governed by its traditional law – but neither Parliament nor the judges (and officials and “legal experts”) believe that any more.
Liam Halligan is horrified by the idea of a British government default on its debt.
However, the American Federal debt (even excluding the unfunded “Entitlements”) is now over Forty Trillion Dollars.
Forty Trillion Dollars (even excluding the unfunded “Entitlements”) – the mind can not grasp such as large number.
It is obvious that such a debt can not be honestly financed – there will either be open default, or the debt will be “paid” by massive fiat money inflation.
There is no reason why funny money should only be created by the Federal Reserve – indeed the Federal Reserve is not mentioned in the Constitution of the United States and did not exist till 1913 (the year my father was born).
If fiat money is Constitutional (“Article One, Section Ten, only applies to the States” and the rest of the obscene, despicable, justifications) then there is no reason why the U.S. Treasury (which has far more Constitutional standing than the Federal Reserve system – which has no Constitutional standing at all) should not create 40 Trillion “Dollars” from nothing – WITHOUT letting the Wall Street welfare recipients (in their expensive suits) “wet their beak”.
The present system of the government (via the Federal Reserve) creating “money” and lending it out to financial sector types, and then borrowing-it-back-again at a higher rate of interest – is utterly insane.
“But doing away with the system would destroy Wall Street” – Wall Street (and the general “financial industry” – including in Britain) is going to be destroyed anyway, its last link with sanity (the link between the Swiss Franc and gold) went 30 years ago.
Again – the present government debt (in Britain, the United States and so on) is just too large to be honestly financed over the next few years, so the present monetary and financial system is going to go.
Paul:
You are indeed right. A debt of $40 trillion is indeed an obscenity, and can never be repaid.
I believe it took the USA 200 years to borrow its first trillion, now it adds a trillion to its unpayable debt every three months.
Of course, since the dollar is backed by nothing, the US Treasury could in theory print $40 trillion Treasury dollars and pay it off overnight. But that would reveal to the world the dark secret that the dollar is backed by nothing, which would tend to make confidence in the dollar, which for some reason still exists, disappear.
Thus, the US Treasury goes through the charade of “borrowing” non-existent money from the Federal Reserve, which then issues Federal Reserve notes as if that actually meant something.
President Kennedy was the last man to issue Treasury dollars which were backed by silver. No-one has bothered since, and since 1971 all US dollars are a legal fiction, backed by nothing at all, apart from men with guns.
Obviously, this system will not last forever. But it might go on for much longer than we think. It suits a lot of people. It enables the USA to have a welfare state and a warfare state, for just so long as foreigners accept the dollars it creates as if they were real money. Bretton Woods ended when De Gaulle insisted on being paid with gold rather than dollars. I wonder what will precipitate an end to the fiat dollar?
JohnK – yes indeed.
“men with guns” is what “Nobel Prize” winner Joseph Stiglitz said the modern financial and monetary system was based upon, not gold, not silver – not any commodity, just the threat of violence. And the swine (and he is a swine) was PROUD of that – he was happy.
The Federal Reserve creates “money” from nothing and lends it out to the financial players – who then lend the money (at a higher rate of interest) to the U.S. Treasury.
Little Real Savings, the actual sacrifice of consumption, no real (commodity) money that is valued before-and-apart-from its use as money, no real financial or monetary system – just fraud and violence. That is the filthy system of the modern age.
When will it finally go? I do not know.
The Roman Empire reached its final insane (and obscene) stage under the Emperor Diocletian – crushing taxation, state factories, most men tied to the jobs of their fathers, spies and secret police everywhere. It was no longer a society worth defending.
Yet it staggered on for another century.
Constantine did not tackle the real problems – but he did plunder the pagan temples, in order to have the gold to have real money again. And he did abolish the price controls of Diocletian.
Paul:
It always amuses me when people say that the government (ours or America’s, it doesn’t matter) borrows money from the bond markets. Where do they think the “bond markets” get this money from? No-one has trillions of dollars hanging around waiting to lend to governments. The dollars (or pounds) do not exist. They are lent into existence by the central bank, which “lends” the dollars or pounds it has just created to the government, at interest. The government could just as easily create its own pounds or dollars out of thin air, and pay no interest. They don’t, because they have to pretend that the system represents something real, as opposed to something imaginary.
The system is thoroughly decadent. Governments borrow trillions in money which did not exist until it was borrowed, all to finance their day to day operations. The idea that if you can’t afford something you can’t have it is an alien concept. Our government is now borrowing money to pay the interest on the money it has borrowed. When an private citizen or a company does that, they are close to bankruptcy. The same may not be true of governments. They can always issue their own currency, since it is backed by nothing. The problem will be that it will also be worth nothing. Then people might begin to notice.
@JohnK
You are indeed right. A debt of $40 trillion is indeed an obscenity, and can never be repaid.
It is certainly an obscenity, and one year ago I would agree that it could never be repaid, but I think differently now. If the new industrial revolution produces massive growth and massive deflation as I am pretty sure it will, then that debt can be eaten up pretty quickly. That’s assuming we aren’t taken over by the crazy left who want to stop it all and instead give all the success and wealth to China. And that is certainly a viable scenario. But if that happens a large national debt is the least of our problems.
Of course, since the dollar is backed by nothing
This is a myth. The dollar is backed by the full faith and credit of the United States, which sounds very nice, but in practice what it means is that it is backed by the guarantee that the government will continue to tax the crap out of its citizens, their children and grandchildren to continue floating the Ponzi scheme for the foreseeable future. So it is backed by the value produced by the hard working taxpayers of America, enslaved to their government masters.
the US Treasury could in theory print $40 trillion Treasury dollars and pay it off overnight. But that would reveal to the world the dark secret that the dollar is backed by nothing, which would tend to make confidence in the dollar, which for some reason still exists, disappear.
Except in the scenario I mentioned above with massive deflation (because goods and services and massively less expensive to make). Economists all agree deflation is bad, though FWIW I don’t agree with this, though I think massive inflation and deflation are both bad since we need a stable currency or operate in a predictable economy. Anyway the solution economists and government have to deflation is printing of money to cover the gap, money that could be used to pay the debt. It’ll be a bonanza for which ever government is in charge since they will spend a lot of it rather than paying off the debt. But the deflation is surely going to be large enough that even our “put a drunken sailor to shame” government can’t piss it all away.
Of course if you are not part of the revolution in technology, which is to say you aren’t the USA or China, all this redounds to your destruction. And, if Bernie and the DSA take us out of the running, we are far more screwed than we are today. Which again is why I am more and more convinced that the Iran war and its political consequences is perhaps one of the most cataclysmic mistakes in our history, something that has potential terrifying consequences for humankind.
Fraser:
I understand the “full faith and credit” business, I just don’t think much of it. $40 trillion is never going to be repaid, just rolled over for as long as possible. Of course, anyone who lends the US government a million dollars will always get it back, it’s just that it might only be enough to buy a loaf of bread.
Economists all agree that deflation is a bad thing. Personally, I quite like the fact that £500 buys me a computer which would have cost £5,000 ten years ago.
Anyway, I hope you are right about AI, but sadly I agree that the UK will not be benefitting from it, not as long as we are consumed by fear of carbon dioxide.
Fraser Orr – I respectfully disagree with your expectations, I do not believe that new technology will achieve what you hope for.
However, let us all hope that you are correct – and that I am WRONG.
Johnk – BAD economists all agree that deflation is a bad thing, good economists agree with you about cheaper goods being a good thing.
@Paul Marks
Johnk – BAD economists all agree that deflation is a bad thing, good economists agree with you about cheaper goods being a good thing.
Sure, but if everybody holds off buying the computer, the people who make the computer won’t have the resources to build that cheaper computer next year. Inflation encourages consumption, deflation encourages saving. An economy, same as a family, needs a mix of both.
Inflation and deflation each have pros and cons. What we really need is a stable currency so people can plan for the future.
@JohnK
I understand the “full faith and credit” business, I just don’t think much of it. $40 trillion is never going to be repaid
Question for you, if you will allow me a hypothetical, currently the US collects about $5 trillion dollars in tax revenue. What would happen if, and here is my hypothetical, if these new technologies accelerated the economy so that the US collected $50 trillion dollars in tax revenue (or the equivalent because dollars don’t mean the same in the two scenarios because of the aforementioned inflation/deflation.) What would happen?
I understand everyone’s skepticism about this, but I can give you my own lived experience as someone working in software. New AI tools like Cursor and Claude have completely changed the game. Programmers are 5 to 10x more productive, even mediocre ones. Some are 100x more productive. What does that mean? Software is VASTLY cheaper to produce, and that means both that the cost is dramatically decreased and the types of software that can be produced is dramatically expanded. Things that in the past were economically not viable, now are straightforward and achievable. Software is leverage to the rest of the economy. This has happened suddenly, in the last 6-12 months so it is not so obvious in manifestation, but these are definitely the facts. I see it every day. I could talk a lot about what this means but I won’t bore you all with inside baseball.
But these same tools are just as applicable to other forms of digital activity. And with the arrival of robots (which will really hit big time end of next year would be my guess) that same sort of productivity will hit the physical world.
I live this every day, most of my day is spent talking to AIs, so perhaps you can accuse me of projecting. But I find it hard to see how the results I am discussing cannot come about. Who knows, no one can know the future for sure, and maybe Skynet will take over. But, like I say, I live this every day, and that is what I see.
Fraser Orr – a “stable currency” has historically been used as an excuse for creating funny money (money from nothing) and dishing it out to the politically connected.
It was the excuse behind the monetary policies of mid to late 1920s – when Benjamin Strong of the New York Federal Reserve did this, and created the massive Credit Money bubble that collapsed in 1929.
“Price stability” is the wrong aim.
Let prices gradually fall over time (as people find better ways to make goods and services) – do not increase the money supply.
Irving Fisher (and his much later follower Milton Friedman) was wrong – indeed the policy of increasing the money supply to create “stable prices” is a disaster.
Fraser:
I certainly hope you are right about AI. Sadly, if it generated the tax revenues you suggest, do you think politicians would use the money to pay off debt, or just spend it on their clients?
Still, I hope good things happen. In Britain the governing blob is obsessed with the threat of a trace atmospheric gas. Until that changes, we are stuffed.
@Paul Marks
Fraser Orr – a “stable currency” has historically been used as an excuse for creating funny money (money from nothing) and dishing it out to the politically connected.
Of course, but “National Security” has also been used to justify all sorts of terrible things, but that doesn’t mean “National Security” isn’t a legitimate goal.
Fraser Orr – Credit Money is, by its very nature, an evil – it is not abused, it is itself an abuse.
It is not a matter of whether it will be used to benefit the politically connected at the expense of everyone else – of-course-it-will-be, that is what it is for.
This Richard Cantillon understood – three hundred years ago.
Let prices gradually decline over time – as people find better ways to produce goods and services.
And money needs to be a commodity that people choose to value, before-and-apart-from, its use as money.