We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Last September, I went walking in the Scottish Highlands with a good friend. My friend and I were booked on different flights leaving Edinburgh airport for London on Sunday evening. My friend then had a connecting flight at Heathrow to Hong Kong and then on to Sydney, so he was particularly eager not to miss his flight. Therefore, I dropped him off at the airport terminal before I went looking for a petrol station to refuel the rental car before returning it to the airport and checking in for my own flight.
The “Where the expletive is the nearest petrol station” dance before returning a rental car to an airport car rental office is one I know well, but this one wasn’t too bad. After driving a few kilometres down the M9 I saw a station on the other side of the road, so I exited the motorway at the next junction, crossed the bridge across the motorway, and found…
Well, I found myself myself in a new and better world, actually. It was an office park, but not just any office park. There was a big sign with an RBS logo, lots of gleaming buildings, water features (both active and passive), corporate sculpture, and the general sense of the intense self-regard held by the people who had had this place built. Clearly, RBS had decided that it needed a new, gleaming head office from which to run its überimportant global operations, and had had this Dr No like compound built near Edinburgh airport, where its highly sophisticated heart could beat, without any interruption or disturbance from reality. RBS’s dedicated motorway junction made it easy for these great bankers to come and go to and from wherever their business now was. I am sure there were also fancy gyms, day care centres, cafes and Lord knows what in the complex.
Having worked in international finance myself, this kind of arrangement is not that unheard of, particularly for banks that are big fish in whichever smaller pond that they originate from. I can think of one or two Spanish banks that have even more Dr No-like headquarters on the outskirts of Madrid. Usually the offices of the same organisations in major financial centres are much more normal – RBS has its London offices in a rather boring but shiny block near Liverpool Street Station.
However, to enter such a complex in Madrid, one faces barbed wire fences, metal detectors, ID checks, men in overly fancy uniforms, and probably finger prints and Iris scans. In Scotland on a Sunday afternoon I was able to drive into the complex by accident, and get lost in the private roads between the fancy new buildings. There were a few security guards around, and I suspect that if I had got out of my car and walked near any of the buildings I may have been challenged, but driving around for a few minutes led to little interest. Eventually I found the entrance ramp to the motorway, which was on the other side of the complex to the exit, so it seemed it was not possible to use the RBS offices to turn around without driving through the private office park. I then refuelled my car and drove back to Edinburgh airport.
However, that of Micklethwait’s laws that says that any company that builds a new and ultra-fancy office is doomed, whereas an important company that is still operating out of grimy offices in Basingstoke is probably okay very manifestly holds, I think.
So how long before not even the mainstream media can pretend this lunacy is not going to spread economic catastrophe far and wide? My guess is they will move from cheerleaders to tut tutting sages of rectitude seamlessly in a few years without the slightest sense of irony. This will probably happen about the same time the mainstream media more or less stops existing in any meaningful sense.
The collective democratically sanctified derangement on display sure does help harden the heart when people start complaining about the economic hardship they find themselves in. A friend of mine said “Ordinary people do not deserve what is happening to them”.
“Sure, except for all the people who voted for any one of the main parties,” was my reply.
They are getting exactly what they voted for, good and hard, and there is a trillion more of it coming down the pipeline that will wash away all our savings.
Let it not be said that the politicians gathering to celebrate an orgy (er, steady on, Ed) of Keynesian delinqency and transnational socialism are letting this current financial crisis go to waste. The G20 countries have agreed to a crackdown on those pestilential things, tax havens. I have defended them before and will do so again. What we are seeing is a determined effort to create a global tax cartel. Cartels, unless backed by brute force, tend to break down eventually. The G20 are making lots of blood-curdling threats about sanctions and so forth. What is Germany or Italy going to do – invade Switzerland? Good luck with that, gentlemen.
At the root of the hatred of tax havens is a hatred of freedom, pure and simple. If you believe a democratically elected government, say, can seize the wealth of a portion of its citizens, then you will believe that that minority can be more or less robbed, held hostage and prevented from going abroad. Socialists such as Richard Murphy believe that if 51 per cent of my fellow citizens want to help themselves to the contents of my bank account, then I am being “undemocratic” and a bad citizen if I choose to park my cash in the Caymans or wherever. Well, why not go the whole distance and require anyone who has an offshore bank account either to close it or be forced to get an exit visa if they wish to do so? We may be already reaching that point. If, on the other hand, you believe people are entitled to their property regardless of what their fellow electors think, then tax havens – “haven” is a place of safety, remember- are an important escape route and bulwark against looters. When politicians want to shut down places of safety in a time of crisis, it is well to be cynical about the motives of those involved. Especially if they happen to be such characters as Gordon Brown or Barack Obama.
The sheer cynicsm of it all is breathtaking. Whatever the cause of the current financial crisis, I think it is pretty fair to say that it did not originate in tax havens. Switzerland, in fact, has been hammered by the crisis; its biggest wealth manager, UBS, has lost an estimated $49 billion in write-downs connected to the US sub-prime disaster. The $50 billion Ponzi scheme fraud of Bernard Madoff happened onshore, right under the noses of the SEC, rather than in some far-flung island in the South Pacific. The huge losses incurred by banks have been nothing whatever to do with so-called “tax leakage”. And in the US, there is already a tax haven, known as the state of Delaware. And the UK has been – well until recently – a tax haven on certain definitions. Ditto places such as Ireland or even Belgium.
Rant over. Thanks for your patience.
“The Federal Reserve…along with other central banks, is a legal counterfeiter.”
Paul Kasriel, economist at Northern Trust, the US bank. He is in favour of all this “quantitative easing”, by the way, but he is far too honest an economist not to identify what that euphemism actually stands for. And he predicts that it certainly will trigger inflation later on.
Two splendid snippets facing each other in today’s print edition of the Times. First Chris Ayres’s Los Angeles notebook:
California’s decision not to ban black cars should by no means reassure anyone that the Golden State is now run by sane people.
And more substantially, Daniel Finkelstein on anti-capitalists:
I think that they have looked back at 5,000 years of human history – at pestilence and famine and disease and degradation, at genocide and civil war, at fear and loathing, at bigotry and ignorance, chauvinism and dictatorship – and concluded that our biggest problem is… shopping.
[…] I have struggled to get to grips with the idea – and maybe I am doing them a disservice – but I really think the notion that they are advancing, once stripped of all their posh words, is this. I go to the shop and buy a new television. The archbishops think that this impoverishes my soul, the G20 protesters think I am destroying the planet and exploiting the workers, and Oliver James thinks that I am making myself mentally ill.
He is really not doing them a disservice. The common motivation is a sort of snobbish distain about vulgar ways of enjoying the material world; and the same thing finds its head in the circles of power, too, as a sort of neo-puritan obsession with work, regulation and oversight of individuals to make sure that no-one is getting away with the sin of unapproved lifestyle.
My post below on the experience of Scottish banking before 1845 – when the rules were changed by the-then UK government of Robert Peel – elicited a lot of great comments. It turns out that the Lawrence White paper that I mentioned had been savaged fairly thoroughly by Murray Rothbard. Rothbard’s paper is immensely detailed and shows what a thorough economic historian Rothbard was. Briefly put, he says that White has misinterpreted the Scottish banking experience by not distinguishing between free banks that operated 100 per cent reserve requirements linked to gold, and those that were simply free banks without such specie requirements. (Rothbard was an advocate of such metal-backed money). This inevitably raises that old friend of ours, fractional reserve banking, which Rothbard described as essentially a fraud. Now in trying to make up my mind on FRB, it seems to me that so long as the holder of bank notes is made aware that the note has been issued by an FRB, rather than a 100-percent reserves one, then what is the problem? It is a bit like the argument about limited liability corporations that vex some libertarians such as Sean Gabb of the Libertarian Alliance. Surely, if I transact with a LL company and knowingly do so, then such consent is what counts. LL companies could, conceivably, exist even without special government legislation, although they might not last as long as LL firms do now. (Here is a rejoinder to Gabb on LL). Same with FRB: if there is commercial deposit insurance and customers know the score, I fail to see why the existence of fractional banking should necessarily lead to disaster. Or is there something I am missing in this debate?
At first blush, some might consider all this to be a bit arcane. It is anything but. Explaining how banks work now, and how they can be made to work much better as a result of competition and basic rules, will go some way, I hope, to destroying misconceptions. Such misunderstandings that exist at the moment only play into the hands of those who want to bring the free market order down. Such as those folk protesting at the G20 summit in London today. I will be in the area on business. I might take some photos and post them up later if they are any good.
Update: I was in the Docklands area. Nothing much going on while I was there.
Those good people at the Institute of Economic Affairs have put this fine study of free banking, as it existed in Scotland until the middle of the 19th Century, back into print. It is examined in great detail, with lots of figures and examples of how these banks operated, how many bank failures there were, and so forth. There are a few equations but nothing that should faze all but the most mathematically challenged. Historical scholarship of this detail and depth is vital. It is as vital, in fact, as those studies that showed that in Victorian Britain, before the Welfare State came along, Britain already had an extensive network of mutual aid societies. Without this historical memory, it becomes easier for politicians to sell the lie that the solution to X or Y lies in ever bigger government.
Readers can either read the pdf for free or, if it is tough on the eyesight, as it is for me, readers can get a publication-on-demand sorted out for just £10.
I do not suggest that free banking is necessarily the panacea for the current troubles. But it seems to me that a point lost on the anti-globalistas as well as many of the other critics of the current financial system is that they fail to grasp how banking, as it is practised in most instances today, has deviated from a genuine example of laissez faire capitalism. What we need is sound money, administered by banks operating under the constant blast of competition in proving the soundness of that money. When you think about it, it is not very hard to grasp the idea, is it?
The President of France is threatening to walk out of the G20 gabfest this week if the countries cannot agree on stricter regulation of the world’s financial markets. Of course, Mr Sarkozy buys into the fantasy that what has happened shows the failure of “unregulated capitalism”. If only he would walk out of the conference, which is likely to involve further layers of largely useless and counter-productive rules and meaningless communiques, not to mention disrupt London, provide a focus point for tens of thousands of anti-globalistas, and cost Londoners a ton of money in policing and disruption.
Go on Sarko, do it for les enfants.
I would not want to get on the wrong side of this scribe when words don’t fail him:
But this? This hole in the air encased in a suit of clunking verbal armour? This truck-load of clichéd grandiloquence in hopeless pursuit of anything that might count as the faintest apology for an idea? Words fail me.
Thus does Matthew Parris muse upon the oratical inadequacies of Prime Minister Gordon Brown. If Brown is now the main object of your rage and loathing, then read the whole thing. You will surely enjoy it greatly.
But what matters to me is not whether Brown is now a doomed and hopeless failure, for clearly he is. But how much more of my country will he quadruple-mortgage? How much more of my country’s earth will he scorch? And, later, how much of the Labour Party as a whole will he take with him into the history books and nowhere else? Not that much more, not that much more, and the more the better, is what I am now hoping (against hope) for.
Now is as good a time as any to confess that I was one of those people who used once to accuse Samizdata sage Paul Marks of not “getting” New Labour.
My problem was that I did really believe (and do still believe) that when Blair said that he was not in favour of wrecking my country’s finances, he did truly mean it. Time and again, Blair outfaced his party with that very proclamation. I don’t believe in ruining Britain, he would shout at his massed ranks of idiot followers. So fire me, he kept saying. And the massed ranks of idiots, despite being enraged by this exasperatingly sensible talk, kept not firing him.
My problem was not that I was wrong to notice these protestations of fiscal virtue, or wrong to consider them significant. Where I went wrong was in understanding their actual impact.
I didn’t think that Blair was ushering in any sort of libertarian nirvana, no way. Nor was I relaxed about the damage being done by Blair to the legal system and to the criminal law and to the regulatory regime. Europe was, as it remains, a continuing disaster. But at least, I thought, this time around Labour will not smash up everything economically. But actually, the whole Blair “political achievement” made it possible for Labour to break Britain with a ferocity and completeness that has no parallel in recent British history. The more we trusters trusted Labour not to scorch Britain’s earth, the more earth they were able actually to scorch, and this scorching, of course, continues.
Old-style socialists were not trusted, and as soon as the danger signs appeared, as they inevitably did as soon as each successive attempt at a socialist-inclined government had got its flamethrowers working and scorching, voters and investors reacted accordingly. This time around, too many (me included) thought that it would be different, until such time as even we could not doubt the unique scale of this particular disaster. To the precise degree to which we thought things would be better this time, they were actually worse, and it was cause and effect.
Did Blair do this on purpose? As the catastrophe started to unfold, did he realise what he had done, sticking his killer grin on the front of the latest and greatest Labour assault on Britain’s economic viability? Did he care? Does he care? Frankly, I don’t care. I now, still, regard Blair more as a destructive force of nature rather than as a deliberately evil man, but in practice, what does it matter? What matters, as we have become used to hearing as other pettier disasters have unfolded in recent years, is to make sure that nothing like this can ever happen again.
The point is not just that Brown has been and is still a catastrophe. That’s a given. The point to ram home, now and for as long as his name is ever remembered, is that Tony Blair was also a catastrophe, and arguably a much bigger one. For without Blair, there could have been no Brown. Burying the Labour Party for ever, as it deserves, does not merely mean keeping the horrid memory of Brown and his cloth-eared blunderings alive. It means remembering how Tony Blair made those blunderings possible.
So, let us learn the big political lesson of this catastrophe, to ensure that, indeed, the catastrophe can never happen again. And it is this. When the Labour Party sounds bad, it is bad. When it sounds good, it is even worse. Only the idiots in the Labour Party now can be blamed for Brown, and not even they really voted for him. But they did allow him to clamber unopposed into the driver’s seat of the wrecking and burning machine, and for that they all deserve their particular places in hell. But many more Brits voted for Blair, because they thought that even if things were not automatically going to get any better (as the idiots were singing – remember that?) then at least, fiscally speaking, they wouldn’t get that much worse.
Clearly Britain will never “vote Brown” in the future, any more than it did this time around for Brown himself. But Britain did “vote Blair”, and this it must never do again.
Talking of protests – see Perry’s post immedately under this one – there are a number of protests going on in London to coincide with the pointless and expensive Group of 20 meeting of major industrialised and developing countries next week. There could be some serious clashes. It makes me wonder, given the Tea Party anti-bailout protests in the US at the moment – which are starting to get more coverage from the MSM – as to whether there is any understanding on the part of the G20 protesters that they actually might share some common ground with the free marketeers of the Tea Partiers. After all, do the anti-globalistas understand the rage that many Tea Partiers feel at having their hard-earned cash used to bail out banks that were run by often quasi-state institutions and highly paid executives? Of course, a lot of the G20 protesters are Naomi Klein-type socialist buffoons who want to replace what they mistakenly think of as “unregulated capitalism” with central planning etc, but it seems to me that the might be a section of the protesters who might be open to understanding the real causes of the crisis and understand also the injustice of the prudent bailing out the imprudent.
Of course this may be unwisely optimstic and that all of the G20 protesters are statists of one sort of another, out to bash at a “system” that they do not comprehend. If there are ugly scenes in these protests and people working for banks are targeted and hurt, I hope that Gordon Brown, a prime minster of a government that once used to fete the City when it suited, feels suitably ashamed for pilloring those same bankers now that the credit crisis has hit. It is now another reason why my loathing of Gordon Brown and his brand of politics has reached hurricane-force level.
I will certainly not be the only one now pointing out the similarity between what this gang of counterfeiters got up to, and British government policy. The biggest difference between the two groups of transgressors is in the scale of it. Our government’s currency printing binge will be on a far more grandiose scale.
Some of his enthusiasm for commodities may have taken a bit of a hammering of late, but I always enjoy what this much-travelled man has to say. He’s a free marketeer with a nice, engaging way of putting his argument across. Take a look at this interview if you have some time.
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We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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