Crap: A Guide to Politics - The Blog

CHEEKY CRAP FROM OUR PRIME MINISTER (for how long??) COURTESY OF IAIN MARTIN

“The far greater depressions and inflations of the twentieth century have not educed nearly as much mass interest in economics as did the milder economic crises of the past century” - Murray Rothbard, History of Money and Banking in the United States (Mises Institute)

I comment on the extract below from Iain Martin, the excellent Sunday Telegraph columnist. Iain Martin is far from being a regular crap artist, but free marketeers are too thin on the ground to let false history pass without comment especially when it comes from our Gordon:

"Confession of a free marketeer: Gordon Brown is right
By Iain Martin

Henry Morgenthau Jr is a name not much mentioned now; in his time he was a giant, an architect of the new world that emerged from the wreckage of war.

He was President Roosevelt's treasury secretary, who chaired the Bretton Woods conference in New Hampshire in 1944 and largely got his way on a redesign of the global capitalist system. The results were a new basis on which currencies would operate, the creation of the World Bank and the International Monetary Fund to encourage growth, more open markets and a greater role for government in the regulation of international finance......

In 1999, Brown said: "The founders of Bretton Woods resolved that the failed policies of laissez-faire which resulted in vast inequities and recurring depression from the 1870s to the 1930s would not be repeated… Unregulated market forces had brought great instability and even greater injustice. In the post-war era, governments had to work collectively.".....

the lesson from Morgenthau and his contemporaries is that we are not powerless in the face of forces over which we might think we have no control. Brown's intervention shows that he understands this. In response free marketeers will need to have more to say than "get government out of the way"."

Free marketeers do indeed need to have more to say than “get government out of the way”.  They have to say why, which in this case means pointing out that Gordo’s “laissez-faire” and “unregulated market forces” had disappeared (at least insofar as Bretton Woods was concerned) long before his starting point of 1870!

For a simple proof of this one need look no further than banking, where free market banking had disappeared in England at least two generations earlier and in Gordo’s Scotland (despite an excellent record in its period of genuine free market banking) in 1844-5.  (In Morgenthau’s USA the early influence of government was even greater; genuine free market banking never existed there at all)

On April 15th in the Financial Times, Martin Wolf (another regular guy) had to admit that: “the incidence of banking crises has been as high since 1980 as in any period since 1800” whilst Ben Bernanke, Chairman of the Federal Reserve Bank, has admitted that the Fed caused the Great Depression. 

The UK’s own Great Depression was caused by government too, by its return to the Gold Standard in 1925 at the parity of its departure in 1914, despite the years of substantial inflation in between, (an error which provided an excuse to go off it altogether in 1931).

In fact the 1925 version was a Gold Exchange Standard, which it was able to impose on other countries, the essential feature being an internationally co-ordinated inflationary government-issued paper money based on the UK pound.  Bretton Woods provided the same thing except that it was based on the US dollar, which was the main objective of Morgenthau.  Neither has stood the test of time and both caused untold damage around the world.

The last thing that is needed in today’s crisis is more government interference, internationally co-ordinated or not.  Gordo should learn a little more about financial crises in his own country and how it avoided them in its period of free-market banking.

Free-marketeers have indeed more to say than “get government out of the way”.  We should also say “get government schools and government education out of the way; its history syllabus and lessons are bunk!

Six Social Myths

Today I take the opportunity of quoting a commentary which is not crap – it would have been in my book as part of my own commentary had I been clever enough to anticipate it.  The excerpts below come from an article in a magazine called Policy, from the Centre for Policy Studies in Australia, “the leading independent public policy ‘think tank’ within Australasia” and it is hard to find a better exposition of the Prolific Crap that sustains the welfare state.  I suppose it’s nice to know that we’re not alone in the world!

Six Social Policy Myths [Policy (Australia) Vol 24 No.1 Autumn 08]

Policy experts often think alike, even when the evidence contradicts them. This is how billions of dollars get spent on government programs that don’t work, argue CIS researchers Jennifer Buckingham, Andrew Norton, Phil Rennie, Jeremy Sammut, and Peter Saunders.

Myth 1: All children can benefit from an increase in government spending on institutional child care

What all this adds up to is that the research literature provides no strong evidence that child care is good (or bad) for all children. You would never know this from listening to the public policy experts in this field. They talk and act as if the research is clear and the issue is done and dusted. The truth is that governments are being pushed to commit ever-increasing amounts of taxpayers’ money to funding something that does not deliver the claimed payoffs. Australian child care advocates are convinced of the case for more child care and greater subsidies, but the evidence does not support their claims.

Myth 2: More government spending on education and training can solve the problem of joblessness

Recent research by the Australian Council for Educational Research (ACER) finds that, far from benefiting from more education, low ability students often lose from it.

The point that is persistently overlooked in the education and training debate is that some people are simply not cut out for year 12 schoolwork, a university degree, or a technically skilled job....

Myth 3: High tuition fees are pricing students from poor backgrounds out of university

Strikingly, the more a working-class family earns, the less likely it is that their sons will go to university, although for daughters, university attendance rates do increase slightly as household income rises. The children of the poorest professional families have higher university enrolment rates than the children of the most affluent working-class families, which suggests that parental occupation has more of an impact on children’s educational outcomes than parental income.

A person’s family background has a big influence on whether they go to university, but it operates indirectly, via school results, and has little or nothing to do with income....

Myth 4: Poverty in Australia is getting worse, and higher welfare spending is needed to counter it.

But there are at least three reasons why we should refuse to go along with this.
The first is that the welfare lobby’s definitions of ‘poverty’ are entirely arbitrary.

Secondly, the report is not measuring ‘poverty,’ but income inequality.

[Thirdly].... Household incomes fluctuate, so most people who appear under any arbitrarily-drawn ‘poverty line’ do not stay there long.

Myth 5: Higher spending on preventive medicine will reduce health costs in the future.

But the authors of these studies admit they contain no evidence that access to and receipt of primary care reduces obesity (that it modifies individual behaviour) or that it lowers the incidence of chronic disease.(32) They also admit that improved health outcomes depend on an ‘appropriate balance’ between primary and secondary care.(33)

Meanwhile, a 2002 cross-country analysis of primary care across thirteen OECD countries found that those (including Australia) that had weaker primary care systems but spent more on secondary care achieved better health outcomes than the stronger primary-care-oriented countries.(34) Of course, prevention is better than cure, but only when it works.

Myth 6: Higher social expenditure creates a more caring society.

The unifying theme that underlies all of the myths we have examined is the belief that social problems require additional government spending to put them right.

Here, then, is the biggest myth of all—the meta-myth, if you like—which is embedded in the shared consciousness of the social policy establishment. It is the assumption that government is the appropriate agency for resolving people’s problems, and that we as individuals bear no responsibility for sorting out our own lives. For as long as this myth persists, ‘social problems’ will continue to grow, government budgets will continue to expand, and job opportunities for social policy experts will continue to multiply.

BACK SOON, WITH MORE REAL CRAP

PROLIFIC CRAP FROM MATTHEW PARRIS

At the launch party of my book at the Institute of Economic Affairs, I quoted with approval a paragraph from the Tory MP and Times columnist Matthew Parris:

“The British Left has never had a problem in principle with intervention, coercion  or prescription. Why would they? To the leftist mind, impressed with the  possibilities of collective action channelled into statist structures for the purposes  of increasing the sum total of human happiness at gunpoint, the idea of wading  into the Middle East to sort things out was always going to have an instinctive  appeal”.

Here is a politico linking the Warfare State and the Welfare State – both need guns. Now that is promising. Maybe, I thought, we could move off the bogus spectrum of Right versus Left (what would the British Right do, Matthew?) to the real issue: Big Government versus Small Government, and thus debate what functions necessarily belong to Government. What must be done at gunpoint?

We had Matthew’s answer on Saturday 29th March; one helluva lot. Under the title of “The State Works; Have faith”, his list of things that only Government can do includes the following:

"Put Canary wharf on the map. Get Crossrail built. Get roads built. Get decent  healthcare for those who are poor and chronically sick. Underwrite and arrange  free and universal schooling. Protect us abroad [wow] and police us at home.  Force the pace on Climate change. Frame, amend and administer the law. Defend  the interest of the generality against the appetites of individuals. Create a  national park, guarantee a green belt. Hold back the march of a million breeze  block bungalows across the countryside. Redistribute wealth and power."

Both history and theory demonstrate that nothing on this list must necessarily involve Government, and much of it is touched on in my book (the basic issues are ownership of property and the signals of market pricing).  But what I would like to concentrate on here is not Matthew’s list above, but rather his assertions below:

“The great challenges as they appeared in spring 2008” are “the environment,  the regulation of banking, fair trade, malaria and HIV-Aids, congestion,  immigration, asylum.  What has anti-statism to say about any of these?  I cannot  remember a time when the ideas of Hayek, Joseph, and Sherman all seemed more  distant to the anxieties of the hour”.

Firstly, Matthew, haven’t you left a few biggies out?  Like war, including Iraq (on which you have those major debates with your colleague David Aaronovitch), political corruption, and falling living standards, all of which are the direct result of Big Government, and only Big Government (ie your statist structures). What about major government cock-ups (like losing discs with data for 25 million people, or Katrina, or last summer’s flooding – about all of which Big Government had been warned months and indeed years earlier and done nothing about it).

Secondly, let’s look at the challenges named by you and generously assume that they are the topics on everybody’s lips (I’ll leave out the environment – too long to cover here, so buy my book!):  banking, where your now irrelevant Hayek’s proposed denationalisation (ie re-privatisation) of money is still the only solution; fair trade (if it’s not free it’s unfair and highly damaging to the poor); malaria and HIV-Aids, (where Big Government is responsible for the deaths of millions of people by banning DDT); immigration (never a problem until Big Government took it on, and now a huge issue as I write – see also my book page 63); and asylum (where last week The Independent Asylum Commission attacked the system as inhumane).

On all these matters the State does NOT work. Anti-statism can hardly do worse. Indeed Statism stole these issues at gunpoint, Matthew, from the far superior laissez faire system. Oh, and by the way, that chap Hayek not only revealed statism as dictatorship (elective or not) in The Road to Serfdom. He showed why the worst get to the top. And he showed elsewhere that the perennial “challenge” of living standards and the quality of life is far better dealt with outside the State, because the taxes government take attack the division of labour at its roots.  My calculation (see Chapter 7 of my book) is that every extra pound of tax reduces overall living standards by about 65p, and vice versa, and that’s before any waste!

Come off it, Matthew.

I should have known better, of course. In Chapter 8 (Ideological Crap) of my book I took to task another Times columnist, Associate Editor Anatole Kaletsky, for including in his necessary list for Government the following: law enforcement, poverty alleviation, environmental protection, the promotion of public culture (see my entry of March 10th on “Crap Art”) and the financing of pure scientific research (see October 29th). And this from a self-described “instinctive liberal”!