Non

Whilst exiting a bookstore yesterday I noticed the headline that France had voted “non” to the European constitution. It was only this morning that I realized that it was ridiculous that I had not actually read any of the constitution, given its potential importance to my life. My only real argument against the constitution before reading it was that it represented centralization of government. Since I believe that our own government is already too centralized, I am certainly against any further centralization. At first the articles seemed to be very libertarian in principle, it began to look as though I might be starting to change my mind, after all, my own personal view is happy to admit that centralized capitalism is much more preferable to local socialism. However, Article I-3 (3) immediately placed a firm “non” into my mind.

“The Union shall work for a Europe of sustainable development based on balanced economic growth, with a social market economy aiming at full employment and social progress…”

This to me sounds like the perfect constitutional arrangement for the development of a socialist state, why not a free market economy, the social market economy has far to much leeway for rent seeking*1 which is not present in a free market. Where is there room for the individual freedom if “social” progress is the aim? Almost any removal of economic freedom, and therefore political freedom can be justified through this article provided it can be called social progress. Whist it is very nicely worded, it is still worrying. Certain rewording of some articles and exclusion of others*2 could change my view of the document, but currently I do not like it.

*1 When a company, organization, or individual uses their resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation. http://www.investopedia.com/terms/r/rentseeking.asp
*2 rewording or exclusion of the following articles (this is only a brief list of the most important points).
Article I-3(3),
Article I-9(3)[“can be better achieved” from whose point of view],
Article I-26(2)[ “one must be a woman” for true equality, one must also be a man],
Article I-29(2)[“price stability” at whose expense].

Teenage freedom fighter

A teenager who is being called “W” for legal reasons is going to take his local council and police force to court over new anti-yob laws. The specific complaint is over “dispersal areas” where police can send home anyone under the age of 16 between 21:00 and 06:00. The idea behind this is to stop young offenders being able to prowl these areas at night. Local councils say that the laws have had a positive effect, but personally, I believe that that’s irrelevant. The 15 year old is right to challenge this law. The Government are here to protect us from physical force, but they cannot use that same force to ban people from an area simply because of their age, we might as well remove anyone over the age of 70 from the town during peak mugging times, that would reduce the crime, but at what cost? Of course this is a silly example, nobody would seriously propose such an idea, but why is it then that we can do the same thing to our children? X I remember when I was a teenager, it wasn’t that long ago, I remember the dirty looks I used to get from shop keepers when they believed that I might steal something. Of course I never did, but the sentiment is very common, teenagers are seen as criminals without any provocation just because of their age. The shop owner is perfectly within his rights to practice due diligence within his shop to protect his livelihood, but the same does not apply to our government, we cannot assume guilty until proven innocent, what is needed is stronger punishment for those that do break the law, not more restrictions to those that don’t.

BBC

There is a strike at the BBC today, thousands of workers have walked out in protest against job cuts. Like any public institution the BBC is funded through taxation, in this case in the form of the licensing fee. The act of charging a license fee has made it possible for the BBC to produce non-commercially viable programming without the interruption of adverts. There is a question, however, over whether the programs are actually not commercially viable. Many of the programs supposedly unable to be paid for via adverts are now shown on cable TV channels as repeats, channels that receive no public funding at all. It is also entirely possible to receive commercial free programming; subscription channels (such as HBO) have been achieving this for years. So is there really a place for a publicly funded network? Personally I doubt it, but more importantly, the property rights of people should override this anyway, people should be free to own and operate their televisions without the need for government licensing. Now back to the strike, if job cuts are necessary then they should happen. People are paying for the jobs whether they gain and benefit from them or not (i.e. whether they watch the BBC or not) and they should not be kept for the sake of it. The main problem stems from sentiment like this “The BBC is a unifying British institution which acts as the nation's conscience” from Mike Smallwood, national officer of Amicus, do we not have our own consciences anymore, can we no longer decide between right and wrong? No, we must pay the government to tell us what to think.

Big is not always better

Thanks to the sleepy man I read this article today. The author makes the very valid point that most people do not realize that big government also means reduced freedom. Some people do not miss this freedom or simply do not realize that it has been removed. People seem to have a fascination with asking what the government can do for them; they do not want to assume the responsibility that comes from being an adult. We all want to be left to do our own thing, but as soon as something becomes difficult we want someone to help us, or even do whatever it is for us. When we are young, we call upon our parents, when we are older, we call upon the government. This mentality is now so common that it has spread into every aspect of life.

Parents no longer take responsibility for their own children, teachers are now expected to ensure that a child is well behaved, not the parent. People have children that they cannot afford because they know that they will receive benefit payments to cover the cost. I agree that children should not be punished for having irresponsible parents, however, neither should the rest of society. All of this government intervention is often welcomed by those who benefit, and not argued against by those who take the burden in case they are called “greedy” or “uncaring”. In truth people are coming from an out of date political philosophy, that of the society. As Ayn Rand said, most philosophical systems ignore man in their search for the perfect society, man is an end in himself*. Government has only three roles, the protection of the individual from other people, protection of the society from other societies, and to assume the role of arbiter in civil disagreements. Big government does not do this, it spreads it s tentacles and grasps control wherever it can get away with it. Individuals should be free to do whatever they want as long as it is not against the rights of another, while government should be able to do nothing except that which it is allowed to achive the above three aims. Governments act with the consent of the people, not the other way around.

* I use the word man to include both genders.

Starbucks

I went to see ‘A’ last night in Leicester. I’ve liked them for a while, especially because I always associate songs from the album Hi-Fi Serious with Project Gotham Racing for the Xbox that is one of my favorite games. One of their songs ‘Starbucks’ is about the hypocrisy in the music industry. People are always saying how hard it is to be a ‘rock star’, the early mornings, late nights, interviews, non-stop badgering from fans etc. The song basically says, ‘yeah, it’s not as great as it looks, but I wouldn’t swap it for a job in Starbucks.’

We are all guilty from time to time of taking what we have for granted, we see a Porsche, become envious and we forget that our Ford is still technology beyond the wildest dreams of people only 100 years ago. We have reached a state in our society that we are the rock stars of the world; we are one of the richest nations, with the easiest jobs, most money and best quality of life. What we are guilty of is refusing to admit the privilege of our position, ok our society may not be perfect, we may not all have yachts, but I wouldn’t swap it for a job in Ethiopia.

I also went to see Star Wars last night. I have now finally seen the whole Saga. I am not going to comment on the film, there will be plenty of other people who will be happy to do that, what I will say is that the whole story highlights the dangers that our own world faces, power corrupts, we cannot allow power to be concentrated through centralization. The EU constitution worries me because we should not centralize government. Power should be spread out to local government within countries, not centralized to a continental one.

All's fair in love and football

What’s all the fuss about Manchester United? Mr. Glazer has gained his controlling share of the club and will before long own it in its entirety. The bid is highly leveraged and there will be a not too small debt to pay off once the process is complete. The fans are worried about rising ticket prices along with everything else. The problem here is that people do not see that they have a choice. They will not be forced to pay any amount that they do not agree to, they do not need to go to the games. If Mr. Glazer raises prices beyond a reasonable level the profit will trail off, if profit begins to drop then so does his income, so he will not raise prices by such a level. The main reason for this concern is the rise in prices for Tampa Bay Buccaneers tickets when he bought the club. However, what people don’t think about is that in the years that he was raising prices, he was taking the club up in the league. Nobody would expect Manchester united to charge the same price as a conference team and this is no different. Manchester united is already close to the top of its game; it doesn’t have a long way to go to get any better, so rising prices won’t be as easy. However, the truth is that people pay to see a game, that price is set as the amount agreed between the seller and buyer, if the fans buy the tickets then they are agreeing with the price. If they do not agree with the price, the answer is simple, don’t buy.

Living under capitalism?

Last night on Channel 4 there was a program about the 1987 crash. The comment was uttered twice that at the time, people though that it signaled the “end of capitalism.” How can something end when it was never there in the fist place? This shows an extreme misunderstanding of the political climate of the time. People often believe that we live in a capitalist country; this is wrong, very wrong. This belief comes from a fundamental misunderstanding of capitalism and the situation that we find ourselves in today.

People believe that a society is capitalist if people are making money. That is clearly an oversimplification, but it seems to be the case. Somehow the common view of capitalism seems to be “make the rich richer and the poor poorer”. Capitalist free markets have never made any section of society poorer, and have in fact lifted the wealth of the poorest in society today to wealth that the Kings of a few hundred years ago could only imagine. While in Communist China, the wealth of the entire nation stagnated until the recent free market reforms were brought in to begin the recent growth that we have seen.

The massive amounts of wealth that were created from the economic reforms under Thatcher were indeed capitalist in nature, however, that does not mean that we were living under capitalism. There was still such a thing as state owned business, regulation, state funded education and health. The government was still spending almost 40% of GDP. That was not capitalism, though it was no doubt a huge evolutionary step forward for Britain. Without the privatization of the Thatcher era, the wealth that we have now would not be possible. So while we have elements of capitalism within our society, we have just as many elements of socialism, and even Marxism as well. Taxation, NHS, state owned education, regulation etc.

All of this is missing the point though. Capitalism is not about money. Capitalism is about the individual rights of each person, the right to freedom and property. Since it is impossible to centrally plan an economy, or to have state owned business, regulation, tax etc without violating the right to property, the only system that is available within capitalism is the free market system, a system that has proved itself throughout the centuries. So money is not the defining element of capitalism, neither are free markets, the individual unalienable rights are, and those have been violated to one degree or another by every government we have ever had in Britain, and that is why capitalism does not exist here.

The ideal still unknown

“No politico-economic system in history has ever proved its value so eloquently or has benefited mankind so greatly as capitalism – and none has ever been attacked so savagely, viciously, and blindly. The flood of misinformation, misrepresentation, distortion, and outright falsehood about capitalism is such that young [and now old] people of today have no idea (and virtually no way of discovering any idea) of its actual nature.”* This quote I believe sums up the situation over the awareness of capitalism in today’s society just as well as it did when it was written. While Marxism is commonly denounced as a practical failure, most people are still led by its doctrines. Most people still believe that society exists as a higher priority; one must sacrifice personal goals to those of society. It is a forgotten truth that society does not exist; it is merely a group of individuals. The individual is the most important thing, and individual rights such as freedom and the right to private property are, therefore, unalienable.

* Capitalism: The Unknown Ideal, Ayn Rand, Signet, 1967

Health Service Reform

It seems as though Patricia Hewitt has got some good ideas, but unfortunately doesn’t know how to implement them properly. Use of the private sector in medical treatment would be very beneficial to this country, it would allow the private hospitals to expand and improve the service to patients. It is also correct that the government should under the current system pay the cost, why? Well, because they are running national medical insurance, this leaves many people in work unable to take out private medical insurance, as they would be paying twice. The only real problem with the scheme would be that the private hospitals would be contracted out on the choice of the NHS rather than the patient.

It would be far better if we could make the NHS (insurance) voluntary and increase the use of private insurance, the current NHS hospitals could remain government run for the moment, however, it would be the choice of the patient which hospital they wanted to go to. The NHS hospitals would still receive money for the treatment, and if they were efficient and provided a good service then they would continue to retain custom, however, if they remained as inefficient as they are today, then private institutions would be able to grow. With this idea I am simply attempting to introduce competition into the market place, by introducing competition, there is a real reward for producing the best service, a reward which does not exist under the present system, and will not exist under Patricia Hewitt’s system.

Tax

Tax is the method most commonly used to fund government spending. Capitalists, although firm believers in laissez-faire government, do realize that even this minimal government needs funding. However, capitalists also deplore taxation as a means to obtain this funding*. Why do Capitalists not believe in taxation? Supporters of tax often cite the benefits of government spending as reasons for taxation. This is flawed for two reasons. Firstly the ends cannot justify the means, the benefits of increased government investment cannot justify taxation, and secondly, the benefits of government spending are created through what is known as the broken window theory.

If a window were broken, then some people would see this as an economically beneficial situation, as someone now has to be employed to make a new window, someone to transport the new window and someone else to fit it. However, the reason broken windows are not economically beneficial is that the money the owner of the window used to replace the broken window with could not be used to spend on other things which would also create this employment. Therefore, government spending, whilst it undoubtedly creates employment, does so with money that would probably have been used to create employment in another area. That money is tax. As government does not create wealth, it has no right to control that wealth. By taxing and spending, the government is effectively breaking windows all over its own country.

The argument is not against government spending though, as I said before, even a capitalist Laissez-faire government needs to spend something. The argument is against tax as the source of this spending. The reason capitalists do not like taxation is because it removes freedom. When we are taxed we no longer have a say on what that money is spent. I might wish to use my money to pay for medical insurance, or to give to someone who doesn’t have any money of their own, or to buy twelve doughnuts every day. It is not what the money is spent on; it is the fact that I no longer have the freedom to choose what I believe is the best use for the money. This is why capitalists will often say that tax is immoral, as removal of freedom is an immoral act.
The UK currently gives over £30bn every year to charity, that’s very nearly £900 per year for all people of working age, or £1090 per year for all working people. If private charities can raise funds of this magnitude with government spending at 41% of GDP, imagine the level they could raise without taxation. It is also usually supposed that the government cannot be a wealth creating body. Even a Laissez-faire government could undertake profit-making enterprise in the free market in order to fund some of its operations. Also I believe, as do many capitalists that a neighborhood would be happy to donate some of its income to a government that provides protection of property rights. Another idea is to have a 1% levy on all contracts entered that the two parties wish to be protected by the nations property rights, this would fund the legal system that would then be expected to help sort out difficulties over the contract. Equally inventive schemes could be thought of for other government funding needs. The unifying theme throughout however is choice; a person must have the choice of how to use their capital.

* Whilst I believe in abolition of taxation, I realize that reform would necessarily be a slow process. Therefore I continue to fully support the proposal for a flat tax, as it is at least fairer than the current system, and is therefore a step towards the ultimate goal.

Freedom

Freedom is central to capitalism, but what is Freedom? Dictionary.com defines it as:

1. The condition of being free of restraints.
2. Liberty of the person from slavery, detention, or oppression.
3. Political independence.
4. Exemption from the arbitrary exercise of authority in the performance of a specific action; civil liberty: freedom of assembly.
5. Exemption from an unpleasant or onerous condition: freedom from want.
6. The capacity to exercise choice; free will: We have the freedom to do as we please all afternoon.
7. Ease or facility of movement: loose sports clothing, giving the wearer freedom.
8. Frankness or boldness; lack of modesty or reserve: the new freedom in movies and novels.
9. The right to unrestricted use; full access: was given the freedom of their research facilities.
10. The right of enjoying all of the privileges of membership or citizenship: the freedom of the city.
11. A right or the power to engage in certain actions without control or interference: “the seductive freedoms and excesses of the picaresque form” (John W. Aldridge)

All of these specific definitions seem to be very good at summing up the meaning of the word. However, I believe that number six is possibly the most useful of them all “The capacity to exercise choice; free will” All of the other definitions seem to be covered within this except perhaps for number seven, however, this isn’t about the freedom of the individual, and maybe this should be what we are trying to define. So there it is, the capacity to exercise choice. It was suggested to me recently that freedom is a state of mind, not something that is defined by the laws of a country; indeed, this has its philosophical backing from Dr Victor Frankl. He came to this conclusion while he was subjected to the cruelest conditions under the Nazis in a concentration camp, he realized that his freedom could not be taken away as it was in his mind, what had been removed was his liberty. However, in this situation Dr Frankl used what he called the most important freedom of them all, the freedom determine ones own attitude and spiritual well being. In this case I believe that he is correct, however, this is the worst-case scenario, the most important freedom can never be taken away, but that does not mean that we cannot be oppressed and enslaved. So should we really separate freedom and liberty?

I do not believe that any form of freedom should be surrendered, even with the knowledge that our ultimate freedom, the freedom to determine our own attitude is not at risk, our liberty is most definitely at risk, and it is that which needs defending, Our capacity to exercise choice.

old new Labor

So, we have a Labor government. That’s no surprise really; the real surprise is the accuracy of the exit polls. Although we are in for another four or five years of tax and spend, the impending slowdown in economic growth should highlight to most of the population the problems with this policy. Had another party been elected, then the coming economic problems would be blamed on them, rather than on their actual source. We can also be thankful for the reduced majority. At least labor won’t be able to do anything they want anymore.

General Election Today

Today is the day of the general election in Britain. The nation will decide who it wants to lead it through the next four or five years through a democratic method developed over hundreds of years. The shame is however, that most of the people in the nation will probably not even bother to vote, and those that do will probably not understand the policies for which they are voting. Most of my friends are very modern liberal, even socialist. They believe in redistribution of wealth etc. I don’t wish to change their mind as their mind is theirs to change or keep the same as they see fit. I do think it is necessary to point out, however, that most people also do not know why they believe what they believe. People have heard that “welfare is a good thing” “the poor need our help” “it is unfair for the rich to steal money from the poor” etc. What they don’t realize is that this is all socialist propaganda, and it is eating into the hearts and minds of our nation. When Charles Kennedy announced his proposal for a 50% tax on £100,000 or above, there was agreement from a great amount of the population, why? The average wage is £25,000 (just below), which means that most people earn well below £100,000. Also, most of them believe that £100,000 is much more than anyone deserves to earn and so the money must be stolen from everyone else, right? Well a very brief look into economics will tell you otherwise.

The £100,000 earned by a top executive is not money that has been stolen from anyone. Really? So where does it come from if not from the poor? I hear you ask. Well, it comes from the money earned by the business from trade, i.e. when someone buys something from the company for which the executive works, there is a certain amount of money which goes to pay the wage of that executive. The price paid for the object is freely agreed between the buyer and seller, and once the money is in the company, it belongs to that company and it can do what it likes with that money, even if that means paying an employee £100,000. So on moral grounds the 50% tax on high earners is not right. But that’s not the end of the story. If a 50% tax were imposed, it would increase the benefit of avoiding tax (legally or illegally). This means that there would be less investment, and therefore fewer jobs would be created, money would be moved offshore to friendlier tax jurisdictions. In short, because of the effect shown by the Laffer curve* tax revenues would likely go down. So instead of funding extra public services, the Lib Dems would instead merely be punishing the successful for little or no benefit to anyone else.

I believe that the Labor party will once again win the general election and we will have more tax and spend for the next parliament. I just hope that people will finally begin to realize the true harm of these policies and begin to question their socialist ideals.

* The Laffer curve (created by Arthur Laffer) shows the effect that is often observed that tax increases often decrease revenues and decreases often lead to an increase in revenue. The curve is constructed through the theory that at 0% tax rate the tax revenue would be 0, and at 100% it would also be 0 as there is no point in earning anything. So in the middle there must be a maximum value of revenue. Given the history of revenue increases under tax reduction in this country it is reasonable to assume that we are operating on the right hand side of the curve and so a rise in tax rates would lead to a reduction in revenue.

Anti-capitalist video

While searching the Internet for anti-capitalist literature I came across this video. It’s very well done and I recommend giving it your full attention. The main problem is, however, the arguments that are directed against capitalism, are in fact not capitalist at all. For instance, the “game” with children in the Kindergarten who suddenly have their toys taken away and given to one child who then runs a despotic rule over the other children as he controls all of the “capital”. The fact that this is given the name of capitalism shows a distinct lack of knowledge of capitalist ideals. Firstly, capitalism is the ideal of economic freedom for everyone. That means that no single person controls capital. The video also ignores the vast changes that have improved our standard of living beyond the wildest imaginations of the hunter-gatherers. The poor today live in absolute luxury compared to the kings of only a few hundred years ago. The “game” does, however, point out the problems with despotic rule. Problems that capitalists have been trying to bring to peoples attention since capitalism was first recognized.

The other ideal in this video is a society without money. This all sounds very nice on the video, but who would produce the things that advance our lives? The vilification of money appears to stem from a distinct lack of knowledge about what money actually is. Adam smith sums up the function of money as a store of value that allows us to exchange goods and services at will. Basically, a baker makes more bread than he can use and the butcher more meat than he can use. The baker could exchange all of his extra bread to the butcher and vice versa, however, bread and meat like most things have a life. They cannot be easily traded again in part payment for the bakers’ delivery van for example. So instead, the baker gives bread to the local population in return for money of some form, which he can then use to make payments on his van and to buy some meat from the butcher. Money is not evil, it is not the root of evil, it is merely an efficient system of arranging trade for the benefit of those who engage in it.

The distribution of income that is often spouted by anti-capitalists as “proof” of the unfairness of the capitalist system, this is not a just argument. Firstly the current income distribution cannot be called capitalist, as we do not live in a wholly capitalist society. Secondly, the wealth that is held by the wealthiest in our society would not necessarily be redistributed to those poorer people if free markets were abolished. It is far more likely that that wealth would simply not exist, as the incentive to create wealth would not exist. If we want to find a very equal income distribution, we must go to the poorest nations on earth, mainly to subsistence farming communities, the richer a nation becomes, its income distribution also tends to widen. But where would you rather live, in America with a large gap between rich and poor, or in Ethiopia with virtually no gap? I believe that I could still elicit the same answer by asking, would you rather be a poor person in America, or and average person in Ethiopia? My answer would be America both times (I currently enjoy living in England, but that also serves my point as we have a large income gap too), and I believe that the thousands of people who risk their lives to enter America (and Britain) illegally every year would also agree with me.