Wednesday, 19 December 2012

'Welfare Cash Cards' are wrong and will not work.

Yesterday, Alec Shelbrooke MP delivered a 10 minute rule bill to bring in Welfare Cash Cards, for those on benefits, the lovely and brilliant Alexandra Swann then blogged about it, supporting the idea. The problem is, not only do I think this is a roundly un-libertarian proposal (telling others what is best for them?), but I also don't think it will achieve the results set out.

I'll start off with the moral case against it, it doesn't really matter whether this is taxpayers money or not, if someone is given money by the state, and all the boxes are ticked, you don't have a right to say "I know how this person should spend their money, I pay tax". It is similar to the stereotypical middle class mum telling the policeman that she can't be prosecuted because her taxes pay his wages. Why does it matter what people spend their money on as long as they fulfil their end of the contract on benefits (i.e. looking for work)? You have a right to argue that people who break their contract should be sanctioned more strictly, and better checks should be put in place - but as something of a bleeding heart libertarian, I don't see why anyone should say "no enjoyment for you, you're on benefits".

Now, you might reasonably disagree with me on that, but I don't think anyone can refute the idea that this petty moralising of those on benefits just will not work. Being strict on those who lie, cheat or don't bother seems fair, and can be done effectively so as to make it work (though maybe not for as long as government is in charge of welfare - friendly societies were much better at this). Firstly, those addicted to drugs (including alcohol and tobacco) - the key things highlighted that this will prevent - will get their drugs another way. They might resort to some dealing to pay for their habit, they might resort to theft and other crimes, but you can almost guarantee that something else will happen. A black market will open up to transfer Welfare Card payments to ready cash, probably with those doing it taking a tidy sum to pay for their services (making those on benefits poorer in real terms). It's no good saying that the government will ensure this doesn't happen - one look at any government department will show you that this is fantasy. Taxpayer money might therefore, be funnelled directly into the hands of criminal gangs. Another unhappy, unintended consequence of government meddling and moralising. People who take too much in the way of recreational drugs need treatment and help, not sterner controls imposed by the state, forcing them further into the criminal world.

There's another point that is missed - most jobs are not advertised, roughly 70% are in the "hidden" jobs market, a huge number of these at all ends of the spectrum are gained through networking, often involving alcohol. Labourers find work chatting to others in the pub, perhaps people they've worked with before, perhaps not. Many self-employed people find work through this process as well. If they have a brief troubled patch, being forced onto income support, would you not want them to find work as soon as possible where they know to get it, or does moralising mean more than the result? The same for those at the top, meeting in a pub or bar might be what gets them the job, just the familiarity from a previous encounter might make the difference. If these people are prevented for engaging in the normal process of networking, or otherwise forced to find a way of trading their Cash Cards for actual cash (losing out some in the process), what has been achieved? There's bound to be many other goods deemed to be "unnecessary" that might well get people into work/to be come fit or whatever else in this system. How does the government know what is best in these circumstances? How can it?

There's another gaping hole in the practical considerations. What of going to the local corner shop to buy necessary goods? Does the corner shop need a licence to process the card? How much will this mass of bureaucracy cost the taxpayer? Small, local shops and businesses will likely be hit much harder applying for licences or whatever else, further damaging the private sector.

This is nothing other than government meddling, tackling a symptom of various problems instead of the diseases of drug prohibition, high taxes on tobacco and alcohol, a poor economic climate and an otherwise lax benefits system. This will fix nothing but it will cause an awful lot of hardship, both in increasing crime and general awkwardness put on those on benefits who want to get back into the economy. This will help nothing but the consciences of the right-wing self-righteous, whilst it will do real damage all over the country, likely doing hard in various parts of our economy. It is stupid and small minded, I sincerely hope it goes nowhere.

Friday, 12 October 2012

Nobel Peace Prize has been a joke for decades.

The Nobel Peace Prize for 2012 has, in the last hour, been awarded to the EU. For um, there not being war within EU countries since WWII. Of course, that has nothing to do with cold war geopolitics (and thus people being rather reluctant to go to war with USSR). Or Western Europe being generally pretty rich (lots to lose from war), like North America or most of East Asia today (other areas with little conflict since 60s about the time the EU was former). The Treaty of Rome, establishing the EU, in 1958 came some 13 years after WWII, and yet there was no major war. To claim that the EU was what caused peace since them seems rather bizarre, given this. Given the Balkans, where the EU at best stood back, at worst help generate tension, and the current strife in Greece and elsewhere within the EU, and EU support for dodgy groups worldwide; I see plenty of reasons why the EU definitely should not have won the award.

Most people understand that this is a complete joke of an award, but few people realise that the Nobel Peace Prize has been a joke regularly - going back decades. One of last years' winners Leymah Gbowee, stood for re-election even though initially promising not to, and has been involved in corruption scandals. Perhaps minor on the face of it, and happened after the award, but still something to consider. Then there's Barack "Drone Strike" Obama, who had done nothing but make one speech on reducing the number of nuclear arms worldwide, to win the 2010 prize - having been nominated, in fact, before he made the speech. He did nothing to earn the prize, and has done much since to discredit the award.

The recent trend may strongly suggest a right-on, left-liberal sentiment to the awards, especially when you consider Al Gore and the IPCC jointly won the award in 2007. Despite global warming not having a great deal to do with peace and despite Al Gore being Vice-President when Clinton was bombing Sudan etc. without the authority of Congress. De Klerk won in 1993 - whilst I understand the reconciliation needed, it is still quite sickening to see him win the award. In 1988 the award went to UN Peacekeeping Forces. Apparently soldiers who fought in the Korean war are peaceful. There are lots of others where the award seems dodgy, like the ILO in 1969, but perhaps the worst of all, was the 1973 award to Henry Kissenger, who played a key role in illegally bombing Cambodia, the 1970 incursion into Cambodia, leading to the Cambodian civil war and napalm bombing campaigns across Vietnam (as well as the deliberate flooding of land). Kissenger was given the award alongside Le Duc Tho for bringing peace to Vietnam. Le Duc Tho refused the award on the basis that there was no peace in South Vietnam. This view was proved correct, given that South Vietnam no longer exists.

The Nobel Peace Prize has long been a joke - the trend however, seems to be one of increasing ridiculousness. Just like the Economics prize.

Thursday, 11 October 2012

Unpopular Politicians Liable to Fall

Following up on yesterday's post, I think there is potential for a few more fluctuations in the coming debates. Tonight's VP debate is probably not going to make that much impact initially (with Ryan likely to win), however, Ryan could easily give Obama some ammunition for further debates. As I said yesterday, Romney is highly unpopular. If Obama gets some "big hits", he could easily get a big swing back his way. The problem is, nobody trusts either candidate, and either, with a few fluffed lines, could throw it all away because of this. You can afford to look like an idiot, get stuck on a zipline and so on if people think you are honest and on their side. If however, they truly see you as a liar, a fraud who has wrecked the economy, gone back on promises, or simply don't have a policy platform at all, then your support base is going to be weak. Polls are prone to move.

What we see right now, is growing disdain, both in Britain and America (and other "western" nations - including Japan) for the political class. We have Ed & Ed, who were at the heart of Brown's financial failures on the one hand, and Cameron, who has time and again gone back on election pledges. Both are still in the 30-45% region in the polls (out of those intending to vote) - but a large segment of that amount, in each case, is soft support. A vote only when it comes down to it. This group is ripe for conversion to a new party, be it the Libertarians in the US or UKIP (and formerly the Lib Dems) in the UK - remember Cleggmania? 23% is what the Liberal Democrats got in the last election. They currently poll at around 8%, even though they are usually prompted. That leaves 15% moving elsewhere. Add to that the fact that turnout was only 65.1% and you see that, actually, there is huge room for a major shift in political alignment. Looking closer, many Labour strongholds only had 50% or lower turnout. Given that UKIP tend to do well in these areas (winning the 2009 European elections in Hull for example) - winning seats in 2015 in these areas is definitely possible, it is a matter of getting people to vote, showing that there is a party that will respond to their concerns. If Labour can lose 'safe' seats through higher turnout, then perhaps 2015 is not as easy to predict as people think. Just like the US Presidential election is still uncertain.

If the population - largely disenfranchised with the typical political options - is passively looking for an alternative, then the establishment should be a lot more scared than they currently are. If a real alternative can present itself, then it might suddenly be something other than an alternative. Those wishing to be the alternatives better get ready for when they are given the spotlight - one by election victory, one big performance somewhere, might just be enough. When the voters look to you, you need to be ready with a plan to take charge.

Wednesday, 10 October 2012

US Presidential Debate and Polling - why the big shift?

In the recent US presidential debate (where the Green and Libertarian candidates were excluded, even though they are on enough state ballots to win), Romney came out on top. This happened to surprise many, and I don't really know why. yes, Romney wasn't the best in many of the Republican debates, but he appeared to win a few of them. More crucially though, Obama, really, has no leg to stand on, anywhere. Nothing he has done has worked, Obamacare (and more crucially the personal mandate) is a disgrace, and this is basically all he has done. The economy is in tatters (Obama said he would not serve a second term if he didn't fix it, yet he still stands). Unemployment is excruciatingly high, and underemployment is still higher. U6 (the unemployment measure that includes these underemployed), is 14.7%, and did not move when the recent "increase in jobs" was announced. People are taking part-time, often short-term jobs when they really need full-time jobs. The economy is nowhere near fixed, and Americans know it - 14.7% are out of full-time work.

So it was quite possible that Obama would lose in the debates, that is fairly easy to understand, especially as he hasn't faced a debate opponent in this format since 2008, Romney has. What people are trying to figure out is why, after the debate, Obama's lead in the polls disappeared. It is unfathomable to many that such a lead would disappear so quickly. As has been rightly pointed out, such a large move, this close to the election, is unprecedented. I am not at all surprised. Why? Because something the political commentators keep mentioning but still overlook. Nobody likes either candidate. One is a proven failure, the other nobody likes. The main reasons that supporters seem to have is that their candidate is not the other guy. A major part of this election revolves around Big Bird, showing just how close the two candidates are on actual policy. The reason the polls shifted so quickly was that, both candidates have a large amount of soft support. Whilst they might have a solid base of say 20%, most of the US electorate would like a different set of choices. One of my US friends (a registered Democrat), hates Obama and the personal mandate that is his only real success. Yet, despite this, he still finds Obama preferable to Romney. Nobody likes either candidate, people are ready to jump to another candidate very quickly - and this is why the polls have shifted so much.

This is why, getting Gary Johnson and the Green candidate into the next presidential debate is still important. If a 10% swing can occur in one debate, it can happen in the next, and with a real alternative, it might make a big difference. This is quite possibly what the establishment are so scared of - a real alternative might prove to be hugely popular if given the chance.

The same is true of the UK - most polling companies still include UKIP in the "other" category, often unprompted on phone polls, yet they are currently above the Lib Dems in many of these, or at least in the same region. It is about time that both American and British politics was opened up a bit.

Tuesday, 25 September 2012

Masters of Money - Hayek

If you ever trawled through my old blog posts (not recommended), then you would not BBC bias being something that frequently comes up. But I was pleasantly surprised last night watching the second episode of Masters of Money by Stephanie Flanders. This episode, based on Hayek, did miss out quite a few details which I think I would have got in, was fair to him. It gives credit to him having predicted the Great Depression and it suggests that his followers predicted the current one (although not making it too obvious).

Hayek's concept of the Fatal Conceit was explained fairly, as was the complication of the market, although the price mechanism explanation was rushed through, meaning that the viewer wouldn't understand the point unless they were already aware of it. The program was also fair when it came to government interventions in the market, and their distorting effects, with money being singled out both by Hayek and by Flanders as the most important. It was great to see. Seeing Ron Paul being listened to without derision or spin on the BBC was marvellous. OUtlining the differences between Hayek and Friedman was also great to see, as the left usually lumps all right-wingers together.I hope to see more like this in the future.

There were of course some typical howlers, like declaring Bush to be a free marketeer (the state growing in size and increasing tariffs are somewhat different to free market positions). Hayek was also described as the most extreme free marketeer, something clearly not true. Rothbard, anyone? The lack of any mention of Mises and the fact that Hayek was a socialist until he read Mises' work as possibly the most disappointing part of the program. The program also resorted to talking to both Mervyn King and Paul Krugman, possibly two of the least useful people to talk to with regards to Hayek and Austrian economics - Krugman probably being the worst economist for mis-characterising the school. Krugman talked about the nineteenth century US as if it was in a state of free banking in an attempt to refute Hayek. Of course Krugman is completely wrong here, with both the First and Second Banks of the US (government chartered quasi-central banks) playing their part early on, government green-backs during the civil war era, the ban on branch banking, and many, many other examples utterly destroying his point. Whilst examples of successful, stable free banking periods abound (Canada during this same period into the twentieth century being a prime example).

Ignoring Krugman, we did get an admission from Merv that economic models are often quite badly wrong. He, and the makers of the program didn't quite connect up the dots on this one for current circumstances, neither were the dots connected for modern QE and Austro-Hungarian money printing (in both cases to buy government bonds).

Overall, there was plenty wrong with the program, but by BBC standards it was pretty fair, and it was a surprise that it was even broadcast in between the Keynes and Marx sessions of the series. I hope to see more like it in the future, perhaps with more in-depth explanation of problems. However, for now, I'll brace myself for Marx next week.

Tuesday, 4 September 2012

The Reshuffle is Pointless

As Dan Hannan points out (seemingly doing his usual, one awful post, one great post routine), the reshuffle will really offer no difference either to the coalition or the government as a whole, the mandarins in Whitehall and Brussels still call the shots. Why is there so much coverage? Well, it's easier for the media to talk about differences in the cabinet, and it is easy to follow, unlike the opaque bureaucracies already mentioned.

Even if the changes could make a difference, the pathetic nature of the changes made by Cameron show why nothing will really change under him, whether in coalition, minority or majority government. Osborne is still in a job - having failed to do anything useful except nudge pension reform slightly in the right direction (but nowhere near enough to combat the eventual collapse). He is too weak, and not enough of an ideas man to take anything like flat-tax proposals or closing departments forward. The backbenches have excellent people like Steve Baker and Douglas Carswell who could perform the role, but there are many less controversial ones who could actually sort a few things out. Jeremy Browne could have been an outside bet, and would have thrown the LibDems a hefty bone.

Of course, the LibDems would need some good news to compensate for throwing Cable out, or giving him a non-position like Clarke or Warsi (who are both only kept in to appease certain groups, everyone knows they are both liabilities). However, Cable stays at BIS, red tape will not be cut, the EU will not be challenged and we will continue to lose our global economic standing.

Next up on the list of useless choices is Hunt. He was in a fairly pointless position before (why do we need a 'Culture Secretary'?), and given that we didn't just scrap the department, why didn't he just stay where he couldn't screw up anything serious? Now we have a health secretary who believes in homoeopathy. Given that the Conservatives are generally not trusted by the health lobbies and unions, why did Cameron give them such an easy target? How will that help push through vital reforms (let alone the cuts that really should, but will not occur).

There is one ray of light amongst all this, Owen Paterson. He is apparently supportive of shale gas and sceptical of AGW. Excellent, but can he really do anything to stop the mandarins, Brussels and the rest of his cabinet pushing through more subsidies, wind farms and other tripe? I reckon he is just a sop to "the right" to quieten them down. It might work for a week or two, but once it becomes obvious that there will be no change, the backbenches will be as "rebellious" as ever.

There was never any real change during the reshuffles of the Labour years, there was very little difference when the coalition came in and there will be very little difference from this reshuffle. The same steady decline, weak leadership and the various economic cans being kicked down the road.

Wednesday, 15 August 2012

Virgin, First and Rail Contracts

So, in the news today is that First have won a bid for running the West Coast mainline service, beating the incumbent Virgin bid, offering a great deal more for the service. The government has chosen, apparently, wholly on the big number, says Branson and he may be right. The difference between the two bids is largely on that number, as without altering the track, I see little ability to improve the service other than with lower fares.

Now, Virgin may be able to deliver and I hope they do, the better the train lines are, the better my transport around the country is likely to be (as an aside I have used the Virgin service on a number of occasions between Birmingham and London, and it is not too bad). However, I doubt that First can offer a great deal better service without new lines. This is the problem, the lines, the actual track is owned by the government and the contracts are awarded by the government (as has happened with this case). The reason the free market works so well for consumers is because those same consumers make a choice between different providers. When the government selects bids, they do not what is best for the end user, but for the government (in the short term) - so the size of the bid, hence why some companies collapse trying to offer the sort of bids they need to make to please the government. Alternate systems of rail travel are impossible, nobody can build a 7 foot gauge track like Brunel did, which can offer faster service with wider trains, the government will not allow it.

When our rail network was built initially, it was private, it was constantly expanding (apart from the war years where it was brought into government service), the London Underground was too, being the track of several companies competing to offer services for London. Whilst some companies over-expanded and collapsed, others kept going - there was a strong market and the customers were the winners. Now we have a system that is part-privatised. There is some competition, but for most people there is a monopoly of the places they go between, there is crucially only one set of tracks for each route. If you want to go by train, you have to use whatever battered old thing draws into the station. There have undoubtedly been huge improvements since the railways were "privatised"; the small improvements and efficiencies brought in through the prospect of bankruptcy to the private providers helped to stop the terminal decline in our rail network. When the "privatisation" occured, the decline in passenger numbers finally stopped and indeed reversed. But we still have a nationalised rail system, and as such government contracting.

The part privatisation of the railways under Thatcher was just that, a part-job, incomplete and in my personal opinion, a bit pathetic. The track itself needs to be sold off, and permission given for private companies to build new lines, whether they are "High-Speed" or otherwise. This means that investment in infrastructure can finally occur, and the improvements to the transport system, a hallmark of 19th century Britain, can happen again. Instead of mis-diagnosing the problems as those of "privatisation" with ridiculous rose-tinted glasses looking back upon the nightmarish nationalised system, we should get government out of the way finally. The failures of Thatcher's privatisations can be brought down to not being bold enough. Whilst I seriously doubt my internet connection would be as fast without Thatcher, I think it should be a lot faster - this is easily achievable. We need to finally privatise what remains of our utilities, ignore the "natural monopoly" claptrap and allow competition to rid the monopolies of their status.

Saturday, 28 July 2012

Quicksilver Trilogy - Libertarian Fiction

This isn't exactly a book review blog, but the Quicksilver Trilogy (Rising, Zenith & Twilight) by Stan Nicholls (renamed the Dreamtime trilogy in the US) which I have just finished is, I think, a very libertarian set of books. They are a pretty easy read, so teens should be able to enjoy them, as would most adults. As a fantasy series, they are fairly decent without the libertarian side, so I would recommend them to fantasy readers on that basis anyway. The libertarian ethic though, I don't think can be ignored.

In the Quicksilver world, magic is hugely important, a controlled product by the dominant empires which is used as a tool of subjegation. The rival empires of Gath Tampoor (a typical seeming autocratic empire, no unifying ideology) and Rintarrah (a fascist/socialist state where everything is ordered and has its place in a supposedly egalitarian environment, but there is an enshrined upper class anyway) are both somewhat oligarchic, with a number of ruling figures at the top of departments, secret services and the like. The story watches as the main characters, through one method or another, are adopted into the resistance movements in the two empires and Bhealfa (a protectorate of Gath Tampoor) and their attempts to escape to a relatively uninhabited island and secure their liberty.

Without giving too much away, I'll try to show how this series goes through the abuses of the state, and thereby will help to give readers good libertarian insights. I'll start with a scene in the first book, where there's a confrontation between a prostitute who's friend has been killed, and a member of the upper echelons of society responsible; in the supposedly equal Rintarrah: "'Listen, slut' he snarled, 'I've got contacts. I can make things really difficult for you. I'm talking about big trouble.'" as well as the inbuilt racim of the state "'And you think the authorities would take the word of a Qalochian whore over that of a man of stature'". Bear in mind that the profession of prostitution, like everything else deemed bad by the authorities is denied to be in existence is the 'ordered' nation of Rintarrah. Throughout the books, the issues of race and legal injustice are brought up. Those at the top enjoying protection against the people, whilst the people are abused by those above.

There is a clear argument that tax is theft in the second book, where a former pirate defends his practice: "I spent three years in the business. And I use the word advisedly; it was a business as far as I was concerned'. 'That's a novel way of describing it.' 'But it's true. Piracy's a very elementary form of barter. You exchange possessions from people in exchange for letting them keep their lives. It's not dissimilar to taxes. Nobody wants to pay them but governments make you. [...] where people have to follow their laws at the ultimate expense of their lives.'"

So, the state is racist and unfair, and tax is theft, now onto book three and the abuse of language (which also appears earlier): "'[T]hey employ language as a weapon against us. Taking another's land is liberation. Suppressing the people's right to speak is freedom. Executing a patriot is an act of public order. And anybody opposing them is a terrorist.'" Even gun rights comes up in (although not directly, guns not yet existing in this universe) with magic as the equivalent; "'[T]hat's the fault of the system we live in, not the craft.' He held up the rapier he was still clutching. 'It's like this sword. It can be in the hands of a tyrant or a freedom fighter. The sword has no say in it.'"

Libertarian foreign policy is also brought to the fore through criticism of an interventionist foreign policy: "Where rival empires competed for dominance, foreign policy was often a euphemism for armed conflict. At any given time, territory was contested, rebellions were being quelled and unruly populations subdued. [...] And while the warring parties had made destruction a fine art, little attention was paid to helping its many innocent sufferers."

Show trials appear several times, including one of an ambassador: "'It amounts to treason.' 'But I'm not even a Bhealfan subject!' 'Ah, and neither is he. So you're making a further admission that like my enemy you're not a Bhealfan subject. This is all starting to sound rather damning, isn't it?' [...] 'Would you be kind enough to outline the nature of the charge?'.

This set of books evidently hasn't set the literary world on fire, and not the most brilliant pieces of fiction ever written, but they are entertaining, and I think they should be touted as the libertarian books they are, they might help open the eyes of somebody, and for that I recommend them to anyone interested in fantasy. Not as good as The Moon is a Harsh Mistress and doesn't show how a libertarian world would work, but it shows the excesses of the state, which is just as important.

Friday, 20 July 2012

Oh Kimi

So, apparently North Korea is to 'reform' its economy under the leadership of Kim Kong-un. This has followed in the great traditions of China and the USSR in 'purging' generals in order to wrest control from them. Apparently the main general was pushed out for reasons of illness, but nobody seriously believes that. Evidently, opening up the insular nation and freeing the press were not high on the reformist list of 'things to do'. However, I have very little hope in these economic reforms, at least in the long run.

The cabinet had created a special bureau to take control of the economy, with the control being taken away from the military. What, on the microeconomic level has really changed? Nothing. This is the typical approach of the statist. Some economists of the left might write about how reforms of this nature will help revive the economy, as if it was simply a problem of mismanagement. Another approach, you might call it an Austrian approach, is to view the economy through the various actions individuals, and through them, businesses make to trade. Do they buy goods from X or Y? do they sell at price A or B? It is from this, microeconomic level, that the economy as a whole grows. The failure to merge this properly into macroeconomics is one of the greatest problems I see with modern economics. Modern macroeconomics sees the economy on the macro level acting independently from the micro, the sectors apparently not acting based on what people at the micro end buy and sell. This is why macroeconomists seem to spout such nonsense so often, and why their predictions tend to be way off target.

The problem is, both in Western governments, and more keenly felt in nations like North Korea, the government sees the economy in these narrow macroeconomic terms. Thinking that if you just build a steel industry, you will sell steel products to the world (or at least your own nation), and it will be wondrously efficient. This thinking is what gave the world the Lada and Moskvitch cars and the appalling failures of the Virgin and Idle lands Scheme (which turned large areas of Kazakhstan into desert and resulted in large quantities of grain being imported from Canada during the 1970s and 80s).

For all the zeal that the North Koreans might put into 'reforming' the economy, I doubt they will achieve that much. It is effectively impossible for any North Korean to accumulate capital, so the market economy cannot function. The only way to repair the economy is to free it from government control, to allow individuals to make up their mind as to what they are willing to buy and sell. Ignore the macroeconomists and set the microeconomy flourish, allow people to start a business and create wealth without facing insurmountable barriers. In essence, to fix the North Korean economy, North Korea must abandon the Communist mantra that makes it so famous today. It might not take up many news headlines, but at least the people would be able to eat.

The same solution applies at home, cut bureaucracy, cut government spending and allow the real, micro-level  economy to thrive.

Thursday, 12 July 2012

Bank of Dave

So, this guy called Dave wants to start his own bank, as shown on Channel 4. A self made man (a minibus dealer), a proper capitalist. Should be exactly the sort of guy to start a new bank. He has some money behind him, should be easy, right? Nope. Contrary to the opinions of many, the banks do not suffer from a lack of regulation; Thatcher's deregulation is mostly a red herring. Not only does the UK have tonnes of regulations of its own, with the FSA and to some extent the Bank of England acting as policemen, but we have the Basel Accords on a more international level. You need to have a government license, for which you need to take of bunch of (costly) exams. This means you either have to be pretty well off, or already working in finance. This means that it is hard for new banks to start, as Bank of Dave showed. Dave could go to prison for using the work "bank" without the proper licences.

Dave starts his business by paying the local business taxes, before he even opens the doors. The government giving a helping hand to new start-ups, in its own special way. But he has to wait for the FSA to make up their mind before he can hold deposits or make loans. The deposit part of which is still undecided at the end of episode 1.

Capitalism rests on the idea that businesses can enter and leave markets, in the banking sector, this is clearly not the case. The normal risks of a business are not permitted, the regulations are so complex that only companies with a huge amount already invested in the sector stand a chance of getting through them. Is economist lingo this is called a Barrier to Entry.

Dave is doing exactly what I'd want a good bank to do, instead of going to some credit history, he goes and looks at the businesses he lends to. Whilst it might take some time to do, it will reduce risk as you know what you are investing in. Someone with no blips in their record might have a terrible business idea, and someone who has been unlucky might have a great idea, but not be able to get the credit he needs. It seems the current banks, and their focus on computer models for risk instead of people, means that they are less good at analysing where to lend (and unable to see a huge crash coming, as explained in the great book A Colossal Failure of Common Sense). If only new banks could start up and compete with them, we might end up with a better banking sector. Lending based on contact with local businesses to help them expand is how banking took off in this country, with most loans in the 19th century being to small businesses, often rolling over as they expanded. This model is also the kind that, in my opinion, would most suit developing nations. Letting small, one man businesses, often unregistered with the authorities, get money to expand and deliver the goods that people want and need.

Dave is a capitalist, a proper one, and the thing standing in his way is the regulator. We need to unleash Dave and others like him. Scrap the FSA and bring in Free Banking I say. Let Dave call his bank a bank, let him take deposits and make loans, and if he fails, then he fails, but on his own merit. Before anyone suggests it, no, free banking is not unstable. Indeed, free banking is a tried and tested model, working historically in Scotland, Canada, Australia, Sweden and a host of other nations.

Help out Dave, support real capitalism, free the banks!

Wednesday, 11 July 2012

More Lords Reform

Many people, including me, are in favour of Lords Reform, but do not support the current proposals, or do so begrudgingly, hoping for later changes. Others are against reform, or for going backwards. So I'm going to try to explain why I'm in favour of reform more clearly, and then look at how to fix the constitutional problems with it.

The House of Lords is meant to act as a reviewing chamber, which more closely assesses the Bills put through the Commons. A replacement Senate, or whatever it might be called, should essentially do the same thing. The crucial thing for any reform is that it aids scrutiny, and does not diminish it. The current set up of the Lords is not only undemocratic (although the EU is a far larger problem on that count), but it is currently full of Labour peers that the Blair and Brown governments stuffed there, holding up reforms and generally getting in the way politically, instead of adding scrutiny to the Bills put through the Commons. Let us not forget that this is just a clearing up exercise for the "temporary" 1911 Parliament Act, which states in the preamble the desire to replace the HoL with an elected second chamber.

Most of the current Lords are not the "experts" that some would have you believe but former politicians, high level party donors, or simply folks like Lord Skidelsky, who is only an "expert" in the way that he is an academic, who frequently gets things horribly wrong. I would be very happy to have this lot chucked out. If the people were sufficiently expert, they need only convince the voters of it and they could get back in. If they don't win the votes, but they are still sufficiently expert, then they can still be called in to give evidence, as people do currently (because, as it turns out, the Lords isn't full of the experts that you need).

One of the issues from the pro-reform side (or at least the pro, current plans side) that irks me is the idea that a referendum is unnecessary because this issue was in the manifestos of all three main parties and was in the coalition agreement. However, none of those documents mentioned anything specific about these reforms, and the idea of there being a referendum is sound, as this is a clear constitutional issue over how the nation is governed.

What should the Other Place look like then? Well, being voted in by region might work, with say 3 or 6 senators/lords for each region/constituency, depending on what size the regions are. If you elect in thirds (with votes every two years), it means the people of the region get a fairly regular say in scrutiny, but the body as a whole is less likely to be based on the whims of national politics. Perhaps 6 year terms like the US senate would work, with the time between general elections cut to 3 or 4 years whilst we're at it. It is more likely to give you the sort of varied group that might do a good job of scrutinising bills. You definitely do not want a party list system as you are aiming for strong scrutiny, which means the less party politics the better, so of course PR voting doesn't make much sense (as it groups people into parties by nature). Perhaps there should be no pay for these Lords, so that they have to work separately as well, meaning that they are less likely to just become career politicians.

After bringing through something akin the the reforms I've outlined, the idea should then be put to a referendum as a matter of course, it is an issue over how the country is governed. The same reason we should have had referendums on the Maastricht and Lisbon treaties (they altered the relationship between the UK and the EU, losing some sovereignty); the way we were governed was greatly altered and it would be difficult if not impossible to revert by a new government, unlike normal Acts of Parliament.

So yes, I do want reform of the Lords, but it needs to be carefully thought out in respect to the purpose of the second chamber, i.e. scrutiny, and not just become a commons Mk.2, with the worst excesses taken further. At the end, whatever the composition looked like, it should be put to a referendum, because in principle, it is the right thing to do for this sort of thing. Besides, how do you keep a straight face whilst arguing that the Lords needs to be more democratic, whilst refusing the right of the people a say it how it is altered?

P.S. This was the last post on Lords Reform. Will find something more interesting to write about tomorrow.

Tuesday, 10 July 2012

LibDems and The Other Place

I briefly mentioned Lords Reform on here the other day, but it seems to be top of the agenda for politicos, so I'm going to have another crack at it.

The House of Lords needs reform. As it stands it is home to a bunch of retired politicians and those who donated large sums to one of the three main parties (largely Labour, unbelievably, no charges were ever made over the Cash for Honours scandal). Nobody gets a say in who is appointed, except the PM. It is a terrible system we have now, worse than having wholly hereditary peers, at least they were unlikely to turn up and make a mess of things. Expenses in the Lords has also been an issue, possibly worse than in the commons, and unlike the commoners, we, the public, have no way of removing the rot.

So, I am very much in favour of reforming the House of Lords. That is pretty much where my agreement with Cleggy on this stops. The reforms suggested by him seem designed specifically to give him and his cronies a retirement home (see above), but with a bit more pretence of legitimacy. Of course, there is no real legitimacy here, 15 year terms? FIFTEEN! And a closed party list to boot! This is not democratising, this is just the elite giving themselves an easier job, I believe at higher pay (though I could be wrong) with pretty much no chance of getting kicked out until they retire. The dream for our 'elite'. I don't see any reason for any of these proposals other than in these corrupt terms. Fifteen years is a huge chunk of a career, only a career politician could think it reasonable to be in politics that long without having to persuade the people of your good works somewhere in between.

So, I do not support these proposals, if what was put before the house now was put to the people in a referendum, I would vote 'no'. That's not to say the current bill could not be reformed to be workable; my support can be gained. However, I am not to be asked, says Clegg, I, who have voted LibDem in local elections (mainly to try to get out Labour incumbents), am being told "we know better than you", by a guy who is purporting to be against unjustified privilege.The Whig tendency in the LibDems in dead. Giving the people a say? Ha! It isn't like this is a constitutional issue or anything, or an issue that deeply divides party political opinions. No, there is to be no referendum, and if the Conservatives don't like it, we'll threaten to  stop the boundary changes going through. Killing two Whig birds with one stone.

Well Mr. Clegg, you just lost any chance of getting a tactical vote out of me ever again, I know it was unlikely, but you represent nothing I stand for, you would rather rip up your manifesto than stop the privilege of your party mates. The current reforms don't really fix any problems and I really can't stand the idea of Sarah Teather, Vince Cable, Simon Hughes, Tim Farron or any other LibDem or other politician of that sort getting to sit in the Other Place for 15 years without facing election. We need less career politicians, not more.

Monday, 9 July 2012

The Samsung/Apple Patent Fight

The current patent system is completely broken, I don't think patents should exist anyway, but if we had a more robust system, I probably wouldn't care too much (I'm not going to go into the philosophy of this now, but there is much to consider on both sides with regard to property rights). As it stands though, the current system does not protect single inventors, nor does it increase the amount of investment made. It has simply become (or always was to some extent) a way for large companies to buy or make loads of patents and spend all their money and time using the system to push smaller companies out of the market.

Now, onto the current case between Apple and Samsung, which has seen Samsung win the latest round. The  case has been going on for over a year, which has stopped Samsung from being able to sell its product (and rival to the iPad) in some countries. To the detriment of consumers. What is their offence according to Apple? What idea did Samsung steal? None, it was a line drawing of a tablet with rounded corners. Now, according to the general principles, this should never have been awarded as a patent (it is not clearly distinct from other ideas), but it did, and so do many, many other "ideas" that are not justified patents.

In a bizarre statement, the presiding judge, instead of saying that the patent should itself be thrown out, or anything justified, he just insults Samsung into them winning. I'm not sure how a high court judge can decide if something is cool or not, but I digress, coolness is something subjective and I'm not sure our legal system should be based on anyone's opinion on whether something is "cool". Not exactly a sound legal principle. One would hope that this is the end of the saga, but I can see it rumbling on as Apple try to force competitors out of the market and establish something of a legal monopoly - despite not inventing the tablet idea in the first place.

This case seems to represent everything that is wrong with the current patenting system, far too many unjustified patents being awarded, large companies amassing patents just to sue each other (patent hoarding) and a growing class of legal types abusing the system to everyone else's disadvantage (patent trolls). Investment in new ideas slows as money becomes earmarked to legal cases, small companies who can't afford millions of patents are trampled on and real inventors are left with nothing for their work, simply being unable to pay the fees to keep patents, let alone fight the legal battles. Whilst there are some sound arguments for keeping patents in some form, the complete abolition would be a great deal better than what we have now, for innovation, inventors, small businesses and the general consumer.

Sunday, 8 July 2012

This Week in Liberty

So, after a long absence from the blogosphere, I'm back. Degree over and plenty of time to blog between job applications (although I hope that this free time dries up in the form of paid employment soon). To get into the swing of things, I'll just give a quick comment on some stories for the week (maybe I'll do this every Sunday, who knows?).

Libya - So, elections is it? I notice the BBC and the like are very happy with this. Democracy, woo! Whilst I'm glad that the socialist Gadaffi is gone, I'm going to hold my breath at least until this new lot write up the new constitution. If the constitution is not set up to limit government, then I think Libya will just be another illiberal country with a pretence of democracy. I hope that whoever takes over is at least better than Gadaffi.

Barclays and Libor - So, Barclays and several other high street banks, seemingly with the knowledge of the ever dodgy Bank of England, fixed Libor rates. This is fraud, hammer anyone guilty. Sack anyone at the BoE who knew about it and was either compliant or did nothing. I have no faith however, in any inquiry, judge-led or otherwise. More regulation, they will surely say, failing to recognise that part of the problem here is clearly regulatory capture by the large banks. Free Banking I say!

House of Lords Reform - I don't think much of the HoL reform proposals, but the Other Place does need to be reformed away from the ever growing list of Labour party donors and that sort of ilk. Ideally, something like a democratic chamber with more power than the current Lords, with longer term lengths (maybe 8 years, with Commons term reduced to 4?) and staggered voting, to ensure that it doesn't just become a Commons Mk. 2 but bringing in some legitimacy. Honestly, this would be about the last thing I'd rebel over if I was a Conservative MP. Would be more angry over the lack of real spending cuts and tax rises in the budget (the Darling plan would have had deeper cuts!).

Glaxo - They made antidepressants that didn't work and were unsafe, corrupted the regulators and doctors. Now the regulators get to look good by fining Glaxo for something they initially said was safe. Yay for regulatory capture again. Calls for more regulation, anyone? OK, so officially the drugs in question were never meant for children and teenagers, just adults. But if something makes children and teens suicidal (this is an antidepressent?), why would it not do the same for adults? The only reason I can think of is that an adults liver would be able to absorb more of the dangerous stuff. But even then, why would it help? The regulators have a lot to answer for here, as usual.

All in all, an interesting week for the regulators of the world, and I do hope that the Libyans come up with a half-decent constitution, they could become a model nation for that part of the world. Anyway, its good to be back to blogging.