protectionism

...but strangely intensely exciting at the same time?

I'm just watching the news on Channel 4 and they've got all this coverage of the squirming going on in Washington and Wall Street.

Is it just me or am I right in the impression that Privilege and Power is absolutely terrified at the moment? That "they" really believe things are on the edge of a precipice which threatens systemic melt-down or revolution?

And also that there is a real massive popular movement going on to get the message across to "the Hill" that "they" will not be forgiven for allowing "our" money to pay Goldman Sachs bonuses.

One of the most common points of disagreement between, let's call them "state-interventionists" and "non-interventionists", is the claim that "non-interventionism" would leave the poorest in society on the scrap heap with no welfare, no support. That the much vaunted idea of "non-interventionists" that "private charity" or "voluntary co-operation" would take the place of state welfare is just an impossible pipe dream. So determinedly do "state-interventionists" believe their own claims that they frequently castigate "non-interventionists" as heartless uncaring selfish individualists who would rather see others die than pay taxes. One quote from a Lib Dem Voice "discussion" just today will give you the general idea:

"Well none of them [Libertarians] are serious, because it an incoherent philosophy....send the kids back down the mines, it’s only a lifestyle choice."

And to an extent, I used to believe that propaganda. As a geo-libertarian of course I do have an answer of sorts - the basic income derived from land user fees (which would on their own create an almost unimaginably more equitable society in any case) would cover the basics of life for everyone, and give everyone an incentive to top it up with as much or as little work as they can manage.

But a recent discussion on a "non-interventionist" mailing list I've been frequenting recently has challenged the basic assumption of this debate for me. Would people really not contribute voluntarily to the upkeep of others if you don't have a government apparatus threatening them with the confiscation of their property and ultimately the loss of their freedom unless they pay their taxes?

It is a strange proposition. Governments for at least the last sixty years have been supporters at some level or another of some form of state welfare. They may argue about how much is appropriate but the fact is, people have overwhelmingly voted for a state that takes money from you in order to give some of what's yours to someone deemed "less fortunate". We even have a cliche about the inevitability of death, and taxes.

We have tens, maybe hundreds of thousands of people who do voluntarily give up their time to care for another. Most people are someone's relative, someone's friend, someone's colleague. And whilst I recognize that some do not have such support networks and would still require some form of collective support, most people do not want to see their friends and relatives on skid row or worse.

One has to wonder whether the interventionist route actually makes things worse. And in how many ways. When we look at our pay packets do we not think often that we've given quite enough for the support of others through our taxes thank you very much. National Insurance and Income Tax between them effectively make the worker near forty per cent worse off. I know what I would do with an extra forty per cent each month. It would pay the interest bill on the piece of land we have just acquired for our first Community Land Trust for a start.

Other taxes and protectionist policies keep the prices we pay for basics artificially high and create incentives for companies to produce cash cows rather than exciting developments. I'll bet if we didn't guarantee one pharmaceutical company a contract for however many millions of doses of Metformin diabetes pills every year a dozen others would have put the effort in to find a cure, not a chronic treatment regime.

The attempt to do welfare as a "universal" system, with the same rules for everyone, means a bloated bureaucracy enforcing inflexible regulations. If welfare were, say, to be dealt with at the parish level, and the barriers to job creation caused by taxes eradicated, I'll bet you more people would be found some work, appropriate to their abilities, even if it didn't give them everything they need and then people would feel much better about helping them out with the rest - because they were trying to help themselves as best they could. We have no way of measuring that at a national level really.

We have a Professor here at Brookes, a chap called Steven King. His area is the History of Welfare mostly in the 18th and 19th centuries - probably the period which received wisdom says was the harshest environment if you were poor or hapless. But I was fascinated by a lecture he gave a couple of years ago on being elevated to the professoriate (you are elevated to that aren't you?). Apparently when parishes were responsible for pensions, those who actually got a pension - those whom their own peers and neighbours if you like knew had simply tried and been unable to support themselves (in common parlance I guess the "deserving poor") would get on average 75% of the average working wage for their area. For others there were varying levels of support down to a pretty basic safety net that was intended to be subsistence rather than comfortable for those they felt were "swinging the lead".

And then there's the problem of administrative costs. If I had an extra 40% in my pay packet and was going to give it away, I'd know that the people or organizations I was giving it to would get all of my donation. I'll bet for the 40% the state apparatus take off me in taxes, probably half actually gets to someone who needs it, to direct service delivery, if that.

So, given all those disadvantages of, and the singular advantage that people actually vote for, this tax based welfare system at some level or another, is it not just possible that by doing away with all that coercion, all that centralization, all that unproductive bureaucracy, the people who get to keep what they earn would be quite proud to "do the right thing" by their neighbours and communities? If they vote at the ballot box to have money taken off them by the state for things they obviously believe are necessary, would they suddenly feel they were not necessary or that they should not contribute towards those same things without the threats of the state?  Isn't that a totally illogical position?  You'd vote for it but not do it if the people you vote for didn't force you to do it?

And so, at the very least, would it not be at least a courtesy to accept that Libertarianism is an optimistic creed; that it is positive about humanity's innate ability and even need to help each other. You may call that a naive optimism. But I'd rather be a glass half full freedom lover than the glass half empty authoritarian approach that says humanity will not help itself unless it is forced to do so by the agents of a state apparatus that may, just may, cause more problems than it actually solves. Libertarian is not a "devil may care/beggar thy neighbour" philosophy but one that places the utmost faith in people, as individuals, to know and do what is right.

And as to whether it is a "coherent philosophy" or not, I submit that "non-interventionism" is the only truly coherent philosophy in the game. For once you admit the state can do one thing better than we can through voluntary co-operation, you inevitably end up in endless arguments between factions about just how much the state can do better, and the ultimate end of that arms race is totalitarianism - that the state can do everything better than voluntary co-operation. Which is manifestly not true.

There's been much talk, most of it at least tacitly approving, of the restrictions or bans imposed in the past few days on so called "short selling" company shares. Most of you probably don't know that my first career, straight out of school., was as a trader on the stock exchange, followed by stints in several stock-broker firms mostly in private client advice and fund management, before I got into IT - which was as a result of my city experience. That's all a bit apropos of nothing really. After all, you'd be right in thinking that if I had been successful in this first career I might now be funding a think tank or something. But it gives a little background to my knowledge of this issue.

Short sellers, per se, are not the problem here it seems to me. Indeed the stock exchange relies on players prepared to go short - that's what market makers are effectively obliged to be prepared to do when they make a price.

Short selling is also an important way of the market getting the information it needs to make accurate value assessments. Longer term shareholders may have more emotional reasons than pure profit to resist pressure. Even perhaps just inertia. Sometimes even tax considerations. Short selling is also a way in which holders of stock can increase their returns on the stock by renting it to the short sellers. Little risk to them.

In my day, you could short sell, effectively, for fourteen working days. The London Stock Exchange used to work on a fortnightly settlement cycle. So for example a deal you do tomorrow, if tomorrow was a new cycle, would not need to be settled until the Monday in the middle of the next fortnightly cycle. If you went short tomorrow, you could, potentially, buy back for cash settlement (a special, premium service for urgent trades that was settled the next trading day) as late as the Thursday night before settlement day - so giving you fourteen trading days to see the stock fall and buy it back.

Nowadays everything is more or less "cash settlement" with positions settled the next working day - hence the self limiting requirement to borrow stock to deliver on short positions.

No, there's nothing wrong with short selling. Once you realize that the secondary market is stocks and shares is a big gambling den in any case, how can you outlaw one type of gambler and not another.

The real problem, it seems to me, with the run on HBOS shares for example, blamed on "short sellers", is the idea that some market players, hedge funds were cited, were "hunting in packs". Now, it is conceivable that even if there's nothing wrong with the fundamental financial health of a company, such a "pack" could be strong enough to provoke a run on a stock simply by weight of numbers. This, however, would be market manipulation. It would be legal, ethical, and even just plain sensible, to suspend trading in a particular share, or even in the whole market, if there was such illegal manipulation going on, or suspected. If a suspension was unwarranted, there should still be the equivalent of a "stewards inquiry" to determine if there was manipulation, a cartel operating, and if so how to punish them.

If the fundamentals were bad for HBOS, and actually I suspect that they were worse than the financial watchdogs have been saying - otherwise opening their books would have been enough to disprove the rumours - then the short sellers simply administered the coup de grace a bit more humanely perhaps than dragging it out for weeks more uncertainty.

I very much suspect that some hedge funds and private equity fund managers do aggressively hunt in packs occasionally. The fact that the secondary market is a gambling den makes it likely. That needs investigating. Market procedures for suspending trading in a market in which the true value of a company has become impossible to assess immediately need looking at. But having a go at the short sellers, who could, after all, just be the people maintaining liquidity in a particular market, is simply creating a scape-goat. The authorities should be ashamed.

...and we still don't seem to know what to do about bankers!

The Bank of Scotland, whatever is now left of it, is 312 years old. That of England just two years older. Ever since the banking system has been built on state protectionism, corporate welfare, monopoly privilege and, at its heart, a gigantic fraud.

The fraud was that a goldsmith could give both you and I receipts for my gold stored in his vaults and make money on both - from me a fee for keeping my gold, from you interest on the receipt you had borrowed from him. Indeed they found they could duplicate this so frequently, fraud upon fraud if you like, that though gold is perhaps regrettably no longer the basis of our money, the "hardest money", real "hard cash", amounts now to just three per cent of our total money supply in terms of everything we all have collectively borrowed and deposited.

To be fair, most goldsmiths at least issued notes of their own. Customers - both depositors and borrowers - chose which goldsmith to bank with on their reputation. If they became overstretched, issued what was felt to be too many receipts for the same gold, their notes would be less desirable in trade, there may even be a "run" when all the receipt holders tried to get their "real" money, the gold, out of the bank, which of course had much less gold than he had issued such receipts for. Nowadays, however, what they create and destroy in their lending business is denominated in the national currency, a currency issued nominally at least, by the state and guaranteed by the state.

This means it is no longer a private affair between a bank and its customers as to whether their business practices jeopardise their customers' savings; it is a problem for us all. We have ceded control of the supply of money issued in our name to private businesses whose main aim is to make profit for themselves and who, in the course of that otherwise noble pursuit, play fast and loose with the very air the entire economic system requires to function. And states protect them, bail them out as seems about to be the case in the US to the tune of almost countless billions, because they have to guarantee the currency they have so little control over.

Regular readers will know I am very fond of a quotation from Josiah Stamp, Liberal politican, Chairman of the Midland Bank in the 1920s and reputedly second wealthiest man in Britain in his lifetime:

"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again.

"However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."

It rather seems to me that with the events of the past few days, we may be "taking the earth away from them" (or, more accurately and nauseatingly, buying it back from them) which they have stolen from us with their inflationary approach to money, but leaving them the power to create those deposits all over again with which, in the next bubble, they will buy it all back again.

Everyone seems to think that money has somehow been pretty constant. The way it works I mean, not whether we call it shillings and guineas or pounds and pence. But the current confidence trick really began with the depression of the 1930s and the work of two extremely wealthy, powerful men in the US who persuaded the government of their day to set up the system that enabled them to create "our" money according to their corporate priorities. The results of John D Rockerfeller and John P Morgan Jnrs' work was the Federal Reserve and the rapid ramping up of fractional reserve banking, and the eventual demise of real solid backing for that currency.

If the current crisis really does turn out to be the "big crunch" at the end of the cycle begun by that 1930s "big bang" we should be ready with policy to replace that fraudulent, anti-competitive, oligarchical system, designed by the very wealthy to keep them that way for little actual productive work with something different. Entirely different. I do not detect any mainstream politicians with the cojones to say so. Our governments and politicians are but eunuchs to the bankers, and the longer that continues, the more the vast majority of us will suffer.

Yes, I'm still meant to be on internet silence, but Linux and various bits of software have me stumped for a while until I get some help from the mailing lists, so I thought I'd cast my mind over the implications of the court case this week that resulted in a jury deciding that it was okay to commit a crime in order to prevent what the perpetrators believed would be a greater harm in the future. The case in point was that they had committed (and admitted) criminal damage by climbing a chimney at a Kent power station with the intent of scrawling graffiti on it in protest at its pollution record and plans to expand the facility, which, their oh so clever advocate declared would cause more and more widespread damage to people and property through the global warming it would contribute to.

Now, some of the more unthinking environmentalists might see this as a great victory. A court recognized that global warming was such an imminent threat to life and property that it was justifiable to commit brazen thuggery leading to criminal damage on anything that allegedly contributed to that global warming. Yay!?

Nay! I have two problems with this.

First is the acceptance, apparently by both judge and jury (and so, you may think, all "reasonable people"), not just that anthropogenic climate change is a fact but also such a grave threat that it justifies individuals taking the law into their own hands. To my mind this is still a matter in the political arena. Not only are there still, and perhaps growing, voices of dissent on the very premise of the debate; that mankind is responsible for such a change that it is a threat to the planet's very future. But also about what to do about it and when. A power station after all merely supplies a demand. Is the power generator guilty or the consumer making those demands? It is more dangerous to disrupt existing dwindling supplies before we have worked out how to replace them with cleaner affordable technologies? If the threat from global warming is real, so presumably is the threat of harm through disrupted power supplies.

Second is how this operates as a precedent in other, possibly more serious cases - although I heard someone saying that this decision will not be treated as forming a precedent, I'm not clear how that can be prevented. It is okay to murder an abortionist in order to stop the immediate harm to others he or she will cause? That threat, after all, is far more immediate and traceable to an individual than the effects of a single coal power station amongst all the coal fired power stations and other "climate vandals". We're starting to get not only into the realms of Philip K Dick's pre-crime but vigilante prevention of what individuals claim may be a pre-crime. This is hardly the basis for the rule of law.

Oh, you can say that no court is going to acquit a murderer because they thought they were preventing a bigger crime, but actually we already do. The "reasonable force" defense can be used to justify a death in the process of preventing an immediate threat to others' life. This decision seems to extend the boundaries of "immediate threat" let alone accurate identification of the person causing that immediate threat.  One could, and many do, fight abortion on the basis that the most immediate threat t future generations of humanity is eradicating them before they are born.  If we're going to adopt a principle (and I do) that we have a responsibility of stewardship not to harm future generations' survival on the planet then it would be legitimate for others to argue more forcefully that we have a responsibility to see those future generations actually survive as far as birth!

Anyway, two odd sounding sources provide what I believe are better alternative "precedents" to work from. First, there is a Catholic maxim that it is not legitimate to cause one moral bad, or an act that could foreseeably lead to morally bad consequences in order to prevent another, even near certain, specific bad. It is used mostly about abortion again. It is used to argue that it is not even permissible to abort a new life in order to prevent the death of the mother - often in the circumstances of an ectopic pregnancy for example.

Of course the world's aggressors, including the US and UK, routinely ignore this. They argue that foreseeable "collateral damage" is permissable to remove a dictator, for example. It is not. Terrorising and killing the people of Bagdad in "Shock and Awe", even as "collateral", was morally repugnant, notwithstanding our general agreement that the regime they were trying to punish or remove was also morally repugnant. The results of ignoring of this basic principle are there for us all to see - there can be little doubt now that more people in Iraq have suffered for longer under the oversight of the western occupying forces than it is likely would have happened at the hands of the previous repugnant regime. At least there could have been alternatives that held less potential for further suffering.

But on the environment, the libertarians' respect for the rule of law provides a better alternative to various bearded crusties climbing a chimney and committing vigilante criminal damage. Locke's proviso can be used, for example, to tackle pollution. If you, a power generator or anyone else - a pig farm even, pollute the atmosphere we both have to share, we have the right to legal remedy. Just as much as if you came along and started digging a hole in my prize rose border. Indeed this ought to work better than any political "solution". Protectionism is a political strategy, and even Green politicians will forcibly protect their favourite, in this case, power generation mechanism against legitimate complaint of harm. If planning permission were truly privatised, those affected most would almost certainly do better out of it than they will once the government has removed most of their rights in order to force their political idea of strategic energy infrastructure through.

Yes, we all need power, but left to ourselves we would probably not choose to have a nuclear reactor at the bottom of our garden. But, as they say, everyone has their price. If, collectively, my neighbourhood decided that the compensation on offer was enough when weighed against the costs of electricity or the convenience of not having a long transmission route or any potential danger they'd accept that nuclear reactor. If nobody accepts any price for nuclear, they have to weigh that decision against the potential alternatives. If nobody wants a giant power station, then we perhaps have to accept that we will have to help our neighbours fund micro-generation.

...and is not "liberal" either.

There are often attempts by ministers (Jacqui Smith is mentioned in Sunday's Independent for example about the recent prisoner data loss) to shirk their responsibility for government cock-ups. There are also left wing commentators who crow that these incidents are clear proof that "neo-liberal" policies of "privatising" government functions are evil and should be stopped; that the "free market" does not work in the public sphere.

But I don't consider such contracting out of work as either liberal nor as implying that ministers are no longer responsible for their incompetence. Nor, even, are they truly "privatisation". To me the doctrine that says some things are better done by profit motivated companies (or other, non-government organizations) does not mean merely sub-contracting to a government service level agreement.

Yes, such arrangements may save on costs or similar. But all they are doing is delivering the same policies and procedures designed by government. This is the "corporatisation" of government. It is inherently protectionist - the government grants usually monopolistic contracts to firms, sometimes even, like Capita, that started life as a bunch of civil servants deciding they could do better for themselves by making a profit out of what they do.

No, real privatisation, so called "liberalisation" of government functions, should mean the state divesting themselves completely from interference in that policy area. For example, just because DVLA contracts out its computer systems and administration does not mean the registration and licensing of vehicles and drivers has been "privatised". Not bothering with a DVLA at all and allowing insurance companies to work out ways of ensuring the drivers and vehicles they are prepared to insure comply with what they consider to be safe would be. i.e. a different way of working, free from government entirely, and open to proper competition where new ideas and ways of achieving similar ends can be developed. Finding new structures, free from the dead hand of government to do the things we need, rather than what politicians think we ought to need.

Similarly with ID cards or passports - it is not "privatising" simply to contract out the development and implementation of a government policy to profit making firms. Indeed, this is anathema to true economic liberals - for it is corporate welfare, money for old rope if you like. My idea from yesterday about getting rid of government validated passports entirely and instead letting people buy their own guarantee of identity if and when they need one using a new mechanism such as digital certificates would be liberal; the true privatisation of functions the state previously chose to regulate and deliver itself.

And of course, such liberalisation may not end up being delivered by "for-profit" corporations at all.

So Jacqui, stop trying to hide from your responsibilities. You have cocked up just as surely as if the person with the memory stick were your permanent secretary. You are incompetent. Indeed doubly so - for not only have you failed to do your job, but you've even failed to make sure the simpler option - getting someone else to do it for you is done properly.  You should go.

Surely it is a given that we are all different? Size, shape, gender, colour, intelligence, personality, practical ability... So surely the human brain, and mind, are also infinitely variable. So why then do we have clothes, shoes, accessories, food, gadgets, literature, music, art, newspapers, all sorts of media, cars, houses, gardens, holidays, hobbies and pastimes of every conceivable colour, shape, size, sophistication, individuality to suit our needs and tastes and yet, when it comes to nurturing minds, especially young ones, in other words education, the state seems always to want a one size fits all, or nearly all solution we must all be dragooned through?

_{Scary kids from Pink Floyd's "Another Brick in the Wall" video, copyright Columbia/CBS. Is this how we see education?}

Even the current advocates of increased "choice" in education are generally not calling for the sort of individually tailored schooling that might cater for a near infinite combination of aptitude and need in different subjects. No, squeezed onto the cattle trucks of the "skills agenda" at an increasingly early age, our children's precious formative minds are driven through National Curricula, SATs, Literacy Hour, regurgitated standardized lesson plans and a plethora of targets till they get an OFSTED stamp on their forehead to say they are ready to be part of Britains fast changing economy. Or at least, the fast changing economy that was being predicted by, yes, you guessed it, government, a decade ago when they started.

On Saturday I was having dinner with friends who either have children going through this system or looking to have soon. All of them, I think it would be fair to say, would be termed "left of centre" and would never have considered private education or home-schooling previously but are all actively considering it now or would if they had the money. They feel patronized by the system, and treated with varying degrees of contempt by the school and its staff.

But most of all they feel helpless when they can see that their child needs extra help or a different approach in one subject where they may thrive in a totally different subject with little struggle. Such different approaches may not be available in the one school. And the lesson plans used don't vary a great deal from school to school so there isn't a great deal of choice anyway. If they wanted to change schools - as one is trying to do now as a result of their experience - the bureaucracy is stifling.

Oh, this all sounds incredibly expensive doesn't it? How can we satisfy that nearly infinite combination of needs and aptitudes? Turn it around and ask, if we can satisfy a near infinite appetite for different trainers, baked beans and holidays, why can we not produce individualized education - surely one of the most important human needs, even for those of us who tend towards Herbert Spencer's view that the state should not be dictating or providing education at all.

I think we need to consider how to personalize education, from the earliest age; we're not going to achieve any step change in attainment just by adding a few extra teachers armed with standard lesson plans, just by putting a little extra money in the direction of the least well off - though that will no doubt help, assuming they can actually find the package to suit them.

Localism is certainly a part of the answer, as perhaps are things like "free schools" on the Dutch model and an idea expanded on at Regno del fines blog. Why not return the provision of schools much much closer to the families using them - at parish level or something similar sized. Parents could decide amongst themselves in a mutualist structure whether to get in a teacher who's going to teach the children proper grammar or to learn their times tables.

And we should not be so squeamish about the corporatization of education. By which I don't mean the mish-mash of schemes to get token private money into the current system. I mean that education,