Monday, September 27, 2010

It's quite a jump to the left

After losing this year's election, the British Labour Party purged Gordon Brown, as he proved himself to be one of a long list of Labour leaders who only lose elections (he joins Neil Kinnock, Michael Foot, James Callaghan, Hugh Gaitskell as post war Labour leaders who never won an election).  It has been on the search for a new leader, and had five candidates get nominated.  

Only one was a woman, demonstrating once again that the party that claims to do so much for women, can't bring itself to get led by one, and Diane Abbott (the first black woman to be elected to the House of Commons) came last, not helped by being the most leftwing candidate by far.  It is telling that the winner said patronisingly that she was "right to stand", if only to avoid Labour looking embarrassingly like what it hates.  She and unionist Andy Burnham were not serious contenders.

Ed Balls, former Education Secretary, was a Brownite, and came third, but the real battle was the bizarre spectacle of two brothers contesting for the leadership, each with a different taste to offer.

The Milibands (as comedian Andy Hamilton quipped he wasn't used to the new metric politicians) were raised by Marxists.  The difference is that David Miliband, the older brother, grew up and was strongly affiliated with Tony Blair.  Ed Miliband, the baby, preferred Labour of the 1980s. 

Ed Miliband was an intern to Tony Benn, one of Britain's most ludicrous Marxist cabinet Ministers.  Benn once argued that the British government should nationalise the 50 largest companies in the country - in the 1970s, having been Secretary of State for Industry.  A Marxist dad, a Marxist mentor, it was little surprise that in the 1990s he started writing speeches for Harriet Harman and then Gordon Brown.

It is also little surprise that he won the Labour leadership for only one reason, the trade union movement overwhelmingly backed him.  You see the British Labour Party leadership race is decided in part by the rank and file, in part by MPs and MEPs and in part by "affiliates", which is code for the unions claiming weight by assuming that members of the union are Labour supporters.

The 1.3% margin over David Miliband means Ed is not the choice of MPs or Labour members.  More importantly it means Labour is sliding back to whence it came - the politics of class warfare, wealth envy and hatred of capitalism.

Ed Miliband wants to keep a 50% top rate of income tax, he wants new taxes on banks (all banks, whether bailed out by the state or not) to reduce the deficit.  He has indicated he wants to slow down the reduction in the budget deficit (remember this is the rate of overspending, not the level of debt, he just wants to grow debt more slowly), he wants to grow welfare and chase more jobs overseas with a new minimum "living wage" and most disturbingly he wants a High Pay Commission to regulate private sector pay.

How much of this was to get the unions on side or not is unclear, what is clear is that even after being elected as Labour leader he continues to trot out the Gramscian rewriting of history that covers up Labour's role in the decimation of the British economy.

The story told is:
-  The banks weren't regulated, they acted recklessly and all needed bailing out.
-  Gordon Brown cleverly saved the world the country by saving the banks, and by running a huge deficit to keep the economy functioning;
-  Without a big government borrowing money and spending it, the economy would collapse.

The truth of fiat money, Labour riding off the back of consumers borrowing and spending and speculating on property, that only three banks were bailed out by the state, that bank deposits for over 95% of the population were protected anyway, that Labour had run budget deficits almost continually whilst in power, that Labour had wasted fortunes of money on bureaucracies and vanity projects (the Olympics will be the last one) that destroy wealth not create it, and finally that Labour's goal of reducing inequalities was hindered by the promotion of a welfare dependent society, with state housing, state jobs, health and education, all are whitewashed over.

The best that can be said about the last 13 years is that they could have been worse.  That Labour still supported privatisation in government tells you how much more mature it was compared to New Zealand Labour.   However, the only reason Labour gets away with it is the cultural dominance of the BBC which happily perpetuates a  centre-left view of the economy, and the ineptness of the Conservative Party and the business sector, both of which are scared of backing capitalism or in the latter case, rather keen to engage in  continued corporatism.

Allister Heath in City AM is particularly worried that the trend has now moved clearly leftward, on Miliband:

"He supports high tax not primarily because he thinks it will raise revenue but to punish the better-off. Ken Livingstone wants to go even further. Even though bonuses are already mostly taxed at a marginal rate of 51.5 per cent, Miliband wants to increase the bank tax, reintroduce a bonus tax and slap a Tobin tax on financial transactions. He believes in the need for the government to regulate pay levels in the private sector. He supports a new graduate tax."

He concludes with a bleak forecast:

"There is no place in Miliband’s intellectual framework for the idea, shared by Thatcher, John Major and Blair alike that too much tax and too much red tape is counter-productive, reduces effort and investment, chases away capital and talent, impoverishes the nation and destroys the public finances. Instead, to Miliband, the private sector can be taxed and beaten and throttled – and it will always come back for more. This view of the world is shared almost entirely by the coalition’s Vince Cable wing. The two men appear to agree on everything apart from the budget deficit, about which Miliband is in denial.


The opposition hates the City and wants to tax everything that moves; Cable agrees; the Tories are too scared to resist. The public, which has not been exposed to a proper defence of capitalism for years, wants to lash out. It is therefore becoming increasingly difficult to remain optimistic about Britain’s long-term future. I hope I’m wrong, but I fear for the UK’s jobs and prosperity."

I am slightly more optimistic, as I think the Vince Cable wing of the government is just about releasing steam from the left of the Liberal Democrats with no real substances behind it. I also think the British public wont stomach the Labour Party of the 1980s today any more than it did then. However a decent defence of capitalism is rare in the UK, with only the Adam Smith Institute and City AM being consistent on this.

Is it time for a UK TeaParty to bolster the Coalition to cut spending?

Wednesday, September 22, 2010

The bleating as the tit is taken from the mouths of the dependent

As the UK Conservative-Liberal Democrat coalition undertakes its comprehensive spending review (which unlike that in New Zealand is about finding opportunities to cut spending almost across the board), more and more of the absurdities of the British welfare state are appearing.

The latest case to cause bleating from the "government is good" left of the Labour Party are payments of mortgage interest to the unemployed.  Yes, you see if you are eligible for the unemployment benefit in the UK, you too are protected from not making your mortgage payments by the state paying for the interest on your mortgage!

So you're not exactly poor, you have property and you expect other taxpayers, property owners and others to maintain your "investment"?   The effect on this is to keep property values inflated about true market value.   It disincentivises people from taking out insurance on mortgage repayments or income, and keeps them as homeowners when some would ultimately decide to bail out, putting their homes on the market lowering prices.   It penalises first time home buyers once again, because it is part of New Labour's programme of middle class welfare, exacerbating the housing price bubble and making it more difficult to people who actually do want to own their own home.

However, the coalition didn't announce it was cancelling this absurd benefit, but reducing the interest rate which would be paid.  You see the state has been paying 6% across the board in interest to mortgage holders on the unemployment benefit even though floating mortgage rates are currently tracking below 4%.   It isn't just welfare, it's a future taxpayer (public debt) funded windfall!   The government simply wants to reduce it to the prevailing market rate.

Still there are plenty moaning about how "unfair" this is, the same who completely ignore where the money comes from (borrow it) and ignoring the impact of being "kind" with other people's money has on those whose money it was in the first place, or on the markets they distort.

The comprehensive spending review wont abolish the welfare state, but it hopefully will completely destroy the middle class components of it.  The universal child benefit (or "you've been breeding, congratulations, here's some other people's money to reward you for having a fuck"), the winter fuel allowance (or "you're old and you forgot it gets cold in winter, so you blew your money on that trip to Barbados"), the "freedom bus pass" (or you haven't even reached pension age, but you're earning a 6 figure sum so how about getting half of your daily commute for free) etc etc, all need to be severely curtailed.

The worst deceit of the last 13 years of New Labour has been how it has used stealth to get so many of the British public dependent on state handouts for part of their income, funded almost entirely on borrowing from their children and grandchildren.   Well Gordon Brown's fiscal profligacy chickens have come home, they can't be evaded and the growth of that debt must be curtailed.

It is one thing to claim the welfare state is about addressing poverty, but it has become a form of insurance to cover people's investment and lifestyle choices.  That should now be coming to an end.

Take a drive on World Car Free Day

Why?  Because cars are NOT bad.

They have offered enormous choice about where people can live and work and play.  They offer privacy, comfort and flexibility.

Competitive Enterprise Institute spokesman Sam Kazman said:

"The automobile has improved the lives of hundreds of millions of people in remarkable ways. It has taken the mobility once reserved for aristocrats and democratized it, immensely expanding the choices that average people have regarding where to live and work. Instead of pushing a misguided political agenda to reduce car use, we should be celebrating automobility"

The hatred for the car ignores that on a per passenger km basis, the number of deaths and injuries from cars keeps declining, that the fuel consumption of cars keeps improving, and the pollution from cars reducing.   Transport for London estimates that emissions from road transport will drop 30% by 2030 if it simply does nothing because of improved efficiency of engines.

The main problem which has cars as the symptom is traffic congestion caused by the ineptness of governments who run them as a commons, without proper pricing and without any concern for delivering a service to customers. 

The incredible growth in car ownership in China and India is not because people there are stupid, but because they want to have access to travel when and where they want to and carry their belongings easily.   It goes against the wide eyed certainty of planners who think they know best how to organise cities and how people move, but the simple truth is that cars bring good, and the growth in car usage will continue regardless of how cars are fueled.  Indeed regardless of the ways that planners find to tax and penalise car use (although thankfully all fuel tax in New Zealand now goes on land transport spending, which is 85% roads).

The car is one of the most liberating technologies the world has ever seen according to Loren Lomasky.
 He comments on why cars and roads are so well used:

In the end, highways are so heavily used because millions of people judge that driving enhances their lives. The striking feature of the critique of highway building programs is that what should be taken as a sign of great success is instead presented as a mark of failure. But the only failure has been with the critics’ attempts to talk people out of their cars and out of the neighborhoods and workplaces that their cars have rendered accessible. This failure is well-deserved. Automobile motoring is good because people wish to engage in it, and they wish to engage in it because it is inherently good.

If only politicians (and voters) would surrender roads from state control, and let them be run commercially by the private sector, like every other utility shown to be far more dynamic outside state control (e.g. telecommunications, aviation, electricity).

Monday, September 20, 2010

Regular service will resume shortly

I've been away, brief periods in France, Germany, Poland, Russia, China, transited Belarus and then spent a longer period in a small highly controversial country of which I can write precious little about here for legal reasons.

All I can say now is that I never thought that arriving in the People's Republic of China would bring with it such a sense of freedom.

UK, NZ and international politics writing will return shortly.