Egypt's new dawn or a new dark age

For many years, there has been much concern expressed in the Western world about the consequences of letting the Muslim Brotherhood take over in Egypt.  After all, it was the justification for providing oodles of financial support for Hosni Mubarak’s regime, after he succeeded Anwar Sadat (who dared to make peace with Israel and was assassinated as a result), who himself succeeded the warmongering personality cult figure of Nasser.   Egyptians have been under the jackboot of dictatorship for decades, and as much as US Administrations have appeased Mubarak and Sadat (given both have maintained peace with Israel and kept the Suez Canal open), their opponents have long deified Nasser.  Egyptians who dared cross with any of the regimes would face a police, secret police and military ably dishing out summary justice, engaging in imprisonment, torture and summary executions.  

There were two comforts casually taken by Western supporters of the Mubarak regime.  One was that he wouldn’t wage war against Israel, back Islamists in Iran, Israel or elsewhere.  The value of having an ally who is peaceful in an area that has been volatile, is considerable, especially when it can have its hands on the throat of one of the great shipping routes between Europe, the Persian Gulf and Asia.   The second was that Egypt appeared to modernise.  It could be seen in the malls and shopping centres in Cairo, where young Egyptian women would walk around in jeans, hair uncovered and look little different from those in Europe.  It could be seen in the relative vitality of a country that welcomes tourists, has many fluent in English and had a semblance of a civil society.   However, underneath that entire facade were multiple pressures.

The first was the tired nature of living under a tired corrupt regime that had last more than 30 years with one president.  A regime where wealth and success could come to the well connected, the relatives, the friends and those willing to share with those in power the booty of contracts, trade and business.  A regime where the victims of such corruption, victims of the extra-legal use of authority by the regime would be ignored, at best.  A seething resentment that a country that was becoming wealthier, more connected, with an increasingly younger population, was sitting atop something rotten.  

The second came from those who resisted the modernisation, who saw the wealth and success of fellow Arab regimes to east and west, and would spread resentment at the dependency of Egypt on the succour of the United States (Egypt being, until recently, the second biggest recipient of US taxpayer funded aid after Israel).  They would prey upon the fact that most Egyptians are Muslims and see the hope in dealing with corruption, crime and what they perceived as moral decay, in dumping the quasi-secularism of the Mubarak regime, in favour of Islamism.  They did not think of the 10% Christian minority, or the tiny Jewish minority, nor did they think women should be anything but “equal, yet not bearing duties against their nature and role in the family”.  They would also prey upon the strong anti-Israeli sentiment, which harks back to the families whose sons were victims of the wars Egypt had waged against Israel in the past, and the strong fraternal sense of injustice many Egyptians felt with Palestinian Arabs.

So when Egyptians threw off the Mubarak regime and held elections, the inevitable binary result was that the top two candidates would represent the old regime, and the organisation best organised and longest protesting about it – the Muslim Brotherhood.

With Mr. Morsi becoming President, in a land that no longer has a working Constitution, the stage is set for a new battle.  Given the Parliamentary elections have been ruled null and void, these will presumably be held again, but he faces the army first and the smaller mass of Egyptians who support modernity.  The women who deep down fear new laws about what they wear, who they marry, their rights to divorce, their treatment if abused, their employment and their work.  The Christians who fear new laws about worship, about free speech, about education and about equal treatment under the law.  The Egyptians more generally who want a society where the state protects everyone’s rights, as individuals, including the right to apostasy (which has, at best, been controversial and difficult in Egypt).

For now, it is likely that Egypt will not become the new Iran.  It is still receiving US government largesse, which is largely benefiting the military.  Any shift in policy that results in this ending will risk a military coup, given the sheer size of the Egyptian military.  However, it is difficult to envisage how a man who belongs to an Islamist organisation, which espouses Sharia law as definitive, which seeks to restrict the role of women, which supports the abolition of the state of Israel and considers jihad and martyrdom as glorious, is going to ever represent a step forward.

If his colleagues get elected in the Parliamentary elections (along with Salafists who are more extremist), then one can envisage a new constitution.  Not one that separates religion and state, nor one that prioritises individual rights.

The intellectual bankruptcy of supporting democracy as the measure of freedom will then be revealed. Egyptians will be deemed to have “supported” an Islamic state, and it will be “better” than the Mubarak regime.

Those who would protest in the streets for civil liberties, for the rights of women and the rights of minorities would appear to be willing to surrender those, for the victory of a man who represents rejection of Mubarak, and implicitly, the United States which backed him.

It may be that fears of an Iranian style Islamist revolution are wrong, it may be that Mr. Morsi is in fact willing to support a secular Egypt, that respects religious and individual freedoms, that fights the scourge of corruption that has long infested that land and takes only token steps towards embracing the long held agenda of an Islamist state.  

However, it is clear that being allowed to vote for a President is not freedom.  Individual rights are not protected when people who do not belong to the dominant religion, live and worship in fear, and when laws are enforced to prohibit people abandoning the dominant religion with the death penalty.

State religion, deep cultural misogyny, suppression of “blasphemous words and deed” and death worship are not compatible with individual freedom (including the rights and equality under the law for women), freedom of religion, freedom of speech and embracing of life.  

Like a train that has escaped one tunnel, had a brief smattering of daylight and may now be about to enter another…

Tax avoidance is not just legal, but moral

The feeding frenzy is out.  In the UK if you legally arrange your personal affairs to minimise your tax liability then the Prime Minister thinks it is immoral.

It all came out when a newspaper reported that comedian Jimmy Carr is apparently using a legal tax-avoidance scheme through Jersey.   Carr's humour is ascerbic and rarely has anything political to say, although it was notable he poked fun at banks and tax avoidance not long ago.

However, David Cameron's jumping on the bandwagon of condemning tax avoidance as immoral is about participating in a radical left-wing campaign that essentially supports more tax.  A campaign pushed by the economic-illiterates at UK Uncut.  That group supports increases in the size of the state, opposes spending cuts and wants more money collected in taxes from businesses and those on relatively high incomes.  Its demand to further infringe on the property rights of businesses and individuals is matched by its supporters invading and occupying private property to "make their point".   However, give them credit for being consistent - these people don't believe in property rights (until you take anything they claim).

As I'm a libertarian, I believe taxation is legalised theft.  It is money taken by force because people engage in behaviour the state has deemed it wants to charge for, such as employment, making a profit, buying certain goods and services and the like.  It isn't a charge for a service provided.  There is no consent involved, there is no relationship whatsoever between taxes paid and services received.

So from my point of view, whatever steps anyone takes to not pay tax are moral, because it is an act of self-defence against the use of force against property.  Plenty of Greek citizens do this presumably because they can and because they don't believe the state spends their money wisely, and they'd be right.

Legally, there is a difference between tax evasion and tax avoidance.  Tax evasion is to take steps to conceal undertaking activities for which tax is due.  Tax avoidance is to structure your affairs to minimise your legal liability for tax, not through concealment or falsifying tax returns, but by any legal steps.

Buying duty free alcohol at the airport is tax avoidance.

Choosing investments that have low or zero tax liability over others, is tax avoidance.

Some instruments for tax avoidance are complex and require professional assistance, which effectively means only people with relatively high tax liabilities can see net savings from paying someone to help them minimise their tax bill.

That's what Jimmy Carr did.

Immoral?  No.  

In fact, if he was illegally evading tax I'd also argue that it is not immoral either.

It is not moral to surrender to the state more money than you have to.   The state, particularly when the bulk of what it spends the money on is to give preferences, privileges and unearned money to other people, is not a supreme moral actor.

Jamie Whyte in the Wall Street Journal explains why Carr acted morally (notwithstanding the mild hypocrisy over his past jokes about tax avoidance).  I'll paraphrase his article below.

The usual vague comment trotted out by statists (those who believe that more state spending is generally a good thing) is that it isn't "fair" and that people must pay a "fair share".  

Whyte makes the split between private and public goods.  

Private goods are those which are consumed personally, such as healthcare, education, pensions, subsidies and the like. To equate taxes for those on any ground of "fairness" is open to serious criticism.  Does Carr consume disproportionately more of these than others?  If not, why should he pay more?  Given his income appear to be many orders above that of the national average, it is fairly certain that he would pay much more than he is ever likely to consume.   The people paying little or no tax, who do consume private goods are the ones where there isn't much "fairness", but the left take it for granted that it's fair for such people to have access to goods and services that they can't afford.  However, that doesn't mean it is fair for Carr to be forced to pay for them.  Why is his existence and success an obligation to pay for others?  The only "fairness" argument is to pay for what you use.

For public goods, such as law and order and defence, the only "fair" approach is for everyone to pay the same.   An argument can be made that the wealthier you are, the more property you have so it is fair to bear a higher burden for the costs of the state to be available to protect it.  In which case, a low flat tax to cover such "public goods" would be "fair".  Income tax of 10% would carry little incentive to engage in tax avoidance or evasion.

Beyond that, Whyte makes the compelling argument that given Carr generates income from people paying for his performance, he must generate a "consumer surplus" (nobody pays to go to his shows to get less than the value of the ticket, but more).  So in fact he is already contributing as a producer.  The snobbish sneers from conservative right and socialist left that he is a mere comedian (the conservatives considering it to not be a proper job in a suit, the socialists thinking it isn't as important as a bureaucrat or a miner) can ignore that, despite his comedy not having universal appeal, he makes people laugh and their lives a little bit better.  They pay for it, so he "produces" (the alternative view is to embrace the wondrous delights of authoritarian regimes where comedy is suppressed).

Even adopting the Marxist view that we all have an obligation to those less fortunate which needs to be enforced by force (which I do not share), making Carr pay more in tax isn't really going to deliver that fairly at all.

The British Government does not redistribute wealth in a way that could be defended robustly as favouring the least advantaged, in actual fact it engages in masses of transfers to people on middle incomes and to people who, by global standards, are relatively well off.  Some of the transfers are:

-  Winter fuel allowance for everyone over 60 regardless of income (a subsidy for energy bills for the elderly.  The Queen would get it if she applied).

-  Child benefit, for every child in a household as long as no one in the household is on the second highest income tax rate (which hits at around £35,000 a year - hardly rich).

-   Housing benefit, which can pay rents for a person or family up to £400 a week (a cap introduced since it was found that one family was getting over £160,000 a year for one property).

Beyond that, if it really was about those most disadvantaged, it would not be most people in Britain.  It would be children in Niger or Haiti or elsewhere.  It would be those without schools, without nutrition, without homes.   However, it isn't.  The claim that it is morally justified by helping the most needy is fatuous because it blatantly isn't true (nor could it be, as neither voters nor politicians would stomach it).

Winding back from all that, taxation exists because people vote for governments who impose them.  Indeed the majority are docile about forcing the minority to pay for what governments bribe them with.  Beyond the core functions of the state, little else that it does contributes to wealth creation, the services it does provide are unlikely to be of a standard or nature that people would choose themselves, and it engages in vast numbers of transfers that are little more than bribes to rent seekers who lobby politicians to get them to loot on their behalf.

Jimmy Carr is both legally and ethically correct to arrange his financial affairs to minimise his liability to this monstrosity.  The budget deficit and public debt are not his fault, it is the fault of politicians and their second-handers who have demanded more and more be spent on them and their pet projects and activities, without being willing to force the public to pay for them (let alone ask).

Tax avoidance is legal, it is moral, and indeed I believe people have a moral duty to themselves and their loved ones to maximise the ways they can avoid tax - for tax takes from YOUR wealth so someone else can spend it, as they see fit. Why would anyone voluntarily, and legally, prefer politicians spending his own money to himself spending it, unless he himself was engulfed in self-hate or believed in his own ineptitude relative to politicians and bureaucrats? 

Who owns YOUR life?

It's a question libertarians pose from time to time, because it is rather fundamental.

It seems silly to most people, for most people consider they are in charge.

Most of the time, in most ways you are.

Indeed, most people in Western liberal democracies accept that adults can choose how they live their lives, in most ways.  That includes freedom of choice of religion (or no religion), and so to live one's life within whatever teachings they wish, as long as it does not involve infringing upon the rights of others.

So why do so many deny voluntary euthanasia?

Is it fear that people will make decisions they will regret?  Well, maybe.  However, surely if a person demands to end his life time and time again, and is absolutely distraught with the indignity and frustration of his life, is the validity of that no longer worth arguing?  Besides.  Who are YOU to say whether someone would regret a decision?  It is, of course, impossible to regret anything when you are dead.

Is it a belief that life is "sacred"? Yes, often.  However, that is a religious belief.  A deeply held one no doubt.  Yet should this apply to the person whose life is actually is?  To whom is it more sacred than the person living the life?  The religious would say "God", but if the person concerned does not believe that, how can this view be forced upon him?

I know religious conservatives have deeply held beliefs, and are not swayed by being confronted by those who want to die, those who have spent months and years day in day out suffering, enduring a life that they despise - in part because, unlike most who seek suicide, they do not have the means to actually end their life painlessly.

However, I'm posting this tragic story because Tony Nicklinson knows only too well who owns his life.  Not him.  

In this interview by the UK's Channel 4 news, he pleads for the right to permit someone else to take his life.  

He has "Locked in Syndrome".  He cannot physically move anything except his eyes.  This man is a father, a husband, once a rugby player, who has had enough after seven years of existing as he does.

Yes, those making such a request should not be those pressured to do so.  Yes those making such a request should not be able to do so on a whim.  Yes those making such a request should have counselling and there be clarity that they are not mentally ill (be careful in how you define that too).  

However, once you get through such safeguards, then get out of the way.

Don't impose your religious beliefs on others.

You do not own their life.

You do not speak for "God" or whatever deity you wish to plead the case for.

Let a peaceful adult who knows what he wants, who declares how much he suffers with his existence, to end his life.

and yes.  This also means opposing the force feeding of an adult with anorexia who wants to die.  The alternative, after all, is the state assaulting an innocent adult.  

You see, those who oppose assisted suicide are not only willing to get in the way of those who haven't the means to take their lives, but also to inflict force upon those who do, as long as the person who does is "ill".  

It comes down to the belief that the state not only should protect people from others, but protect them from themselves - even to use restraint and invasive intimate physical force to do so - even if protection causes them constant and persistent pain and suffering.

Now how can one believe that is right to inflict choices on adults that involve such pain and suffering that if a private citizen initiated it, he or she would face a criminal charge and likely lengthy prison sentence?

Moreover, if you do resist allowing people to take their own lives, when they are consenting intelligent adults, in obvious ongoing chronic distress, why do you think it is your right to do so? 

For if you simply got out of the way, then all these people would be guilty of is offending you and possibly, your conception of a deity.

You do not have a right to not be offended, and certainly you do not have the right to prevent the offence of a deity.

So what would YOU say to Mr Nicklinson as he sits only able to communicate by the movement of his eyeballs, weeping?  If YOU think his life is worth more than he does, what will YOU do to prove it?  Will you spend day after day, week after week, month after month, sitting with him, with his existence, unable to walk, talk, gesticulate, move, manage your ablutions, wash yourself, dress yourself, change the channel on the TV, itch, scratch, hug or kiss your loved ones?   Will you tell him every day as he looks into your eyes that he ought to keep going on like this, whereas those with the physical means can choose to terminate their lives?

Go on - prove your compassion isn't just words.  Share in his life in a way that will make a difference, or leave this peaceful suffering man alone to make his own choices.

He's not asking you to kill him, he's just asking you to let him choose to die when and how he wants.

It's his life, not yours - and as he does not (and cannot) own your life, then stop trying to own his for your conscience or because of your own belief system. 

Myths of UK economic policy

Now I could have said this myself, but I don't need do, because Liberal Democrat blogger, Stephen Tall, has done it for me.  Now that's someone who is no libertarian, and ought to get a wider constituency that those laissez-faire capitalists who are fed up with the Conservative/Liberal Democrat coalition's pathetic attempt at austerity and Labour's dishonest attempt to present itself as the saviour.

What are the myths?

1.  UK public spending is reducing:  In nominal terms it is rising by 8% over the term of this government, in real terms cut by 3%!  Any large business that couldn't extract 3% savings out of five years of operations would be an abysmal performer.  Moreover, in real terms spending in the last year of this term of government will be higher than every year of the Blair/Brown government except the last year.   Big swingeing cuts? Hardly.

2.   Public debt is being reduced:  No.  You see you can't do that unless you run a budget surplus, and that isn't happening or going to happen in this term.  Public debt as a proportion of GDP will be rising by 8% during the term of this Parliament, and wont be dropping in nominal or real terms.  

3.   Labour's approach would have made a big difference:  No.  Ernst & Young modelled the difference, and calculated it would have meant the economy growing on average 0.2% more across three years.  Each additional job would have cost £370,000 in debt (jobs with average income of a tenth of that).

4.   The Obama Administration has taken a different approach which has paid off:  No.  The Obama Administration after the 2010 congressional elections, cut federal spending by 0.9% in real terms.  Somewhat equivalent to the UK government.  Barely austerity at all for both, but US tax levels remain far lower than the UK's.  That's a difference Labour and other leftwing opponents ignore.

5.  There is a magic easy alternative solution:  Both recent UK governments have been Keynesian.  Both dropped interest rates to near zero levels, both printed more money,  both engaged in deficit spending. 

Now I'd argue there are solutions, and that taking a more aggressive stance to cutting the deficit by cutting spending, NOT increasing taxes (which has been about a third of the strategy), would have cut wasteful wealth destroying spending, helped keep the growth of the state interest bill under control, stopped the state competing with the private sector for investment, and meant more money would remain in private hands.  

However, no party in the UK offers that solution as of yet.  You might wonder quite why a government, that is now quite unpopular, didn't just take the hard medicine at the start - rather than pretend to do so, given people think it has already, and it hasn't worked.

Three elections - freedom's not the winner

Greece

I've never seen so much televised election coverage for a Greek election, with BBC News, Sky News and CNN all providing dedicated coverage yesterday.  This was an election about remaining in the Euro - Greek voters, more often than not, wanted to play it safe.

The Greek election result is clear - a country divided amongst those who are scared of losing their savings in Euros to those who want to demand other country's taxpayers support a bloated socialist state, and then a who lot of others who variously want either the government to take over and steal from the rich, steal from the foreigners, or the 1.59% who actually want less government.

So for now, Greece will live off of the back of hundreds of billions of Euros of money from taxpayers in Germany, Austria, the Netherlands, Estonia, Slovakia and other solvent parts of the Eurozone, and will attempt to survive with some spending cuts and tax rises - although the former wont be enough, and the latter will choke off the economy even more.  The optimist in me hopes that Greece can actually cut its deficit, balance its budget, open its economy, cut costs and move forward.  However, I suspect Greece will be racked with strikes, mass protests and continued exodus of the best and brightest, whilst the coalition between the two parties that led Greece for 30 years into this mess in the first place fractures as the vested interests both have protected fight for their cut of the borrowed bankrupt pie.

I can only hope that since New Democracy now includes a few elements in favour of less government and not increasing taxes, that the concessions that this government can get from Germany are to not increase taxes more.  That at least will stop choking the private sector more (as cutting government spending is not the same as increasing taxes).   Meanwhile the far left reality evaders, whose xenophobia about foreign capital doesn't extend to foreign taxpayers propping up socialist states, will continue to portray all of this as some grand conspiracy to make foreign bankers rich.  Those "foreign bankers" (Golden Dawn would be proud of that rhetoric) took a 110 billion write off of Greek debt so far, meanwhile foreign taxpayers have effectively restructured most of Greece's private debt into new lower interest rate loans.   However, Syriza and the leftwing xenophobic haters of capitalism just blank this out - and none have any answer as to how to bridge the gap between the Greek government's spending and its tax receipts.   The newly elected Greek government must close that gap, or will face yet another judgment in a couple of years.   The only way it might even hope to do that, and rescue the economy, is to let the private sector flourish by getting out of the way (and doing its proper job when it is expected to do so).

France

French voters have snubbed Sarkozy's party and have voted for the fancy funny land of the Socialists. The party that helped decimate the French stockmarket and chase businesses away when it was last in power in the early 1980s (as Francois Mitterand - the man who instigated the Rainbow Warrior bombing - sought to nationalise major businesses).   France will now either follow the path of Greece, in strangling its already fairly stagnant economy some more, chasing its best and brightest to London, some more, or will actually face reality and introduce reforms that hitherto were too hard for the vain git Sarkozy to introduce.

France is full of myths, one is its great manufacturing sector - which as a proportion of GDP is no greater than the UK's - another it how its mixed economy staved off the worst of the financial crisis - when in fact France has parts of its economy (agriculture and the space sectors in particular) largely propped up by EU subsidies.  

Higher taxes, more regulation to protect those already in jobs at the expense of those without them, and a head in the sand attitude to fiscal balance, will help ensure France continues to lose competitiveness relative to Germany and the world.  It is probably a decade away from its final decisive crisis, as France's generous welfare state and corporatist monstrosity of an economic policy finally collapses in on its own contradictions.  Not much liberte, not so much fraternite, and perhaps egalite of poverty.

Egypt

How's this for a choice?  Want an Islamist President who has vowed to respect other religions, the rights of women and the new freedoms Egyptians went on the streets for?  Or do you want a President from the old guard, the old corrupt militarist regime that kept a lid on freedom of speech and ensured that its cronies were wealthy and comfortable?  Half of all Egyptians chose neither.  It appears that a narrow majority of the rest chose Islamism.

Some on the left in the West who rail in favour of womens' rights, secularism, tolerance, liberal values, peace for homosexuals and the like will celebrate this, to their shame.  Others will share the concern with those of us elsewhere on the political spectrum.

The overriding of the parliamentary election by the judiciary may be worrying, but if the Islamist has won the Presidential election, it may give some impetus for others to vote for a new Parliament that isn't so dominated.

However, I am not hopeful.  The simple reality is that democracy in Egypt is more likely than not to create a state run by those who think religion and state are the one and the same, who hold views of women (let alone gay people) as being subordinate and whose views on Jews, Christians and others who don't hold their religion are less than flattering.   

The result wont be clear until Thursday, but let's be clear - it wont mean more freedom for people in Egypt.

Greek voters do have rational choices - but they reject them (UPDATED)

The two main incumbent parties in Greece, although both supporting the necessary bailout plan, are both institutions that have led the country down a path of corruption, fiscal incontinence and reality denial for too long.  Beyond them, the Greek Parliament is polluted by the likes of Marxists who believe business should all be owned by the state, and fascists who preach bigotry and racism with their faux pride and proto-violent approach to government.

However, there are parties that can make a difference:

- The Liberal Alliance advocates the state withdrawing from business, abolishing permanent employment in the state sector, privatisation and replacement of the state pension with a privatised pension system, along with tax cuts. 

-  The Drasi party supports cutting government spending and free market reforms.

Both parties ran on a single platform in the May 2012 election, but only gained 1.8% of the vote.  This time they are running with the "Recreate Greece" party which is said to share a similar approach to economic policy although being more centrist.  The hope is that the combined support of all three will cross the 3% threshold for Parliamentary representation.

Democratic Alliance would have been another option.  It supports cutting the civil service by a third, abolishing permanent tenure and introducing performance pay.  It also seeks major tax cuts with a flat tax of 20% and negative income tax to replace welfare.   However, it has aligned itself with the incumbent New Democracy Party (the non-socialist one).  Will it have enough influence to make a real difference?  I doubt it.

So the best option appears to be the "Recreate Greece - Action – Liberal Alliance". 

Together they would embrace real austerity that does not include raising taxes, but does include cutting the state down to a size that is affordable, it does mean not scrapping the Euro in favour of a junk currency and means opening up the Greek economy to be more competitive and dynamic.

The two major incumbents support more taxes, the Syriza party supports putting its head in the sand and hoping that Greece doesn't go bankrupt.

In the meantime, wise Greek citizens will be emptying their bank accounts in Greek banks.  Opening German, French and British ones, and depositing their Euros as fast as they can, and holding onto just enough cash necessary to function.   Good luck to them all.

UPDATE:  It looks like a binary choice between New Democracy (in favour of the bailout package including spending cuts, privatisation AND unfortunately tax rises) and the Green Party like Syriza Party which essentially expects to blackmail Germany into paying for its retention of socialist economics.   New Democracy retains a chance Greece remains in the Euro, Syriza is highly likely to see a complete default in late July if it can't convince the Germans to prop them up.

It is entirely plausible that neither could form a government.

That's why it remains the most principled choice to back the Liberal Alliance, for only it will support both less spending and lower taxes.  New Democracy may be less worse than Syriza, but if economic growth matters to anyone in Greece, they can't get it voting for for those who support higher taxes (let alone a bunch of reformed communists).

No Asset Purchases without a referendum

If the parties that lost the last election can demand that the Government seek an additional electoral mandate to implement the policies National stood on in its 2011 manifesto, then surely the same applies in reverse.

Every time the state buys something with taxpayers' money, it should ask permission.

Labour should have held a referendum on buying buy Air New Zealand, buying the Auckland railway network then buying the national rail network then buying TranzRail. 

If the state should gain permission when it sells assets, it should also seek it when it buys them.

Somehow, I doubt the idea will gain traction with Labour and the Greens, because to them when they spend taxpayers money, acquire property for the state - it is "good" for it is for "everyone".

In other words, the state can always accumulate more and more property with your money, but it daren't dispose of any of it.   However, none of that is really a surprise is it?

Greeks withdrawing cash

If anything demonstrates how far we are all removed from free market capitalism and an economic system based entirely on private property rights, one need only look to see the power the state has on the resource most people have as a medium of exchange and storage of value - money.

With speculation rising about the next Greek government quite possibly being led by a quasi-communist who thinks he can call the bluff of Eurozone governments in demanding that they lend the Greek government more money it can't pay back (having already received bailouts worth nearly a quarter a trillion Euro), fear is that the bluff wont work and Greece will be cast adrift, with the Greek government unable to pay its bloated public sector, unable to pay interest on its debt and pushed out of the Eurozone.

With all of that goes any talk of European solidarity, as quite rightly, Germans, Austrians, Dutch, Slovaks, Estonians and the like say no to their government funding Greece's fiscal incontinence, so Greece finds a new way to pay its bills - by printing worthless banknotes likely to be called a New Drachma.

What does the average Greek citizen do then?  Well, Greek banks get all their assets and liabilities redenominated into this junk currency, so the savings of Greek people get utterly destroyed, because of the Greek government.  Greek companies with debts with foreign banks in Euros face bankruptcy as they will be unable to pay debts using the junk currency.  

Many Greeks will seek to flee to live and work in the rest of the EU.

Except the EU has other ideas.  Greeks will be cast asunder, not only having their savings plundered and destroyed by their government, but having their fellow EU partners treating them as foreigners, not worthy of being able to live and work in other Member States.   The grand political project would be over as far as Greece is concerned.  This shameful treatment of people unfortunately stuck in a country that the EU embraced, subsidised and treated fraternally for decades, shows the real limits of the openness of the EU - when the going gets tough, they turn their back on you.

So Greeks are preparing.  With 800 million Euro exiting Greek bank accounts today, this will only accelerate.  Once they have their cash, they will deposit in foreign banks, convert it to gold or silver, or simply stuff it under the mattress.

For you see when it comes down to it, a fiat currency isn't a store of any real value if those who issued it declare it to no longer be so - for it is as easy to destroy that which you printed out of thin air.

For all the SYRIZA party is offering Greece is the promise that all can be made better out of the thin air of socialist economics.

UPDATE:  A former Socialist Defence Minister of Greece is facing charges of money laundering and is facing ongoing investigation for tax dodging.   Is it any surprise that so many Greek citizens actively avoid tax when then is corruption at the highest levels by those who want to spend their money, but make sure they use the state to enrich themselves?  Shame the political choices of Greeks are largely more of the same.

Only the state should dominate the media, right Ed?

The ludicrous circus that is the Leveson Inquiry, has been filling media time for many weeks now.  In part because the media is so excessively solipsistic it think everyone else gives a damn.  Most don’t.

The key “story” being manufactured by this waste of time and money is whether News Corporation and Rupert Murdoch have “undue influence” over politicians.   The inquiry is meant to have a wider mandate that beating up on News Corp, but it is driven by politicians and bureaucrats whose agenda has that narrow focus.   

It’s important to bear in mind the extent to which News Corp is allegedly dominant in the UK media.  It owns, effectively, two daily newspapers.  The tabloid Sun and the more serious Times (and Sunday Times).  Like most British papers they don’t shy from expressing editorial views regarding politics.   However, that isn’t unusual.  The Sun’s direct competitor, the Daily Mirror has long been seen as a left wing tabloid, consistently supporting Labour (which of course means accusations of impropriety aren’t flung its way).  Its other competitors in the tabloid market (such as the Daily Star) take next to know interest in politics.  The mid market Daily Express and Daily Mail have tended to take an angry “anti-politics” view that slammed the last government and are not much more keen on this one.   

Of the serious papers, the Guardian/Observer is the leftwing rag of record, followed closely by the Independent, which largely tended to sympathise with the Liberal Democrats.  The Daily Telegraph has long been seen and acted as the “Torygraph”.  

This diversity of newspaper choice is astonishingly wide, and whilst the Sun and the Times are influential, it is generous to claim either are dominant, when the market is so split among others.  The Daily Telegraph remains the leading circulation serious paper, although the Sun leads the tabloids.

In broadcasting, BSkyB (minority owned by News Corp which sought to take it over 100%) is the major pay TV provider, yet it has competition in that market from Virgin Media (for the half of the country with cable TV) and BT.   However, the most influential broadcasters remain the TV extortion tax funded BBC and commercial operator ITV (followed closely by commercial state owned broadcaster Channel  4).  Sky News is one of the news channels, but it faces direct competition from the 24 hour BBC News channel (let alone a panoply of foreign ones).

So when Labour leader Ed Miliband decides that newspapers shouldn’t be “allowed” to have more than “20% of the market”, you might ask some questions not only about what he means by that, but why he thinks it is ok for the state to be dominant in TV and radio broadcasting.

For a start, the “market” he says is not clearly defined.  Does he mean nationwide newspapers?  What about local or regional newspapers?  Besides which, what if people actually LIKE buying the newspapers with bigger market share, does it mean that a proprietor with a very successful newspaper must do something to be less successful?

All this nonsense is taken even further when one looks at the British government’s overwhelming presence in the broadcasting market.

It owns two major free to air broadcasters.  The BBC and Channel  4.

The BBC itself has seven fully owned national TV channels, and owns a 50% shareholding in a company that broadcasts another ten channels.   It also has nine continuous nationwide radio stations and a network of regional and local radio stations.  

Channel  4 has six fully owned national TV channels (and five timeshifted +1 channels on top of that).

The state is by far the dominant TV and radio broadcaster in the UK, with its channels gaining a majority of the audiences in both media.  The BBC is also one of the most popular websites.

Of course it should hardly be surprising that the Labour Party thinks the state supplying news and entertainment to the masses is a good thing, since it presided over the rapid expansion of the BBC when it was in government.   However, this is a point the Conservative Party should be making.

Media dominance is the newspaper sector in one of the most competitive newspaper markets in the world is ludicrous, particularly when it is a sunset industry as circulation continues its ongoing erosion and people seek out online media and other options.

The questions raised about the influence of a single proprietor of two newspapers and one TV news channel are never raised about a vast organisation that dominates the TV and radio market, that has been recession proof (having been funded by a extortion racket called the TV licence that criminalises people who don’t pay it and haven’t the wherewithal to evade it successfully).  

The state should not have its hands on so many levers of media in a free society, out of principle.  That’s setting aside the myth about the impartiality of the BBC and Channel  4, both of which carefully select stories to report on with a line that demonstrates a certain perspective (for years, Euroscepticism was treated as the view of cranks, but not now).

I don’t have to buy the Times or the Sun or subscribe to Sky TV in the UK.  The influence of Rupert Murdoch on me is my choice.  I also don’t have to watch or listen to the BBC, although if I have a TV I am forced to pay for it regardless of whether I want it or not.

Attempts to restrict media ownership when plurality of the print media is so obvious are absurd, particularly when attention ought to be drawn to the dominance of the state in British broadcasting.  That dominance is not only unnecessary, but it is unsettling and has a profound influence upon political and public discourse.  It is about time a debate is had about weaning the UK public off of state broadcasting.  Privatising Channel  4 should be an uncontroversial early first step.   The bigger step should be weaning the BBC off of the TV licence fee so that every day it has to convince people to pay for it, not threaten them with court.

Calls in the UK to stick up for capitalism

For too long those of us who have stood up for free market capitalism have tended to wonder why it seemd quite lonely.   With the exception of a handful of think tanks, the voices in favour of less government and more freedom have been few and far between.  Most of the media seems to be inhabited by the "what is the government going to do about it" school of questioning regarding any issue or situation that comes along, precious few ask "when will the government get out of the way".

So it is gratifying that in the UK, at least, two voices have come out in the past day in favour of capitalism and less government.

The first comes from Sir Terry Leahy, former Chief Executive of the largest supermarket chain - Tesco.  He is no libertarian and he wasn't advocating stripping back the state like I would, but writing in City AM he said:

"As a believer in the free market, and someone who trusts people, in my eyes taxes are still too high.  Insufficient incentives exist in the UK to encourage investment, hard work and job creation.  The ambition to steadily cut corporation tax is laudable.  This, though, should be part of a much wider programme of tax reduction, which does not imperil plans to cut the deficit or spook the markets, but gives employees, employers and investors more money to do with as they wish."

More of their own money of course.

"what is needed in the UK: a rebirth of capitalism. Business cannot sit idly by and expect politicians to do this alone.  If we have the courage of our convictions, business people need to get stuck into the debate, taking this message not just to the media but elsewhere, including schools.  Every student should be taught about wealth creation and entrepreneurship."

Quite.  Business people have for far too long stood by and let politicians on the left push anti-business and anti-capitalist agendas.  The chimera of "corporate social responsibility" has been used to shroud the idea that fundamentally business and capitalism is "bad", and that it needs to compensate society for what it does.  Utter nonsense.  More recently the idea of "green business" and "triple bottom line accounting", have been spawned by those pandering to the ecological-left, in the hope that it will chase away threats of more taxes and regulation, when all it does is surrender the intellectual argument to them.  There is no harm in seeking to be more energy efficient, to gloat about how environmentally friendly you are and the like, but to surrender the intellectual argument that in fact - your business creates wealth, makes people better off, satisfies consumers and employs people - all through voluntary exchange - something government fails to do, is a disaster.

It parallels the businesses who embrace corporatism, who think "government relations" is about seeing what favours can be granted to their sector, whether it be reduced competition, more subsidies, regulation of competitors, taxing of competitors - rather than encouraging government to get out of the way, except when it is about protecting property rights and contract enforcement.

For Leahy to say this is welcome, but the other promoter of capitalism is more bewildering, although one might hope encouraging.

It's the Chancellor of the Exchequer George Osborne.  He said businesses need to fight back against anti-business sentiment that "dominates current political discourse".  He was quoted by City AM saying "If you are not out there, engaged in those arguments, then you are going to leave the field open to those people who want to fill that space, and who argue that companies... have got to pay more tax".   He wants businesses to retaliate against "the politics that says it's perfectly acceptable for the state to take half of all national income".

Naturally I agree, but isn't this his job too?

Shouldn't he be arguing in favour of not just simplifying planning law, but by scrapping it in favour of private property rights?

Shouldn't he be actively cutting all areas of state spending, not ringfencing the Soviet style NHS with half-hearted reforms that incentivise more contracting out, not ringfencing aid to developing countries?

Shouldn't he be abandoning the "Green Investment Bank" boondoggle, not waste money on an unprofitable (and uneconomic) high speed railway, abandon green taxes on electricity generation and be winding back and abolishing the legion of regulators for so many sectors?

Shouldn't he be leading the charge against the ban on new airport runway construction by the private companies that own London's three biggest airports?

In other words, shouldn't he be the government's chief advocate of capitalism, less government and freer markets (let the Liberal Democrats argue the contrary)?

The morality and the empirical evidence of what capitalism has enabled should be getting shouted from the rooftops, especially when the UK media is dominated not by Rupert Murdoch and News Corp, but the state owned BBC - itself almost entirely funded by the forcible extracted extortion system known as the TV licence.

Spain's bailout for dummies

What's gone wrong?  A cluster of Spanish banks loaned money during the credit boom years of low interest rates in the Eurozone to a large number of investors whose investments have now proven to be worth far less than the loans.  Most of this is the property bubble in Spain which has popped, with property values dropping by 30-50% in some places.  The banks are facing insolvency because if they write off the bad loans they will fold.

It is not a sovereign debt crisis of the kind being witnessed in Greece.  In fact Spain's total national public debt as a proportion of GDP is less than Germany's (although it has had a serious budget deficit issue risking escalation of that debt) at 68.5%, although it was predicted to hit 78% at the end of this year.

Whose fault is it?  It takes three to tango this one.  None of these loans would be taken out if people or businesses hadn't borrowed to "invest" in the Spanish property bubble.  Nobody forced them to do this, so they bear responsibility for their own personal tragedy of poor choices and being lumbered with liabilities.  Of course, they wouldn't have received such loans if the banks had been more prudent about their predictions about the property market and had considered the risks of an inflated property bubble.  So the banks bear responsibility for lending money in circumstances that were overly optimistic.  Finally, the European Central Bank sets the interest rates for banks accessing its fiat currency.  As interest rates were set based predominantly on the dominant economic drivers in the Eurozone of Germany and France, this effectively created a line of cheap credit out of nothing at all.   Of course, since the European Central Bank makes money from thin air, it doesn't really bear any consequences of anything, as it is those who own and loan the currency that bear those consequences.

Why should governments get involved?  They shouldn't.  The banks should go bust.  Their shareholders and creditors should bear the losses.  At the most, if there is a deposit insurance scheme, then depositors up to a certain level should be protected, but there is no good reason for governments to do anything other than to have a framework within which bankrupt banks can wind down.   Of course, regional Spanish governments own a majority of the largest bank being bailed out - Bankia - which indicates that it going bankrupt means that those governments lose their "investments".   Naturally, none of them are very keen on this because they want their own decisions to be vindicated.

Why doesn't the Spanish government do it?  It can't afford to do so.  Whilst its relatively new government is eagerly cutting spending (and increasing taxes) to cut the rampant overspending of past governments, it is finding that interests rates on newly issued sovereign debt lie over 6%.   If it was to try to swallow the bankrupt banks it would see its debt as a proportion of GDP slide up by another 9% of GDP bringin it close to 90% (and 100% in 2-3 years' time).  It doesn't want to do that, and claims that Eurozone countries are like a big cozy club that look after one another (although German, Dutch, Austrian, Slovak and Estonian taxpayers might have a wry laugh at how one way that relationship is).

Where is the money coming from for this bailout?  Thin air.  It is part of the slow fiat currency issuing of the Eurozone called the European Financial Stability Fund, which is to become the European Stability Mechanism.   In both cases, they can only lend money to governments, so the Spanish Government will be effectively borrowing from its Eurozone supporters, adding to its public debt, pass on the money to the banks (presumably in the form of capital) and the banks will then pass on that money to the European Central Bank to provide liquidity in the face of their bad debts.  Of course don't think that making money out of thin air and passing it through a merry-go-round has no cost.

Who will pay?  Taxpayers directly in the solvent Eurozone countries (i.e. excluding the PIIGS) and all Euro currency holders indirectly, as they contributed involuntarily to a fund to socialise the losses of the banks.  Spanish taxpayers will be expected to pay too, as they guarantee the repayment of the "credit line", so ultimately will have to pay more unless miraculously the bailed out banks can be sold for more than the bailout funds.  Of course, given Spain's precarious budget deficit, public debt and national economic position, the real risk is that it lays the path for Spain to follow Greece - and so demand more money from Eurozone taxpayers.

Who will win? Creditors of the bailed banks (even if they face major writedowns in their shareholdings).  Owners of Euro debt in Spain.

Who will lose?  Taxpayers across the Eurozone, who collectively will see more of their future earnings diverted to save bad investments.  Ultimately this means the Eurozone economy being dragged down a small notch, again, for many years.  Holders of Euro currency deposits or cash lose as well, because it ultimately contributes to inflation.

What happens next? The markets will lemming like treat all of the propaganda around this bailout as gospel, and get a sudden shot of confidence, until the realise it helps to inflame a sovereign debt crisis in Spain.  The Eurozone economies will be no more better off.  Economic growth will not be facilitated.  The lunatic far-left parties in Greece (including the fascists) will clamour that Greece should get the same support, as will Irish politicians and those in other profligate Eurozone countries.  None will acknowledge that this is not about sovereign debt and actually increases Spain's sovereign debt.  People in France will have voted for a socialist Parliament, which will seek to continue the "print it and bail them out" philosophy that pretends that fiat currencies can be used to just print your way out of recession.  The ideological debate in Europe will continue between three groups:

-  Austerity and Integration:  Led by Germany, it is the view that things will get better if only the PIIGS would follow the policies of the 5 or so Eurozone countries that have budget deficits lower than GDP growth, improve competitiveness and then create a new European Treaty that harmonises budgetary, taxation and economic policies. Spain's current government has tended to share this view too.

-  Profligacy and Integration:  Now led by France, but also driven by leftwing and populist politicians in the Eurozone.  It is the view that the Eurozone should socialise its gains and losses.  In other words, Germany and others should pay for the debts and deficits of the PIIGS, and there should be extensive transfers across the Eurozone, as if it was a United States of Europe.  

-  Disintegration:  A growing view that the Euro is unsustainable in its present form, and the way to resolve the crisis is for it to split into two zones or multiple independent currencies, so that the PIIGS can devalue their way to "competitiveness", and the European project becomes a looser free trade association and customs union.  This is the view of Eurosceptics generally, although there are versions of this argument against any form of open Europe (from Marxists and fascists) or against new small fiat currencies (supporters of commodity-based currencies).

The one thing is sure, don't expects sun to rise and everything to be rosy.  For the Greeks have to vote again to decide if they want to swallow reality and take their medicine, or run away from it and truly see what it takes to become a tinpot backwater that makes Albania look good.

North Korea's bad? The Sun thinks it's about circus animals

Regular readers will know I have a particular interest in North Korea (aka DPRK).  The reason being that it is, in my view, the most totalitarian regime the world has seen for any extended length of time, having now existed for 64 years, and is now the only successful three generational personality cult.  It is, as one writer described it, as if George Orwell’s novels “1984” and “Animal Farm” were taken not as warnings, but as instruction manuals.  Moreover, I’ve been there, although I am legally bound to not publish anything regarding that visit, and it is in the interests of my guides (who were exceptional), for me to do just that.

The sheer horror of the all pervasive denial of individual freedom and rejection of any objective consideration of reality, in favour of an “official view” is difficult to get across.  It is dehumanising, debilitating and life is cheap there.  It has all but scrubbed capitalism away, with private property rights virtually non-existent beyond a few personal chattels, with all employment defined and prescribed by the state.  Where you live, what job you do and your spare time are all almost entirely determined by others, and is a mixture of chance, favour and whim.   For those who insult the personality cult heads, or are deemed to be counter-revolutionary, the future is grim for them and their entire families.  If a man is said to have said something illegal, or folded a newspaper the wrong way (creasing an image of one of the leaders), or the like, it is to the gulags that he goes, with his wife or girlfriend, his parents, siblings and children.

You see in the DPRK, children can be political prisoners.  Forced to live in prisons high in the mountain valleys, from babies.  They receive rations that are starvation level, those who survive do so by eating bugs, mice and other things they can forage or hunt for.  Many are physically abused, some sexually abused, when old enough they are forced to work from dawn to late in the evening, every day.  It is one step removed from Nazi concentration camps, in that it isn’t gassing used to eliminate them, simply hard work, cold and malnutrition.

That horror isn’t easy to visit in the DPRK, for obvious reasons.  However, DPRK watchers have been adept at mapping, in great detail, where such camps are, with a brilliant Google Earth overlay.  For actual visitors to the DPRK, the horror is more subtle.  It isn’t in the power cuts, the propaganda, the relatively barren streets, crumbling infrastructure or the regimentation, it is what is not so obvious.  For there is a surfeit of videos and pictures of the DPRK’s key spectacles, none of which is that new.

It is the lack of children playing spontaneously, for their before and after school and weekend time is all taken up by state organised clubs and associations, all designed to promotion loyalty to the leaders, the party and the state, including dobbing in their parents for not being sufficiently loyal.  It is the orphanages where infants are shown off singing and dancing a song like “Kim Jong Il is our father”.  It is the constant climate of fear among citizens about who sees them, who listens to them and what will be said.  People who have had much history and information about the outside world kept from them, and what they do get is frequently heavily distorted.  People who are anxious to know about the outside world, to understand and to be free of fear.  Of course you never see those who are taken away, imprisoned, tortured or simply starving to death because of a regime that imprisons them and steals from them all to maintain a true 1% elite of privilege, gained by force, birth-right and fraud.

So what did Sun journalists Alex Peake and Simon Jones think was most important to focus on?  The treatment of circus animals.  The two of them lied their way into the country for a rather asinine story, probably wrecking future business of the tour company Lupine Tours, and quite possibly risking not only the end of the career, but also possible imprisonment of their tour guides.  A bit of research with DPRK experts (and there are a number of noted academics) would have told them the real cost of their “story” lies with others.

Now I’m all for thwarting dictatorships and embarrassing them, I’m particularly keen on getting more information into them and engaging with people who live there.  I’m also interested in raising the profile of the most serious atrocities of such regimes.  For the DPRK it must be the use of Stalinist type Gulags to imprison and enslave the children of political prisoners (though one can count the banishing of the disabled, uncounted public executions of political prisoners and the mass starvation of millions whilst the leadership dined like oligarchs).

However, for the Sun, it no doubt figured its readers were more interested in finding a country where they don’t know Michael Jackson is dead (hardly surprising, since the moon landings were never ever reported, and the Holocaust isn’t commonly known to have happened either), and where circuses involve the undoubted cruel treatment of bears and baboons.

Sad though it is, the treatment of the bears and baboons is not unusual outside Western Europe, and would also be found in many former Soviet Republics and China.  Quite simply the cultural norm of treating animals with compassion is alien to many cultures, and hardly a surprise for a state which retains structures and systems little changed from the ones the USSR transplanted onto it in the 1940s.

However, for the Sun to regard this to be the real tragic story of the DPRK is a travesty.   Although I would not be surprised if the human hating fraternity called PETA thinks the treatment of bears is more of an issue than the treatment of humans in the country, and that compassion for animals in the UK tends to rank higher than that for people.

I don’t belong to the feeding frenzy of hate-mongers who think any media owned by Rupert Murdoch is somehow evil – far from it.  However, this sort of “journalism” is not only rather facile, but at best is not useful, and at worst counterproductive.

For a start, if it means less people get to visit the place and expose it to foreign ideas and questions, because Lupine Tours is shut out of the market, then that is unfortunate.   I expect Lupine Tours to sue for breach of contract (presuming it was clever enough to include a contract that restricted the journalists).

However, the likely reaction of the DPRK is going to be more simple.  It will stop including the animal circus on tours visited by Westerners.  It wont save the animals.   However, it will give the impression that this is what matters the most – the treatment of circus animals.  It shouldn't be.

You see the impression most people have of the place is ludicrous dictators and nuclear weapons, with big monuments, mass regimentation and all other sorts of spectacles.  The unadulterated evil behind it all is largely ignored, particularly by the likes of Amnesty International and the leftwing protest movement - all too keen to damn the USA on its treatment of Islamist terrorist suspects, but never raising a protest against the torture of children by the DPRK.

A far more useful article would have sought out defectors, and discussed what they saw and experienced, and talked about the gulags with children in them.   This is what must be raised, again and again – the gulags must be opened up, letting the ICRC in and get closed down.  Children should not be political prisoners – ever (even though, in reality, virtually everyone in the DPRK is a political prisoner).

Better reporting on the DPRK is here in the Economist, about the horrors of the gulags, pointing out it is easier to lampoon the regime as freaky than to confront the true horror of the place.

This video of a starving orphan girl in the country is far more harrowing and disturbing than grotesque circus animals.   Although, I doubt PETA really thinks so.