Quantitative easing should upset the left - it's highly regressive

Anthony Randazzo of the Reason Foundation explains why money printing quantitative easing ought to get the socialist Occupy movement out in the streets. 

Which of course wont happen, since their pinup economist - Paul Krugman - is a fond believer in printing more money and spending more money the state doesn't have, to boost the economy.

No doubt some Democrats will think this is a cunning move to give the US economy a boost before the election, as some Republicans think this also, and are criticising it on that cynical basis.  That isn't a reason to criticise it, because it is unlikely to make enough difference to enough people to have an electoral impact.

So why is it bad?

You see you have to ask the question as to who benefits from the creation of new money and who loses.  Bearing in mind Bernanke has said he will create US$40 billion out thin air, every month, until the economy recovers, this matters.  It's also why the price of gold took a big hike overnight.

The beneficiaries are those whose securities the Federal Reserve is now going to buy with its new money.  Those will include the securities holding debt to the Federal Government or mortgages.  So the immediate winners are investors in those securities who now have a willing buyer.  With such purchases, the recipients are the financial institutions who now have money to reinvest.  So it is the shareholders of those institutions who immediately gain from money printing.  The next beneficiaries are those owners of securities, stocks and bonds that gain such investments, as they suddenly find there is more money available to invest.  Prices for stocks and bonds will rise, so existing holders of them benefit.

Those who own such stocks and bonds are going to be primarily other institutions or wealthy individuals. People who are also aware of the counter-risk of money printing - inflation - and so are able to take steps to protect themselves from what inevitably becomes a new round of malinvestment.  Why malinvestment?  Because the flow of "free money" will see choices made that are dependent on what securities the Federal Reserve buys.  The Federal Reserve will want to sweep up government debt and mortgage securities because they are seen as low value investments, so that there is a preference for stocks and shares.  However, with investors having low confidence in the economy, many also sweep into commodities, because they see any scope for rising demand being seen in rising prices for commodities.

So a speculative bubble emerges, with those who joined at the start - those who gained from state purchases of their securities, gaining the most.  Whether it be energy, food or minerals, another round of malinvestment will create a bubble.

That's where we find the losers.  For the consumers of such commodities, be it in purchasing food, heating their homes or even building materials to fix or extend their homes, they face inflation, and as that grows it means their purchasing power declines.

With virtually zero interest rates, it means savers lose out as with growing inflation, they find they are fighting a losing battle.  They can choose to hop onto various speculative bandwagons, but know it is high risk.  So they mix between commodities, stocks and shares, property and various other equities.  Those who already had property theoretically benefit, but few are likely to realise this gain unless they sell at the right time and convert their depreciating currency into another investment.   Of course for those who largely live on receiving an income, they face inflationary pressure with little hope of relief unless their field of employment can afford to raise their wages.   Those who are saving to buy property or indeed anything, are on a losing streak.

In short, what is called quantitative easing, which is a euphemism for printing money, benefits those who the Federal Reserve buys securities from the most, and actively harms those who are poor, who don't own property or whose savings are primarily in bank deposits.  

Will it work?  Well Randazzo believes that private debt levels remain so high that most people are simply concentrating on reducing their levels of debt, rather than seeking to invest.  So whatever trickles down is likely to be used on that.  

Black and for school choice? You must be racist

So says the Louisiana Federation of Teachers.

The American Federation for Children (a lobby group promoting educational voucher programmes and tax credits to enable parents' taxes to follow the school they want their children to attend) reports that the Louisiana Federation of Teachers, an avowed opponent of school choice (presumably because it breaks their dominance of the profession and the single shop approach to negotiating pay) has tweeted that the Black Alliance for Education Options (BAEO), a group of African Americans who also support education vouchers/tax credits for private schools supports teaching that the KKK is good.

Yes.  A pro-Democrat, leftwing union claimed a black educational advocacy organisation endorsed the teaching of racism.

How did it come to this conclusion?  Who knows.  It simply tweeted this...

BAEO has responded and clarified...

Because some private schools enrolled in the program reportedly use texts that may attempt to downplay the awful history of the Ku Klux Klan, LFT (via twitter) called BAEO a "black organization that supports KKK vouchers." This is not only the most ludicrous description of our organization but it is also one of the most unintelligent. 

We unapologetically stand for parental choice. That doesn't mean that we believe every private school is great or that private schools are better than public schools. It simply means that while serious people go about the difficult and long-term work of trying to reform low-performing traditional public schools, we must also give parents real options that allow their children to get a quality education today. We trust that parents, when given the option to choose and when armed with accurate information, will make increasingly better choices for their children.

What I see is an interest group adopting any technique it can to smear those presenting options that threaten their position of privilege and lack of accountability.

The idea that a state monopoly on education and restrictions on access to schools only in a local area is good for children or what parents want is ludicrous, and it is little short of disgusting that teachers' unions - whose primary interest is to increase the pay, reduce the workload and reduce the accountability of teachers - continue to prey upon the vulnerable, weak and poor to demand that they maintain this monopoly on teaching their kids.  They fear new schools, dynamic ones, ones that pay teachers on performance, that hire teachers that aren't unionised into their collective gang, and that parents like them.  They fear not being able to lobby politicians to decide what those schools teach or what they should be paid.  They fear that, when given their own money back or given a way to transfer their taxes from public schools to other options, that they wont choose the options the teachers want monopolised.

They'll find every example they can of non-public schools not delivering the best performance, whilst ignoring the same of their monopoly schools, they will constantly claim that it's all about the children, that this is all they care about, all the time implying that they and the state knows best, not parents.  

Nothing is more important in pushing freedom and changing the culture of modern liberal democracies today than taking schools out of the hands of these peddlers of protectionism, hatred and statism.  That's why they, and their friends in politics (e.g. the Green Party in NZ), are so keen to oppose them.

For they argue private schools should remain for the rich, for the poor kids shouldn't get to go to a school which declares that individual achievement and excellence are the primary goal that should be strived for.

After all, what could be worse that kids from backgrounds that can't afford to pay taxes and private school fees, stand up and proudly live lives that aren't about dependence.

The Olympic honeymoon period is over

I've spent the last month or so basking in what truly was a magnificent time to be in London.  It was, on two occasions, a centre not of banal cultural emptiness, not of history shrines and hoards of tourists eager to look backwards, not of a sub-culture of misogynistic violent no-hopers eager to pillage and destroy in anger at their own uselessness, not a centre for Islamist horror, but of individuals as elite athletes, whether Olympic or Paralympic, striving and winning, and in a culture that truly glorified and celebrated them.  Whilst Team GB got by far the greatest attention, there was never an ounce of resentment or denial of the wondrous successes of those from other countries, the remaining malignant nationalism that comes with the Olympics (and which China still pushes), was not apparent. 

It was truly a celebration of the achievements and efforts of thousands of individuals, it saw a mood of benevolence and patience, as both the cost and the draconian approach to branding were largely ignored, and people celebrated.  Yes, I wish it hadn't happened because it was destructive of wealth (proven also by July seeing a drop of around 200,000 overseas visitors and drop of spending by visitors of around £120 million compared to the previous year) and a travesty of a waste of money, but it did come with that beautiful element of human beings striving, succeeding, proud of success in any form (whether it be medals or personal bests), and others genuinely celebrating in their success. 

The bubble of that culture has been well and truly popped.  One minor event was at the Trade Union Congress, where t-shirts were being sold that said that when Thatcher dies a generation of trade unionists will be dancing on her grave.  It was being sold by the Derbyshire Unemployed Workers' Centre, which itself is part funded by three local authorities. All of the nastiness of Marxism epitomised in one product, and whilst the TUC condemned it, Labour leader Ed Miliband chose to remain silent.

However, that minor piece of disgusting behaviour is nothing compared to the true travesty of justice over Hillsborough.  David Cameron has apologised for the vile behaviour of the South Yorkshire Police and the emergency services, not just for their grotesque negligence that apparently allowed as many as 42 of the 96 who died in that tragedy to die unnecessarily, but their lies, manufacturing of evidence and perverting the course of justice to cover up their own ineptness.  This conspiracy by agents of the state to cover up their own failings is not just disgusting, but criminal.  There should be people charged for acts which, if they were private citizens, would see them in prison for many years.   Altering statements and editing evidence to conceal failings is palpably inexcusable.  

Many in police forces wonder why people don't trust them, why they are antagonistic or obstructive, it is because of this sort of activity.  The willingness to flagrantly act without good faith.

Finally, it looks like a badly made film lampooning Islam and making it out to be a religion of violent bigots, has incited lots of groups of Muslims to act as violent bigots.   Those who think that the act of private citizens in a country is the act of a state, those who believe that the appropriate response to being offended is violence.

Meanwhile, the US is led by an Administration which has as its first response is to sympathise with those offended, whose Secretary of State condemns the film as disgusting and reprehensible (as well as condemning the violent reaction to it).   

Yet there is hope.  Mitt Romney, who is easy to criticise for so many reasons, gets it right by saying:

America will not tolerate attacks against our citizens and against our embassies. We will defend also our constitutional rights of speech and assembly and religion. We have confidence in our cause in America. We respect our Constitution. We stand for the principles our Constitution protects. We encourage other nations to understand and respect the principles of our Constitution because we recognize that these principles are the ultimate source of freedom for individuals around the world.

“I also believe the Administration was wrong to stand by a statement sympathizing with those who had breached our embassy in Egypt instead of condemning their actions. It’s never too early for the United States Government to condemn attacks on Americans, and to defend our values. The White House distanced itself last night from the statement, saying it wasn’t ‘cleared by Washington.’ That reflects the mixed signals they’re sending to the world.

When was the last time you heard a major party US Presidential candidate standing explicitly behind free speech and freedom of religion? When was the last time that you heard one talk about those principles being a source of freedom for individuals around the world?  Where is the stereotypical theocratic authoritarian that is the caricature that Democrats want to paint him to be? 

What exactly could anyone of a classically liberal (not socialist liberal) bent oppose of that statement?

Farewell Thomas Szasz

Thomas Szasz passed away last weekend.  He was a prolific writer and critic of psychiatry.  He was vociferous in his view that so much of psychiatry was not scientific at all, and was rooted in social and political beliefs that when people behaved in ways that were unacceptable that they were "ill".  

He only saw illness in those who had physiological attributes of brain damage or disease, whether they be congenital, infection, stroke or accidental, not in conditions that were diagnosed with no signs of such damage, such as depression and schizophrenia.

His famous quote was. "If you talk to God, you are praying; If God talks to you, you have schizophrenia. If the dead talk to you, you are a spiritualist; If you talk to the dead, you are a schizophrenic"

He was highly critical of the use of drugs to "treat" perceived mental illness, looking to ECG and lobotomy as previous coarse and even inhumane exercises in curing behaviour.

He talked of how women who didn't act as were expected were deemed "hysterical", about attempts to cure homosexuality through surgery.   This and other attempts by psychiatry to diagnose and treat people reflected more about the context of social norms of the day as to what was "acceptable" behaviour, than to actual disease. He saw incarceration used more and more as a means of control than to protect people from those who would behave badly, as few people deemed to be mentally ill commit criminal acts upon others.  He rejected the defence of insanity as being an abrogation of personal responsibility, and believed the defence should not exist.  He wanted people accountable for their behaviour which it denied the rights of others, but he was a stalwart defender of the rights of others to live their lives as they saw fit, as long as they did not interfere with others doing the same.

He thought of psychiatry as a profession full of people bent on control, and indeed the film One Flew Over the Cuckoo's Nest was in part inspired by Szasz's observations of the profession. 

He saw some diagnosis of mental illness as denying people responsibility for their own behaviour meaning they could have control of their lives taken over by professionals, only too keen to medicate, incarcerate, electrocute and operate.

Psychiatry loathed him.  He was a libertarian.  He was no fan of psychotropic substances or narcotics per se, but he loathed the war on drugs and loathed depictions of drug users as all "addicts", and believing that the state's treatment of drug users created far more harm than they ever did to themselves or others.

Reason has a good obituary about him, along with a series of links to articles, some supportive some scathing.

However, for me Szasz has the status of a man who confronted power, who confronted orthodoxy and did so despite being excoriated by them, for whilst he was not always right, he was not meek.

For who can pick up a copy of the "The Myth of Mental Illness" and not be rattled by the title, and not consider that the term itself has been used, so very much, to simply describe people who are having problems living.

Tax stops Usain Bolt from bothering more with Britain

It was telling that in a live BBC interview during the Olympics that Usain Bolt said that he would love to spend more time in the UK, but the tax laws make it not worth his while.

The Taxpayer's Alliance explains why:

Under current rules, athletes competing in the UK are liable to pay tax on their winnings in addition to paying levies on any of their passive income such as marketing, sponsorship and image rights deals. Athletes often have to pay a 50 per cent tax rate on their appearance fee as well as a proportion of their total worldwide earnings. 

No wonder he can't be bothered.

Of course, neither the supposedly "pro low tax" Conservative Party, nor the Liberal Democrat or "opposition in name only" Labour Party agreed with him, largely because all three parties have been embarking on a cannibalistic feeding frenzy on tax for months. How did he compete in the Olympics then? Simple. The UK Government was told it had to suspend these provisions for the extent of the Olympics: The International Olympic Committee insisted that HMRC suspended its normal tax regime for those competing in the London 2012 Olympics. London simply wouldn’t have been able to host the Games otherwise. And the Government has also said that tax breaks will be available to the Commonwealth Games and those taking part in the 2017 World Athletics Championships in London. They've all been claiming how moral it is for people to pay taxes, and how tax avoidance (i.e. legally acting in ways to not pay more tax than you are required to) is immoral. It's been a Marxist orgy of claims that tax avoidance "costs the UK" money, when what is actually meant is that it costs the government - when in fact people with more of their own money tend to invest it or spend it, benefiting them and the people who gain the investment or sell them goods and services. The classical Marxist bogey of tax avoidance is the stereotype of some rich businessman sitting in a suit with a cigar laughing as he appears to do nothing whilst gaining more and more money. He's probably a banker, or someone who earned lots of money in ways that are "not honourable" to socialists (remember earning a six-figure sum as a politician or unionist is ok though). Usain Bolt doesn't fit that stereotype. He's loved by millions of fans. Nobody dare utter a criticism of him or the substantial earnings he gets from promotional deals. See it is ok to make money running fast and being attached to ad campaigns, but not to run an advertising company, or manage his investments, or own a hotel he stays at. Yet the political silence of this issue is palpable. Clearly the tax laws as they stand not only deter the UK from hosting athletics events (when they get hosted they do so with exemptions), but stop people from living and working in the UK as athletes. It is completely self defeating, it means there is less money in the economy and indeed if Bolt lived in the UK and paid no income tax, the UK would still be better off. This is a man who wouldn't be claiming public housing or welfare benefits, he would be almost certainly never using the NHS (when he can afford private healthcare) and would be paying plenty of VAT on his consumption (and fuel tax and air passenger duty on travelling) to cover a decent contribution to defence, law and order and other state spending. However, to argue that, Red Ed Miliband, his new sycophants in the Liberal Democrats and the sellout Conservatives would have to admit that, actually, most wealthy people don't cost the state very much at all. They pay their own way, pay for their own housing, education, health care, pensions and by and large only have a role for the state in defence, law and order and the provision of roads. Because, you see, the underlying reason for the clamour for tax is to take from the rich to give to everyone else. Now if you were Usain Bolt, earning for a relatively short period of your life, enormous sums of money for promotional campaigns, why would you decide that middle class and low income British deserve to get half of all your earnings, when you can stick to Jamaica?