View from the office - Tuesday morning

View from the office
Originally uploaded by David Farrer

View from the office
Originally uploaded by David Farrer

View from the office - Monday morning

View from the office
Originally uploaded by David Farrer

View from the office
Originally uploaded by David Farrer

Students - off work today

It's always good fun to confront the bourgeois left. Explaining to the chap selling socialist literature on Princes Street that planned government spending was still going up caused a bit of a frisson. When I made the same point to one of the "anti-cuts" demonstrators a few weeks ago, I was accused of "being a journalist from the Daily Telegraph"! Where's my paycheque?

At the recent Political Innovation event, one session found a young chap - I think he was a LibDem - asking about the voting age. Should it, perhaps, be 16? Some agreed, and other ages were suggested. When I proposed that voting rights should only be given to net taxpayers no matter what their age, the room went a bit quiet. But no one actually disagreed. It's always good to sow the seeds of doubt in the heads of young statists. You never know where the next Rothbard will come from.

On to today. I had to visit the local post office on Libertarian Alliance business and then went along to the Haymarket Bar. The landlord was a bit concerned about the student demonstration that was shortly to arrive outside. He had received no prior notification from the authorities. I was standing beside some members of the traditional working class who were speculating about going into the plywood business... But our host wasn't worried about having his windows done in - this is Edinburgh after all. No, as he observed to me: "Students like a drink and I've only got three staff on this afternoon."

Here is a view of the Haymarket junction taken from inside the bar. The poppies are on a temporary site as the war memorial has been removed for the tram works. These "works" are taking longer than the Great War itself. The police are outside the Liberal Democrats' Scottish headquarters.

P1020733 - 2010-11-24 at 15-02-03
Originally uploaded by David Farrer

Here is the view after the arrival of the demonstrators. Fortunately perhaps, no one seemed to have noticed the Starbucks a few feet away. Actually, I suspect that quite a few of the "mob" were Starbucks customers...

At this point I had a lengthy debate with an "anarchist". I asked him why an anarchist wanted more government spending. Didn't he want to smash the state? Not yet apparently. Not while he was still at university. I made plenty of libertarian points to this chap and it was clear that his young followers were somewhat discomfited by seeing the boss anarchist being confronted by an older gent in a cloth cap. Especially by one who kept pointing out that he was a taxpayer.

P1020737 - 2010-11-24 at 15-34-53
Originally uploaded by David Farrer

This chap was having his photo taken by his friends. Too late, he saw that he was also being photographed by a member of the taxpaying bourgeoisie. He quickly removed his balaclava and said to me: "Only a bit of a joke." He looked the sort to be a Writer to Queen Kate's Signet in twenty years time. He could call his firm Evil Lawyers LLP. That has a certain ring to it, does it not?

P1020742 - 2010-11-24 at 15-36-32
Originally uploaded by David Farrer

Here are the forces of law and order outside the Clegg building, which had been closed for the day.

P1020743 - 2010-11-24 at 15-37-58
Originally uploaded by David Farrer

I did have some sympathy for this protestor. Why should banks be bailed out if not students? Readers of this blog know the answer.

P1020744 - 2010-11-24 at 15-46-05
Originally uploaded by David Farrer

Britain and Ireland

Joan McAlpine has a piece up today about the British reaction to the Irish crisis.

Here is my comment on Joan's site:

This is a scary interview that deals with the UK situation:

link here

Our friends down south would see an immediate problem with the GERS Scottish surplus, which allows for "a share of the UK government's banking bailout funding". Read any English site and they'll say than ALL of the RBS/HBoS bailout funding should be attributable to Scotland because their registered offices are here.

There are several points we can make in response. Would an independent England have permitted a foreign bank (RBS) to take over NatWest and so grow so big? Even if RBS had grown so large in an independent Scotland, would the City not have given more support to Barclays (and not to the foreign RBS) in the ABN/Amro take-over battle thus saving RBS? And the big one: What banking regulations would Scotland have had if independent back in 2008?

It's no good for Nats to just say that we'd have done things differently. Given the dominant Keynesian belief system I'd guess that we may well have gone down the Irish road. What a future Scottish chancellor needs to say is that there will be NO bailouts of banks - or of any other private business for that matter. Government guarantees are what have led to this crisis. Until the mal-investments that were caused by the state-supported credit boom are liquidated, there will be no recovery.

[UPDATE: here is an excellent article about just what's been done by the Irish political class. A warning to us all]

I am not a "right libertarian"

It was good to place some faces to names at Saturday's Political Innovation event that was organised by Slugger O'Toole

One of those I met was Shuggy and he appeared on the panel during the plenary session after lunch. Shuggy told us that the blogosphere had enabled him to become more acquainted with less well-known political ideas including "right libertarianism". Shuggy and I once co-operated over a matter of mutual interest back in our early blogging days. It seems likely that he sees me as one of those "right libertarians".

Except that I'm not.

Consider this well-known diagram:

It seems straightforward at first. The vertical "social scale" line in the centre runs from "authoritarian" at the top to "libertarian" at the bottom. On this axis we can plot our attitudes towards civil liberties. The horizontal scale runs from "left" to "right" and from the terminology that seems to mean something like from collectivism to individualism or perhaps from socialism to capitalism. Folk like me who support both capitalism and civil liberties are therefore described as "right libertarians".

Now consider this older diagram: Here, we have a vertical "personal freedom" axis and a horizontal "economic freedom" one. The bad guys - communists and fascists - are in the bottom left corner and they appear in the top left corner on the first diagram. Traditional right-wingers (Tories perhaps?) who are somewhat in favour of capitalism but not too sound on civil liberties appear at the bottom right. Traditional left-wingers (Labour people perhaps?) who are somewhat in favour of civil liberties but not too sound on capitalism appear at the top left. On the first diagram the Tories would be on the top right and Labour on the bottom left although the relentless attack on civil liberties by Blair and Brown arguably pushes them into the top left box...

In this second diagram libertarians are placed at the top right corresponding to the bottom right box in the first diagram.

But this only seems straightforward.

According to the first diagram, I am a "right libertarian". According to the second diagram I am simply a "libertarian". And the second diagram is correct.

The first diagram confusingly only uses the authoritarianism/libertarianism terminology along the social scale axis and uses quite different terminology (left/right) when dealing with the economic scale.

This is a fundamental error and one that gives rise to endless confusion.

The point is that liberty is indivisible. The case for economic liberty is exactly the same as the case for personal liberty. The economic spectrum goes from authoritarianism to libertarianism just as does the civil liberties spectrum. The government that takes away your economic freedom is as much your enemy as one that takes away your personal freedom.

So why is the view presented in the first diagram so prevalent?

The answer is that knowledge of economics is in such an abysmal state. Almost all British politicians, academics and journalists are in thrall to some form of Marxist or Keynesian nonsense that totally misunderstands the practical and moral case for economic liberty. In short, people need to spend a year or two reading their Mises, their Hayek and their Rothbard before they start writing about anything that's going on in the world. (*)

Long live libertarianism!

[(*) Shuggy excepted of course!]

Avoid the Testicular Squeezing Authority - Wear a kilt!

See here.

China Syndrome

I once met Sir John Cowperthwaite at an event in St Andrews. He was probably the greatest Scot of the last century.

What did Sir John do? He created Hong Kong and that led the the rise of capitalism in China.

Can we here in Scotland prosper, whether independent or not?

Yes, of course we can. If, that is, we bring back the likes of Sir John.

Even British television is beginning to get the message.

Quantitative Easing - a modern con

I read this article by Peter Jones in yesterday's Scotsman. Although it's behind the paywall, I have the paper version.

Here's a key quote:

On certain mornings, the government's Debt Management Office will sell hundreds of millions of government bonds. The buyers include banks. That same day, the Bank of England will buy bonds from, yes, you've guessed it, the banks, giving them cash with which the Bank and the government hopes they will use to lend and stimulate the economy.

Mr Jones then says:

And since bank lending is not rising, the idea that banks are sitting on heaps of cash is plausible.

When asked, the Royal Bank told Mr Jones that they didn't have any of this cash and that it was "out there in the economy".

When I read this article something didn't seem to add up. Surely one reason for the banks not having any of the cash from selling the bonds in the afternoon could be because they had laid out the same cash to buy the bonds in the morning. But of course it's certainly possible for the Bank of England to buy in bonds already in circulation and held by investors other than banks.

I began to think through the series of double entries required in this game. Again, something didn't make sense until one realises that, unlike all of the other participants, the Bank of England purchases second-hand bonds by writing a cheque drawn on itself, not on a commercial bank.

Quantitive Easing does involve an increase in the money supply. The original purchaser of the bond transfers buying power from his own earnings to the Debt Management Office and on to the government to be spent on warfare, welfare or whatever. The final buyer of these bonds is the Bank of England, like the DMO another part of UK PLC. Instead of transferring real earned wealth back into the real economy, the government simply creates more "cash" out of thin air. The purchasing power of all existing savings is thereby reduced. The holders of those savings are the ones who are really paying for the extra government expenditure. It's all a con.

Jones concludes his article by saying:

Something must be done. But what, please, what?

We know the answer.

Postcode lotteries

I've been reading Postcode Lotteries by G. R. Steele, an article in the current issue of Economic Affairs.

The first two sentences:

An internet search delivers over a quarter-million hits for "postcode lottery". Almost all are British.

Why British I ask myself.

Steele points out that postcode lotteries are generally to be found in the public sector, which is ineffective in distributing goods and services. Competition tends to cause the private sector to distribute more evenly although that process is constantly challenged by technological and entrepreneurial advances - to our advantage.

I believe that the reason why the concept of the postcode lottery is essentially British is a direct result of the extraordinary degree of centralisation of both the British state and the British media. When the likes of the Daily Mail reveal that Mrs Smith in Sunderland doesn't have access to the same drug as Mr Brown in Bolton, the readership and the political class respond. It's a "National" Health Service so we must all get the same deal, whether it's good or bad.

This is quite in addition to the fact that we have a separate NHS here in Scotland. The implications of differing "national" NHS systems seems to cause consternation down south. When they realise that there are different systems of course - which is not very often.

In federal countries like Germany or the US one generally reads a paper published in the local big city, not in Berlin or Washington. Similarly, government services are administered locally to a degree that would be unthinkable in Britain. It follows then that a German or an American would expect public services to vary across the country, and not be surprised by that. Furthermore, the individual German and American states are all of equal status whatever their size. How very different from the UK.

Here we have a "national" broadcaster, funded by coercion, that's quite unable to grasp the nature of the British state as we saw in the Dimblegate affair. Similarly the "national" newspapers are really English ones with just the occasional confused foray into Scotland.

This "national" media is staffed with assorted statists who are as unaware of economics as they are of the make-up of the British state. Just as "all must have prizes", so "all must have the same healthcare" (sic, or is that sick?), and "all must enjoy the same national wage scales" no matter how much they pauperise the "provinces". (How I hate that word.)

To end Britain's championship of the postcode lottery concept we need to do one of two things. Preferably we should reduce the role of government to such an extent that state-created postcode lotteries disappear naturally. Failing that, we need to decentralise government along the German or American model. Neither's going to happen of course. Scottish independence will probably be one of the outcomes. Hopefully we'll not be stupid enough to constantly compare our (hopefully small) government expenditures with those of England. Or "Britain" as Mr Dimbleby will no doubt call it.

Devolved weather!

Reply to William Gruff

As promised, here are my replies (in italics) to William Gruff's questions over on Nourishing Obscurity.

The categories quoted are interesting: Do those exports from Scotland include goods and services sold in or to England?

As stated, £20.7 billion is exported outside the UK and £63 billion exported to everywhere outside Scotland, including England.

‘Refined petroleum products, for instance, what does that mean? Does it include things produced at premises in the ‘U’K region of Scotland by multinational companies using petroleum that may have come from the ‘U’K sector of the North Sea, and may have come from anywhere on the planet?

I 'd guess that most of it comes from locally drilled oil. Why does this matter?

Presumably those Scots, and others who live in Scotland, were paid for the work they did. In what way are they Scotch earnings?

James asked about exports, not earnings. The figures refer to exports.

Does the reference to ‘accommodation’ include hotels?

Almost certainly.

The last figures I looked at showed that ninety per cent of tourists to Scotland went there from England. That’s not to say that all tourists from England were English but a good proportion of them must have been and it’s not unreasonable to observe that money paid from the ‘U’K region of Scotland to the British government that came originally from English pockets is in no way a ‘subsidy’ to the ‘U’K.

Who said it was? It is normal to count tourism income as an export. My weekend visit to London would count as an English export. So what?

Did the sums that identified the alleged Scotch subsidy to the rest of the ‘U’K include the eye watering sums of money a Scotch dominated Labour government stole from the English tax payer to bail out the incompetent Scotch banking system, the same Scotch banking system that we are told was once such an example to the world of how banks should be run?

The Scottish banking system that was once upheld as an example to the world was one without guarantees of government bailouts. Such guarantees have wreaked havoc in numerous countries. I oppose all bailouts as did Edinburgh-raised Professor John Kay (now of Oxford) at a recent lecture to the Edinburgh financial community. Incidentally, after the HBOS merger the first communication that I received was to tell me that my Bank of Scotland ISA was now with the Halifax and that further communications should go to Leeds, not Edinburgh. It's true that the brass plate remains here. By the way, these bailouts were paid for by all UK taxpayers, not just those in England. Far more RBS shareholders live in England than in Scotland.

Does Professor Hughes Hallet really believe that the money that should have been paid to ‘Scotland’ (Does he mean the Scotch ‘government’?) was diverted ‘south’ (by those perfidious English presumably), suggesting that some unfair and discriminatory levy has been made on Scotch goods and services, , or simple chicanery perpetrated, by the ‘English’ government, which is how most of them regard the Scotch dominated and Scotch favouring British government. The bills were presumably paid and the relevant taxes and other levies paid to the British government. What should have gone to Scotland that didn’t?

Why is it so odd to describe it as the "Scottish Government"? That's what it is. Hughes Hallett is discussing whether taxation raised in Scotland is more or less than spent here. I presume that you know that we Scots pay taxes on the same basis as elsewhere in the UK. That money goes to the Treasury. Some is sent back as a lump sum to the Scottish Government to be allocated locally and some is spent on non-devolved matters like defence and foreign policy. The grey area is our share of the non-devolved expenditure. Hughes Hallett says that £2.8 billion of Scottish taxation ends up with the Ministry of Defence but only £2 billion is spent here on jobs and procurement. Less after the defence cuts I'd imagine. Only one third of the BBC licence fee raised in Scotland is spent here. And don't even think about the Olympics...

The last time I looked at the figures there were just one hundred and sixty thousand or so net tax payers in Scotland, out of a population of five million, with a ‘U’K population of sixty million. Are we in England, all fifty one million of us, seriously expected to believe that the money contributed by those one hundred and sixty thousand exceeds our own contribution?

As I wrote on Nourishing Obscurity:

"There were 580,500 working in the public sector in the first quarter of 2007 – down 4,900 or 0.8% – compared to the same period last year.… It compares with almost two million workers who were employed in the private sector in Scotland in the first quarter of 2007."

Where does this 160,000 figure come from?

The Jocks have always expected the English to pay the price of ‘union’, and never to question why, and have never expected to make any contribution themselves, and they seem never to have regarded themselves as British except when access to English money and English opportunities makes it convenient for them to do so.

Funnily enough I sent a cheque to the Inland Revenue only yesterday...

I’d love to see the Jocks paying for themselves but I’m becoming resigned to the possibility that the prospect is unlikely in my lifetime. That notwithstanding, whether the Scotch can stand on their ‘ane twa’ (Old English words and not Scotch) feet is irrelevant to the people of England. All that matters to us is that we are rid of the burden they are, and the pernicious control they have over our affairs.

We shall see what happens. I expect that independence would be a bigger shock to the English psyche than you might imagine.

As for figures: Where can we find figures comparing what is spent in Scotland by the British government, and on its behalf in Scotland by the laughably self-styled Scotch ‘government’, with what is raised there in taxes (whether from the earnings of exporters to England of what has previously been imported from England or the levies on fags and booze consumed by the subsidy junkies)?

As you can see here the economies are similar.

As for the diaspora: England would be much better off if the eight hundred thousand to one million Scots estimated to live amongst us, many of them benefits dependents, were to take themselves home and the half million or so English people who live there were to return. Here’s to independence for England.

I see that 4.9% of the Scottish population are on jobseeker's allowance. I suppose that you could argue that vast numbers of Scots in England are making claims. I never met any in decades of living in London. Most Scots I knew down south seemed to be running the English economy.