Saturday, 31 December 2011

The Magic Washing Machine

An excellent illustration of how we all take science and technology for granted and how the free market has brought the cost of such products down to practically nothing as a percentage of income here in the West.

Friday, 23 December 2011

The Crunch

Crisis on the continent persists. Bund's not sold. Greece yet again needs more time and money. The Iberian peninsula looks decidedly shaky. Portugal's borrowing costs rise and the public go on strike, just like many other nations throughout Europe. A change of leaders in both Spain and Italy won't solve the problems, just like it hasn't solved anything in the UK. Spain moved to the right, with  Rajoy looking similar in make-up to David Cameron. Sound-bites but little substance. 

The ECB have "loaned" out another ton of money to keep the system afloat for the short term. The French Politicians had a spat with the British Politicians to take peoples mind away from the declining living standards all Western nations are experiencing.  

General strikes not seen since the 1970's flared up in the UK. People are getting angry and after the Chancellor declared that recovery may take longer than initially expected, theres no sign of that feeling abating. There will still be a budget deficit at the end of parliament unlike when the Government claimed it would be gone. Cuts entails further budget shortfalls but politicians and members of the public forget such realities.

The Bank of England continues to be in the Government debt buying game. George Osborne points to the lowest bond rates in history, forgetting that we never bought our own bonds during any previous period, excusing radical policies during war time. It reminds me of what I wrote when all this QE started

The statement that they made sent a signal out to the market, "If there are no genuine buyers of government debt, then we will buy it". Hence the first market bond sale after this statement was made saw huge amounts of buyers with the auction being oversubscribed. The market is now playing the governments game, a game of the last one to hold the debt will get burned, and the market is thinking that will be the Government. In the future all Bonds will be bought by the Government, with all other sellers rushing to sell. It's a classic Ponzi scheme, where the whole pyramid exists on the premise of selling to the bigger fool.
Over the short run they can bring the price down, but over the long run the price will go higher than expected. The countries in the Euro don't have such a mechanism as they are on a Pseudo Gold Standard. Problem being the Gold Standard is nothing more than a fiat standard and like any paper standard is worthless in the long run. The Euro is no different.

The autumnal budget didn't contain much festive cheer. Pension ages raised. Public Sector pay capped to 1%, despite inflation running at 5%. Hundreds of thousands of job losses. The Government finally admitted they won't be able to control the budget by the end of parliament. Eighteen months into their term and they are still blaming the opposition, but there's only so long that lasts and peoples patience is running thin. Four years into the crisis and pay packets are  not keeping pace with living costs, the golden goose which was housing has flat lined and now when you retire your pension is continually been reduced. 

Its classic basket case economics. Stagflation. Socialism. Running faster to stand still. The only predictable thing is the Gold price. Solid as a rock during volatile times and it continues to be the investors ultimate safe haven making continual gains. Its still only the unconventional investors choice with the recent dip being part of the healthy bull run, another buying point for the few. People are waiting for their gilts, stocks or real estate to make a turn. Others have no idea of what to invest in as to many there appears no light at the end of the tunnel.

The FTSE like many other stock markets gyrates wildly on a daily basis. Stuck in a trading range, the fluctuations are from market instability and State interference. The bear market in bonds has only just begun. With rates in Italy hitting 7% people have pondered whether to buy, but they would be catching a falling knife. The rates will no doubt go back down like many European bonds in the short term as the ECB will in all probability ease its monetary policy (as they have already done with the loan process) with its new president, but don't be fooled, its a mugs asset class, best left for the pros. 

Looking at other bonds, the UK, Japan and the US look like a great sell currently. Private banks don't care. They always know the respective central banks will be the buyers of last resort when no one else is in the market for the  worthless paper promises. 

Chinas Central banks loosens bank reserve requirements while the Bank of England's Governor requests UK banks to check their capital. Recession defined by the states manipulated statistics looms once more, although most people feel like we are still stuck in a permanent one as living standards for the majority decline. Credit Crunch part two? We never solved the initial one, and the storm is going to get worse.

Saturday, 5 November 2011

Cuba Legalises Sale of Private Property

Many Cubans have always lived under the Communist system, one of the few countries in the world to still operate under the defunct economic system. Recently I discussed how the country is slowly opening up, giving its people individual liberty. Now private property has become legalised which can only be good thing for the Cuban people. For years property, along with many other goods, have become rationed. Housing for everyone, but the catch is you have to share with 3 other families, just like under Joe Stalins Russian utopia days. 

During my trip to the country one of the people we spoke with discussed how he still lived with his parents in law as they couldn't move out due to state oppression. The bitterness was clear, in the West we are lucky in comparison. For the past decade property rampers have said we have a shortage of property, of course its all nonsense. I moved out of my parents place since I was 18 and never once have I had an issue getting a place to stay. There's lots of properties to move into and anyone can get their own place. Prices rose in line with the expansion of the money supply, not due to so called "Shortages". Go on Rightmove, you get pages of properties available. 

When you buy a place its not like you have to go on a waiting list. Properties are stuck on the market for months, even years, where's the shortage there. Shortages are where something is not available at any price. The shelves are bare. The Cuban didn't have the option of getting his own place. Our housing situation is similar to saying there's a shortage of Ferraris because everyone hasn't got one. Of course there is no shortage, it's either because people can't afford one or choose not to buy one, just like our houses. The current price of houses? Well blame Government for that one. Printing money, as the BoE are doing despite inflation running at two times the targeted level, won't help affordability either.

The comments under the video amuse me. Westerns telling the Cubans how bad they will have it as they copy our systems. Yet I never see these Westerners move to these Communist utopia's. They enjoy the free market benefits, buy what you want, live how you wish and have the freedom to express themselves. Hypocrisy, but hey that's the "do-gooders" mentality. Its so simple to fix societies ills that all we need to do is just share everything out and allow central planning to work its magic. 

So long as the Cuban old guard are present they will always claim to be running a Communist regime. In all reality they look to the free market, just like all Governments, to fix the problems that they create. 

Friday, 30 September 2011

Fast Buck Economics

"We must challenge irresponsible, predatory practices wherever we find them"
Ed Miliband, Labour party conference

Politicians have always been opportunists. New labour was in power for over a decade and when times were good they were best of friends with business. Now stagflation has hit due to successive Government policies and its time to blame the free market, predatory business methods, the so called 'fast buck society'. The war is now on between the private sector versus the so called public sector. Yet public and private sectors are widely misunderstood by the majority of the population. Contrary to popular opinion, public sector entities are in fact not run by the people and are controlled by the few. The private sector are the organisations in the hands of society.

When the details are examined it is clear to see that companies run on the principle of individual demands. If we first examine big multinational companies, the sort of companies conspiracy theories label as 'corpocracies', so big they dictate the way we live. In reality you and I will probably own a part of the company. Companies start small. Once they get bigger with a more mature business model they go public, offering to sell a part of the business to raise capital. Many multinationals are in fact owned by the people. Part of your pension fund. Your saving funds. Your employment contract or bonus scheme. We all own bits of these companies. They are generally owned by the people. They also exist to serve our needs, if not they go bust. All multinationals start like this, with very little assets or capital but grew by doing something right, by selling products people wanted. 

These companies are run by these very shareholders who are usually represented by a board. Their aim is to grow the business, to increase the share price and increase profits so as to maximise the yield on your shares. 'Its all about the money', yes that's how complex societies perform economic calculation. Money is meaningless. Its used as a medium for exchange in a complex society such as our own. So 'profit' or 'maximise returns' may be taught under a negative banner but in reality under an objective view it means 'satisfying consumer demand' and 'ensuring effective use of societies scare resources', in order to provide us all with a better standard of living.

The great thing about big companies is they start small. Big companies always fear the little guy. Their business models are always under constant threat from new ideas, the innovation of small startups, the new ideas they bring. They break old conventions, create new markets by removing the old established ones. This is the true public sector. Anyone regardless of skin colour, background or origin can meet the needs of society. 

Contrast this with the public sector run by monopolistic entities. They have no pressure to use societies resources effectively, in fact usually the opposite happens as Governments believe they should protect jobs, those old industries that other people in the private sector found we could automate. They try to meet consumer demand based on centralised planning objectives, not on consumer demand. They take resources from society at will. Pay your taxes or go to jail. That tax money, as has always been proven, could be far better utilised by the private sector. With the supply and demand dynamics driven by price signals of the free market, resources could be far more effectively utilised. Economics isn't rocket science. Prices, supply and demand - that's all you need to know. Those mathematical models are broken by the fact that human innovation can't be modelled. There is no science into how new markets are created or how many people want flat screen TV's. Only prices can direct all this activity on a micro scale. The innovators always break these neat mathematical or central planned models. 

I still await for the public sector to offer me something that is truly free. Sure we get the 'free' schools, hospitals, libraries and so on, but its not free, lets not kid ourselves. Taxes are huge these days due to fiscal drag and inflation over the years. Meanwhile the free market does give freebies. Regardless of income we all have access to online encyclopedias with millions of articles, free videos on youtube, free email with 8Gb storage, free document software in the cloud. Between ten and fifteen years ago you had to pay for this. Now its all free to anyone inclined to use it. I can access millions of songs for a flat subscription fee and my whole music library follows me on any device. I used to dream of tools like this as child, now it has become reality for only $9 a month. That's the private sector, driving down costs and increasing the quality of its products. 

During the same period council tax bills have kept increasing. NHS treatments have been further rationed where people can't get urgent operations for months. General VAT has risen. No more free dental care, but we still have the taxes. State pensions are shrinking and are moved further back with many asked to put more money into the schemes. University used to involve no fees, now youngsters have to pay up to £9,000 a year. Costs go up, product quality goes down, the complete opposite of the private sector. 

So what about these predatory businesses? 'Excessive profit' is always my favourite misunderstood slogan. There is no such thing as excessive profit, if there is why doesn't everyone buy shares in the company and we can all be rich! The media mumbles when such companies make a loss six months later or when some even go bust. Even then this becomes a crime despite the fact that it releases societies scarce resources for others to use in a more effective manner. 

With the public sector and socialism there is no such thing as individual liberty. Why don't the socialist do good'ers set up the peoples oil company or the peoples software house? Its because they can't be bothered, its much easier for them to expropriate others hard earned wealth, the producers, for them to waste. Public sector entities will never be run in the interests of society, they will be run on short term whims of politicians seeking to gain short term affection from the public or by idealists who believe society has unlimited resources and promise everyone a Utopian world. Private companies are created by the people, they compete for societies scarce resources and meet all our demands. Fast Buck Economics? More like opportunistic Socialist Economics.

Saturday, 2 July 2011

We have no Solutions Yet

"Don't be fooled. Don't fall into the government's trap. Lenders and debtors will sit at the same table, having agreed to skin the people alive."
Aleka Papariga, Greek Communist Party Leader

The ECB and IMF have yet again decided to lend Greece more money in order to 'avoid' contagion which would lead to a tsunami of defaults across the financial world. The Greeks can't pay but who cares, I don't think any Western Government can. 

'Tough talking' British Prime Minister Cameron told Ed Milliband during this weeks PMQ's Punch and Judy show that if Labour were in power, then we would have a Greek crisis. Yet what is the current Governments approach? Inflation is rising. The BoE have now admitted they don't give a monkeys about Inflation. Despite it being more than double their official target they have stated that more QE (money printing) may be 'required'. The rate of inflation is now predicted to stay above target for the next two years. Of course, what they don't say is they plan for it to stay around for the whole decade.

David Cameron is a showman, all talk and no action, a modern day Ted Heath, as I previously said before he came to power. He has been in power for over a year, yet the Government continues to spend more money
"During April and May, the first two months of this fiscal year, the Government borrowed £27.4bn according to figures released last week, up from £25.9bn during the same months in 2010."
The majority of people are wrong that Cameron will solve our problems. A valuable lesson in life is that people are not able to see trends. They see the current time-frame, and extrapolate. When Cameron talks of 'austerity' and 'cuts' the public believes we will be back to boom times again soon. Cameron is no Thatcher. The Governments loose monetary policy may inflate tax receipts, but spending will rise as costs always catch up. Thatcher raised rates, lowered spending and let business go to the wall. Until this happens, then the current rhetoric is all fluff.

History is repeating itself again. Britain in the 1970's had some of the highest inflation in the developed world. Fast forward 40 years and its the same again, we are world leaders in the Western inflation league table. Germany meanwhile has less than half our inflation rate, and their earnings, unlike ours, are rising in real terms,
"Real earnings, that is, the price-adjusted gross monthly earnings of full-time employees, rose by an average 2.0% in the first quarter of 2011 on the same quarter of 2010. As also reported by the Federal Statistical Office (Destatis), nominal earnings increased by 4.1% in the first quarter of 2011 compared with the first quarter of 2010. Consumer prices were up 2.1% in the same period. The increase in real earnings was the second highest since the beginning of the time series in 2008, while that in nominal earnings was stronger than ever before in the given period."
Yet Germany imports every drop of oil, and the majority of food, just like the UK. UK wages in real terms continue to decline,
"Average pay rose at an annual rate of just 1.8% a year in April, according to the Office for National Statistics (ONS), while the consumer prices index was running at 4.5%."
Inflation is a monetary phenomenon. Keynesian's will point to the symptoms of Inflation and tell the public that these are the causes, for example increases in workers wages. Government friendly economists state that if wages do not rise, then inflation should be subdued. It doesn't take an economist to work out this is just plain illogical thinking. The above clearly disproves the theory. German wages are rising twice as fast, but the inflation rate is half as much. By any scientific measure this Keynesian law wouldn't even hold at primary level education. 

Now is a time to reign in loose monetary policy, but not for the UK, its time to print more. If history is a guide the UK will have negative wage growth and high inflation for a long time, just like in the seventies. Worse still, we will accept it. Its a culture thing. Similar to the Greeks, as the quote at the top of this article reads, believing their problems are inflicted by others, when in reality it is all their own reckless doing. They wasted money for years.

The rise of union strikes have also become more prominent. So rather than lacing up our boots to go work, like the Germans, we decide not to turn up to work, compounding inflationary pressures, eroding our global market competitiveness and lowering real term wage growth. Marvelous! I believe people are free to do as they please. Strikes however are always a waste of time and do not raise peoples living standards. It seems to me that their living standards are already quite cushy compared with many,

"The calculations show that a mid-ranking teacher on £32,000 a year will receive a final salary pension that is the equivalent of having built up a £500,000 pension pot. This is 20 times higher than the average private sector scheme, according to figures from the Office for National Statistics."
Rather than sulk, how about they spare a thought for future generations. State pensions will be non existent, despite the fact we pay National Insurance, the greatest ponzi scheme in existence and the new pension standard is to be put on a private contributory scheme (if you are lucky) that is no where near as previous non-defined schemes. 

Previous generations fought a war, underwent rationing during the 1940's and 1950's, left school at 15, worked for 40-50 years and got a paltry state pension, if they lived that long. Meanwhile many boomer's were the first generation that got a free University education, gained greatly from credit booms from substantial asset inflation in items such as houses and to top it off were given gold plated pensions. A generalisation, of course, my mum left school at 15, never went to University and won't have a gold plated pension, but for many of her generation this was not the case. However this is how economies should work, the next generation has it better.

Subsequent generations now have to pay for their University education. They will never see their state pension as it keeps riding on further into the sunset. Private pensions are minimal in comparison. This is not how the next generation should have to live. But hey, that's governments, they take money from the future to buy off present day votes.

Circumstances will improve, the free market will see to that. As the Government creates more problems the only way to solve them will be to expand the price system and allow free markets further reign over the economy. It always happens. The end of this current age of stagflation will result in further moves towards free markets. Just like the last stagflation. In the current climate I see no solutions yet, just more compounding of our current problems. The solutions will come, just not quite yet.

Friday, 20 May 2011

BoE 'Inflation, Thats Our Job'

"The MPC's chosen approach has been to accept a temporary period of above-target inflation, rather than seeking to hold inflation as close to the 2 per cent target as possible at all times."
Charlie Bean, Member of the BoE Committee

News it may be to many, but for readers here this is not news. This is how Governments work. Goalposts move. Targets change. Inflation is always present. People looking for action on Inflation from Central Banks are looking in the wrong direction. These people create inflation, not control it. With private and public debt out of control they are 'secretly' creating inflation.

When I have mentioned previously of interest rates going to double digits during the decade this may seem scary in the current time-frame. But by that time  debts will have been drastically erroded by the damaging effects of inflation over the years to come. Negative interest rates, where inflation out paces the savings rate is here to stay for some time. When interest rates hit 10%, expect inflation to be at least twice that rate.

The central banks primary function is not to fight inflation, or to sustain economic growth. Its job is to prop up the whole fragile fractional reserve banking system. Its aim is to ensure financial collapse does not occur. This means re-leveraging the system back up and and trying to inflate their troubles away. It takes a while for people to become sick of inflation. Britain had terrible inflation for over a decade during the seventies. No one did anything as the public didn't feel strongly enough over the issue for some time. Its going to be the same again. Inflation is here, 4.5%, double the targeted rate, but no one in the public wants to do anything about it. Most people are so heavily in debt, they want it.

The Bank of England's comments will worry no one. The words may even reassure people. The deflationists are wrong, as they have always been since the post war era. With Central Bankers running a monopoly on the printing press, how can we ever have deflation?

Friday, 29 April 2011

Socialist Technology

One of the great myths during the Cold War was the belief that Russia had more advanced technology than the West. With hindsight we saw that this was not the case. Russian people during the time didn't have personal computers, mobile phones they didn't even have fitted clothes or adequate food to eat.

During the rule of state planners Russia became a complete basket case. Russia is one of the most resource rich countries in the world, this factor helped Socialism go on for so long. People forget that Russia are the number one oil producer ahead of even Saudi Arabia. Before it became Communist, Russia was ruled under an absolutist monarchy, the Tsars. Despite this dated social system Russia exported grain and agricultural produce to Europe. During Communism this went into reverse where the country became so desperate that during the 1960's Khrushchev had to sell huge Gold holdings just to prevent starvation. 

Most of the technology Russia had was stolen from the West. They stole the H-Bomb, they stole Rocketry, they stole what little knowledge they had on computers. They had a network of spies in the West whose sole responsibility was to steal knowledge of the latest technology. However as we all know technology in a free market moves fast. The spies used to joke that as soon as they stole the technology, sent it back to Russia and allowed engineers to study the ideas, it was already out of date and obsolete. 

The space race was a classic example of how the free market was able to land people on the moon. Russia had no hope, they were no where near as they didn't have the expertise in microcomputers that were crucial to the moon landings. The Rocketry they had was stolen from WWII and crudely refined. They never really got past the point of firing a rocket into space. The Americans were able to fire a three man crew, perform lunar obits and land a small craft on the moon with the help of early computers. 

As the video states the Russian car industry again used free market ideas. They used Fiat as a model and basically made it worse. Russia was never short of great engineers and mathematicians - they were short on giving these people the freedom to express themselves. Startups are formed by individuals having ideas and having the capability to try them, away from the frustrations of big bureaucratic organisations. Some ideas fail, some succeed. There is a saying, 'The person who never makes a mistake, never tries anything new'. Free markets allow people to try different ideas and to innovate. We all know of failed concepts but without these failures we can not learn from them and make the new technology that helps human prosperity. Any innovator will tell you their greatest success were what they learnt from their failures. Prosperity always has and always will come from the bottom up, not a top down central planning approach. The do-ers need the freedom to use their talents in order to make all our lives better.

Keynes vs Hayek Part II

Central Planning pitted against free markets once more in rap format.

Saturday, 16 April 2011

Rationing is taking place in the UK

Do not underestimate the importance of prices in shaping our quality of life. Countries without them do not prosper. Prices are the key component which co-ordinate supply and demand in an unpredictable, ever changing world. Zero percent interest rates sound great to many, just like having a free bread policy or setting its price below the market level. As previously discussed, it can only lead to rationing which is occurring in the UK today with Mortgages. Its not just backward countries that can experience such a phenomenon.

Interest rates are prices. Unfortunately the government tries to set such prices, usually below the real market level. Well we may like to think that our society is above all that rationing nonsense but that's exactly what is happening in a developed Western country today. 

After the financial crash of 2008 the Government took out large stakes in many UK banks. It also propped up the financial system by slashing interest rates in an attempt to pump liquidity into the insolvent system. It did the job - the losses were stemmed and prices began recovering. The problem was bad assets were not liquidated. Bad loans that were made during the credit boom, again engineered by the Governments loose monetary policy by setting interest rates too low, are still present. These bad loans remain on the Banks books, and they know it. In order to cover against such bad loans (and ensure no more are made) banks they need to preserve capital in order to cover such shortfalls. Viewing housing as a dead duck, Banks demand borrowers to stump up larger deposits, deposits they know people can not afford. They are sitting on cheap money supplied by the Government at very low rates but are too aware of the poison within the system. 

A true free market would clear prices, drive savers interest rates up in order to meet the capital supply and demand imbalances while liquidating bad loans. Its similar to wheat shortages. Bread prices in such a situation would rise, forcing demand to tighten and directing economic resources to find new sources of wheat increasing the supply thus solving such market imbalances.

The free market can't do this with mortgages today. During the credit boom people were given 125% mortgages and interest only payment options. So long as the market went north, banks would have the required equity in a house if repossession was necessary. Now with prices falling Banks are driving up interest rates for people with less than a 25% deposit, the banks safety margin. If you wish to take out an interest only mortgage (which few banks offer) then they drive up rates to deter the buyer and cover the risk that less buffer would be created by the buyer. In these times you need at least a 10% deposit, even then the deals are few and sparse with rates on such products far above the Bank of England's base rate. The Bank of England's artificial interest rates keep the whole system in a zombie state, a la Japan. The commercial banks can access cheap money so existing borrowers with large capital can access it and savers have zero percent interest rates on their savings. There is no incentive to save, repair the capital shortage, as Central bank give out money for nothing. Why pay someone to save and accrue genuine capital when you can borrow from the Central bank for nothing (which incidentally is not real capital, it in fact erodes the value of genuine capital within society).

You can't escape the basic laws of supply and demand by artificially manipulating prices. 

As the market rations mortgages people believe we need further Government interference despite the fact that they caused the shortfall in the first instance. The Governments solution is to take taxpayers money and give it to first time buyers to meet the banks deposit demands. Of course this only makes matters worse. The Government merely diverts economic resources from more sustainable lines of production into the dead duck that is housing. It gives this to people who probably can't afford the house in the first place. It also is completely unfair as it becomes a lottery who wins this money. If further losses are incurred then it is the taxpayer that foots the bill thus creating a double negative.

The solution is to allow prices to do their job. Otherwise rationing is the option and that is the last thing we need.

Saturday, 12 March 2011

Intervention in the Middle East and the Maghreb?

"[The Palestinians] are beasts walking on two legs."
Israeli past Prime Minister Menachem Begin

"We Palestinians will take over everything, including all of Jerusalem....All the rich Jews who will get compensation will travel to America....We of the PLO will now concentrate all our efforts on splitting Israel psychologically into two camps. Within five years we will have six to seven million Arabs living in the West Bank and in Jerusalem....You understand that we plan to eliminate the State of Israel and establish a purely Palestinian State....I have no use for Jews; they are and remain Jews."
Yasser Arafat, 1996

With all the human suffering in Libya during the current period of unrest, calls are being made for intervention from the West. We always like to meddle in the desert. While people in Zimbabwe or North Korea have been subject to the same humanitarian injustices over longer periods of time the West never seem to intervene. The Islamic nations have for as long as many of us can remember, had troubles, but it wasn't always like this. It began with a war in Europe, nearly 100 years ago. 

The First World War erupted and split Europe in two. Britain decided to opt on the side of France, a country who it had been in war with for hundreds of years prior to the events of 1914. We had more in common with Germany, but our Government had created a vast empire, therefore France and Russia were seen as a better ally in order to protect the kingdom. Who knows how history would have turned out had we sided with our more natural allies the Germans. A quick war? No Russian Communist Revolution? No Adolf Hitler? No Joseph Stalin? Historically counterfactuals are always an interesting area of discussion but instead two balanced alliances slogged it out for 4 plus years. Various fronts were fought. One such front was in the middle east that the British created, the famous Lawrence of Arabia rallying the people of the middle east against the Ottoman empire.

At the same time with Britain desperate to recruit support, it promised Jewish volunteers land in the middle east for their efforts. They also made promises to the Arabs fighting against the Turks for the land in the same area.

After the war Arabs and Jews lived side by side in the early days during the British Mandate. During the post war years an explosion of Jewish immigrants flooded the area, so much so that the economy could not absorb the extra labour. Discrimination became common. Divisions became more visible. The British exacerbated the problem they had started. With the rise of Fascism in Europe, more Jewish people fled towards Israel. In the past America would have been able to absorb the numbers, but now with its strict immigration laws, it was no longer possible. America had closed its borders as it was no longer as scarcely populated as it once had been. 

With the Second World War Hitler spread anti-semitic propaganda in the region. The Jewish secret security forces, Haganah, fought alongside the British. After the war Britain was exhausted. Overstretched with its crumbling empire and the sensitivity of the genocide that took place during the war, America stood into the breach to act as peacemaker. For decades tensions have increased, never abating. All because the West intervened.

Nearby during the war a political party was being formed, the Ba'ath party. Saddam Hussein admired European leaders such as Hitler and Stalin and seeked to emulate their methods. Despite the party being ideologically opposed to Western influence, Saddam was seen as an ally to many Western leaders during the time. 

Another country in the region, Iran, had been a key oil exporter to Britain during the 1950's and 1960's with British oil companies operating in the region. The Shah at the time allowed the West to export oil out of his country to keep the peace. However he wasted billions from the oil money and attempted to implement secular politics. Iranian patience was running thin, revolution was on the cards. 1979, the Khomeini was installed, a religious revolution. 

Meanwhile Saddam was fearfull of Iran, a Shia majority nation that could ignite further revolutionary actions towards Iraq. Saddam being a Sunni decided to 'pre-empt' such an event and so began the Iran-Iraq war. Saddam got backing from the US and the Soviets along with other middle eastern countries. A long, brutal war ensued. Civilians were massacred. Our governments gave Saddam the weapons to perform such acts of terror, our dirty work and we called him our friend. 

Eight years on a stalemate was declared. Iraq was in poor nick. The commodity bull market since the war began back in 1980 had turned into a bear market. Oil prices were falling. Saddam owned huge sums of money. During these days Saddam asked if the debts could be written off from Saudi Arabia and Kuwait. No such luck. Being the risk taker he was, his next master plan was to invade Kuwait, hold it to ransom and write off the debt. However his friends, the Americans didn't like this one bit. With UN backing, a swift war, the Gulf, was fought. George Bush Snr decided against toppling Saddam fearing it would cost more lives or the coalition forces would break up. So the West decided to try topple Saddam with sanctions, the infamous oil for food program was implemented by Bush's successor Clinton. The Iraqi people suffered greatly with such policies, more so then if Bush had finished the job. We love to meddle but always get it wrong. Saddam meanwhile prospered. He was able to maintain control and persecute his people. A younger George W. Bush was critical of such policies that the Clinton administration had taken, setting the scene for the invasion when he became President.

With the 9/11 bombings it was the green light for Bush to invade Afghanistan. A Nation that was an ally of the West during the Soviet invasion, perversely our governments had trained many of the people who made the 9/11 bombings possible. With all the history our Governments also gave them a motive. The Mujahideen was once labelled by President Regan as 'Freedom Fighters', now they are seen as terrorists to people of the West. We trained them. We had betrayed them. Now we invaded their land. 

Why stop there with interfering? Iraq was next, the mass weapons of destruction was the next scare story told to the public. Saddam may have been a risk taker or stupid, but he would never pose a threat to the West. If he did have such weapons he would never use them, given the arsenal we posses. North Korea under Kim Jong il have Nuclear capabilities but we can ignore that nation. It's too near China. Theres no oil. It's far easier to meddle in our 20th Century laboratory, the middle east.

You don't make allies with such a checkered history. Are we surprised that there is so much Western resentment? If my country was invaded, if I'd lost a family member, if I'd witnessed the contradictory policies of this foreign country, if I'd had no job prospects, could you understand if I was a little mad?

With Libya again people in the UK are demanding intervention. The right want a coalition force to oust Gaddafi. The Left say no intervention, although again in their contradictory manner, they say we should help the rebels. I say we should do nothing. If the Libyan people want Socialism or another dictator or Democracy then we should let them choose and let them fight their own battles. 

Arab people in Islamic nations are not crazy suicide bombers portrayed by the media. They are people with feelings and thoughts. Just like us they want future generations to have a better life. Our leaders shock us with fear to induce support to take such actions. If we don't act now, then it will be a risk to national security. All it does is create the next 'martyrs' of suicide bombers. It creates further tensions between cultures and people. Despite the fact that we are all the same.

Once again we feel compulsion to interfere. The state can only create more problems. Let individuals work these things out. The only reason we have problems in the middle east is from past state intervention. In order to solve this we need to stop swallowing the lies that the Government can solve such a problems. They were the ones that caused it. History, as detailed above, can give answers as to why events happen. People are rational. Government actions make people act irrational, just like with the recent economic bust. Just like the next financial disaster. They tell us they are here to help solve such issues. All smoke and mirrors. They cause them and with it take further liberties away from us all. Anyone for Intervention in Libya? 

Sunday, 6 March 2011

Two to Tango

"I'm not going to condemn him (Gadhafi) ... I'd be a coward to condemn someone who has been my friend."
Hugo Chavez on recent events in Libya

Socialism has always held an emotive appeal for people. Rational thought is never used, instead phrases such as 'Progressive', 'its the right thing to do', 'justice' and 'equality' are spoke of in order to emotionally blackmail large segments of society. Throughout my life I have seeked rational answers be it through science or history. Socialism never made sense to me. History taught me this initially, then through economic theory and reasoning I was able to see the flaws in placing ultimate power to a centralised state. I would like to add that I am not rich and never have been. I went to state schools. I have predominately 'working class' relatives, with only my father, myself and my brother attending University. Yet I know Socialism impoverishes all members of society, from all types of backgrounds.  

Western nations who run true democracies have no place for it. It is dead. Any so called Socialist movements in Europe are just as free market orientated as the 'right wing parties'. To be honest I can barely tell the difference between Labour and the Conservatives here in Britain. They are both as free market orientated as one another, with each one having similar ideas of what should be done by the state. The only way Socialism, in its true form can exist is as a dictatorship. The left conveniently ignore all this. They use their emotive language ignoring lessons of history.

Generations of Western Socialists have supported terrible regimes across the globe. It may be hard to think now but Stalin's rule during the 1920's and 30's was supported by many left wing thinkers at the time. History showed it to be of great suffering to the Russian people, millions died and tortured, oppression from the state, no freedom for peoples rights. But back then Socialists were more than happy to support Stalin. From Mao, Castro, Mugabe and Chavez - all have endured popular support from Socialist leaders in the West. All have proved to be tyrants, degrading peoples living standards. Now we have revolution in the Middle East, with another iconic leader who was endorsed by many Socialists, Gaddafi, now in trouble.

Gaddafi was held up by the left as a role model. He opposed the West on many fronts (until recently) and was seen to give the ordinary person in Libya a better standard of living. Roll forward to now and subsequent generations of Socialists are condemning his actions against his people. They conveniently ignore that for decades he was an enemy of the West and that they supported his rule.  

On the contrary the left pervert current events in the way they have throughout the previous century. All of this is not a failure in central planning or Statism - no its a failure of Capitalism. The very system that such thinkers live under with far better living standards than the Socialist dictatorships they endorse. A failure of 'neo-liberal' policies. Neo-Liberal? What is that? Its a trendy word the left use to label other forms of Socialism, forms they disagree with. If they were appointed to dictate the people it would be different - they would do the 'right' thing. When others do it, its Neo-liberalism. To keep it simple all political parties, States, Governments they all amount to the same thing. Loss of individual freedoms and liberties. There is no debate. 

When all these revolutions occur, how do the people of these countries get their message out? The Internet. Wasn't that a platform that the free market adopted to be used by anyone? Wasn't Facebook, Twitter, Wikileaks and Youtube all creations from the evil capitalist system. The system that creates the tools that didn't exist 10 years ago to shake out the tyranny around the world and to oust various governments for what they are.

The left has collective amnesia of such facts, tweeting on their microblogs or uploading their videos to youtube - for free, with open access to all. Quick to blame and throw their toys out the pram, but never ones to offer solutions. I, like most people, want hard, rational solutions to problems. Free markets and individual liberty enables economic problems to be solved and provides answers. Socialism just creates chaos and further problems for everyone. It takes two to tango. Fortunately people aren't dancing with Socialism any more as seen by the decline of the left all around the West for the past few decades. In short bursts maybe. But over the long run, the 21st Century will mark greater freedoms for everyone. Gaddafi is the same as Chavez, Castro, Mugabe, Mao or Stalin, each to his own but all grab power and abuse it. Abolish this, and everyone across the globe can have access to true equality - freedom. Money is not freedom.  True wealth comes from the freedom a person is given.

Sunday, 20 February 2011

Dubner says Democracy doesn't work

Below is a link to an interview with Stephen Dubner. If you've not heard of him he is the co-author of the Freakonomics books which I highly recommend. Skip in to around 28 minutes for his interview.

He talks about the incentives we give politicians and concludes our current set up is wrong. Problem is, he doesn't arrive at the correct conclusions but his theory is essentially correct, democracy doesn't work. We need to abolish the state and allow individuals to make decisions for themselves. Individuals always act for societies long term interests. Politicians are only interested in the short term and kicking the can of problems along for the next person.

Friday, 7 January 2011

Robin Hood Theory

"The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom."

"Louis XIV was very frank and sincere when he said: I am the State. The modern etatist is modest. He says: I am the servant of the State; but, he implies, the State is God"

"A new type of superstition has got hold of peoples minds, the worship of the state. People demand the exercise of the methods of coercion and compulsion, of violence and threat. Woe to anybody who does not bend his knee to the fashionable idols!"
All quotes from Ludwig Von Mises

Social structures seem to come and go throughout history. Absolutist Monarchies, Religious sects, Communist central planners, Feudalism, human history is littered with a constant evolution of selecting what is seen at the time as the next logical progression for the organisation of society. Many of us currently live under a democratic system. Such a system gives us choice between various political parties who stand for certain principles that are supposed to represent the wishes of the public. The problem is that democracy never works. You can never please everyone all with a single unified action. Many people use Apple or Linux Operating Systems rather than the dominate Windows system. Yet under democracy we would all heed to the majority. The biggest irony being that the majority actually would choose the weakest one. Individual freedom allows people to try new things under their own will and thus improve societies well being.

Governments prey on peoples belief that they can offer something for nothing. Notions of "Free" health services, "Free" education are popular sound-bites used by politicians and to give the sayings credit they tell us the minority pay for such services. Ever think why the political system now targets middle income families? So long as people think they are not paying for such services they are sucked into the mirage that is state planning. Someone has to pay for all these projects and it isn't the rich. They can cope with inflation or the Government waste as they can afford to use the additional high quality private services. Its you and me, the majority that pay for the states wasteful use of societies resources.

Anarchism generally conjures up images of chaos, lawless society with no rule or order. The opposite is in fact true when seen through a free market Anarchism viewpoint or Anarcho-Capitalism. Sure we could all go round killing one another, but the majority of people wouldn't. We don't kill one another not because of the implications of going to jail but for a simple human factor, it wouldn't be right or make sense. The majority of people want to get on, increase their living standards and quality of life, ensuring the next generation has access to a lifestyle better than their own. That's peoples nature. 

People also when left to their own devices, do what they want. Why do people want to become Doctors? Because either they want to help people, notice that it is a specialised profession with job security and good pay or they just enjoy that field of work. When individuals have the freedom to do as they please, human needs are met. The only limit is our current knowledge base. As time passes knowledge from generation to generation is passed down, the next problem is solved but then 10 other new problems are created from its solution. A free market has infinite amounts of work for us all to do. 

In a classic example of how Government destroy wealth, think of jobs. Governments on a frequent basis state they want to 'protect' jobs. The free market however creates new opportunities. Under the state we would still be working underground mining coal or whatever our ancestors did as the state would 'protect' such jobs. Meanwhile the free market sent these jobs overseas, people across the world can make products we used to make for a fraction of the cost, thus increasing peoples wealth. How many people 10 years ago could afford a 40 inch Flatscreen TV? Now it doesn't even cost a months minimum wage here in the UK. Meanwhile despite the loss of jobs, new ones have been created. One day Chinese people won't have low paid jobs. We will have sophisticated machines to do the jobs they carry out today. The global pool of intellectual labour increases. Current developing nations workers now join the West to help solve the next 10 problems we have created, while our ever advancing capital structure does the jobs we don't want or need to do. This process happens spontaneously under the action of individuals and free markets. Governments want us to work as we did in the past, all to appeal popular aiding their short term election campaigns. Despite it being a detriment to societies progress.

We don't require a state to co ordinate our lives. Who runs the schools, hospitals, police or fire services? People do. But under the states stewardship there is no consumer demand in order to direct these resources. These monolithic entities are enforced on us all, through the use of taxation, regardless of utility to the individual or society as a whole. I would personally like to use private health insurance, however I feel it is a matter of principle that I don't and instead use the NHS as I already pay a wedge of money every month in which I have no idea what it goes towards. I may as well get my moneys worth despite private care being better.

If we rationally think of taxation we see the reality of its stupidity. Every month I have to hand over a certain part of my pay packet. I don't know where this money goes, or even if it goes to services I use. On most products and services I buy I also have to pay 20% to the government. Again I have no idea where this money goes. By law I have to pay this, similar as to the Kings taxes hundreds of years ago. Theres no mutual exchange, just expropriation. This is another of the states great illusions, a "progressive" society, a Robin Hood childhood make belief, take from the rich to give to the poor. All taxation is regressive. There is no such thing as a progressive taxation.

If it was that simple why don't we just hit all entrepreneurs with huge taxes - simple, poverty solved. Why don't we just create ever more rigid labour laws? Got a new business idea, not sure if there is consumer demand, risky venture? Well if you need to recruit someone the state will impose a minimum redundancy notice of a year and an annual salary payout. Not many Googles or Facebooks would have got started in such an environment. Taxes are always regressive because what if we had not taxed the wealthy entrepreneur that money. Wouldn't they have used it more effectively than the state? In new ventures to create further wealth? Heaven forbid that they would try and create charitable organisations such as what Bill Gates is doing, giving back to society run by the stewardship of someone who has proved himself to have a sharp brain at directing economic resources. The invention of electricity, the refinement of the motor car, the rapid advancement of electronics have all improved our lives and some people have got rich along the way. But the state wants us to just see this side. The reality and the side that they conveniently ignore is that with these innovations, products and services - we all got richer along the way! When was the last time the state made us all richer? I'm typing this article, for free, and I'm able to access a global audience. It's not provided by the government but a company set up by individuals. 

The quotes provided above from Ludwig Von Mises provide an excellent historical perspective of the current state system. It's not the final step that society will take. Just like we abolished Feudalism, or Absolute Monarchism or transitioned towards a secular state, we will one day abolish the state. Just as in the past people could not imagine a world without the absolute rule of a King, the majority of people today can not see a world without the state. Just because we do things a certain way does not make it right. For years the world practised slavery. We didn't allow free speech. We were dictated by a privileged few. We used to accept lower living conditions to be ruled by a tyrant in the vain belief that we would go to heaven in our after life. Now people are told the Robin Hood theory from the state and without our current socio-political system the majority of people's lives would be substantially worse. The opposite is true. The sooner people relinquish the oppression of the state, the better all our lives will be. Maybe not in my lifetime, but as a student of history this type of event would definitely be up there as one of the most historically important events for humanity. I just hope its within my lifetime so I can witness such a momentous event. 

"Whoever wishes peace among peoples must fight statism."
Ludwig Von Mises