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November 21st, 2011:

Western Governments are not evil or insane – but they are trapped in false ideology.

Mr David Cameron,Prime Minister of Great Britain and Northern Ireland, has some new policy suggestions.

For example, (I will deal with the other policy suggestions at the end of this post) some 400 million extra Pounds of government spending is to be used to try and get extra housing developments built.

At this point free market people (not just libertarians, but others also) will reply “has the man not read Bastiat, does he not know that such schemes have costs greater than their benefits?”

Sadly there is a direct and simply reply to that – of course Mr Cameron has not read Bastiat, Frederick Bastiat is not required reading for an Oxford degree in Philosophy, Politics and Economics (or required reading in any of the elite universties of the Western world), Keynesian economics (i.e. what Bastiat would have rightly described by such terms as “the fallacy of the broken window”) is required reading – and if one comes out against government “support” (either in terms of “monetary expansion”, i.e. creating new money and using it to prop up the banks and so on, or “fiscal expansion” – government backing of housing schemes and so on) in a time of economic slump, then one simply fails the degree (whether at Oxford or other elite universites) and people who fail their degrees do not tend to become Prime Ministers or Presidents.

Even if someone who has not been to a university, such as John Major, or has studied a natural science at one, such as Mrs Thatcher, becomes Prime Minister they are surrounded by civil servants and professional economists who, whether they call themselves “Keyneisans” or “monetarists” (the Chicago School that is, falsely, considered the opposite of the Keynesians) suggest the same policies in time of economic slump. It is very hard for such a person to see, and fight, their way past these people – and even Mrs Thatcher did so to a far lesser degree than most people think.

There is no real examination of what caused the credit money bust (the slump) – just vague talk about “animal spirits”, “confidence” (when a politician says that “confidence” is vital in an economy it is the doctrines he was taught at school and university talking – an economy as a “confidence”, i.e. a CON, game). And, of course, blaming things on “deregulation” (at a time when the financial industy in the United States and Britian was more regulated than at any time in history – but, again, reality does not matter. Only the ideology (really the fashion) of the elite matters.

And the policies suggested are always the same – support the banks (they must never be allowed to really go bankrupt – close their doors), create (from NOTHING) any amount of money to keep the “finance economy” going (the very policy that created the credit money bubble in the first place). And, on the “fiscal” side, support housing estates, road projects and …….

There will be disputes between political parties (with one party denouncing another for “savage cuts” – by which they mean INCREASING government spending by less than they would), but fundementally they are the same – because they have been taught the same ideology.

And it really is international….

After all the massive dispute in Europe (and internationally) is not over whether the banks are to be bailed out (“everyone” agrees on that), but over the method to be used. With the German government wanting a different method, for bailing out the banks, than the method other people want. And the British government is united with all other Western governments (Germany included) in flinging more money at the International Monetary Fund (I.M.F.) at a time when it is pretending to “cut” government spending and…. (on and on). Even the so called “war over the European Central Bank” is, partly, an illusion, for the “ECB” is ALREADY producing money (from NOTHING) and using this money to buy government bonds of Italy, Spain…….

Remember the Labour Party Prime Minister of Australia (the one who could speak several languages – and not a word of sense in any of them), he  flung money at Australian banks even though they were NOT in trouble. All the big boys had given “their” banks money so………

Why are Guernsey and Jersey introducing “deposit insurance” – do they not see the terrible effects this demented idea has had in so many other countries?

No the governments do NOT see that – because of the ideology they are trapped in (not because they are evil or insane).

The finance minister of Guernsey (supposedly one of the most conservative places on the planet) even stated that to cut government spending would “harm the economy” – showing that he is fully signed up (whether he knows it or not) to the fashionable, but utterly false, ideology that has taken a stranglehold on education in the Western world.

Why did Ireland bankrupt itself by standing behind the liabilities of the (supposedly private enterprise) Anglo Irish bank? Partly it was indeed German pressue – but the real reason is the basic ideology that all the people involved (of whatever political party) would have been saturated in all their lives. Major banks must never be allowed to close their doors with the creditors losing their money, the “finance economy” must be supported AT ALL COSTS (even bankrupting the entire country).

Not wickedness, not insanity – just following ideas that have been banged into their heads every day, their whole lives. If they had rejected these ideas they would have seemed like freaks – and they would not be working as university economists, or Prime Ministers, or top bankers or….

They would be working as security guards, or car park attendants – and such people do not tend to make major decisions of economic policy.

It was a similar story with the rise of the Welfare State – i.e. the rise of the doctrine that a primary role of government is the education, health care, old age and disability provision and income support of the majority of the population.

It started with education – as E.G. West (and others) pointed out long ago, the standard of education in England and Wales was not really inferior to countries with state education systems in the 19rh century. But that is not how politicians (and other “opinion formers”) understood the matter – blinded by false ideology they went, step by step down the interventionist road.

Take one small (but important) verbal example. The main rival to J.S. Mill in 19th century liberal philosophy circles was Sir William Hamilton (supposedly a man of the Scots “Common Sense” School – against the more Germanic influenced J.S. Mill). Yet long ago I happened to come upon how Hamilton defined the term “university” (alas I can not remember the source) – to Hamilton the word “university” meant an institution endowed by the STATE with…… collectivism (perhaps without him even knowing it) had entered his thinking (basically from Germanic sources) in his very definitions of words.

Of course when Sir William Hamilton was writing there were plenty of universities in the world (for example in the United States) that had not been created by governments (but had been created by churches and so on) and had nothing to do with governments. But this reality was not as strong as ideology – so the very defintion of the word (in Hamilton’s mind) automatically involved the state.

When Edwin Chadwick (very much part of the same tradition as J.S. Mill) went around pressing for government police, government provision of street lighting, water, gas (and on and on) he was not really interested in reality (it has been an open secret for many years that Chadwick’s famous reports were full of made up numbers and so on) it was a matter of basic ideology to Chadwick that governments (by definition) should do X, Y, Z, – as J.S. Mill says in his “Principles of Political Economy” (1848) “everyone agrees” that local govenments should…….

Of course it was not true that “everyone” agreed – but the intellectual elite agreed, and that is what Mill meant by “everyone”.

And in health and old age provision?

Why did Britian copy Germany – was the Prussian way (government schemes) really better than the British way (the mutual aid “Friendly Societies”)? Of course it was not – but the ideology that government must (by definition) provide the basic services of life to most people had a stranglehold by the early 20th century. British Conservative party leaders (such as Balfour) believed in “social reform” as much as Liberal party leaders did (their conflicts were really shadow boxing – all sound and fury, signfying nothing). And, in the United States, the “Progressive” movement had arrived – although held up by that pesky “Constitution” thing (which it took them a long time to destroy – I mean to “interpret”) such Republicans as “Teddy” Roosevelt were just as collectivist as Democrats such as Woodrow Wilson (indeed the mentor of both these politicians happened to be the same individual – Richard Ely).

Out in the country the ordinary Republicans (like rank and file Conservative party people in Britain) might have some doubts about collectivist ideas. But such small businessmen and other such were easy to attack as ignorant “Babbits” (to cite a leftist novel of the 1920s).

Nor is any of this confined to the English speaking world…..

Why did little Andorra adopt a social security system in the 1960s – no one could serious claim that old people were dying in the snow (or stuff like that). No, Andorra adopted the Welfare State – because EVERONE ELSE HAD ONE. Fashion (pushed by the intellectual elite) – nothing more.

Why did Switzerland adopt government unemployment “insurance” in the 1970s? At a time when THERE WAS NO UNEMPLOYMENT IN SWITZERLAND.

For the same reason that  Switzerland got rid of the last links between its currency and gold in the Consitution of 1999 (the document that reads like a P.C. editioral – “we celebrate our diversity…..”). Fashion – the ideology of an intellectual elite, stuff they were taught in their schools and universities.

One can see this ideology (that the government must obviously provide…….) in such things as the Economist magazine (a publication that gives an insight into the mind of elite undergraduates – for no matter how old the writers of the magazine get, they maintain the beliefs they were taught in their college days). Even countries like India (which had not adopted the Welfare State) must to copy the bankruptcy of the West (and the Indian government is copying the bankrupt modern princples of the West) because…. well because they must. Providing education, health care and income support for the majority of the population (as if the Roman Empire had decided to expand the policies applied to the city of Rome and a few other cities – to the entire population of the Roman World) is simply what “modern governments” do.

Just as one can also see the credit bubble finance ideology in the Economist magazine (and in almost all the schools and universities) also. All the policies I started this post with.

And it goes on, and by now it should not be a surprise.

Press banks to give 95% mortgages (just like the “affordable housing policy” in the United States) – of course!

Offer to take on the risk of defaulting mortgages (just like Fannie Mae and Freddie Mac) – also of course!

Desperatly try to KEEP UP house prices – ignoring the reality that if you really wanted the poor to be able to buy or rent housing, then a “house price collapse” is exactly what one would want.

No – let house prices (both for sale and for rent) be kept up to as high as possible! Let vast numbers of empty houses stand, whilst homeless people sleep in the streets and under them (as in Las Vegas).

Markets MUST NOT be allowed to clear, the price system MUST NOT be allowed to work.

Remember the frustration of Herbert “The Forgotten Progressive” Hoover when the American economy recovered from the credit money bubble bust of 1921 before he had managed to convince President Warren Harding to really let him (Herbert) indulge in his interventionist dreams.

In 1929 there would be no delay,  instant intervention (to prevent markets clearing) was the oder of the day – hence the Great Depression. President Herbert Hoover used every power he could find (or invent) to PREVENT prices and wages adjusting to the bust – i.e. to PREVENT markets clearing. And, yes, he went in for lots of government spending schemes as well (and higher taxes – especially on the rich). All policies that were continued (under new names – and with bigger budgets) by President Roosevelt – even though “FDR” had campaigned to CUT government spending and denounced Hoover as a “socialist” (remember the ordinary people were not collectivist – the elite were).

Herbert Hoover was not evil and he was not insane – and getting rid of him (and replacing him with President Roosevelt) did not help. What was wrong was PROGRESSIVE IDEOLOGY. The ideology of President Roosevelt as much as that of President Hoover.

And the ideology that, in Britain, looks at errors in American policy (95% mortgages, wild government “stimulus” spending to back housing projects and so on, government underwriting of loans Fannie Mae and Freddie Mac style, and underwriting it all, endless “monetary expansion” by the Central Bank) and COPIES the policies (all of them).

I repeat – it is not evil and it is not insanity. It is just international elite fashion (ideology).

And it is international – many of these ideas (going back to “collective salvation” and the-State-is-God) may have their origin in the German speaking world, but there is nothing really “German” about them now.

Indeed modern Germany itself may be slightly less controlled by these ideas than Britain and the United States are.

Although, I suspect, these ideas (the idea that the State is responsible for everything) will destroy all of the West – with no exceptions.

Captain Carrot!

I guess I have written loads of stuff here on a whole variety of subjects ranging from war and peace to aviation and buses. I have written on religion and politics, on culture both contemporary and esoteric. I have even dabbled in the dismal science of economics and yet something was always missing…

Well it was until Friday night when I made carrot and coriander soup and I saw this in the bag…


No blog can ever be complete without a post about an amusingly shaped vegetable. Certainly not when a clearly circumcised vegetable quite literally falls into my lap. Certainly not whilst I’m peeling it back [just stop - Ed].

PS. If anyone wants my recipe for “Carry and Cozzer” let me know. It’s bloody good. The “recipe” is somewhat Nanny Ogg because I have done too many hours in the physics lab with tediously exact measurements to treat cooking the same painstaking way.

PPS. At no point hitherto has the WordPress phrase “insert into post” caused such hilarity. Well for me anyway. I shall now get my coat.

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