The battle for freedom and opportunity
is never finally won.

Good intentions, of course.

Chris Huhne proposes to introduce a bill to repeal the legislation that has stripped away our rights. So far, so good:

There has always been a problem for civil libertarians. The sacrifices of freedoms made by successive governments often seem small, particularly when they are pushed through at times of panic about terrorism. Each time, the government argues that you only need to give up a modest amount of freedom or rights to win greater security. And what could be more free than life itself? Yet the cumulative effects of this salami-slicing have now become deeply corrosive to the free spirit of a civil society. Like some sci-fi horror movie, we are slowly becoming the authoritarian threat that we are fighting.

via Chris Huhne: Our new freedom bill calls on the government to repeal the legislation that has stripped away our rights | Comment is free | guardian.co.uk

And, like all of us with good intentions, he rails against human suffering in the form of grotesque inequality:

I want the party to be true to its beliefs, as expressed in our constitution, to “balance the fundamental values of liberty, equality and community”. These three stand or fall together; inequality shackles freedom and undermines community. It was this recognition, that however much one removed political and legal constraints to freedom, the social and economic barriers of poverty, ignorance, unemployment and ill-health remained, that underpinned the new Liberalism of the early twentieth century. This was when British Liberals became a social liberal party, accepting that government intervention – in the shape of pensions, national insurance and progressive taxation, laying the foundations of the welfare state – was justified to enlarge liberty.

via Liberty, but equality too | Comment is free | guardian.co.uk
Read more

Yesterday, I had lunch with two of the UK’s leading Austrian-school economists, Toby Baxendale and Anthony J. Evans, the authors of the IEA article “Testing Times for Central Banks — Is there room for Austrian ideas at the top table?”

The article is a fascinating read, explaining how Austrian economic ideas can offer a fresh perspective on the system of money which sometimes complements, sometimes supplements, the prevailing Keynesian and Chicago-school ideas.

Relatively simple reforms could offer stability and sustainable prosperity for everyone: more to follow.

It’s not exactly clear how the Federal Reserve’s policy of pushing interest rates well below where the free market would have set them, thereby inflating the biggest asset bubble in the history of the world, could be the fault of the free market, or attributable to “laissez faire.” But since hardly anyone discusses the Fed, no one has to answer this inconvenient question. The Fed’s very existence is a violation of laissez faire. Yet the destructive effects of what it does are then blamed on the market. This charade has gone on long enough.

via Why the Downturn? – Thomas E. Woods, Jr. – Mises Institute .

Bureaucracy: from Stalin and Trotsky to David Cameron, we all know we loathe it. What is it?

In “Bureaucracy”, Ludwig von Mises explains:

Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. His discretion to act according to his own best conviction is seriously restricted by them.

“Bureaucracy” is a slim book of only 101 pages, thoroughly readable and insightful. Mises uses his understanding of economic calculation to explain succinctly the differences between bureaucratic management and profit and loss management in the free market. His argument has far reaching consequences: it demonstrates that public administration must become uneconomic and irrational.

Here’s a favourite section:

The history of Sweden can be treated with almost no reference to the history of Peru. But you cannot deal with wage rates without dealing at the same time with commodity prices, interest rates, and profits. Every change occurring in one of the economic elements affects all other elements. One will never discover what a definite policy or change brings about if one limits his investigation to a special segment of the whole system.

It is precisely this interdependence that the government does not want to see when it meddles in economic affairs. The government pretends to be endowed with the mystical power to accord favours out of an inexhaustible horn of plenty. It is both omniscient and omnipotent. It can by a magic wand create happiness and abundance.

The truth is that the government cannot give if it does not take from somebody. A subsidy is never paid by the government out of its own funds; it is at the expense of the taxpayer that the state grants subsidies. Inflation and credit expansion, the preferred methods of present-day government open handedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.

So we begin to see how the Austrian school of economics explains how the policies of the left create the very inequalities and injustices that they rail against: inflation hits savers and credit expansion widens inequality (the poor don’t invest with leverage). The intentions of the left are very well, but their impatience to use the power of the state to advance social, economic and political justice is a great enemy to progress in every area.

The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent on abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office.^[Lenin] Every man but one a subordinate clerk in a bureau, what an alluring utopia! What a noble cause to fight for!

No one likes bureaucracy. Detailed rules and regulations abolish much in life for which we strive: they destroy progress and extinguish hope. We need another way.

Via A Golden Way Out of the Monetary Fiasco – Thorsten Polleit – Mises Institute, essential reading for anyone interested in the financial crisis, its causes and a route out (despite its use of the G-word!):

The government-controlled monetary regime — the most destructive force set into motion by state interventionism — has finally been blown to pieces. This is the message conveyed by the monetary fiasco in global capital markets, typically referred to as the international credit crisis.

However, politicians and central bankers the world over are taking great efforts to hide this truth and its full consequences from the public’s attention by taking recourse to even more far-reaching market interventionism.

Central banks provide commercial banks with any amount of base money needed to prevent them from defaulting on their payment obligations. The Federal Reserve, for instance, keeps expanding the monetary base at the highest rate seen since 1919 (see graph below).

 

The article succinctly covers:

• The situation: monetization of paper assets, interest rates, yield spreads, public debt and the risk of government defaults
• The likely future pattern of state intervention
• The causes of the present “fiasco”
• Inflation and deflation
• Returning to free-market money

Highly recommended and it’s perhaps no surprise that Mises’ “The Theory of Money and Credit” is currently sold out at Amazon UK.

read more | digg story