It’s not just the economy, stupid.
It’s everything, stupid.

Via Business Minister Mark Prisk wants to strip away the red tape – Telegraph:

Friedrich von Hayek is a controversial choice as a pin-up. But a signed pamphlet that the Austrian-born economist wrote in 1980 entitled “Full employment at any price” is proudly framed on Business Minister Mark Prisk’s wall. In placing it there, the Conservative MP for Hertford and Stortford is following in a line of leading Tories to place their faith in one of the 20th century’s most prominent economic theorists.

Great news, but let’s hope my colleagues are reading Hayek’s much-neglected Prices and Production, which explains the structure of capital and which allows a better grasp of real patterns of economic activity.

Hayek is useful, but I find his work takes for granted Mises, who wrote “Society is cooperation; it is community in action.” Consequently, Hayek can be misunderstood. Mises’ work has as a primary theme “social cooperation”: his theories explain the realities of acting individuals working together to improve their condition, that is, the cooperative relationships which constitute civilized society.

Meanwhile, I am beginning Mises’ Omnipotent Government – The Rise of the Total State and Total War (1944), which can be read online here. Read more

The FT reports that US legislators have reached “fundamental agreement” on the Bush administration’s $700bn rescue plan:

Hans Jorg Rudloff, Barclays Capital chairman, said: “Anyone looking at the money markets would come to the conclusion that we are one minute before a terminal heart attack. Therefore the rescue package will pass. There is no choice.”

However,

“I’ve never seen people so angry,” said Jim DeMint, a Republican senator from South Carolina. “Our calls are a hundred to one against this bail-out. They don’t trust the government.”

read more | digg story

Reflecting on the demise of Lehman Brothers and on Bank of America’s purchase of Merrill Lynch, I revisited an article by recent US presidential candidate Ron Paul, posted on mises.org:

Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!

It’s hard to agree with Paul on the requirement for a gold or other commodity-based currency: another great believer in freedom, Friedman, dismisses the idea convincingly in Capitalism and Freedom, before asking:

If we can achieve our objectives neither by relying on the working of a fully automatic gold standard, nor by giving wide discretion to independent authorities, how else can we establish a monetary system free from irresponsible governmental tinkering, a system which will provide the necessary monetary framework for a free enterprise economy yet be incapable of being used as a source of power to threaten economic and political freedom?

We need some fine minds on this problem, minds that can find a sound alternative to the present system that will enable the restoration of competitive, free market capitalism and the prospect of avoiding boom and bust.

I see the European Commission is pressing ahead with legislation to “beef up” bank supervision: let’s hope they get it right.

read more | digg story

Readable expert opinion on the financial crisis, including bald predictions: there will be more rogue traders, good salesmen will hoodwink smart people, convexity will be missed, correlation products will blow up dramatically, risk management will fail, volatility will increase enormously at times for no economic reason, too much money will …

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Google’s analytics tool is superb: it turns out my readers are mostly in Oxford and London.

Thanks for keeping in touch!

This morning, I found myself reflecting once more on the use of military language in corporations. All day, I hear about strategy, tactics and operations. We “attack” things, usually costs or inefficiencies. And now software is to be a “weapon”. The duty manager has a “second in command”.

I wonder who among the people promoting this language could understand or perhaps be moved by General Sir Mike Jackson’s comments in his Dimbleby lecture:

The role of the MoD is to translate the Government’s political objectives into military capabilities and military operations; it’s therefore both a Department of State and the supreme headquarters of the Armed Forces. These two roles can be uneasy bedfellows, and that unease can be to the detriment of the Armed Forces. The Department of State appears to assume that commercial so-called “best practice”, with its proliferation of performance indicators and targets, transfers seemingly without question to defence in general, and to the Armed Forces in particular; I find such an assumption to be without foundation. Incidentally, who judges best practice? And this obsessive measurement which goes on is often against plans, not actually against real-world requirement. So we get the Kafka-esque situation whereby the MoD congratulates itself on improving accommodation according to a plan based on what it calls affordability, but which is far from what is defined by the needs of soldiers and their families. In stark contrast to all of this – operations, fighting, are demonstrably not commercial activities. I am very clear about the only performance indicator which really matters to the Armed Forces – to achieve whatever objectives are set to us; that is, to win.

It’s worth watching the speech – the video is linked from this page – and particularly how he delivers the text above, from 5:30 to the end of the video. The General makes a couple of grammatical errors: he’s not using a teleprompter or a script, just notes.

Good leaders should know what they want to say and say it simply.