A Martian’s assessment of earth
by Godfrey Bloom
Let us assume for the purpose of argument we were hosting a competent, experienced management consultant from another galaxy with an in depth knowledge of planet earth’s economic history. He has, of course, no cronies, no axe to grind, he is dispassionate, he is most certainly not an intellectual or academic. He is not part of any political dogma or machine. He has no cronies and no personal financial interest. Indeed he returns to his own galaxy on completion of his report. What would this ice-cold individual recommend driven by pure common sense?
I believe he would summarise the industrial economies of planet earth very simply. ‘Government is your problem not your solution’. The United Kingdom is an ideal example but much the same could be deduced from any European or American economy to a greater or lesser extent.
What is the role of government? At the beginning of the second British industrial revolution, at the risk of being mildly over simplistic, one could argue it was defence of the realm and keeper of the Queen’s peace. There were many other secondary minor roles, the main understanding of the responsibility was generally accepted. Taxes were raised to maintain a navy to protect trade and an army to keep a European balance of power. Borders were open, passports were non existent, revenue was, by modern standards a very small percentage of GDP. (Incidentally GDP is a very poor reflection of an economy but here is not the place to expose its frailties).
The second industrial revolution, arguably the period between 1815 and 1913 was a direct result of the enormous strides made in technical innovation. The advances were not peculiar to the United Kingdom. France enjoyed its ‘Belle Epoch’ and the United States was emerging as a major industrial power as was the new united Germany. Although major advances in medical science came later and social deprivation was rife, life for the average British subject improved dramatically over that one-hundred-year period. There were social advances promulgated by the great philanthropists of the age: Titus Salt, Cadbury and Rowntree. Some of the great societies came of age: The Royal Society, Geographical Society, various medical institutions, particularly the great teaching hospitals. There was the birth of a Police Authority whose mission statement was the prevention of crime. Indeed the Victorian age was a testament to man’s initiative, certainly not government’s.
What else facilitated this unprecedented advance by humankind on this small island? Perhaps the most important catalyst for this was sound money. The British formally adopted the gold standard post-Napoleonic-Wars. The gold standard simply prohibits governments from degrading the currency. Victorians understood, unlike their successors in the 20th Century that money is a medium of exchange. It is not wealth in its own right. Interest rates therefore reflect the true cost of money. Governments could not over borrow or ‘print’ money. The concept of ‘time preference’ was the cornerstone of the medium of exchange. This stability of money meant that the staple diet of the common man remained constant for nearly ninety years, a phenomenon inconceivable to 21st Century man.
This meant that the massive advances in science and technical methods of production were passed straight to the citizen. Thrift was rewarded, the individual could make provision for his family. The equation should be how far did man progress in relative terms from 1815 to 1915, versus 1915 to 2015. Why in the last seventy years has the national debt exploded to totally un-repayable levels yet the nation has been at peace and significant scientific advances continue to be made? Why in the last ten years has the advance in living standards of the ordinary family stagnated?
Let us examine for a moment the extraordinary expansion of the role of government, much of which is relatively recent. Perhaps one might pause here for reflection on political systems. Two main political systems of the twentieth century have been communism (the ownership of production) and Fascism (the control of production). Incidentally too many commentators on the political scene use the term fascist in a simply pejorative and abusive term not as an established system of government for better or worse. Such people usually expose their lack of a traditional education. Both systems failed abysmally and are no longer expounded by politicians seeking election. Yet, paradoxically these systems live on. They are alive today in Europe.
Today, politicians advocate a ‘mixed economy’. What does that mean? Well, in the words of Lewis Carroll its whatever they want it to mean. To use an old fashioned term the United Kingdom today has a mercantile system, in modern parlance ‘crony capitalism’. It is desperately unfashionable in academic circles to point out that no European or North American economy has been run on laissez-faire capitalism for over 80 years. The only pocket of real capitalism was post war Hong Kong: perhaps the most successful economy since the renaissance city states.
Observe if you will the support of this view to our intergalactic consultant. In the UK the following dynamics are controlled by government, much but not all significantly from the European Union. Energy, agriculture, fishing, employment legislation, health and safety, food labeling, transport, national health, education, the list is endless. Indeed it is difficult to find any aspect of our lives not controlled by government through some form of enforcement agency. This is often using regulation in direct contradiction of the principles of English law.
Reflected in this, no surprise, is that the level of government spending is completely out of control. 50% of GDP and rising. Tax is stifling the economy, borrowing is increasing at an alarming rate and the national debt has increased by 50% in the last five years. To fill the gap the government has printed £350 billion resulting in asset price inflation which amongst other things means our children and grandchildren cannot pursue a career in the nation’s capital. Paris and New York are equally unaffordable where the same systems of government apply.
Manic knee-jerk government responses to every fiasco major or minor result in another crisis popping up the following year. Does anyone seriously think the banking crisis has gone away?
So what practical things can be done to restore prosperity, advancement and happiness to deserving members of society?
Remove regulation on a gigantic scale. We have in the UK a world renowned and admired system of law, developed over hundreds of years. Let the law of contract reign without interference of political self-seeking journeymen keen for short term popularity with their support base. Abandon social and corporate welfare, the source of the demise of industrial democracies in Western Europe and America. Facilitate the growth in businesses, especially small businesses, close down the town halls and their jobsworth bomb-proof-executives on salaries completely disproportionate to their abilities. Abandon the obscene amounts of money wasted daily. £1 billion per month on fake charities, £4 billion per month on Quangos, £1 billion a month on ‘foreign aid’. None of this has even been touched in the fake austerity ‘cuts’.
Return to hard money, outlaw fractional reserve banking, revoke the legal currency laws which line the pockets of politicians and their cronies. Introduce a limit on government spending to a percentage of GDP (or a better measure to be discussed).
This would slash what makes people unhappy i.e. unaffordable beer, petrol, cars or caravans, failed road systems, massive deductions from their wage packets. Make saving for the future worthwhile.
It is an interesting phenomenon that in most surveys people were happier in the 1950s than more recent years. Material wealth was significantly less, so we must look further than just money. Murder rates were much lower as were crimes of violence. The family was accepted as the foremost unit of society. People respond to responsibility. Beveridge was a safety net. Welfare was not – nor would it allowed to have been – a lifestyle choice. Alcohol for most was a social experience in pubs and clubs. Low strength drinks were relatively inexpensive.
Ridiculous government initiatives make binge drinking amongst the young more likely as the cost of visiting the pub increases yet alcohol in supermarkets is cheap. Remove the tax assault on public houses and reintroduce drinking as a social pastime. Why do young people turn to drugs? What educational and social abandonment turn them to such despair? What madness to give fit young people money to not work? Government-enforced minimum-wages fuel youth unemployment. Germany has the lowest youth unemployment rates in Europe, with no minimum wage.
Every economic or social mores is government inspired. Sadly, as things get worse there is a call for more not less state interference. Let journalists and academics start learning a new question, “Is this the role of government?” The answer 99% of the time is a resounding no.