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Thursday, 29 January 2015

Accepting Lies Will Catch You Out

The unloved and unaudited eurorats who manipulated the negotiations that led to the foundation of the Euro knew that they were basing the whole structure on two lies.

One was the untruth that all the original member countries had 'converged' sufficiently in their economic performance for the currency to be able to work. It was stressed in large portions of the press at the time that the data were more-or-less heavily 'massaged' by several governments, including most of the those in southern Europe. Greece was the most outrageous liar, but the spivs wanted the eurozone to be as comprehensive as possible from day one; so the lies were accepted. The eurozone has lived with the consequences of that acceptance ever since, and the recent Greek upset is only a stage in the unravelling of the skein of untruth.

The other lie was the assertion - in which all of the EU joined - that it was possible to have monetary union without economic union. This allowed national governments to maintain their own divergent economic policies, and to continue falsifying key statistics. The Governor of the Bank of England spelled this out in Ireland yesterday, though Ireland has tried conscientiously to implement agreed policies, once the myth of the 'Celtic Tiger had duly been buried.

It is a universal truth that your lies will be exposed; equally true is the proposition that the conscious acceptance of lies, as north European governments did in the euro negotiations, will come back to embarrass you.

Saturday, 24 January 2015

Vampire Votes for Europe

Today's news are that the monster vampire squid - a certain US banking group - has come out strongly in favour of Britain remaining in the European Union. The banker-friendly regulatory regime in London, that so nearly released the world economy to self-destruct in 2006-8, has been tightened; but not so much that it is no longer the global bankers' favourite playground.

And every Briton should give thanks for that every day, because finance is one of the few UK business sectors that is productive for the economy; in the sense that a net profit come to London in terms of tax revenue and distributed profits, to staff who live here and shareholders who mostly don't live in the UK but who reinvest some and spend more in London.

Although the EU institutions and the eurorats who wallow in their corruption hate the City of London they have not yet been able to suppress its enterprising an innovative spirit. Thus while most British voters would prefer to be free of all that 'Brussels' represents in terms of interfering, largely irrelevant regulation and cost, the profitable 'banking' and motor industries would probably have to put their profits into Europe-based rather than UK facilities if Britain were to leave the EU.

David Cameron, with immense immodesty, has offered himself as the one person who can so successfully 'renegotiate' British membership of and participation in the EU that a majority of the population would vote to remain in on his terms. I don't believe that he can. No European leader has said that they would support treaty revision, and most have said it is out of the question. The British people are not daft enough to take the word of a politician - especially not one who has spent five years in close proximity to the despised ex- and perhaps future-eurorat Clegg - so the terms will not be taken according to Cameron's spin.

The strongest probability is that Cameron himself will be forced to recognise that any package that the rats let him take home can't be sold even to the disillusioned British electorate. Thus before we vote we need to know what his Plan B will be. If he still goes for an in/out referendum he can make a deal with Farage, and take Britain further down the road to economic ruin.

The odds are that Cameron won't have a chance to negotiate, because any coalition partner he may find - other than Farage - in the event of the Tories being close to having a parliamentary majority will stymie any plan to leave the EU.

 In the event that the sorry figure of Milliband becomes tenant of Number Ten, his probable allies the ScotNats will demand their renegotiation to allow a future independent [probably bankrupt] Scotland to be fast-tracked to membership of the EU. Spain and others will veto that. So whatever decision the people make in June, the EU will loom large and ugly in British politics for years to come.

Oh dear!

Monday, 19 January 2015

Half of the World's Wealth

Today's media are making much of the 'analysis' by Oxfam that the richest 1% of the human population will own more in personal assets than the other 99% by sometime next year. Put another way, this means that more than half of all the personal assets in the whole world that are taken into account will belong to that 1% of the population.

This is taken to epitomise 'inequality'. It is Thomas Piketty's reason for proposing a global wealth tax, and the basis for the Vice Cable idea [now adopted by the Labour Party] of a 'mansion tax'. Robbing the rich to help the poor has been the ages-old method for defusing peasants' revolts; yet within a few years following any redistribution the wealth of the rich is again consolidated so that disparities are greater than before.

No existing textbook of 'advanced' Economic Theory explains how disparities of wealth arise, or how they could be reduced, if the political will existed to attempt some forced equalisation. Indeed, Economics has no explanation of inequality, because it does not explain what wealth is, or how it is generated. The time has now come when a majority of educated citizens may be willing to recognise the fact that Economics is an anachronism: and a hindrance to understanding how the system really works.

Of course, there are quibbles to be enjoyed about what the data mean. Much wealth is held by collective private-sector organisations like pension funds, most of which is allocated to providing future benefit to individuals, but it is impossible to allocate their shares to persons at the present time. Much wealth is also held by governments, effectively in trust for their people. When Mrs Thatcher became Prime Minister the British people collectively owned a huge coal-mining industry, gas and electricity, telephones, water supply, airlines, railways and ports, Rolls-Royce and a host of other ancillaries and industries. They also owned a massive acreage of land and all public buildings. Most of this huge asset base was shut down or sold cheaply; and it has now passed to foreign ownership. Instead of being asset-rich, the British people must pay toll and tribute to the alien owners in perpetuity: and there are still people who hail Thatcherism - and privatisation, in particular - as a triumph from which future generations will benefit.

The future is bleak: hence I am in the process of publishing BLEAKONOMICS: my explanation of how the economy came to be as it is, and how an economy really is structured. I hope that it may do much to explain the disparities of wealth that have grown so massively in an era when Democracy and 'fairness' have supposedly prevailed. That publication is the main call on my time at present; once it is 'out' I will be available for discussion via this blog.

Sunday, 11 January 2015

Piketty in Context

A huge amount of interest has been shown, in most countries of the world, to the writing of the French Economist [really, a Political Economist] Thomas Piketty. By massive statistical work, he has shown that income and wealth inequality between individuals in every country that he can assess has increased in the past decade.

For a considerable part of the twentieth century the extremes of income between the rich and the masses were coming closer together. There were many explanations available for this equalisation of access to the good things of life: including progressive income taxation. But the trend ended and disparities of wealth have subsequently become extreme.

Picketty's primary solution to this is to impose a global wealth tax on large fortunes, with appropriate accompanying taxation of incomes. It appears to be the case that rising rates of income tax for greater incomes can advance to 50% on the top tranche of higher incomes without any detrimental effect on investment and thus on the growth of the economy. The practical problems of getting more than 150 states to come into line on the principle of such taxation, let alone of implementing it simultaneously and to the same standards, are surely insurmountable. So the proposed solution - like the earlier proposal for a global levy on transactions in the financial sector - is just a wonderful work of imagination.

Meanwhile the real and worldwide growth of inequality proceeds apace, expanding the gap between the politics of the right and of the left and demonstrating that politicians and Economists are stumped by the situation. The rich are increasingly able to buy political influence, while the masses experience alienation from political rhetoric from all sides. The few who seriously embrace fringe parties - as distinct from the many who temporarily allocate their votes to such parties - usually are types who alienate rather than attract their fellow citizens. Where an attractive or dynamic personality appears in the leadership role, as Nigel Farage has appeared in the United Kingdom Independence Party, the number of votes released to such a party can increase significantly; especially if the less attractive members are unrecognised in the media.

Picketty's analysis of economic inequality is first rate: but he has not exposed the real causes for the recent rise of inequality. I plan to fill that gap in the coming weeks: watch this space!

Saturday, 3 January 2015

Sinking Britain

Last year, I made a serious mistake.

Under the title SINKING BRITAIN I published a e-book that brought together my polemical history of the mismanagement of the British economy since 1945 and my own explanation of how a modern economy works.

The result was confusion: an indigestible and largely unreadable concoction. Kind friends made this clear, in the nicest possible way; and I cottoned-on quickly. I then spent several months carefully separating and then reconstructing the two strands as separate texts.

The simple history has now been published, as a slimmed-down SINKING BRITAIN.

The text that is the more important to me - my exposition of the basic structure of Political Economy - is now being edited for publication as BLEAKONOMICS. It will be out soon.

Meanwhile Master T Pickety has refused the Legion of Honour on the grounds that the President of France should be focussed on the redistribution of wealth rather than engaging with fripperies and baubles; and David Cameron has launched a Tory election poster that is the height of complacent mendacity. So the world has begun 2015 exactly as it ended 2014, and the sense that nothing is new pervades public life and business.

I am genuinely hoping to shake things up with BLEAKONOMICS: we shall see!