Cancerous government

Another terrific comment in the DT by Buda Nevey on the subject of Ireland's economic demise and its causes. I love that man!

Time is running out for Western prosperity. Our Governments have meddled in the business of wealth creation far too much and for far too long and their plans to continue doing so are jeopardising recovery. Fortunately, the opposite could be the case, if we choose to accept 'The Mission'.

What is my advice? Well if Governments showed more respect for private property, personal responsibility and contractual arrangements, by undertaking a radical simplification and reduction of taxes and interference in our lives, businesses and households would regain the confidence of adjusting their budgets and investments for the longer-term and the stifling uncertainties and deadening hand produced by constant change and short-term political initiatives would no longer blight our progress. Does it ever occur to politicians that the steady drip-feed of statutes, budget changes, welfare changes and tax changes, every year, is deleterious to responsible household and business decision-making? I really do wonder. The unsettling expectation of government direction in every aspect of our lives has produced a damaging cultural servitude since the Common Law countries accepted general taxation and switched to industrial-scale law-making by Parliament, international bodies, regulatory quangos and now the micro-managing, centralising EU. Democracy has been no restraint on this steady drift, because governments and vested interests have always found a way of ignoring, bribing or subverting public opinion. Indeed government is a manufacturer of cancerous vested interests used to divide us as well as being one in its own right. Let me illustrate this evil of short-termism with one topical example. With all the recent shenanigans of government interference in pensions, who has any confidence that money put aside will be left untouched by future politicians? The answer to that question should have been given more serious thought, because the hole in pensions is just as important as the hole in our banks. The Government should introduce a referendum-lock on future pension arrangements to inspire some confidence.

What about the Euro in all this? Well, it's the same story. I am not a supporter of the Euro, but we should be honest enough to admit that it is not the name on a piece of paper, used as a promissory note, that we should be blaming for the woes in Ireland and elsewhere. The Pound is a federal currency for the inhabitants of the United Kingdom. No-one is presently proposing that Scotland, Wales and Northern Ireland introduce their own currencies in order to gain some illusory competitive advantage in devaluation with England. The Euro is a target for critcism, because it is the symbol and political instrument of those who wish to create a United Europe by stealth (why not do it openly) and to this end politicians have exacted a huge and distorting transfer of resources in mutual aid taxation and regulation since the inception of the Common Market and EMU. This comes in the form of membership fees, costing hundreds of billions over the last forty years, (did it ever occur to anyone that free trade shouldn't cost this much), such as regional aid, the CAP, Fisheries and infrastructure projects, the abuse of fiscal and monetary policy to support the ECU, (the SNAKE, shadowing the Deutschmark, the ERM, the Maastricht Criteria used by the PIIGS as cover for admission to the Euro, Brown selling gold reserves to buy Euros and political control of interest rates from the ECB). Add to that the cascading interference of politicans through all manner of regulations and petty bureaucracy (on top of national, regional and local political interference), is it surprising that the business and social environment no longer favours responsible behaviour or long-term subsidy-free investment or hard work, but encourages greed and dependence and short-term profit-taking and the attendant dishonesty of making a fast buck, welfare or expense claim, with risk and social costs priced into the system accordingly. Just to talk about it makes my head spin.

So step back from the Euro hysteria for a moment and you see that this is what happens with the federal Pound. Westminster uses mutual aid transfers to Edinburgh, Cardiff and Belfast. Investments are politicised with nationalisation, public expenditure transfers (think shipbuilding and defence contracts, for example) and public sector employment and direct grants in local taxation and regional and industrial aid and on and on it goes. The same is true even within England, with north-south transfers. We don't blame the Pound for this farce; this is the result of big government interference and it is equally misleading to blame any common currency, if it is used for its proper purpose. It should be just a common medium of exchange between private businesses and individuals, like a Visa transaction (why not let them manage it) and if politicians want to keep the Euro, they should respect this simple utility, stop using it for politicial ends and resile from the Stabilisation Fund. What we need is a Freedom Fund, one that will ease the transition to a low tax, small-State paradigm of doing business with government doing less. Efficiency drives are a temporary illusion.

It is not better government that we need, but less government. When are we going to learn this lesson?The politicians connived with central bankers in the creative accounting that allowed the PIIGS into the Euro. On the back of this creative accounting, bankers lent money to the PIIGS, which has spiralled into this doomed €440 billion 'rescue package' (yet more costly mutual aid for bankers, at the expense of taxpayers, deferring the inevitable). The politicians connived with central bankers in setting politicised interest rates, which fuelled the asset bubble bursting around us now. The politicians set the ever-changing tax and regulatory framework that has scared businesses, householders and banks to think short-term and take early and excessive profits and bonuses out of their immature investments (including homes) for fear of creeping taxation and inflation. The politicians have created a business and employment environment in which subsidy, fraud (think self-certified mortgages), tax avoidance (and evasion) and welfare dependence are abundant. Let us never forget that it was a politician (President Clinton) that legally compelled lending to 'sub-prime' borrowers in the US that helped trigger the present asset crisis. It was Greenspan, Brown and the ECB that set inflationary interest rates across the whole Western World after 9/11, adding more fuel to the flames in a cycle of personal, corporate and government debt-bingeing, which has seen money go to the Far East for crap Chinese exports and come back to us to be borrowed again and again (how they must be laughing). It was opportunistic politicians that exploited the Debt Bubble consequences of their short-termist bankers and businesses in order to swell the tax coffers for our bankrupt Ponzi welfare schemes and public spending. Is it any wonder that our economies are plagued by persistent fears of inflation when the governments and central bankers misuse the money supply and the risks and costs of short-term political interference have to be priced into the activities of every one of us? What ties all of these woes together is big government. The populist rush for more stringent banking regulation and political accountability is therefore misconceived. What we need is fewer politicians and central bankers and both doing a lot less interfering, but we do need more judges doing a lot more enforcement of contractual obligations to restore commercial integrity.

I had hoped when Enlargement admitted the new aspiring tigers of Eastern Europe, with their flat taxes and post-communist enthusiasm, that wiser counsels in the EU would give priority to an agenda of budget reduction, tax simplification and liberalisation, but they have neglected the foundations of wealth creation in their counter-productive pursuit of a political agenda and the tigers have been corrupted by the Grand Projet, EU largesse and imported bureaucracy. Pity.

I had hoped when the Debt Crisis started to unfold that the imperative for change and part of the trillions being applied to bandage the opening wounds would be used more imaginatively to ease the passage of big-State interference from our lives with dramatic tax and regulatory reform. Another opportunity so far missed.

I remain hopeful that the American Tea Party Movement will restore some semblance of fiscal and monetary rectitude to the most powerful beacon of freedom still left in the World and bring change to the socialist thinking of our own blinkered and short-termist politicians, but here in the UK, Cameron's Coalition appears to have bought into the travesty that led us here. How quickly he has shown himself to be a stupid and irresponsible leader (I didn't vote for him, I thought the omens of treachery were there all along).

Time is indeed running out and the lights are dimming on our democracy too, although our Eastern cousins should fare better. What makes this all so pointless and tragic is that the solutions really are within our grasp. Just to acknowledge them in a collective will of political leadership would be a radical boost to market sentiment (how about a G8 for freedom). The generations who will hopefully 'ease' us out of this mess, one way or another, deserve the truth and the process will be made much more fruitful and promising if we are going in the right direction.

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