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Be of Good Cheer: Christmas Greetings from Sean Gabb

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  • Dr Sean Gabb
    Free Life Commentary, A Personal View from The Director of the Libertarian Alliance Issue Number 178 25th December 2008 Comments| Trackback Be of Good Cheer: A
    Message 1 of 1 , Dec 26, 2008
      Free Life Commentary,
      A Personal View from
      The Director of the Libertarian Alliance
      Issue Number 178
      25th December 2008
      Comments| Trackback

      Be of Good Cheer:
      A Christmas Greeting
      from the Director of the Libertarian Alliance
      by Sean Gabb

      There being nothing else on any of the channels we can receive, my wife
      and I have spent much of the day watching the various Christmas greetings
      from religious and political leaders from around the world. These range
      from the vacuous (Her Majesty the Queen), to the impressively malevolent,
      so long as the volume is turned down (the Bishop of Rome), to the plain
      stupid (the Archbishop of Canterbury). I will not bother with reviewing
      these utterances. Instead, I will issue one of my own.

      There is little doubt that 2009 will be a bad year in every respect where
      the politicians have influence. In England, we may have a general
      election before the summer. If this happens, and if the votes are fairly
      counted, or if the police decide not to arrest all the opposition
      leaders, Gordon Brown and his Labour Party will be ejected from office.
      In the past decade, he has helped turn this country from the incipient
      police state established by the Conservatives into a true police state
      that is tempered only by the mockery we are still permitted to heap on
      its projectors. It would be nice to see these people out of office -
      especially since they could never be re-elected, and the only thing they
      have ever really wanted in life was to be in office. But there is no
      reason to suppose the Conservatives would do much to prevent our final
      slide into totalitarianism. They have too many nasty inclinations of
      their own to break up the vast apparatus of control brought near
      perfection by Labour. Even otherwise, I suspect they are too stupid and
      lazy to know how to break it up.

      I would ignore political developments elsewhere in the world - only it
      would deprive me of the opportunity to feel sorry for the Americans. I
      saw their President-Elect in a newspaper the other morning. Posing
      shirtless, he looked for all the world like one of the more raddled black
      boys you see selling their bodies in Leicester Square. I think this says
      more about the tone of his coming leadership than his choice of Hillary
      Clinton and the usual neo-con suspects to run his foreign policy, or his
      having accepted the full climate change nonsense. I have no doubt the BBC
      will cover his inauguration as if it were the Second Coming. It will be
      watched in much of England, even so, with laughter and contempt.
      President Obama will be rather like Tony Blair, but without the taste or
      restraint which Princess Tony will, by comparison, be shown to have
      possessed.

      Since they too are influenced by the politicians, 2009 will be a bad year
      in most respects economic. I am not sure when the present cycle started,
      but interest rates have, for many years, been manipulated by the
      politicians below the level needed to balance savings and loans. The
      resulting additional demand for loans was satisfied by creating new money
      out of nothing. This enabled a gigantic speculative bubble that sprang a
      puncture last year, and that has now burst. Recession is the natural
      result. The structure of relative prices has been distorted. Investments
      have been made that are now shown to be unwise. There must be changes.
      The beginning of change is to allow interest rates to rise and unsound
      businesses to go bankrupt. The faster this is allowed to happen, the
      sooner we can return to prosperity.

      Sadly, the political response has been to look for any scheme to save or
      replace the speculative bubble. Interest rates have been cut in England
      and America. The taxpayers' money has been lavished on propping up the
      more unsound banks. Governments are threatening to inflate without limit.
      The stated purpose of this is to avoid recession. The result will be to
      make the recession longer and deeper than it needs to be. The politicians
      tell us that Keynes was right after all. Perhaps that is what they
      believe. More likely, they have been taken in by the bankers with
      warnings about total collapse of the financial system, and are now
      responding like the victims of those Internet frauds run from Nigeria. I
      see the car makers have taken up the bleat for subsidies. I suppose they
      will be joined soon enough by the coffee bars and every other business
      that overexpanded.

      2009, therefore, will be a bad year in the economic sense. If it is not,
      the pain will only have been delayed until 2010, when it will be felt
      with compound interest.

      Here, though, is an end of my gloom. Much is bad now, and will get worse
      in the next few years. So long, however, as we can avoid a collapse into
      totalitarianism, the future is nowhere near so bleak as we are presently
      assured. Scientific and technical progress continue at the most wonderful
      speed. Sooner or later, there will be a renewed scramble to bring the
      results to market, and our lives will be still further enriched - and
      this time, I hope, considerably extended.

      And there need be no relative decline of the West. We have been told for
      years - usually by self-righteous lefties, gloating over a fall that they
      assume they and their families can personally avoid sharing - that the
      coming economic giants of this century are China and perhaps India. This
      is as fatuous as earlier claims about Japan. If you type the phrase
      "population pyramids" into Google, the first result will be an American
      Government website showing how the population of every country in the
      world is, and will be, distributed by age. Until we know how to extend
      not merely life but also youth, the most dynamic people in any country
      will be aged between twenty five and forty five. In England and in
      America, this age group will predominate throughout the present century.
      In the Orient, every developing country is following the Japanese pattern
      of rapid ageing, followed by actual decline of population. The Japanese
      at least reached Western standards of living before they stopped having
      children. The Chinese may simply grow old before they get rich. After a
      fashion, China has been getting richer for about thirty years. We shall
      see how long that can continue once the majority of the population is
      over the age of fifty, and have neither savings nor children to support
      them in old age.

      And China has been getting richer only after a fashion. About thirty
      years ago, its Communist rulers decided to turn the country into one big
      sweatshop, supplying the West on razor thin profit margins. They managed
      this by unlimited force. Ordinary working people in China have been
      ruthlessly exploited. With the banning of real trade unions, and with
      generally oppressive contracts of employment, labour there is free only
      in the nominal sense. Otherwise, costs have been socialised for favoured
      companies; and competitiveness has been maintained by an undervalued
      exchange rate. Look beyond those glittering towers built for the ruling
      class and its foreign partners, and you find endless and increasing misery.

      Even without the start of demographic crisis, this may now be ending. We
      are told about the huge scale of the foreign currency reserves maintained
      by the Chinese Government and its banks - as if money were the same as
      riches. At least the mercantilists in old Europe wanted their governments
      to accumulate gold and silver. These could eventually be made into
      imports. What the Chinese Communists have done is to send us a continuous
      stream of manufactured goods, accepting in exchange a mountain of dollars
      - and at an undervalued rate - that are only worth anything if they are
      not spent. The moment these reserves are used for imports, or switched
      into more stable currencies, their value will collapse.

      The Americans have had the main benefit from this fraud. But so far as
      the Orientals have had an insatiable hunger for dollars, and the rest of
      us have had no trouble in getting dollars to hand over, all other Western
      peoples have benefitted.

      This brings me to the supposed crisis of our national debt. The English
      and American Governments have been borrowing for the past decade on a
      scale that would once have been thought reckless. Gordon Brown has
      already given this country the ratio of debt to output that we last had
      after the Second World War. This is without the further borrowing he has
      announced. The Americans are facing the same explosion of public debt.
      Some economists are telling us that we shall have to pay higher taxes for
      at least a generation to service these debts.

      But this is not true. Our governments will borrow little from us - most
      of us having no savings to lend. They will instead continue selling bonds
      to the Arabs and the Orientals, and a few Russians if the price of oil
      recovers in time. The real value of these will then be inflated away.

      None of this pleases me. Inflation harms us all, if in ways that are
      often hard to trace. But once the mess of the last boom has been cleared
      away, it will become plain that the chief victims of that boom were the
      very countries everyone thought were the chief beneficiaries. We shall
      have had our cheap notebook computers and our flat screen television
      sets. We shall have increased our wealth in the present, and increased
      our abilities to grow wealthier in the future. Those who screwed their
      peoples to the edge of destitution to make this possible will find
      themselves holding our increasingly worthless paper. Chinese growth will
      grind to a halt. India will break up. Eventually, the Arabs and Russians
      will learn that we have discovered some cheaper source of energy than
      their carbons. All we need to do is somehow bring our politicians under
      control, and we shall enjoy a most agreeable twenty first century.

      And so I wish all the lucky members of my mailing list a Happy Christmas,
      and - if the coming year will be dreadful - the prospect of much better
      times to come.

      NB—Sean Gabb's book, Cultural Revolution, Culture War: How Conservatives
      Lost England, and How to Get It Back, can be downloaded for free from
      http://tinyurl.com/34e2o3
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