Be of Good Cheer: Christmas Greetings from Sean Gabb
- Free Life Commentary,
A Personal View from
The Director of the Libertarian Alliance
Issue Number 178
25th December 2008
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
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
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.
NBSean Gabb's book, Cultural Revolution, Culture War: How Conservatives
Lost England, and How to Get It Back, can be downloaded for free from