The Justification of the modern State

When we voluntaryists declare that the state is an immoral coercive authority we are challenged usually with the argument “but without the state the weak would be at the mercy of the strong”.

As voluntaryists we care about the coercion of the weak by the strong more than most would, and so we sympathise with this predicament, we would still say that the coercive power of the state is worse: the cure is worse than the ailment; if the answer is ‘the state’ then you’re asking the wrong question.

But let us assume for the moment that a coercive power has been enacted as an agent ‘of the people’ by a substantial minority of its subjects, and without this coercive power the poor would be abused, robbed, libelled, evicted, or even imprisoned, raped and murdered.

Ignoring the positive rights that many infer on the modern state, let us assume that protecting the weak from the strong is the sole justification for a ‘legitimised’ coercive power, such as the modern state.

So shall we review the current situation in the UK?

  • Legal aid has been effectively withdrawn from many of the poorest people, thereby enabling the ‘powerful’ to ride roughshod over their rights. At the same time habeas corpus and double indemnity have been withdrawn;
  • The libel laws in the UK prevent anyone but the richest from starting, or more importantly winning, a court case;
  • Many of the poorest are subject to sub-standard education reducing their life options, provided with little or no useful career guidance, and condemning them to the dead-end jobs at best, or worse: a life on benefits;
  • The ‘poor’ suffer higher effective tax rates due the application of VAT and ‘sin taxes’ on ‘luxury purchases’, such as fuel, tobacco and alcohol;
  • Many of the poorest are left with few legitimate career options and can end up convicted of victimless crimes, such as prostitution, drug use (with associated theft) and drug dealing. Once imprisoned they struggle to break out of the vicious circle of imprisonment, release and recidivism;
  • Recent historical cases have shown that many in power have raped and potentially murdered young children with the state covering their tracks for decades.

In light of these examples it should be obvious that the modern state is not protecting the weakest from the strong; in fact in the last example it is doing the complete opposite.

Hasn’t the state proved itself to have breached its only justification for existing?

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Who will build the roads? We will.

 

 [This was written as a speech and delivered at Libertarian Home in September 2014]

I’ve spoken and written before on the topic of ‘the road to liberty needs a strategy’. I’d like to elaborate on this topic with some subsequent thoughts I’ve had. All libertarians accept that we want to reduce or remove the state, so how do we get to that libertarian nirvana; or at least closer to it?

There is no simple answer.

Murray Rothbard said:

“Only liberty can achieve man’s prosperity, fulfilment and happiness. In short, libertarianism will win because it is true, because it is the correct policy for mankind, and truth will eventually out.”

Whilst I agree with the sentiment I don’t think it’s as easy or inevitable as Rothbard imagined. I don’t believe that we can currently win against the state and its supporters solely via political means. The state has too powerful an incentive to relinquish its existence, and the people are as yet unconvinced of its inherently violent nature.

As Macchiaveli said:

“It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.”

As I’ve said before there’s no point getting involved in political parties – they’re corrupt and still require taxation, which is ultimately obtained through the threat of violence. And in a democracy they rely on hoodwinking the electorate, buying them off with money stolen from us.

Instead I propose a multi-faceted approach to achieve our libertarian society, utilising anti-political and entrepreneurial economic methods. Some of you may say that I am proposing an agorist approach towards achieving a libertarian society, as described by [Samuel Edward] Konkin III in the New Libertarian Manifesto. Well, while I see some advantages in this approach as a strategy, I am personally closer aligned to Rothbard’s vision of anarcho-capitalism. And I am definitely not going so far as to propose any of the currently-illegal counter-economics tactics that J Neil Shulman introduced to Agorism! Getting into a violent confrontation with the state would not be advantageous; at least not at this stage while it is so powerful.

The first facet of my approach is education.

We can, and should, educate the public about the dangers of the state and how we believe that liberty is the best philosophy for the human race. But how successful is this approach? In the UK the IEA has existed since 1955 and the ASI since 1977; yet they haven’t brought about any discernibly radical change in the thinking of the electorate. In fact a recent (11 May 2014) YouGov poll showed that 60% of respondents wanted rail renationalised compared to 20% who didn’t. Of those who supported renationalisation only 21% thought the trains would then run on time and 22% thought customer service would improve. How has the pro-market argument been lost so badly when less than a quarter of people who want trains renationalised think it will improve the service???

This is shocking!

People are happy to buy innovative or inexpensive products that only the free market can create, yet they want state-owned railways and more NHS?!

Fellow libertarians, we are losing this debate!

We need to educate with facts – we must always take the debate back to empirical evidence of why the market is better than the state. We must destroy their claims with that evidence and thereby expose their ideas as empty rhetoric and lies. For example, almost any scare-story that Ed Miliband brings to the forefront of debate is quickly dismissible with evidence (e.g. his blathering on about “irresponsible capitalism”). We know we have the stronger moral argument: a state based on violence cannot be more moral than a free society built on consent.

However, it’s not enough just to educate, we need to do more than win the debate: we need to encourage people to think differently about the state; we need to alter their perception of it. People need to start questioning the state’s motives and see that its actions are not for the greater good as it claims. To do this we need to control the language of debate, as the statists previously have. This way we can break people’s mental adherence to statist language and encourage them to think about how they are controlled by the state.

We should start by always refer to the state as requiring violence to enact its will, point out that if it couldn’t rely on violence then it would fail. We should always talk about taxes as penalties and benefits as subsidies. We should criticise the concept of tax as indentured labour, and especially criticise sin taxes and their impact on the poor. [For example, of a £12 bottle of spirits only £2.10 goes to the entire value chain – whereas £9.90 goes to the Exchequer. We need to show how sin taxes disproportionately affect the poor, and how most taxes fall heaviest on the poor and working class.]

Most importantly we need to create disillusionment in the state and its agencies.

How do we do that?

You only have to look at the news to find cases that we can talk, blog and tweet about. We should adopt the outrage that statists stir up for our own ends – as the underlying cause of their latest campaign-du-jour is often state failure, not market failure.

For example:

  • power prices – affected by state restrictions, climate levies and pricing controls;
  • rail pricing – affected by state monopoly of the infrastructure and regionally franchised (outsourced) to the highest bidder;
  • crime – affected by state criminalisation of victimless crimes (10,000 out of 84,000 prisoners were in for drug-related offences; 20,000 in for robbery, burglary, theft & handling);
  • youth unemployment – exacerbated by the national minimum wage;
  • bankers’ bonuses – government bailout of banks which market would have let fail;
  • hedge funds – how they increase value, not destroy;
  • finally, holiday prices outside of school terms – state distortion of the market caused by treating schools as prisons and pupils as prisoners; etc.

I propose that we should always use current affairs as a focal point, enabling us to frame the debate around liberty versus the state. Where possible we should utilise contemporary news stories to talk about how evil the state is. We can discuss these on social media, in conversations, in blogs, etc.

For example, recent UK news stories that are appropriate include:

  • Ashya King – taken from NHS by parents to get the treatment they want for him, and are prepared to sell their home to pay for, but were subjected to arrest and imprisonment because they dare to question our national religion of the NHS;
  • Rotherham – police and council ignore or cover up 1,400 cases of child abuse.

And internationally:

  • Police brutality – in the US the murder by police of Mike Brown in Ferguson, Missouri;
  • The plight of Gazans – innocent people being killed in a dispute between two bloodthirsty states (and both were democratically elected, if you want to demonstrate that democracy <> freedom);
  • State surveillance – Snowden’s leaks: revelations to some, no surprise to many of us.

Other historical stories, but still in the public consciousness:

  • Hillsborough – police cover up their incompetence with lies and falsified statements;
  • Bloody Sunday – British army gun down peaceful protesters;
  • Ian Tomlinson – unlawfully killed by Met Police during G20 protests;
  • Jean Charles de Menezes – innocent electrician executed with seven shots to the head after police had held him down and first evacuated a crowded tube train; incidentally, did you know that their shoot-to-kill policy is still in place?

All the above cases can be utilised to demonstrate the power of the state and the fact that it’s only there to protect itself and its agents. Finally, dismiss democracy wherever possible and don’t engage with it. Tell people that you don’t vote and they’ll always respond with “then you have no say”. This is easily countered by firstly pointing out that a bad decision made by millions is no more morally right than a bad decision made by one, or a thousand. Secondly, you can point out that by voting they’re validating 5 years of incompetent and interfering political decisions. They cannot complain as they participated in the election and so implicitly support the winner, whether they voted for them or not.

The second facet is taking action. Talking alone won’t change anything

While it’s very enjoyable, there’s no point sitting month after month, talking about the differences between agorism, voluntaryism, anarchocapitalism, Georgism, objectivism, etc., if nothing comes out of it.

We need to act if we want this new society – nobody else will do it for us.

Marx and Engels may have sat in a room and wrote their philosophy without personally doing anything about enacting it, but the people who did so could see the power they could grab; with libertarianism there is no power structure, so no incentive for power-hungry politicians. We want to liberate people – so to provide for them with alternative market solutions we rely on entrepreneurs. They will be our agents of change…

…and, in fact, they already are. But I’ll come on to that shortly.

So how do we build a strategy to actively undermine the state? The answer is through acts of resistance and even civil disobedience.

Here are a few example ideas:

  • police the police (there are many accounts on Facebook, Twitter and even YouTube that expose police brutality and their ignorance of the laws they claim to be upholding);
  • attend council meetings, film them and blog about them;
  • expose corruption and incompetence of any public officials you encounter (note: Private Eye is great for this);
  • FoI requests (remarkably easy, though often resisted by the challenged organisation);
  • object to legislative in writing at the Green Paper consultation stage;
  • use encryption technologies for communication;
  • Support human rights organisations in their fight against state oppression of the individual;
  • Sit in on public enquiries and blog/tweet about them;
  • write letters to newspapers – blogging doesn’t provide as wide an audience;
  • withdraw from paying for the TV licence;
  • protest on the streets or via petitions (against the latest war, etc.);
  • tax resistance – potentially costly though.

Though these actions will help us undermine public confidence in the state and win the moral argument, people will still primarily care about all the things that affect them – health care, benefits, etc.

So that brings me onto the third facet…

The third facet of my proposed approach: let’s build the society that we want.

Let’s do it ourselves.

Rather than try to change the state let’s make it obsolete.

WE need to identify private solutions and publicise these. There are many existing services that replace the state systems that we complain about. And those services that don’t exist we need to create.

Let’s look at a few examples:

Health care.

One of the most common complaints about the NHS is getting to see a GP, especially in crowded urban areas. As the price of consulting a GP is currently zero, and supply is limited, there is always over-demand. This causes service rationing, demonstrated best by waiting lists.

However, there are alternatives:

  • Technology is making remote care possible over videoconferencing services. For example the US firm MeMD offers an instant consultation for $49.95.
  • There are many primary health care providers in the UK offering private consultations for as little as £70 for 15 minutes.
  • Most interesting however a new subscription method of medical care is emerging in the US called concierge medicine (aka ‘retainer medicine’ or ‘direct care’). Simon knows more about this topic than me, having written several articles on it, but a quick Google search and I found ‘My Healthcare Clinic’, based in south London. A £25 per month subscription provides you unlimited 20 minute appointments and an annual health examination.

The great thing about this service rationing is that charging for GP appointments is back on the political agenda. This will instantly make all the above services comparatively less expensive, thereby encouraging more people to go outside the NHS. There is already a large market in UK residents travelling to have surgery in cheaper countries, such as those in the former eastern bloc.

Welfare

  • Most insurers offer better schemes for serious illness and death than the state schemes, we should be encouraging people to investigate these more;
  • Friendly Societies still exist and as mutual societies provide all of their profits back to their members.
  • Many trade unions offer benevolent funds for hardship cases, as well as many other excellent member services. Some examples from Unite include free legal and financial advice, credit union facilities for the ‘financially disenfranchised’ and a tax refund service. (Unions suggesting their members utilise legal tax avoidance? Surely not!)

Pensions

There is one challenge in withering the state: how do we unwind the Ponzi scheme that is ‘national insurance’ and pensions within the ‘welfare state’? This will concern many who wrongly believe that they have paid into some fictional pension scheme. This isn’t easy to answer, but it’s an important answer if we are to progress. Interestingly, the coalition government has implemented legislation that requires all but the smallest employers to force all of their staff into contributory private pension schemes, albeit with low contributions initially. However, this could be seen as the first small step towards removing state pensions for all but the poorest.

Education

Whilst private education is still prohibitive (except for children of MPs, and prospective MPs, and MPs), there is an alternative that many parents have utilised: home education. This has become increasingly popular in general, but particularly with libertarians. Also, with the advent of the internet, there are now many primary, secondary and even tertiary education courses available for free online now.

There’s even a Facebook support group called The Libertarian Homeschooler.

Transport

  • Who will build the roads? Entrepreneurs will. You may have read about the private road in Kelston, near Bath – the local council closed a road causing a 14 mile diversion. This increased fuels bills and travel time for thousands of commuters; an entrepreneur (Mike Watts) has built a private road and charges £2 per journey.
  • Avoiding state licensing and monopolies of taxis has been recognised as beneficial to customers and Uber was founded with this in mind. However, some states are fighting back – it has recently been banned in Germany.

Currencies

States that issue their own currency can constantly devalue it; this is a hidden tax that most don’t recognise as such and never get to vote for or against.

As many of you know there has been an explosion of private or ‘cryptocurrencies’ in recent years as stable technological solutions become available: Bitcoin is but one example of these. Interestingly I was recently reading the European Central Bank’s October 2012 document entitled ‘Virtual Currency Schemes’ and was pleased to see the invention of Bitcoin credited to the concepts of the Austrian school. There was even a sidebar mentioning Mises and Hayek, a footnote mentioning Rothbard and a reference to Hayek’s 1976 publication ‘Denationalisation of Money’. HMRC has even recognised Bitcoin this year, albeit primarily to tax transactions.

So those are some easy areas; how about the really difficult areas where even the various strands of libertarianism frequently disagree, such as private policing and private courts?

Justice

There are already many private alternatives to courts, such as arbitration and mediation. For example, family law solicitors advise that you should first attempt private mediation to negotiate financial divorce settlements rather than go to court, as it’s faster and cheaper. In employment matters there are many arbitration services, including ACAS, that an employee, employer, customer or supplier can utilise. In fact The London Court of International Arbitration is one of the world’s leading international institutions for commercial dispute resolution and currently hears 300 commercial cases per year.

Policing

This is always a difficult area, as many imagine policing to just be limited to the uniformed thugs you occasionally see after a crime has been committed. But surely preventing crime is better than solving it afterwards?

The first of the nine principles of good policing, as defined by Sir Robert Peel in 1829, is crime prevention. Police judge their success by the number of arrests they make, whereas the public judge their success by the absence of crime; this is a fundamental difference.

So how do you deter crime?

My business office is fitted with an alarm that is connected to a manned security centre 24 x 7; it costs £230+VAT per year, whereas just to be issued by the police with a unique reference number for our alarm service costs £40.51+VAT. Did you know that there are 330,000 private security staff in the UK compared to around 132,000 police officers? Increasingly in recent years residents are clubbing together and procuring private security guards to patrol their streets. I found a company called 1st Class Protection which has many contracts for protecting residential streets in London. In one publicised example seventy residents across five streets in St. John’s Wood have clubbed together and pay £1,000 per annum each for a patrol service.

Summary

As you can see there are already many private alternatives available to state services. We need to encourage use of these services, as they contrast well against the state’s poor services. Its inability to provide the assistance that it uses to justify its existence will just make more people discontent with having taxes extracted from them. And where private alternatives don’t already exist then why don’t you invent them? Are there any gaps in the market that you can think of that can undermine the state? If so then why don’t you create a service to fill those gaps?

So why aren’t you helping? How can you help personally?

Most importantly, be an entrepreneur: they are the only ones that can create a society based on libertarian ideals. We need to out-deliver, out-manoeuvre and out-compete the state; only private business can do this. If you don’t feel you can effect this societal change personally, then at least investigate and use alternatives to state services. If you find that these services are good then publicise them widely. It all undermines the perception of the state as mankind’s saviour and provider.

Conclusion

My proposed strategy is threefold:

  • Firstly, educate people as to how consensual market solutions are better, and that the state can only adversely distort the market;
  • Secondly, undermine the public’s confidence in the state by exposing its corruption, violence and other failings;
  • Lastly, show them examples of how the market can and does provide better solutions than the state.

In his book Civil Disobedience Henry David Thoreau said:

“I heartily accept the motto,—“That government is best which governs least;” and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which I also believe, —“That government is best which governs not at all;” and when men are prepared for it, that will be the kind of government which they will have. Government is at best but an expedient; but most governments are usually, and all governments are sometimes, inexpedient.”

So are we libertarians really prepared for that kind of government, the one that governs least?

2014 is the 70th anniversary of the publication of Hayek’s ‘The Road to Serfdom’. Instead of travelling along that road to serfdom we should start building the road to liberty.

Our liberty.

Who will build that road?

We will.

Ed Miliband: A Case Study Of Rhetoric Over Facts

On an almost daily basis Ed Miliband, Leader of the opposition Labour Party, announces his latest attack on the ancient regime of ‘capitalists’. No matter how specious his argument he is rarely challenged on facts by the other ineffective politicians he criticises, often being left to set the political agenda du jour; only his minions are challenged by more astute journalists on Today or Newsnight. The government’s collection of idiots is left running to catch up, often implementing policies worse than Miliband is prescribing.

This has repeatedly happened with much of his recent agenda-setting such as the ‘cost of living crisis’, where he focused on energy prices, the largest rise in the last 20 years being overseen by him when in government. His outpourings have cause energy companies to increase prices to lock-in profits ahead of any 2015 Labour majority, and to cause the shares of the banks wrongly nationalised under his and Balls watch to crash, reducing value to the shareholders (i.e. us, mainly).

In his FT article entitled ‘Our toxic blend of capitalism and short-termism‘ Miliband calls for a discussion on “how we can build a better, more responsible and productive form of capitalism” and blames a crisis “caused by inadequately regulated financial activity” and “rules that encourage wealth creation focused on short-term returns, fail to reward productive behaviour and skew distribution towards the top”. Yet again, these accusations all fly in the face of evidence: the banks are more heavily regulated than at any time in the past and he calls for many unproductive and anti-re-distributive policies (e.g. 50% tax). In the same piece he says: “short-termism seems hard wired (sic) in to our economy, with small companies unable to access the capital they need” not recognising that the high corporation tax that he advocates encourages businesses and their owners to make short-term decisions.

Miliband, in his speech to the Labour Party conference in September 2011, asked “are you on the side of the wealth creators or the asset strippers?” The Director General of the CBI responded that “I don’t recognise this idea that there are large numbers of companies in this  ‘predatory asset stripper’ class. This is just very black and white and it  doesn’t reflect the world as I see it”. Perhaps Miliband had recently watched Michael Douglas in Wall Street, imagining it to be a documentary? Digby Jones, former CBI Director-General and Labour government Minister for Trade and Investment, said Miliband’s comments were “divisive and a kick in the teeth for the only sector that generates wealth that pays the tax and creates the jobs this country needs.”

The view that Hedge Fund managers are evil capitalists just trying to put people out of work is quite stupid; like all of us in life they are trying to make a profit. All of us, in business or our personal lives, want to make a profit. Socialists may deny that fact, but quickly accept that spending more than you earn is a bad thing and leads to poverty; they expect the state, i.e. taxpayers, to make the poorest families ‘profitable’, yet denounce those very taxpayers (individuals and businesses) that attempt to do so.

Hedge Fund activists are simply trying to make a profit too. Their chosen method is no different to any other business – they buy something which is of lower value than they consider it should be, attempt to make some change to the underlying product and then sell at a profit, often several years later. And yet Miliband calls these people “irresponsible capitalists“.

Miliband recognises that “some [takeovers] might have been crucial to turning a failing company around” but fails to identify his data in this area.

An excellent Economist Blog on Corporate Governance published tomorrow (!) entitled ‘Anything you can do, Icahn do better‘ states that critics of Hedge Fund, such as Miliband, are wrong: “empirical proof that activists exacerbate short-termism is strangely elusive” (thanks to @johnycassidy for tweeting this). As usual Miliband’s calls for action are driven by his socialist view that the market (i.e. us citizens making voluntary transactional decisions) is wrong, and that he and his political clique are right.

The Economist Blog refers to an excellent paper recently published by Harvard Law School, entitled ‘The Long-Term Effects of Hedge-Fund Activism‘. This paper concludes thus:

“This paper has investigated empirically the claim that interventions by activist hedge funds have an adverse effect on the long-term interests of companies and their shareholders. While this claim has been regularly invoked and has had considerable influence, its supporters have thus far failed to back it up with evidence or even to subject it to an empirical test. This paper provides a comprehensive investigation of this claim and finds that it is not supported by the data.

[…]

We find no evidence that interventions are followed by declines in operating performance in the long term; to the contrary, activist intervention are followed by improved operating performance during the five-year period following the intervention.”

As usual Miliband believes his dogma is correct despite evidence to the contrary. He rabble-rouses his natural electorate against the productive in society who fund his privileged position, his pension fund, expenses-based lifestyle, and all of his beloved socialist infrastructure that the state controls.

He is an evidence-free zone; a snake-oil salesman of socialist rhetoric.

Taxes and Subsidies: Incentives and Disincentives

Like it or not the world is driven by economic activity. Nothing happens unless people buy something, be that a product, service or employees. These economic activities vary in importance to those procuring and supplying them, with the balance point between supply and demand coming when the price for that product, service or employee is agreed between producer and purchaser. However governments have their own idea of how much of each product, service or employee should be procured and they attempt to control this via a number of mechanisms:

  • Banning that activity completely (e.g. selling of drugs that it determines only it should have the monopoly on);
  • Banning that activity as best it can (e.g. sex work);
  • Setting the price for that product, service or employee. This is very dangerous as it moves the economic equilibrium point and always has adverse and unintended consequences (e.g. national minimum wage, energy prices, train fares, etc.);
  • Taxing and subsidising.

When the state doesn’t want an activity to happen, but recognises it cannot successfully ban that activity, then it taxes it. Examples are the ‘sin’ taxes on tobacco and alcohol (the latter I’ve blogged about here). When it does want an activity to happen, but recognises it cannot do that itself, then it subsidises that activity. An example is agriculture.

However, although it is widely recognised that if you tax an activity then you create a disincentive to undertake that activity, the government then taxes anything that it sees happening in sufficient quantity for it to become a useful revenue stream if taxed. The unintended consequence of this is that less of that activity happens (or less of it happens legitimately). Similarly the government identifies activities that people cannot afford to do by themselves (usually due to their excessively high tax burden) and creates subsidies (called grants, tax credits, benefits, etc.) to assist those people.

So let’s take a look at what the government taxes, that is what it is (often unintentionally disincentivising):

  • Employment: Employer’s National Insurance is a tax on employing people, thereby creating disincentives for businesses to employ people until they really have to. Rates vary from 0% to 13.8%;
  • Work: Income Tax and Employee’s National Insurance are taxes on employees, making it costly to work (legitimately). Income Tax rates vary from 0% to 45% (recently reduced from 50%) and National Insurance rates vary from 0% to 12% – maximum of both is now 47% (45% Income Tax + 2% NIC);
  • Spending: VAT is a tax on spending. Spending is the way that we purchase items we need (or just want) which drives the economy and employs people in profitable activity. We are taxed on virtually everything we buy, except a small subset of items that the government deems as essential, such as some food, books and children’s clothing, but not gas, electricity, petrol, diesel, women’s sanitary protection products, incontinence pants, etc. (rates vary from 5% to 20%);
  • Insurance: Insurance Premium Tax is levied on all insurance premiums (6% or 20%);
  • Travel: Air Passenger Duty is levied on each segment that you fly from the UK (ranges from £13 to £188 per flight);
  • Profitable business: Corporation tax punishes the profitable business and creates incentives for companies to employee accounting schemes to minimise their corporation tax burden. Rates vary from 20% to 25%;
  • Earnings from a profitable business: Dividends are taxed with rates from 10% to 37.5%;
  • Digging oil out of the ground: Oil production companies are subject to several separate tax regimes to punish them for their ‘super-profits’. These taxes include Petroleum Revenue Tax (50% on value of oil extracted), Ring Fence Corporation Tax (disallows offsetting losses made elsewhere, unlike for all other companies) and the Supplementary Charge (75%);
  • Pensions: saving for your retirement is free of tax in certain closely-prescribed circumstances – step outside of those criteria and face tax rates from 20% to 55%;
  • Moving house: Stamp duty is levied on buying houses (!) with rates varying from 1% to 7%;
  • Death: Inheritance Tax is levied on dying. So if you haven’t managed to spend the lot before you expire then they take another swipe at whatever you’ve built up for your family (rate is 40%). Obviously government cannot disincentivise dying, but instead creates a market for exploiting loopholes that mainly the rich alone can afford to utilise.

Conversely (and often perversely) government creates schemes that subsidise many activities, again this may be unintentional:

  • Unemployment: I have written on this extensively elsewhere, but even Beveridge, the architect of the modern welfare state, warned against excessive or lengthy unemployment ‘benefits’;
  • Farming: the idiocy of the Common Agricultural Policy is well-documented by many already;
  • Under-performing or failing businesses: the history of nationalising or subsidising failing businesses, in the vain attempt to somehow turn them around by managing them with civil servants, has proven that this approach simply destroys more value than it creates;
  • Marriage: the latest moronic social engineering plan from the Conservatives. ‘Nuff said;
  • Children: while Child Benefit in itself probably isn’t enough to incentivise anyone to have children, the plethora of services provided to parents does create a system which taxes those who chose not to have children more and subsidises those who do have children. More social engineering.

As can be seen from the few examples above the UK has created a taxation system that creates some unfortunate economic incentives and disincentives. These all distort the market, whether they intend to or not. That we discourage employment and encourage unemployment alone should make us question the sanity of this system; and surely the continually high level of unemployment is evidence of this. Similarly taxing successful businesses and subsidising unsuccessful ones can only encourage the wrong behaviour (witness the legal use of tax avoidance to minimise corporation tax and the subsequent idiotic moral outrage at this natural consequence).

While we let government distort the market in the way it thinks benefits its electorate* then the economy will never operate freely, employing all, feeding all, benefiting all. We will forever be slaves to these idiots, few of which have ever run a successful business.

*note use of word ‘electorate’ – the fools who vote them into power – not citizens, the poor schmucks who pay for them and their ideas.

On The Stupidity Of Bureaucracy

I recently tried to pay my company’s quarterly VAT bill to Her Majesty’s Revenue and Customs (HMRC). As I used the compulsory method and logged onto the ‘Government Gateway’ website I discovered that I couldn’t submit a VAT return. In a panic I called the HMRC office that deals with our returns (only 16 minutes negotiating their phone system and on hold before I spoke to a human). There I discovered yet another travesty of bureaucracy.

Some background:

We moved our company offices in March last year. I asked our accountant, who is registered with HMRC as our ‘tax agent’, to change our VAT registration address, but they weren’t allowed to. Although this was stupid I have now discovered that the actual process verges on ridiculous.

As time progressed I continued paying the quarterly VAT via the Government Gateway website without any issues. However, earlier this year I tried to change the VAT registered address online. To do this you have to register separately for the ‘Change Business Address’ service on Government Gateway, even though I’m already registered to pay VAT and PAYE.

When you register for any new Government Gateway service they send you an authorisation key in the post. So guess where that went? Yes … to the old address!

This would have probably been ok but for another bureaucratic organisation: Royal Mail. They cannot setup a redirect on a shared office, as ours was previously, and so this post was never delivered but instead returned to Government Gateway; subsequent VAT post must have been sent back to HMRC too.

So despite the fact that I’ve been paying the VAT as expected on each quarterly date they registered us as a ‘lost business’. This is despite:

  • our address being online on our website
  • our address being correct at Companies House
  • our address being correct at HMRC to pay PAYE
  • them having my mobile telephone contact details

Finally in their completely inadequate ‘tracing’ process they sent me an ‘update contact details’ form to my home address. This lay unopened, like all my HMRC post, for a couple of months.

When I did discover it I completed the form and sent it off, receiving a new VAT registration certificate at our new address last month. However, because we were registered as a lost address we were switched to six-monthly returns, so a VAT payment is not due this quarter (after all the panic). When I explained that I have £90,000 to pay the nice chap on the phone said “well you’ll have to wait” – so that’s about £250 interest we’ll make! Also there are also no penalties as we’ve been paying VAT to date and it’s HMRC who changed our status.

Just how stupid is this system?

  1. You need to change your business address?
  2. No, you can’t do this online even though everything else is without registering for the ‘change address’ service
  3. When you register we’ll send you the key you need to your old address

The chap at HMRC was surprised that I hadn’t registered for this important service already: how often does he think businesses move? This was our first address move in nine years! And who would honestly expect that changing address for VAT would be so difficult? Weirdly HMRC allows you to change the business address for paying PAYE and other taxes online without this convoluted mechanism: the same government department!!!

Now the astute among you will know that HMRC was formed in 2005 by the merger of HM Customs and Excise (who dealt with VAT, customs and excise taxes) and Inland Revenue (who dealt with company and personal taxes). This merger was sold to parliament as a method of making 12,500 job savings by then Chancellor of the Exchequer, Gordon Brown. Obviously little actual integration has occurred in the intervening eight years, even though all payments and returns are made through the Government Gateway.

This is yet another demonstration of the stupidity of bureaucracy, especially in government.

By the way, I’m not suggesting that this process is ‘accidentally’ used as a tax avoidance mechanism!

An Eloquent Brand of Revolution

Russell Brand has caused yet another disturbance in the Twittersphere with his recent appearance on Newsnight. Many question why a mere comedian should be afforded the gravitas of a one-on-one interview by Jeremy Paxman. The obvious answer is his obvious intelligence and eloquence, but he is interesting beyond his showbiz facade.

I know many people dislike Brand, with his airy-fairy bohemian language, over-gesturing, crudeness and simplistic belief in socialism; personally, I like him. I’ve watched his material for years, seeing past the flamboyant performance art of his stand-up comedy to the intelligent foundations beneath. And, importantly, he makes me laugh – a comedian’s raison d’être, after all. Several years ago I arrived in Edinburgh for a few days at the Fringe, walked up those never-ending steps from the dinginess of Waverley station into the majesty of Princes Street, to be greeted immediately by Russell Brand and his entourage walking past. He noticed that I’d recognised him, smiled and said “Wotcha mate!” In that passing second his joie de vivre was contagious.

But Brand is more than just a former addict-turned comedian. Here he was in front of Britain’s toughest political interviewer mocking democracy and promoting revolution; even Paxman looked shocked. Brand rightly pointed out that voting is useless, it changes nothing: “why be complicit in this ridiculous illusion?”. He then railed against the inequity in society and linking this to the self-serving political elite. He boasted of never having voted, to which Paxman used the political-establishment line of ‘if you don’t participate then you have no say’; Brand decried this mantra as the con-trick that it is.

And then on BBC’s Newsnight, its flagship TV news platform, Brand advocated revolution! He didn’t go into detail about how this revolution would happen (thankfully, as advocating violence to enact political change is illegal under the various Terrorism Acts), but was adamant that this was the only way to change society radically. Personally I don’t agree, but I do share his belief that democracy isn’t going to help the state abandon its ways.

At this stage I agree with much of Brand’s enthusiastic critique of society. However, as many other libertarians would agree, it all goes wrong here. As you would expect, if you know anything about him, Brand then espouses as the saviour of humanity “a socialist egalitarian solution based on the massive redistribution of wealth, heavy taxation of corporations and massive responsibility for […] any company exploiting the environment”. His policy to reduce inequality we need to tax corporations hard, ‘catching’ tax avoiders, and all the usual Marxian dialectic and faux-logic (“profit is a filthy word because wherever there is profit there is also deficit”) short of putting evil capitalists up against the wall come the glorious day.

So Brand is intelligent, why socialism? I believe there are a few options on this…

1. He’s taking the piss? His eloquence and political solutions are just his own performance art, and he’s parodying Wolfie Smith.

2. He honestly thinks this is the best solution?

3. He, like many who make their living in the public view, recognises that saying you believe in socialism is the easiest way: you appear caring and cuddly, albeit ignoring the evidence of the vast social, economic and political inequities that socialism brings. (Why anyone thinks that being proud of believing in socialism is any better than believing in fascism is beyond me: they are the same evil ideology separated by relatively few characteristics).

As a libertarian, I share his anger at the political class, the inequality in society, and damage to the environment: he is right to see the existing system as the fault. However, I disagree vehemently with him as to the solution. Only voluntary trade (‘capitalism’ if you will) can improve this. Without the individual’s self-interested actions we would live in a society where the bureaucrat controls our lives, deciding our job, pay and conditions. Why would anyone think that Whitehall can make decisions about my life better than me? This is idealistic nonsense: to decry the status quo and then think that ‘administrators’ could control the economy better than millions of self-interested individuals. The inequalities that Brand so dislikes still exist after 70 years of our glorious welfare state, so why on earth would one think more statism would change that?

Brand is right, a revolution is coming. However it’s not a socialist revolution, despite his support for neo-socialist groups like the anti-capitalist Occupy movement. The rising wealth in China, India and Africa, all due to international trade, is creating a new class of educated young, people whose parents struggled in poverty. Even Bono has come to the realisation that trade not aid is needed to lift Africans out of poverty. This wealth and education, along with the international awareness that social media has brought, will create a desire amongst those not enjoying it to participate. Unfortunately this new-found approach to individual voluntary action isn’t shared by all.

In the UK we have created a society where school leavers expect work to be given to them, or free money if nobody thinks them worth employing. That entrepreneurial spirit required for growth is lacking in many in the UK, despite attempts by the BBC to promote it with such successful pro-business franchised shows as The Apprentice and, more importantly, Dragons’ Den. Sadly many of our youth have been left behind, indoctrinated by state education that society (i.e. government, i.e. the taxpayer, i.e. them and their parents) owes them a living. As Simon Kelner in the Independent says: “His call for revolution may be Spartist nonsense, but Brand definitely articulates a strain of thinking among a growing number of young people who feel disenfranchised, disenchanted, disengaged and, most important, disinterested in the idea that politics can change the world.” While Brand recognises the anger of these left isolated from the productive world around them, he misses the cause.

It is a shame that Brand hasn’t recognised voluntary transactions, free trade, as the greatest route away from the inequality that he rightly despises; that the state that he advocates more of as being the root cause of much of that inequality. Imagine the fireBrand in action, convincing the youth, if he understood and believed in the coherent, egalitarian philosophy of libertarianism.

In the meantime we must just be glad he’s arguing against established politics, politicians and democracy. Come the glorious day…

Nelson Mandela: Saint or Sinner?

With his failing health and impending 95th birthday Nelson Mandela is once again at the forefront of world attention. The world is bracing itself for the inevitable news and the world’s press are jostling for position outside his hospital to report that news. Barack Obama stated this weekend that he wouldn’t visit the ailing Mandela as it would appear just a photo opportunity and would invade the family’s privacy; instead Obama took his photo op at Mandela’s cell on Robben Island, stating he was “deeply humbled” to stand there. Such is the kudos of Mandela that world leaders are keen to touch his sleeve, albeit only metaphorically now. Jonathan Freedland’s article ‘When Nelson Mandela goes, the global village will lose its elder‘ sums up many people’s view on this elder statesman. However, many on the political ‘right’ have always argued that Mandela was a terrorist and so was rightly punished. The facts, for a libertarian, are (ironically) slightly less black and white, with Mandela’s struggle against an evil state taking on three main phases.

Nelson Rolilhalha Mandela was born into a royal family in an already racially-divided South Africa on the 18th July 1918. When young he attended university, training as a lawyer, and became involved in anti-colonial politics co-founding the ANC’s Youth League. By the late 1940s it had gained control of the party in response to the Apartheid laws passed from 1948 onwards by the ruling National Party. The ANC at that time supported a campaign of civil disobedience, including strikes; the government responded violently: in 1950 during one strike 18 black strikers were killed. This was the first phase of Mandela’s struggle against apartheid – the non-violent phase.

However Mandela and the ANC adopted a new approach at the start of the 1960s with the founding of Umkhonto we Sizwe (MK: “spear of the nation”); on this dramatic shift in policy Mandela famously said:

“At the beginning of June 1961, after a long and anxious assessment of the South African situation, I, and some colleagues, came to the conclusion that as violence in this country was inevitable, it would be unrealistic and wrong for African leaders to continue preaching peace and non-violence at a time when the government met our peaceful demands with force.

This conclusion was not easily arrived at. It was only when all else had failed, when all channels of peaceful protest had been barred to us, that the decision was made to embark on violent forms of political struggle, and to form Umkhonto we Sizwe. We did so not because we desired such a course, but solely because the government had left us with no other choice.”

After 13 years of increasingly violent response to peaceful protests the ANC had become despondent and desperate for change. They started a guerrilla campaign against government installations and included many other acts of sabotage. This was the second phase: a violent campaign targeting the government alone. Many libertarians would err at the thought of starting a violent campaign against their state due to the non-aggression principle, however in South Africa at the time it can easily be justified as the state had already initiated the violence both mentally with apartheid laws and physically with the violent response to civil disobedience; this wasn’t initiation of aggression, it was defence against it. Some libertarians may disagree but I believe that Mandela’s response at this time was entirely justified. The South African government declared Umkhonto we Sizwe a terrorist organisation and therefore illegal (incidentally the US government also declared MK a terrorist organisation, undoubtedly as it was in fear of similar events there due to the increasing civil rights campaign).

The question of whether the individual is right to take up arms against their state is a difficult one. South Africa was one of, if not the most, democratic country in Africa at that time, even though only a minority of its people were allowed to vote (or even be classed as citizens). This question challenges the very nature of democracy – as I frequently do – is the legally-mandated government ever really morally legitimate?

Whilst many libertarians, including me, would prefer Gandhi’s adherence to non-violence as the preferred route to liberation I can sympathise with Mandela and his colleagues making the choice they did at that time. The one aspect on which most ‘right’-leaning libertarians will agree is that the ANC’s politics were pretty abysmal: as with many of its regional allies, who it relied on for military support of MK (including ZAPU, FRELIMO and SWAPO), it was aligned with various flavours of socialism and many of its contemporaries were funded by the Soviet Union. The ANC was also closely affiliated with the South African Communist Party at that time.

The third phase of action against the apartheid state was a result of the gradual slide into despotism within MK: it was subjecting recruits to extreme punishment and many human rights violations occurred including executions without due process within ANC detention camps. Umkhonto we Sizwe then extended its military campaign to other targets, including mining rural roads leading to farms, and bombing bars, restaurants and shopping centres. The landmine explosions alone resulted in over 123 deaths and the ANC eventually abandoned it due to its high rate of casualties amongst black labourers. One set of statistics record 230 deaths due to the ANC/MK campaign in the period 1976-1986 with only 10% being members of the security forces; as with the ratio in the general population over 70% of the casualties were black.

As a libertarian I cannot support initiation of any act of violence against civilians and therefore this campaign was abhorrent and immoral (incidentally, to hold democratic voters responsible for their government’s worst excesses is the approach Osama Bin Laden used to justify the attacks against the US on September the 11th 2001). This extension of violence from the state to civilian targets didn’t start until 1976 after the Soweto uprising, where at least 176 protestors, many children, were killed by the police. With respect to Soweto the extension of violence can be seen as an understandable, but not justifiable, reaction.

While the ANC and MK is to be rightly condemned for its escalation of violence the involvement of Mandela with this decision has to be questioned: he had been imprisoned since 1962 and during this period was in isolation on Robben Island with only one visit and one (heavily-censored) letter every six months; with this limited communication it is dubious to hold him responsible for MK’s campaign against civilians.

While I would view Martin Luther King and Mohandas Gandhi as better role models for liberation movements, due to their non-violent approaches, there does come a time when state oppression can only be fought with violent means. In my view Nelson Mandela was right to do this in his time, though his movement’s successors were wrong in their subsequent approach. While I vehemently disagree with the socio-economic model that Mandela and his colleagues wished to inflict on their people I do think that he should be recognised by libertarians for his fight to free the persecuted and effectively enslaved people of South Africa.