Libertarian or Democratic libertarian?

One of the joys of our new Whats App sites is that you can have a jolly good debate over important issues and, as long as it doesn’t get personal, which all good debaters avoid, make substantial progress in developing them.

Inevitably in the aftermath of Brexit the debate has turned to the position of the party on the political spectrum. Before it really didn’t matter too much as we were all united behind the common objective of getting Britain out of the European Union. We have members from all walks of life and background, but once the tide goes out you can see what’s below!

Our constitution, clause 2.5, says we are a democratic libertarian party. Small ‘d’ and small ‘l’. It does not say, as some have claimed, that we are a Libertarian party, with a capital ‘L’. I don’t know how much thought went into the original wording? Perhaps not very much and they were just looking for something vaguely neutral. However it says what it says, so what does it mean and do we want to change it? I discovered a general reluctance to change the constitution, but I don’t think many realise quite what a Mad Dictator’s Charter we have been lumbered with. However I am not going to go into that here as I have covered it in a previous post.

My immediate reaction is that the words ‘democratic’ and ‘libertarian’ qualify each other. Traditional libertarian theory pretty much means no taxes and no government, at least in its American incarnation, where all taxation is regarded as theft and only those paying into the pot should be entitled to a vote. This was the position espoused by John Stuart Mill writing in the 1860s and based on the theories of classical economics. Since then of course John Maynard Keynes has produced his General Theory in which he introduced the concept of involuntary unemployment and observed that economic equilibrium can occur at less than full employment. Keynes’ view is now mainstream. More recently we have become familiar with the notion of dysfunctional markets where the imbalance of supply and demand is so great that the price mechanism no longer works, such as in housing or steel, and government intervention is required.

Mills’ theories are not redundant however, particularly in the realm of social justice, and Keynes himself was careful to stress that the classical laws of economics remain valid in normal conditions. As with Einstein’s general theory in physics, the classical laws only break down in extreme circumstances such as for matter approaching the speed of light or the interaction between subatomic particles. In fact I think Keynes was being a tad pompous in comparing himself with Einstein because by the time he was writing he was analysing a different ‘nature’ whereas Einstein was explaining more deeply the original nature. That is because during the late nineteenth and early twentieth centuries the introduction of a full franchise and the advent of trades unions meant that a resistance to the downward movement of wages had developed which was not there before.

The principle tenet of JS Mill’s philosophy that I adhere to is that of the ‘Tyranny of the Majority’. If the majority decides everything then nothing is left to the discretion of the individual or to minority rights. Classic examples were Labour’s disbandment of catholic adoption agencies and their insistence on single-stream comprehensive schools and persecution of independent schools. In neither case is there any overriding national interest involved; no need for uniformity across the land. The Socialist view is totalitarian ideology in which Big Sister knows best.

A free society might be defined as one in which the domain of morality is greater than the scope of the law. A bit like concentric circles it is the size of the gap in between them. A free society requires respect for the law, and that will only occur if everyone is equal under it. The law is there to protect us from harm or loss by third parties, and to enable us to deal with confidence with second parties. It is not there to protect us from ourselves nor to coerce us into patterns of behaviour which are simply of convenience to the state. A free society requires a strong sense of moral responsibility and history shows that it not only requires one, it also breeds one. By comparison in the EU, where most laws are based on Napoleonic law, you can only do what the law permits you to do. Here it is the other way around. That is now threatened by incoming alien cultures to replace the threat posed by the EU.

All libertarians reject the tyranny of socialism, but how far to the right do you have to go to escape it? This depends on whether the majority of voters are socialist or libertarian, and I am quite sure the majority in this country are libertarian. Indeed I maintain that the word ‘democratic’ in ‘democratic libertarian’ places us firmly at the centre of the political spectrum pretty much by definition. That is where the votes are, and there is no point in taking an extremist position where there aren’t any. Activists in all parties like the simple clarity of extremist positions, but activists are not typical of the general population.

So we need a simple yardstick to say what government should be about and what it should leave to the discretion of the individual. I suggest that yardstick should be the concept of ‘national interest’ as assessed objectively by its very nature. For example there is clearly a national, or common interest in defence and equality under the law. That means we must raise sufficient taxes to pay for these things as a common good. It also introduces the concept of a transfer of wealth from rich to poor as our tax systems are progressive. The money could not be raised otherwise.

Other areas of policy are more debatable, but I argue that there is no national interest in allowing an unemployable underclass to develop. Not only do you have to be educated but you also have to be fit and healthy to pursue and hold down a job, and you have to be free of such structural unemployment factors such as the poverty trap and skill and regional imbalances. So education, health, welfare and regional policy also qualify, and so on. Those who argue that all taxes are theft should try earning a living on a desert island. They only reason they can do so is because they are part of a society that provides them with the economic opportunities and framework of law in which to do so, so some recompense is surely only just. I also pointed out that I do not myself now pay tax! Every year I use savings to make additional pension contributions so as to keep my taxable income to within the personal allowance. I would be pretty pissed off if I lost my right to vote as a result!

At the start of our discussions I tried to quantify such a centre position by saying we should limit central government expenditure to 35% of GDP. After all we have just been through a general election where Labour wanted to increase it to over 40% yet at the same time we are struggling to balance the books with a pre-Covid deficit of around £40bn, or 2% GDP, when the OECD says central government is currently spending 33.5% GDP and many public services are clearly struggling. This drew some sharp intakes of breath in certain quarters. OK the constitution in Clause 2.5 does go on to say that we will “seek to diminish the role of the State and lower the burden of taxation on individuals and businesses”. I can go along with that provided we remember that the majority of people in this country clearly want decent public services and a reliable welfare state. That means focusing on efficiency and possibly also on alternative sources of finance. There are plenty of opportunities to do so as my policy contributions demonstrate.

Policy Papers

Over the past couple of months a number of Whats App groups have been commenced within the party including one for policy development. This is a huge improvement on the previous arrangement where members could fill in a form on the members website and it would be sent to persons unknown. They just disappeared into the ether. Now we have a system where policy ideas can be seen by everyone and commented on as you go along.

I have now submitted the following papers which you can download and comment on here:

  1. Trade and the economy
  2. Border controls
  3. A Sovereign Wealth Fund
  4. A National Credit card
  5. Constitutional and Electoral reform
  6. Education

Addressing Islam

UKIP’s constitution under Clause 2.4 says clearly that we uphold the principles of Equality under the Law and oppose all forms of discrimination. It follows from this that it would be wrong to mention Islam specifically in any manifesto, at least as far as proposed changes to the law are concerned, because if the law identifies any person or group then automatically that person or group is no longer equal under the law. A number of members who have left us have found that difficult to reconcile.

The issues we face are those of criminality and cultural displacement, not Islam as such. I see no reason to enquire into the nature of Islam. I have never read the Koran as it is not my religion. I am a libertarian believing in freedom of conscience and worship. A problem only arises if the law is broken. The law is binary. Either you are Guilty or you are Not Guilty. There is nothing in between. Motivation is irrelevant as far as the verdict is concerned. It may be taken into account in the sentencing, but that is another matter. The fact that some individuals do not respect the law and want to substitute their own need not concern us at the level of an individual crime. It does concern us however if such individuals attain political power and influence in large numbers. It also concerns us if the indigenous population start to feel pushed aside and ignored either physically or politically. That is what I call cultural displacement. Nobody minds a bit of diversity and I support those who say it enriches our own civilisation, but when the numbers become as large as they are now it ceases to be diversity and becomes displacement.

Those who protest at this are often accused of Islamophobia. It seems to be an exclusively Islamic problem. We don’t have the same problem with Judaism of Sikhism for example as they make an effort to fit in and adopt our values, and we have benefited greatly from their contributions.

Phobia simply means fear. Machiavelli noted that if you hurt a man he will hate you for it, and all the others will fear you for it. He was of course advocating fear as an instrument of policy, whereas we want exactly the opposite. But his understanding of human nature was spot on. Of course if someone comes along and tries to kill us or rape our daughters we are going to hate them for it. And everyone else will fear them for it. What else did they expect! Fear is irrational and will not draw nice distinctions between good moslems and bad. Aggression is always and only a sign of insecurity. Insecure people will lash out indiscriminately, and that will then create fear on the other side, and before you know it a viscous circle has flared up and you have a civil war on your hands.

If you want to reduce an effect then you must reduce the cause, and the principle causes of racism and Islamophobia in this country today are perceived inequality under the law and cultural displacement. To paraphrase Tony Blair’s famous dictum about crime, we must not only be tough on racism, we must also be tough on the causes of racism.

Canvassing around Southall now during two general elections, a majority black and Asian community with a large number of different ethnic groups and the largest Sikh community outside India, I was struck by how almost all of them said it was natural for each to self-segregate. I don’t have a problem with this, provided always that no group becomes disproportionately dependent on the state. I certainly don’t agree with those who want to whiz everyone up into some sort of homogeneous, mono-cultural mulligatawny soup. On that basis we should object to the Welsh speaking Welsh! We all want to preserve and celebrate our own cultures, and that is the glory of multiculturalism. Long may it survive. It only becomes a problem if one group becomes over-assertive and insists on shoving their own identity up the noses of others. Gay Pride marches routed through Muslim neighbourhoods provide an entertaining example! Muslim ethnic cleansing and grooming gangs a much more serious one.

However the result is the formation of something akin to geological tectonic plates. When one plate expands and starts to overlap another you get earthquakes and volcanic eruptions, in this case in the form of conflict and racism. I understand the dilemma that local authorities find themselves in when faced with the need to accommodate increasing and changing numbers like this, but their attempts to mix everyone up simply does not work. The result is the ethnic cleansing gangs that we have seen in Luton and elsewhere which intimidate all others out of the areas they themselves want to live in, and the police, under orders from the local authority, simply stand by and do nothing.

The only real answer is to control the ethnic balance and numbers with strict control over immigration and by ending breeding for benefits. I address those policies elsewhere. In addition we must review the lines of accountability of the police so that enforcement of national laws are not overlooked. The appointment of a national Chief of Police to provide a clear line of accountability and responsibility between local constabularies and Parliament would be a start. It would also help ensure the police get the resources they need, and that the performance of each constabulary is reviewed in comparison with its peers. And it would enable a secondary line for public complaint to a national review team for instances where local constabularies fail to follow up on local complaints or, even worse, start to persecute those who complain, as has been witnessed now on several occasions.

 

 

Reviewing UKIP’s constitution

Back in February I was invited to join an internal working group reviewing the party’s constitution. This seemed particularly apt in view of the series of disastrous decisions over the past year which has seen both membership and finances damaged, but I soon found that some others saw it as no more than a routine maintenance exercise.

No matter, I ploughed on and contributed my findings and ideas. There did not however appear to be any urgency from the NEC so things drifted until our new leader, Freddy Vachha, was elected in June. Freddy soon decided he needed to be directly involved with this and the team was reshuffled without me!

However still nothing has happened, so for the sake of posterity I post my report and it’s appendices here:

Report

Appendix 1. Proposed new constitution showing changes

Appendix 2. Review of documents

Appendix 3. Proposed new Memorandum and Articles of Association (incomplete)

Carillion

The government is in the process of reviewing what needs to be done to prevent such corporate collapses happening again, and is in receipt of substantial petitions on the subject, so here is my two pen’orth.

The prime focus of the protests and review is on whether the auditors could and should have picked up the warning signs and issued a qualified audit report on the basis that Carillon was no longer a going concern. So the first point to make is that even if they had the damage may have already been done, and if so probably nothing would have been different. I don’t know if the warning signs were there at the time of the most recent audit anyway, but let us assume for this discussion that they were and they were missed. That would be a simple failure in practice that could always occur.

One proposal being pushed is that audit firms be split up with their tax and consultancy arms floated off separately. I qualified as a Chartered Accountant with one of the big firms in London in the early 1970s, and shortly after transferred to the management consultancy division. The first thing I noticed is that it was not a division at all. It was a completely separate practice trading at arms-length from the main firm. Indeed there were some audit partners who would not let us management consultants anywhere near their clients! The audit partners who did pass work to us saw their role as being able to offer a wide range of services to their clients which they could oversee on behalf of their client. There was nothing financial in it for them then, and I do not suppose that has changed since.

So is there a problem here, or are we just looking for scapegoats? I think there is.

For an auditor to qualify an audit report is a hugely damaging decision for both of them, and to do so on the basis that the client is no longer a going concern is incendiary. It takes a lot of courage. So the larger and more significant the client the more difficult the decision. Some people have proposed that the big firms be broken up into smaller practices, but that would just make the client significance problem even greater, and the question of ancillary services is not even relevant. The other suggestion being bandied about is for an audit watchdog, some sort of auditor’s auditor, or for auditing by state auditors. Neither of these suggestions it seems to me addresses the actual problem, and would just add complication and cost and almost certainly a deterioration of service. Yes, state auditors would be more independent, but the cost to the taxpayer would be huge and could not possibly be justified.

However there is another possibility and that is the creation of shareholder supervisory boards (SSBs). I have recommended these separately in relation to fat-cat pay and over-ambitious mergers and acquisitions. Responsibility for appointing and reviewing the auditors is an obvious addition. It would change relationship between the Directors and Auditors completely, making it much more arms-length. The half dozen or so largest shareholders on the register at any time would comprise the board, together with the Chairman, MD, FD and one Non-exec, and where significant government contracts are involved a government representative could be included too. Key decisions have to be made much more quickly these days than can be deferred to all of the shareholders in general meeting, and in any case it is the Directors who get to draft the resolutions. An SSB could make quick interim decisions and approve the resolutions first.

I would also change company law to make the shareholders supreme once again. Even today Directors can over-rule the shareholders on key decisions including resolutions about their own pay. This goes back to the 1890s when the Bank of Glasgow went bust and everyone asked why the shareholders had made such bad decisions. It turned out that most shareholders in those days were retired vicars and little old ladies and so on who had no professional training at all, so it made sense to give the Directors the final say. Today the situation is completely different with most shareholders being highly proficient asset and pension fund managers. Time to repeal this one!

Finally there is the question of limited liability. I am extremely surprised that the risky contracts that brought Carillion down were not being conducted through subsidiaries with limited liability. The conglomerate structure that you will find in most large companies is designed to do this so that if one subsidiary goes bust the rest of the group is unaffected. Bad luck on the creditors of the subsidiary of course because they have no recourse to the holding company or the rest of the group, but it makes sense overall. If a subsidiary is considered to be taking on too much risk there are always insurance options available.

Labour Shortages

The Government’s Migration Advisory Committee wants to increase the number of jobs on the list aimed at plugging gaps in the UK labour market. Jobs on the Shortage Occupation List are effectively allowed to jump the queue for workers from outside the European Economic Area. Their review said there should be a big expansion of jobs on the list. Under these proposals, the list would cover 9% of jobs in the labour market, compared with approximately 1% currently.

What the government fails to realise is that the economy is over-heating. The alarm bells of inflation no longer ring because open borders mean that the labour market never tightens. The system introduced by Ken Clarke and Gordon Brown whereby the Bank of England can set interest rates to apply the brakes when this happens no longer works. Thus it has become a self-fulfilling prophesy that we are always going to be ‘short’ of labour and key skills however many people we let in.

It is perfectly possible for any government to achieve full employment (strictly speaking that level of employment before inflation takes off) with the right combination of fiscal, monetary and exchange-rate policy. Currently the economy is booming because of the devaluation that followed the referendum and the authorisation of a further £70bn of Quantitative Easing later in 2016. It is quite possible this was a misjudgement because they did not expect the boost from devaluation!

In fact immigrants do not ‘take our jobs’ as the government can simply increase consumer demand in this way to accommodate any level of population, though it may not seem that way during a recession. If immigration were restricted then conversely the level of consumer demand could be set to match that lower level of population and you would still have full employment.

There are many reasons why we do not want net immigration to this country which I am sure I do not need to rehearse. Personally I would prefer a Quota and Auction system to Nigel’s Australian points-based system, some loose version of which we now seem to have, because it would create a far less bureaucratic and more open competitive market for the skills we need as well as giving much more direct control over the actual numbers involved.

Employers wanting to import labour, and others wanting to come under their own steam, would have to buy a place in a monthly quota, which we can gradually tighten until they realise it would be cheaper to train up and employ British staff. We also need urgent reform of the welfare system to remove the poverty trap and reverse the sadistic implementation of Universal Credits this government is fixated about and which is having completely the opposite effect. I want to see self-assessment for benefits. We have it for tax, so why not for benefits, with payment by return on submission of an online timesheet? As Nigel doesn’t seem to understand, there is more to Brexit than Brexit. It needs a whole raft of additional policies if we are to avoid a C&D (crash and disaster).

Steel

It is disingenuous of Greybull, the owners of British Steel, to blame Brexit for their losses. They had already lost £19m in the year to March 2018 long before delays to Brexit were even announced. The company had been profitable as recently as 2017.

The real reasons are firstly the EU’s refusal to grant the company its proper quota of emissions trading licenses until Theresa May’s Withdrawal Agreement has been passed, and secondly China’s increased dumping of inefficiently produced steel onto world markets following Donald Trump’s imposition of tariffs.

Once we are out of the EU (properly – without any sort of ‘free-trade’ deal either before or after – that would just increase our deficit as any mathematician could tell you) we can either ditch the emissions trading scheme or ensure that British Steel uses a green energy supplier. The green taxes can be removed because green energy is now cheaper than fossil fuel energy. Panic over. That will reduce British Steel’s costs significantly.

Secondly we can impose our own import tariffs after Brexit. We have a massive trade deficit with the other EU countries which we must turn around and eliminate if we are to recover economic growth. That requires import tariffs which a No Deal Brexit will enable to prevent dumping as well as manage our trade balance.

Steel is not a dying industry. There is huge demand for it both in this country and potentially as exports. Investment in it makes a lot of sense. New technology is currently available and continues to develop alongside artificial intelligence. Yes, that will lead to a gradual loss of jobs, but there is no need for a cliff-edge collapse now. We can nationalise or part-nationalise the company just as we did with the banks. That was in fact very successful with the benefit of hindsight. The capital came from QE and the taxpayer profited from the rise in the share price.

I am not suggesting that the taxpayer or QE fork out for the new investment required. That way lies inflation, as they have discovered most recently in Venezuela. It worked for the banks because it was offsetting a fall in the money supply due to the writing off of bad debts (and also, it is now apparent, the financing of our rapidly increasing trade deficit with the EU). A new share issue can be raised for that if the investment is genuinely viable, and the City is in the best position to judge that. Either way new management is needed.

Finally Brexit will enable us to put in place a proper regional policy aimed at achieving an even level of percentage employment across the land. Those released from work as technology raises living standards generally can then find new jobs much more easily. It just needs to be given time.

Abortion

During the euro election campaign, as a candidate I have received over 400 identical emails asking whether I would support EU spending or other influences to persuade either EU member states or other countries to legalise abortion. I sent out a response saying that as a libertarian I am pro-choice but that does not mean I would support any EU spending or policies to interfere with the internal democracies of such countries.

Interestingly I did not receive any emails on any other subject. Perhaps others realised that at number seven on the London list there was no hope of me becoming an MEP! However I did get around a dozen responses to mine which to my surprise represented a wide range of views, and certainly not all of them based on religious beliefs. One of the latest read as follows:

Dear John
Thanks for your response which I appreciate. Whilst I suspect you have thought this through, your response seems to indicate you think pro-choice is the only position consistent with libertarianism? I would also consider myself such, but think the exact opposite. If you do have the time, I would be interested to know why you think this.
Best wishes
A****
so I thought I would share my response to him with you which was as follows:

 

Dear A****
Thanks so much for your reply. I have received over 400 identical emails on this, but it is only when someone replies to one of my admittedly identical responses that it comes alive and we can have an interesting discussion.
The first point I would make, as I am sure you will have realised but just to be sure, pro-choice does not mean pro-abortion. Abortion must be a horrible experience for any woman and I would not wish it on anyone. I have been told that some children survive abortion with horrible consequences, that the foetus can experience pain at earlier than 24 weeks, and that many women, especially children, are hounded into a decision without the benefit of full and independent advice, though whether these things happen at professional clinics was not made clear. Clearly the law needs to be tightened up if they do, but that is surely more easily done if abortion is legal.
No, my first question is to ask if there is any over-riding national interest in establishing uniformity across the land. I do not see one, and therefore believe a free society should allow the matter to be left to individual discretion either way. After all, the individual facing such a decision can have a far better understanding of the circumstances and consequences involved than a general and remote law can possibly do. What do you say to the woman who is both well informed and clear that she does want an abortion? Why should others have any right to impose views on her she does not share if they are not themselves involved?
Which brings us to religion. Many of my correspondents have had strong religious views which I fully respect but do not share. That of course puts me at a disadvantage, but I do still want to address the question of rights of the unborn child. It seems clear to me that rights are a man-made legal construct, determined for all of us by Parliament, and therefore cannot pre-exist. Of course we can choose the give the foetus rights, but that is a decision for the majority who then face a question of priorities over maintaining a free society. I would ask how far back do you go? What about the unfertilized egg? It all gets very subjective and impractical. I am therefore happy to stick to the current practical and , I think, reasonably balanced arrangements. Ultimately it is a matter for a free vote in Parliament.
With best wishes,
John.