My New Blog

So as you can probably tell by the gap between this and my last post, I no longer write this blog. However, I have picked up blogging again at: http://matteroffactsblog.wordpress.com/

Markets aren't all bad

We need to follow the facts rather than the zeitgiest.

The Cambridge professor William Ralph Inge once quibed that ‘whoever marries the spirit of the age today will be widowed tomorrow.’ The Credit Crunch is producing a lot of future widows. It is suddenly fashionable to trash the market and laud the state. Those who now engage in this practise will look deeply unfashionable as soon as state intervention produces the next crisis and fashion changes accordingly.

Such thinking is the product of a false choice. To talk of just ‘market fundamentalism’ or ‘statism’ is glib and simplistic. If we try to understand the Credit Crunch in terms of this dichotomy, then we will not understand it. The credit crunch does not show that markets in general fail but that certain markets fail. Nor does it show that state intervention works because the crisis has been caused in part by bad interventions. We need to look at the particular mix of markets and interventions that produced the crisis and replace them with a mix that works better.

This post was inspired largely by this month’s edition of Liberator, which is full of statements like ‘the notion...that the efficient operation of markets can largely be taken for granted has been brutally assualted’ and ‘economic liberals have been left looking pretty silly by this autumn’s meltdown.’ In fact the truth is more prosaic. The present crisis is macroeconomic in nature and financial in origin. It does not tell us much about, for example, the merits of using Quasi-markets to deliver public services. And why should it; running schools is very different from trading in derivatives or deciding whether to approve a loan for a poor man in Detroit.

The fact that the Credit Crunch has financial roots is important because financial markets are unusual. So the lessons derived from them will not easily translate to other markets. Banks are both uniquely powerful and uniquely vulnerable because trading happens at an extraordinary speed and involves massive sums of money, so the potential for sudden and destructive crises is that much greater. Compare the bankruptcy of Woolworths and Northern Rock. The former decayed over years, the latter imploded in days. And because money underpins every other part of the economy a financial collapse creates economic carnage. Taken together, this makes the financial markets unusually dangerous and unusually important and as a result they will need an unusually large amount of regulation.

Gloating statists should also bear in the mind the role of government in producing this crisis. The cheap money that banks so eagerly lent to people unable to pay it back was available because of state interventions. When the American economy last stumbled back in 2001, policy makers responded with exceptionally low interest rates. The Chinese government encouraged Americans to borrow vast some of money from Chinese savers by pushing down the value of their currency. These interventions are at least as important as the deregulation of financial markets in creating the crunch.

The present crisis has been a boon for simple minds on the left, much as the fall of the Berlin wall was for their counterparts on the right. We need more thoughtful analysis than ‘more state, less market’ if we are going to understand what is happening to our economy and how we can stop it.

Not in God's name

Christians should be as worried as the gay community are by Pope Benedict’s comments on homosexuality

Anyone hearing a Christian leader suggesting there is a moral equivalence between homosexuality and the destruction of the natural environment could reasonably assume that either Christianity condemned homosexuality unambiguously or that the harm caused by tolerating same sex relationships is both massive and evident. Neither of these is true.

If one was to try to discern God’s view of homosexuality solely from specific references to it in the bible, then one would come away with no clear answer. In Leviticus there is the famous edict ‘that man shall not lie with another man.’ There are also (as every West Wing fan can tell you) rules covering topics such as eating shell fish, the correct price of slaves and only wearing clothes made from type of thread. These are now seen by most Christians – including presumably Benedict – as anachronistic pieces of Hebrew law that are no longer binding on Christians today. There is no obvious reason to jettison those rules yet retain the ban on same sex relationships. Other (generally negative) references to homosexuality may simply be injunctions against rape and male prostitution. There is no unambiguous biblical reference we can point to that says what is right, one way or another.

What we can say, however, is that homophobia contradicts many key Christian principles. The hate and violence directed against the gay community, ought to motivate anyone who believes in ‘loving their neighbour’ to trying to strip away any religious justification for such bigotry. The condemnation of all same sex relationships by people, who may themselves be in imperfect relationships, is hard to square with the injunction ‘judge not, lest you be judged.’ Most importantly of all, if Christians condemn people for being gay then we make it harder for anyone who is gay to become a Christian.

If we look away from scripture and look at the impact that homosexuality is having on the world around us the case against being gay looks even weaker. The millions of loving, faithful same sex relationships should be celebrated by Christians not condemned. Allowing these couples to marry, surely strengthens the institution rather than undermining it.

Christians ought to condemning homophobia and not homosexuality. To do anything else undermines too many Christian values. That really is more worrying the destruction of the rainforest.

Time to kill the swingometer?

Over at politicalbetting.com, there is an article comparing the US network's coverage of the presidential primaries with what the BBC puts on for General elections. The Beeb does not come out well.

"[On US network's] there are no lofty hosts like the Dimblebys. there are few outside broadcasts except those following the key players, and the US news networks don’t seem to have those silly time-wasting three-party discussions where politicians try to score points off each other. The US coverage also avoids those irrelevant “How are they seeing it in the White Lion?” sequences which seem to be a speciality of the BBC."

I was lucky enough to be watching the results of Super-Tuesday in my college common room, which has a sky package that includes CNN and Fox. This was a revelation because the approach they took was forensic, analytical and informative. It takes politics seriously and assumes a degree of intelligence and engagement on the part of its audience. I came away from that evening feeling I had not only learnt the results but also a lot about American politics in general.

It is really time that the BBC acknowledged that if someone is up at two in the morning watching election results then they are interested in what is happening and do not needs gimmicks to be kept awake. The BBC being outrethianed by Fox is a painful sight. It is one that we can only hope ends soon.

P.S: There's an alternative and more amusing take on the election coverage courtesy of the Daily Show.

Love thy enemy

At the height of the civil war within the Labour party that eventually led the creation of the SDP, Shirley Williams issued a warning to anyone complacent about the danger of the extreme left.

‘I was brought up as youngster to learn about fascism. My parents fought against fascism, and they were both on the Gestapo blacklist, so I know something about it. But there can be fascism of the left as well as fascism of the right.’

I was reminded of that quote by events at the Oxford Union yesterday. What we saw was fervent anti-fascists being overtaken by a most fascist impulse. They were so intolerant of those who disagree with them that they were prepared to use force to get there way.

Let’s be clear about this. You have a right to object to Irving and Griffin being invited to speak. You have the right to protest about that decision. But at no point did anyone acquire the right to break the law in order to threaten people attending a perfectly legal meeting.

The views held by Irving and Griffin are indeed reprehensible but this will do nothing to help counter those beliefs. Trying to stop the fascists being heard is a strategy bound to fail. There are a regrettably large number of people who sympathise with them and they will make us hear them one way or another. The way to stop them is not through violent protest but by engaging in the kind of community politics that makes a difference to people’s lives and shows them that there is a real alternative. That requires us to be able to tackle the fascist’s arguments and that requires us to have heard them.

What makes someone a true anti-fascist is not joining unite against fascism or waving placards in the rain but the willingness, simultaneously, to tolerate and to challenge views we find repulsive.

P.S: The best account I have seen of what happend comes from Jonny Wright’s Hug a Hoodie blog. Please do read it, it will be worth your time.

The two faces of capitalism

Why you don't need to be selfish to believe in capitalism.

I wrote this article a couple of months ago but forgot to publish it. I have put it up now because having gone to the effort of writing it, it seemed a shame to let it go to waste. This is why some of it may seem a bit dated.

People who read this blog regularly will know that I do not have a high opinion of Naomi Klein. Her work rests on dubious assumptions and baseless attacks. Her latest article for the Guardian does nothing to change that.

In a previous blog on Miss Klein’s work, I attacked her claim that Milton Friedman was a fundamentalist by saying: “Market fundamentalists do exist but they tend to be marginal figures like Murray Rothbard and Ayn Rand rather than the architects of Machiavellian conspiracies on a global scale.” Little did I know that Klein, in fact considers Rand to be an influential thinker whose work has “liberate[d] entrepreneurs to pursue their narrowest advantage while claiming global altruistic motives - not so much an economic philosophy as an elaborate, retroactive rationale.”

Rand is certainly an extraordinary individual. A Russian immigrant to the United States who went on to become a hugely successful novelist and screenwriter, she also created her own political and ethical system with a band of disciples committed to advancing it. According to Rand morality is an illusion and truly great individuals act solely in their own interests without giving thought to the impact of their impact on others. If Rand were indeed typical of free marketers then capitalism would indeed be a dreadful creed. She is anything but. Rand is to capitalism what Osama Bin Laden is to Islam. Her ideas are extreme, intolerant and belong solely to a bizarre fringe. Klein pins her argument for the importance of Rand on her influence of Rand on the young Alan Greenspan. The problem is that he is (to my knowledge) the only policy maker of any note, who could be considered a Randian and even in his case the actual difference that Rand’s ideas have made is debatable. As Fed chair, he seemed less like a market zealot and more of a latter day Keynesian. Rand must have been turning in her grave as time and time again, Greenspan bailed out the US economy with cheap money.

Klein suggests that Rand is merely reproducing the ideas of Adam Smith. The reality is very different. The difference between these two thinkers shows just how little a market economy has to do with amorality. Both Smith and Rand explore how humanity can benefit from the actions of self interest individuals but Rand takes this principal much further. Smith is concerned principally with commerce and industry (his great book is called ‘the wealth of nations’), while Rand makes no effort to set a limit on self interest. Smith’s ‘Theory of moral sentiments’ is a hymn to the value of charity. By contrast, characters in Rand’s books that show generosity are scorned. To see the value of wealth accumulation as a driver of wealth creation does not require you to give up on the idea that in much of life concern for others is a great and noble virtue.

One thing that Klein does not seem to get is that there is a distinction between self-interest and selfishness. It is quite possible to do something that makes you better off but which does no one else any harm (and in fact may be benefiting them). To my way of thinking, this is not selfishness because that requires you to be causing harm to others. This is no semantic difference, it is key to how operates in practice. While self-interest is rewarded, there are laws to prevent selfish behaviour such as lying, stealing, bribery, breaking contracts and using violence. For the market to work there must be legally enforceable limits to the harm people can do to each others. Without them you will have anarchy (or Yeltsin’s Russia as it is otherwise known). This idea was not alien to Smith who imbibed against the power of monopolies, while Rand would doubtless have seen the competition commission as an undue restriction on the strong for the benefit of the weak.

At the root of the different viewpoints of Smith and Rand are fundamentally different views of morality itself. Rand’s philosophy simply turns the world on its head and makes virtue into a vice. Smith is attempting something much more complicated, to set how to create a good society composed of people who are not necessarily good. If we look closely at his famous saying that ‘it is not for the benefit of society that ‘It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.’ We see not a celebration of self interest but a statement of how Smith believed things were. Smith might wish us to be entirely virtuous but he knows we’re not. He understood that to try to build a socialist utopia on such shaky foundations was futile and we would be better off trying to turn mans vices into virtues through the market.

To be a free marketeer a la Adam Smith is miles away from being a cold hearted, Randian sociopath. Trying to win an argument by claiming that your opponents are greedy rather than misguided is low and even Naomi Klein should know better.

The Shah Lives

Far from protecting Pakistan from extremists General Musharaff’s attack on democracy is making them far more dangerous.

The most perceptive and alarming comment on emergency rule in Pakistan has come from the former cricketer Imran Khan: "When you stop all legal and constitutional ways of people challenging [the president], then the only ones who challenge him are people with a gun". Pakistan is in danger of becoming the new Iran where the closing down of democracy leads to the suppression of liberal and reformist movements and leaves the way clear for a takeover by Islamist extremists.

Anyone in any doubt as to whether emergency rule is aimed at keeping out the militants or keeping Musharaff in power need only look at who the victims of the crackdown have been. We have seen lawyers beaten by riot police, judges under house arrest and the mass detention of opposition activists with no Islamist links. The Taliban by contrast are largely unaffected as they are safely ensconced in their strongholds in the tribal areas along the border with Afghanistan.

Religious extremists by and large fare better when opposition to the government is outlawed because they can meet and organise in places of worship in a way that their secular rivals cannot. If Musharaff pushes ahead with his desperate attempt to cling to power, he will most likely find that his main rival for power will soon not be Benazir Bhutto but Mullah Omar.

The possibility of an extremist take over in a country with a large stock of nuclear weapons is too awful to countenance and every pressure needs to be brought on Musharaff to restore democracy.