Russell Taylor: In Praise of Profit

One of the joys of writing for Bogpaper is the feedback we receive from readers. Much of it is complementary and constructive, but, as a recent comment by a Lucy to my colleague The Austrian demonstrated, not everyone is a fan:

This website is pretty depraved. You, Delingpole, Taylor and Rocco are dangerous, inhumane and impractical. A well-selected body would sort out these energy companies much better than your convenient obsessions with ‘the market’. I feel dirty and depraved just having read this drivel. Urghhhhh. I won’t be back.

As you can imagine, this caused much hilarity at Bogpaper Towers. We even interrupted our Friday afternoon money fight to have a giggle about it. ‘Dangerous, inhumane and impractical’? That’s going on my business cards. Amusingly overwrought though it was, it did remind us that not everyone shares our appreciation of liberty and free markets. For a lot of people, they mean being free to be deprived, frustrated and put-upon. Just look at how the energy firms used their freedom rip off the public in their pursuit of profits. If that’s what liberty is all about, you can keep it.

I don’t want to dwell on the energy prices issue, because it’s already been done to death, but Lucy has a point when she claims that a ‘well-selected body’ could sort it out. If, God forbid, Ed Miliband became PM, he could pass a law capping prices, making them more affordable at the point of use. In this left-wing fantasy, the energy bosses would be led away like Scooby Doo baddies, muttering, “We’d have gotten away with it, too, if it hadn’t been for those meddling lefties”, and everyone would hail the benign omnipotence of the state. It could happen, because it’s happened before, and if you stop yourself from wondering what happens after the credits roll, it’s an attractive proposition. Why entrust events to the vagaries of the market when a ‘well-selected body’ can make things happen by decree?

There is a very good reason why the above is complete bunkum, but it would be like white noise to the Lucys of this world. They won’t accept that any good can come from self-interest, because they think that doing good is about the act of giving. And sponsoring the government to do the giving on their behalf is the most charitable act they can imagine. When they think of the government and its ‘well-selected bodies’, they picture earnest, intelligent men and women, undistracted by the vulgar pursuit of money, using their big brains and bleeding hearts to solve the world’s problems. They like to believe that such people – passionate, ethical and public-spirited – are the key to making a better world, because that’s how they see themselves. It’s a kind of oblique self-flattery. It doesn’t matter to them if their ‘generosity’ turns people into living corpses, manacled to the monolithic hulk of the welfare state, just so long as the trickle of filth that sustains them is delivered with their approval.

It’s this arrogant self-regard that persuades socialists to believe that economic theory is an evasion designed to thwart their right to rule. Supply and demand? Just a bunch of mumbo-jumbo cooked up by fat cats to justify their inflated prices. If it wanted to, the government could wave its magic wand and make it all go away, delivering us into an age of wine and roses. But not too much wine please, because alcohol is bad for you. And mind the thorns on those roses, because they’re very sharp. In fact, maybe the government’s wine and rose experts should look after them for you, in case you come to any harm.

To Lucy and her big government chums, the market is like a Spartan rite-of-passage, where people are abandoned on a mountainside to endure the elements and prove their worth. The strong survive and the weak fall by the wayside. Compared to the cosy certainties of socialism, it’s barbaric and chaotic. Where’s the compassion? Where’s the intelligence?

The simple answer to that is: who cares? Compassion is often irrelevant to doing the right thing, because outcomes matter more than intentions. When, a few years ago, UNICEF poisoned millions of Bangladeshis in a disastrous well digging operation, it was of little consolation to its victims that it meant well. For all its good intentions, UNICEF produced the same result as if the Koch brothers had personally poured arsenic into the water supply. As long as the people of Bangladesh end up with clean water, they won’t care if it’s provided by big-hearted UN functionaries or profit-hungry fat cats. It’s the water that matters, not the motives behind it. You can’t drink piety.

As for intelligence, it’s overrated as a decision-making tool. What really matters is knowledge, and in order to make sound decisions about prices and production on a national scale, more of it is required than any committee of bureaucrats can bring to bear, no matter how smart and ‘well-selected’ it is. We, the public, possess the requisite knowledge, and it is conveyed via market forces in the form of the decisions we make as consumers every day. Without it, there is no way of knowing what to produce and in what quantity – a reality that socialist regimes have ignored to their peril over the years.

Critics of capitalism bemoan the corporate obsession with profits, as if they are the sole reason that things don’t cost less than they do. But they’re looking at the problem from the wrong end of the telescope. The key to reducing prices is not to squeeze profits, it’s to encourage them. There’s an upward limit on prices, determined by what people are willing to pay, so businesses have an incentive to increase profits by reducing their costs and making their products more attractive. They do this by becoming more innovative and productive – benefits that are passed onto the public in the form of better products, superior service and cheaper prices. As profits increase and businesses grow, they spread wealth and create more jobs, stimulating new demand that others will seek to profit from.

If profits are capped and prices fixed, businesses will look to preserve their margins by rationing supply, lowering standards and laying people off. That’s the best case scenario: shortages, redundancies and shoddy service. The worst case is that companies would go bust. And if the government decided to keep them afloat at the taxpayers’ expense, it would end up costing us more than those price increases that sparked the issue in the first place. Whichever way you play it, the public loses.

As with companies, so with people. Unless there is a link between personal effort and individual reward, people will not work to the best of their abilities. To borrow a thought experiment from the philosopher Jamie Whyte, suppose David Cameron introduced a minimum annual income of £40,000. Those whose efforts would earn them less than £40,000 would not bother to work, and neither would those who could earn more, since the tax rates required to fund this entitlement would render their efforts pointless. With mass indolence, incomes would soon fall well below £40,000, whatever the law said we were entitled to. Giving people money unconditionally might sound generous, but it’s a sure path to failure and poverty.

Leftists are unwilling to accept this analysis, because it debunks the myth of the benign state. They feel that asking people to earn the money they need to afford the things they want is like an undertaker presenting his bill to a widow during her husband’s funeral. They think the fortunate should show sensitivity to the unfortunate in their moment of need, even if that need amounts to a desire to avoid the pressures of economic reality, and even if that moment lasts a lifetime. To this end, prices should be fixed, wages hiked, markets rigged and favours granted – all to spare the discontented from suffering a moment’s unhappiness. Any resulting burden should be dumped on the well-off to deal with because, well, they think they’re so big and clever.

One only need consider how the quality of life has skyrocketed in Britain over the past two centuries to appreciate how much wealth has been created, and how it has benefited more than just a privileged few. In Georgian times, poverty meant hunger, misery and destitution. Such is our wealth in 21st Century Britain that poverty is taken to mean having an income less than 60 per cent of the median. A person can have a house, a car and an obesity problem, and still be classed as poor. By this reckoning, thousands would be plunged into poverty if Bill Gates moved to Britain. I doubt the people of Central Africa will be doing a charity record for us anytime soon.

This definition of poverty is clearly a sham, designed to establish inequality as a grave injustice. In reality, a person’s absolute condition is more important than their position relative to others. And their best hope of improving their condition, and that of the people around them, is through the sordid, grubby, stinking pursuit of profit and self-interest.

44 comments on “Russell Taylor: In Praise of Profit

  1. therealguyfaux
    November 6, 2013 at 2:01 pm #

    People of a socialistic bent who are argue that, “From each by ability, to each by need,” seem to disregard the fact that it is never the individual who is allowed to make that determination, because, no matter how well we may have been indoctrinated, we still cannot be trusted to come up with valuation of either that can’t somehow be pointed to as “self-interest.”

    What happens, then, is that the State, on a macro level and micro level, has to tell the individual that (a) you really don’t NEED as much as you think you do, and (b) you are well able to put out more than you are doing now.

    In other words, the State has to get as much bang for their buck/”pow” for their pound as possible, and this differs from capitalism HOW, exactly?

    “Meet the new boss– same as the old boss”?

    • Anthem
      November 6, 2013 at 7:27 pm #

      It differs in many ways but the main way is that trade will be voluntary.

      I offer my product/service to you and you decide if it’s worth the price. You’re not forced to buy it.

      The other main thing is that when you live by the “from each according to their ability to each according to their need” you’re going to find that ability becomes a very rare commodity but need is everywhere.

      In this scenario, your “self-interest” will be best served by doing less than the next guy, not more.

      You can guess what direction everyone’s life takes from that point.

      • therealguyfaux
        November 6, 2013 at 9:10 pm #

        Well, obviously my question about the difference was rhetorical, but the functional equivalence is the same, in the sense of one person looking to maximise return and minimise output, meeting another with the same aim.

        Obviously, the resolution of this, and how that is achieved, is the operative difference.

        And it is these facts which are evaded by the socialists.

        Society-as-crab-bucket is no-one’s conception of an ideal state of affairs. Yet it is inevitable under socialism to the extent it is rigorously practised.

      • John B
        November 7, 2013 at 1:16 pm #

        Socialists overlook that ‘the centre’ is incapable of knowing the abilities and needs of each, whereas each individual does and in a free market, resources get allocated in the best way because of each individual giving and taking as best suited to them, and turns out best, if not perfect, for all.

        This robs Socialists of their addiction, control.

  2. dr
    November 6, 2013 at 2:06 pm #

    Russell Taylor wrote:
    “Such is our wealth in 21st Century Britain that poverty is taken to mean having an income less than 60 per cent of the median….By this reckoning, thousands would be plunged into poverty if Bill Gates moved to Britain.”
    No. It is unlikely that anyone would be plunged into poverty if Bill Gates moved to Britain because he is only one person. (Maybe two if his wife moves aswell). The definition refers to a median income, not a mean income.

  3. Illiod Francesco
    November 6, 2013 at 2:20 pm #

    Standing Ovation! :o)

  4. dr
    November 6, 2013 at 2:20 pm #

    I think it is tempting to view this as a battle of economics. I’m not sure that is really the case from a political perspective.
    I think it is really a battle of marketing departments.
    I suspect that due to the fact that Ed Milliband has a Master’s degree in economics, he probably knows that price controls don’t work. This is why he has time dated his promise of controls. He can use this “new idea” of price controls, to woo the electorate, with an idea that they are likely not familiar with, and then abandon it once he is in office, in order to minimize the investment damage that the policy will cause. So what matters, is not “does the policy work?” but “does the policy look good?”.
    Likewise, profits are always regarded by the left as being the result of greed. Suggesting that profits are nevertheless good, is seen be arguing that greed is a virtue. It would be better marketing, to argue that profits are the source of investment to create jobs, and investment to create productivity gain and hence wealth. Since we want jobs and wealth, we should therefore tolerate and desire profits.
    Just because the right can win the economic arguments does not mean that its ideology will easily be popular. It seems to me that most of the electorate want to seek a government and an ideology that will be a force for good in the world; Austrian economics is probably the best example of this, but it needs to be marketed on its virtue rather than its qualitative predictions of economic indicators.

  5. rjmackin
    November 6, 2013 at 2:22 pm #

    In Ireland Sinn Fein constantly exhort us to protect the most vulnerable in society by increasing capital investment, increasing welfare, increasing the number of medical cards, increasing disability benefit, increasing social housing and increasing wages of front line public sector staff. When asked how they intend to fund this largesse, the answer that is invariably trumped out is to increase taxes for anyone earning over €100,000. With taxation already at 52%, crippling mortgage repayments, school fees and a plethora of stealth taxes, I wonder how much longer they’ll bother getting out of bed…

  6. Rocco
    November 6, 2013 at 5:10 pm #

    I should point out that not all the Lucys who comment here on BP are as silly as the one quoted above. There is another Lucy who is really very good.

    As a side note, what most amused me about Bad Lucy’s comment was that she included me, even though I explicitly criticised the energy companies on that very thread!

    Having said that, perhaps Bad Lucy wasn’t keen on other things I’ve written. She may even be a Badger-socialist. 😀

  7. tomas
    November 6, 2013 at 6:22 pm #

    The way the poverty level is calculated essentially means that unless you have a socialism you will always have people in poverty

  8. Anthem
    November 6, 2013 at 7:10 pm #

    I was going to write something on poverty myself the other day and started off by looking at the definitions.

    Like its opposite (sort of) “wealthy”, it’s clearly a relative term and so a concrete definition isn’t really out there.

    On the BBC website are three definitions from different sources.

    Only one has a stab at “absolute poverty” (as opposed to relative poverty) and that says: “Absolute poverty is defined as the lack of sufficient resources with which to keep body and soul together.

    Even that’s a bit crap. How much does it cost to keep a soul together these days?

    The one which you mention in your article is the cruncher though – the one where anyone earning less than a percentage of the average is “poor”. This will obviously mean that there will always be “poor” people. The “problem” will never go away – even when we’re all living in mansions and flying our spaceships to work every day.

    I remember reading something about poverty in a local rag a few years ago and one of the criteria for being “poor” was the inability to go on holiday once a year…

    As for profit, well, that represents the value you’ve added to something by your effort. It’s really a very good thing. We should all be very happy that people are making profits.

    If they weren’t, that table over there would still be a tree in a forest somewhere. This laptop would still be some sort of gunk swilling around in the earth somewhere. And you’d be sitting in a cave.

    No one would be rich and no one would be poor but life would be pretty shit.

    • kevinsmith2013
      November 7, 2013 at 7:08 pm #

      If poverty must be defined, it should be something along the lines of a person lacking the funds to fulfill the basic requirements of living in a temperate climate, namely sufficient food, water and shelter to sustain a healthy life for themselves and their dependents.
      Certainly not the above after they have paid for the other necessities of life such as their plasm TV, Full SKY subscription, X-Box, PS3, iPAD, iPhone, beer, fags, lottery tickets, car and other indispensibles.
      people in poverty in some contries die, people in poverty in this country can amybe only afford one car.

    • theaustrianway
      November 9, 2013 at 1:30 pm #


      You should be writing for Bogpaper! How about it?


  9. Henshaw
    November 6, 2013 at 7:23 pm #

    I have this quote on the about section of my blog, but it’s a constant reminder how people ignore progress.

    This is my long-run forecast in brief:

    The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or two, all nations and most of humanity will be at or above today’s Western living standards.
    I also speculate, however, that many people will continue to think and say that the conditions of life are getting worse.

    – Julian Simon Professor of Economics, University of Maryland (1932-98)

    Perhaps it’s because human lives are so short that we’re seemingly incapable of realizing how much things have improved over the last 100 years. Heck, even the past 25 years.

    In the United States, less than 200 people a year die of starvation. There’s over 300 million people in the United States. When I used to talk to my great grand parents… those who survived the Great Depression. They told me how bad things were in the 1930s. Those people knew poverty. They knew what hunger was about. No one in this generation has a clue.

    • Anthem
      November 6, 2013 at 7:35 pm #

      Spot on but in those three definitions I put in my comment up there, one of the definitions has this base covered (the one by the Scottish Poverty Information Unit).

      Poverty is defined relative to the standards of living in a society at a specific time.

      So, you see, they can just keep moving the goalposts.

  10. silverminer
    November 6, 2013 at 7:59 pm #

    Profit is a good thing if it is earned by honest endeavour. However, we’ve a great many examples of where this is not so and you can usually pin point the cause to some kind of collusion between the State and large corporations. This corporatism is rife. It’s the system we now live under.

    The worst culprits are the banks, who, by the possession of a banking license (you try getting one…) possess the ability to create money out of thin air and lend it out at interest. Then there is Big Pharma, who peddle their “treatments” (never cure anything…it’s bad for profits) and vaccines, of dubious benefit, all at the tax payers’ expense through the NHS. You could throw the Big Six energy companies into the mix, an oligopoly that is a far cry from the original plan at privatisation.

    The point is that markets only work, for the general good, under certain assumptions, which are purely theoretical. So it is right for the public to be vigilant for markets where things have gone way off track and the customer is being exploited. Where there is a problem the best solution has to be to move back towards the conditions of a “perfect” market, i.e. cure the disease, not treat the symptoms like Miliband with his price controls.

    • Anthem
      November 6, 2013 at 8:38 pm #

      It’s always amusing how whenever someone criticises capitalist/free market type theories, they always have some “worse case” scenario up their sleeve which they then go on to “prove” by pointing to an example of it in the current system.

      These cases don’t prove that free markets don’t work; they prove that what we’re doing now doesn’t work.

      The sad thing is that the answer is usually “we must do more of it!”

  11. Roger L
    November 6, 2013 at 8:12 pm #

    Another joyous read! Many thanks.

    Time for the next glass of red. Bogpaper makes an evening.

  12. Anthem
    November 6, 2013 at 9:42 pm #

    @therealguyfaux – can’t reply directly to your comment above so will do so here.

    “Well, obviously my question about the difference was rhetorical, but the functional equivalence is the same, in the sense of one person looking to maximise return and minimise output, meeting another with the same aim.”

    I think the answer lies somewhere within the concept of trading values.

    Trading value for value is the capitalist’s aim.

    Trading value for non-value is the socialist’s aim.

  13. David
    November 6, 2013 at 10:30 pm #

    “One only need consider how the quality of life has skyrocketed in Britain over the past two centuries to appreciate how much wealth has been created, and how it has benefited more than just a privileged few.”

    If you look at the history of Britain, the reasons for this are obvious, but to say ‘look at this, this is great, we are a great big fat lazy country’ without pointing out how this necessitated poverty and exploitation elsewhere is smoke and mirrors.

    I know what the answer is, slowly the rest of the world catches up via trickle-down, but right wingers do themselves a disservice by trying to pretend that there are never at any point gross injustices with regards to the exploitation of resources.

    It does not harm your case, just as it would not harm left wingers to occasionally admit that human nature and selfishness ruins the paradise.

    • Rocco
      November 6, 2013 at 10:43 pm #

      David, you might want to ask yourself how, if wealth is merely a product of exploitation, a “trickle-down” can increase wealth in exploited countries without leading to a corresponding impoverishment in exploiting countries.

    • Rocco
      November 6, 2013 at 10:46 pm #

      Also, no free market economist has ever argued that there is such a thing as a “trickle down” effect. It is a complete myth and a straw man.

    • Anthem
      November 6, 2013 at 11:08 pm #

      How revealing are the socialists when they throw things out without thinking. “Human nature ruins the paradise“.

      It must really suck to hate yourself so much.

  14. Simon Roberts
    November 7, 2013 at 9:35 am #

    “We, the public, possess the requisite knowledge, and it is conveyed via market forces in the form of the decisions we make as consumers every day. Without it, there is no way of knowing what to produce and in what quantity – a reality that socialist regimes have ignored to their peril over the years.”

    I’m a big fan of Adam Curtis and if you aren’t familiar with his work I suggest taking 45 minutes to watch this documentary:

    It’s the best exploration that I have seen of the consequences of statist thinking regarding supply and demand.

  15. andyL
    November 8, 2013 at 12:19 pm #

    I completely agree with Silverminer. Although that’s not to say that I don’t agree with much of what Russell has posted.

    I also appreciate that Lord Wakeham et al transformed the energy companies from poorly controlled state monsters losing hundreds of millions of pounds a year into efficient and profitable enterprises.

    Many on the right confuse entrepreneurs with those who have gained their position through privilege and band the two together into one category. The vast majority of Footsie 100 Directors are not entrepreneurs. They do not automatically deserve the remuneration packages that are afforded to them or the subsequent bonuses awarded and yet many of you seem to imply that they do; why? By all means award the entrepreneurs but not the freeloaders who are no better than those who don’t work and are on £500 benefit a week. The only difference being that those on benefit did not bring the Global economy to its knees in 2007 and the subsequent mess that unregulated Capitalism has left us in.

    I have no problem with Footise companies paying dividends to shareholders and by all means cut Corporation Tax for entrepreneurs. Many Footsie shares will be held by Pension companies, Trust funds etc. I do have an issue with this money being paid at an ever increasing rate (above and beyond the average wage inflation) to individuals who often do not deserve it.

    Link Footsie Directors total pay to a % of dividend paid. Also (and you guys will hate this), increase the minimum wage to a living wage in line with Corporation Tax cuts; a quid pro quo for allowing companies to keep more of their profits. Reward work. This means that millions of workers are able to spend their extra money on goods and services in this Country rather than the money going off-shore.

    I do not understand why you guys would want a rerun of 2007. I can’t understand why you would want to do that again to our Country and your portfolios.

    • Russell Taylor
      November 8, 2013 at 12:42 pm #

      How directors are remunerated is no one’s business but the shareholders’. We don’t want a situation where the government decides what’s fair, because a) it is inherently illiberal, and b) because fairness is subjective and the parties involved should be the ones who decide what’s fair.

      As for the minimum wage, yes, dreadful idea. The real minimum wage is zero and that’s what a lot of people will be earning if employers are forced to pay employees more than their labour is worth to them.

      Finally, I would say that the crash of 2007/8 was more to do with structural problems that encouraged irresponsible behaviour than a failure of capitalism.

      • andyL
        November 8, 2013 at 2:58 pm #

        A pyrric victory 🙂

        Anyway, I’m off to make, sorry, allow the kids to watch Iron Giant again. For the 16th time. This week.

    • Rocco
      November 8, 2013 at 1:35 pm #

      Andy, you can’t have it both ways, dude. If big businesses owe their positions to cronyism, favouritism and political privlige, we don’t have unregulated capitalism, do we?

      • andyL
        November 8, 2013 at 1:40 pm #

        I see the logic in your comment but it doesn’t undermine my argument. You are simply stating that it may not work for another reason, on my behalf.

      • Rocco
        November 8, 2013 at 1:50 pm #

        No, Andy. I am pointing out to you that you have contradicted yourself.

      • andyL
        November 8, 2013 at 2:02 pm #

        OK, you’re saying that I have said that capitalism is unregulated. Then I didn’t make myself clear; it needs more regulation.

      • Rocco
        November 8, 2013 at 2:11 pm #

        You made yourself perfectly clear, dude. Last sentence, third paragraph of your first comment on this thread: “…subsequent mess that unregulated Capitalism has left us in.”

      • andyL
        November 8, 2013 at 2:23 pm #

        Then I thnk you’ve contradicted yourself.

      • andyL
        November 8, 2013 at 2:24 pm #

        blud 🙂

      • Rocco
        November 8, 2013 at 2:33 pm #

        Yeah? Then I think you’re contradicted yourself times infinity!
        (If destroyed still true.)

      • andyL
        November 8, 2013 at 2:37 pm #

        infinity x infinity +1. Fingers crossed. No returns.

      • Rocco
        November 8, 2013 at 2:44 pm #

        You win this round, Andy.
        But the war is far from over.

  16. andyL
    November 8, 2013 at 1:25 pm #

    Ah, but Directors write the rules. These are essentially publicly owned companies rather than private companies owned by sole traders or partnerships and yet those that own them have to jump through hoops to try to ensure reasonable behaviour by the Directors. I am in full agreement with you if we are talking about pay to Directors who are sole traders or partners where the Directors own the majority of the shares. Not privately educated morons with degrees in chemistry or whatever who suddenly think they know all about business because pater and mater know Lord snot and this got them the job.

    Yes, the real minimum wage is zero. But your sentiment is typical of those who would want us to race to the bottom. If workers have more money, they buy more from the companies that you would want to make more profit and so on. Retail sales analysis will bear testament to this where a correlation can easily be drawn between wage inflation/unemployment and sales growth.

    OK, increase the personal allowance to 10k and increase Corporation Tax to cover it. I’m guessing that you don’t like that idea either, but it would ensure that small, barely profitable businesses don’t have to pay more in wages.

    Structural problems? In other words, structural problems as a result of unregulated capitalism.

    • kevinsmith2013
      November 8, 2013 at 7:17 pm #

      A private company, whether owned by individual, partnerships or shareholders is at liberty to pay directors whatever they wish, they are only answerable to the owners, partners or shareholders. We may think it is obscene amaonts, but its none of our business – literally.

      Companies that are public sector, or (partly or wholly) publically subsidised are completely different. Banks that have been bailed out (NONE should have been) are in effect public sector, and all public sector should be subject to pay constraints, lets say that no-one in the public sector should earn more than the prime minister, or even more than 80% of the prime minister, nor should they be entitled to obscene bonuses, unless they have turned the banks fortunes around, repaid the taxpayer plus a percentage above the amount of bailout, and returned the bank to profitabilty. We don’t just want the bailout money back, we want a handsome return on the investment we never authorised Brown to make.

      The minimum wage at whatever level (above £0) is a contributor to unemployment, as are statutory benefits, particularly for small companies. A company may need an employee but can only afford to pay them £5,000 a year. If someone is willing to work for that amount (without being coerced in any way) why should the state exclude that mutual agreement? A minimum living wage, which is a wonderful idea in principle, will simply destroy yet more jobs, as companies find they are unable to pay their staff and have no option but to make cuts, usually in the form of redundancies, so who wins there? More people on welfare, and companies forced to reduce their workforce.

      As for regulation, there was plenty in place when the crash happened, we had the ratings agencies and the FSA, what good did they do? They didn’t see it coming (they claim), these over payed wastes of space with their over-inflated ego’s and feelings of self-importance, just sat back and let it happen. They knew banks were overstretching themselves, taking insane risks, usually with other peoples money, and did nothing. So now we are to give those powers to the BoE so they can sit back and do nothing as the next hyper-bubble inflates. What should have happened is we should have let those over-stretched banks go under, not just a few, and those individuals taking the insane risks should have been made to face the consequences. Banking would not have failed, just some banks would have gone under, and they should go under, most of them are still insolvent “Zombie” banks anyway, still up to their old insane tricks. New banks would appear, more “ethical” banks that care more about their investors and depositors than they do about their executives and traders salaries, bonuses and ego’s. We need honesty, integrity, transparency and accountability, much more than we need regulation. Many, many bankers should now be languishing in prisons and not in luxury.

      In short, we need a return to sound money, the sooner the better. Learn all you can about fiat currencies and fractional reserve banking.

  17. kevinsmith2013
    November 8, 2013 at 7:31 pm #

    Check out this website if you wnat to know how money works, episodes 1 to 4. Not my site, so not self promoting. Or this will tell you the true state of the US economy and this one will help you visualize what debt levels really mean

  18. AndyL
    November 8, 2013 at 9:06 pm #

    Hi Kevin,

    A few points:

    I am a shareholder in a number of Footsie companies; it bothers me, it is my business. I can do little about it. Even collectively it is nigh on impossible to do anything. Do you have a pension? Then it should bother you too.

    Miminum wage introduced 1999. In 1999, 2000, 2001 and 2002 (The latter, I think), Gordon Brown, as Chancellor, achieved a budget surplus. Minimum wage didn’t seem to do much harm and still hasn’t. But I accept there must be a limit before it doesn’t work (common sense). Increased personal allowance?

    Again, money in workers pockets boosts British business*. I’m not interested in the cult of the self although it is an interesting ideological discussion point, but I am, like millions of other floating voters, interested in how a political party can help reward us, the workers and not Footsie freeloaders and those on £500 benefits a week which unfortunately are the two main groups that the two main parties want to reward (ironically as they contribute little). Brand and Paxman have got it right.

    Willing to work for £5,000? Try it. (I have, note).

    Regulation; FSA was lip service regulation (and more than the Tories had in place). Labour were unlucky to be in power when the crisis hit although their spending spree didn’t help in their 2nd term.

    ,,,,and then I rather agree with you except that I don’t think you have thought through the minutae of the consequences of global banking failure but it’s a fair sentiment.



    * if we ignore inflation for sake of argument

    • Anthem
      November 9, 2013 at 12:44 am #

      You might want to look into how Brown made a surplus that year.

      You might also want to ask how on earth he then took us into the worst deficit on record… a deficit that haunts us to this day and it only going to get worse when the pension time bomb goes off.

      There’s a lot wrong with the “capitalism” as we know it today but at all junctions, ask yourself, “Is there an element of governmental interference at work here?”

      A rule here, a regulation there. It all matters.

      As for your earlier remark that some people are simply given highly paid positions because they’re in positions of privilege to begin with, well… maybe, maybe not.

      If their role is unimportant, why are the businesses suffering them?

      If their role is important then they had better be good at it or the business will not suffer them.

      To summarise, Iron Giant is a great film and I swear it was just a drop of rain that flew into my eye through the window.

  19. Rod Corby
    November 9, 2013 at 12:57 am #

    ” benefits that are passed onto the public in the form of better products, superior service and cheaper prices.”

    NO NO NO NO NO.Prices are not cheaper, they are LOWER. Price is a measure. Cheaper prices is as much nonsense as shorter miles.

    Good article though. Thanks.

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