The title of Kristian Niemitz’s latest book, “Socialism: The Failed Idea That Never Dies”“Socialism: The Failed Idea That Never Dies”, is easily explained by the current crisis. We are experiencing a re-emergence of a giveaway culture designed to shield individuals, groups, businesses and industries from the devastation of our lockdown, without the slightest regard for the economic and social consequences of offloading money in quantities not known since the second world war.
The money in question, conjured up from nowhere by the Treasury’s computer, is utterly unbacked and represents nothing but itself. Its aim is to shower the population with power to purchase the essentials on which we depend for maintaining life and health. Grants, subsidies, business loans, suspended liabilities, loan guarantees, hikes in state pensions, deferring tax payments, furlough guarantees, reliefs of every shade. So what’s not to like, especially when the beneficiaries perceive all this largesse to be the government’s duty, and their entitlement?
This financial emergency is born of a rampant and unpredictable viral attack, warranting crisis management. The result isn’t socialism in its pure sense – but the circumstances it has created are consistent with the very essence of a state-managed collective society, including the proposed remedies. As a leaked memorandum by HM Treasury discloses, these include wealth and property levies, higher VAT, corporate and income tax rates, threatening that the only alternative to raising taxes is another bout of deeply divisive austerity measures – not exactly music to the PM’s ears.
When the principles of free markets and the primacy of self-determination have all but disappeared from the state’s own institutions what chance is there for a post-lockdown reassembly of the familiar economic order?
Dealing with experts – and germs
It’s astonishing how a serious dose of fear can be politically exploited. When we hear dire warnings from health authorities on what could happen to us, and what we should do to avoid it, we suddenly become as compliant as mice on a treadmill.
Never mind that the expert opinions are mutually inconsistent; or that they are based on predicted outcomes roundly discredited by equally eminent scientists; or that ensuing government “advice” is garbled and barely intelligible. As a leaderless herd we hear what we want to hear and feed unquestioningly into a stream of communal inertia.
Our leaders’ knee-jerk response to the perception of threat, and our own spineless compliance, highlights the virtual abdication of individual will.
Why? Our hard-won immunity against disease has been compromised by decades of coddling. When we were kids in South Africa the only basic rule was to wash hands before meals and after visiting the loo – sensible enough, but there was no obsessive follow-up list of strictures. My Durban-born wife recalls how, as a child, she loved the taste of sea-sand, and put it in her mouth whenever she went to the beach. No one knows what degree of lifelong immunity those sand-borne microbes bestowed.
What about risk?
The belief in entitlement in a welfare-driven culture leads us to expect that the government is responsible for “sorting it out”, whatever “it” is.
But what’s at risk? Death isn’t a “risk” – it’s a cast-iron certainty for all of us. When it comes, and how it comes, are imponderables beyond the wit of any government, and we are “entitled” to no more than that the state will act reasonably and in good faith to protect the lives, health and civil liberties of its subjects.
The fact is, in this cruel, but just, world, every action entails an element of risk – yet rather than accepting risk and facing it, far too many of us have effectively been emasculated and rely on the state to provide blanket protection against every risk, under some corner of its labyrinthine “Health & Safety” regulations. Far from affording protection, this regulatory compendium provides citizens with an utterly false sense of security against ills that have no place in the state’s mandate. There are non-negotiable limits to entitlements. And, above all, what happened to our own, innate, self-protective mechanism?
We have a deaf and physically disabled son. My wife and I established a charity a dozen years ago with the mission of enhancing the lives of adults with physical and learning disabilities. It is a small charity but, due to the unwavering efforts of its trustees, it has become an established presence in the community, partly because its fund-raising efforts include the staging of monthly chamber music concerts and buffet suppers for up to 65 guests. It has become a living demonstration of sustained achievement.
Over the years the trustees, including our long-suffering treasurer, have undertaken all the regulatory burdens of form-filling, filing of returns, training, safeguarding, writing mission statements, award-seeking declarations, independently verified financial statements, and the rest. I can’t speak for other charities, but there is a point at which wearisome regulatory compliance saps energy and creates an additional financial cost that yields little compensatory benefit. In short, if we had faced it in our early days it would have acted as a deterrent rather than an encouragement.
The economic cost of universal bailouts
Governments everywhere have responded to this crisis by robbing money of its purchasing power on a scale not known in our lifetimes, excusing their actions under the heading of necessity. It is true that many citizens have benefited from the redistributive effect of debasement, but that does not mean there is no cost.
The shakedown that follows today’s inflationary frenzy will be no less cruel because the government’s motives were pure!
Traditional recourse to the printing press is plagued, this time round, by pressure on central banks to introduce negative interest rates to stave off their counter-intuitive fear of deflation. The theory is that if banks can be stimulated into lending fiat money at zero cost, recipients will spend, spend and spend.
But, since interest rates reflect relative time preferences, there can be no such thing as negative rates. The recipients of all that free moolah will include unviable businesses that cannot service loans, leaving swathes of weakened banks begging for bailouts – but with what?
Conclusion
Every financial crisis has its own particular features. In earlier crises deficits were expressed in “millions” of dollars or pounds; next time these became “billions”; this time even “trillions” are commonplace. Do you think next time it will be “quadrillions”?
My bet is that this will not happen. Before that we’ll revert to barter.
© Emile Woolf May 2020 (website)
The Goodnight Vienna Audio file
