MESSAGE TO DAN HANNAN: In the tyranny of the status quo, there is no difference between Chairman Mao and Chairman Milt

Why stagnant ideology poisons the well of new ideas

hannanmegafoneIn this strongly worded essay, The Slog argues that Dan Hannan’s insight on some matters cannot hide his naivety on the big econo-fiscal issues of our time. Without question the most glaring example of that blind spot is his unswerving support for the obviously busted flush of Friedmanite economics. Milton Friedman was a genius, but he was wrong because he was narrow. That his ideas have been perverted by contemporary manipulators is no excuse for continuing to idolise the founder of Chicago economics. Ultimately, Friedman was an inflexible ideologue: it is in the very nature of any resultant ideology that it cannot withstand change, and fails to develop new ideas outside its self-imposed box.

I have long admired Rod Liddle, a bloke who like me has thought hard about his liberal values in middle age, and then become a sort of curmudgeon for all seasons. Equally, I think the eternally irritating Dan Hannan does have genuine insights about important stuff. The problem is that both of them can be such complete prats at times. So when Dan wrote a very interesting (and accurate) piece in the Telegraph last week about the link between euroscepticism and leaving political office, I wasn’t surprised when Rod gave it the thumbs-up in the Spectator. But this one Liddle observation (OK, only a teensy-weensy Liddle observation for some people, but not me) got right up my nose:

‘Dan puts this down to what Milton Friedman called ‘the tyranny of the status-quo’, and of course it is true about many more things than simply our membership of the European Union.’

No, really? This only served to remind me of the prattish side of both blokes – for two reasons. First, because I’m sick to the back teeth of fans quoting Friedman’s alleged sagesse when he is, let’s face it here people, the single biggest reason why Berlin has been able, over the last three years, to get away with quite the most destructive economic attack on southern Europe in history. And second, because the ‘once they’ve left power’ thing in a broader sense isn’t an insight at all: it’s an insult to the intelligence of all those who can spot a cliché from a mile off.

Enormous power brings with it the need to keep quiet about thousands of nasty things – it’s one of the dozens of things wrong with it – up to and including one’s real personal views….if one has any at all. Thus every President leaving the White House, every MP kicked upstairs to be a Peer – and every Minister who gets fired – is that person ready, willing and unable to resist the chance to finally speak that which passes for their mind. The best evidence for this being a tedious truism is that Rod Liddle felt it de rigueur to add the words ‘of course’ to his flaccid observation.

The rigidly observed status quo harms the small and vulnerable. It rarely tyrannises the powerful.

‘The tyranny of the status quo’ only has any validity as an observation when somebody in power is prepared to lose that power by breaking out from the herd reaction. If Friedman called the status quo a tyranny, I’d imagine he was talking about how difficult it was to get policymaking minds to accept his madder assertions during the 1960s.  But once he became an economics Deity, Milt benefited hugely from the new status quo. The problem with most Friedman idolatry is that it has itself become one of the silliest and most tyrannical personality cults in history.

Committed Friedmanite fanatics tell us – when the inflexible tyranny aspect is put to them –  “Ah well you see, that’s not really what Friedman meant”. Er….can someone tell me what difference there is between that excuse and the classic Hard Left nonsense about what Marx “really meant”? Or the fluffy libero-socialist view of what Keynes was saying between the lines?

The fact is that there is but one true tyrannical status quo in what passes for economic thought in 2013, and that is the neocon doctrine almost entirely derived from Milton Friedman –  a theorist who is gradually being proved wrong about pretty much everything he posited.

It is Friedmanism that insists markets must decide, that bourses are the most ‘natural’ ways to raise money, that any company’s sole responsibility is to its shareholders….and a dozen other potty dimensions of his anorexic ideology. The core elements of Milt’s catechism – so readily adopted by the greedy buggers – try to divorce the making of unethical and ill-directed money completely from the socio-cultural milieu that provided the context for it to do so in the first place. That is like a child in denial about the vital necessity of parents in order to exist. Markets should not always decide, because markets are only collections of people, and people – especially many of the clowns working on bourses – do dumb things, panic a lot, and snort coke. Companies do not owe loyalty only to the shareholders, because the shareholders are far too often remote, asleep, and motivated by different needs to those of the company, its management, and employees.

Again, one puts this to the goggle-eyed Miltonians, and they smile patronisingly while saying “Yes, but what’s happening today is not Friedmanism – it’s a perversion of it”. In which case, Friedman was an idiot with no grasp at all of human moral frailty. I will offer you one simple but massively significant example of why this perpetual get-out clause for the Nuttall Miltoes is bunk.

Friedman was a very, very smart bloke, but he was a little sketchy about what the point of governments might be, and the social anthropology of how citizens interreact with them. He theorised that there exists a “natural” rate of unemployment, arguing that governments can increase employment above this rate (by artificial stimulation of demand) only at the risk of causing inflation to accelerate. First point: note the way that Friedman conveniently sets to one side the first duty of every Sovereign State: the safety and welfare of its good citizens. There is no thought here about why employment is below par….or why the unemployed should be blamed or suffer. The underlying assumption is that’s the lever you pull, because it ‘works’. From this socially flawed idea came the idiotic phrase “jobless recovery” so beloved of the MSM during 2010.

Second point: what SuperMilt and his disciples never did – and still aren’t doing – is ponder what the underlying causes of that employment might be in the first place. Friedmanite Chicago economics do not allow for qualitative, organic change in the nature of capitalism: like Keynesians before then, and Marxists before JMK, they adopt the Talcott Parsons structural functionalist approach to society….rather than the more dynamic change-orientated human behavioural model developed by Ralf Dahrendorf. This paragraph you’re reading at the moment explains in one why Sovereign policies are getting nowhere right now: they’re about graphs, economics and history…..not the huge socio-technological changes forcing us to face the future.

So for all the Dans and Rods and Georges and Bens and Marios out there – and the Milibands, Balls, Stiglitzels, and Obamas – let me explain something: we have structural unemployment that won’t go away in the West for four crucial reasons:

1. The model of lowest-cost, volume production is wrong for us, and has been for years: we cannot compete with Asia using it, nor should we even try. As currently constituted, the approach moves jobs to the East and doesn’t replace them. That, my friends, is the real tyranny of a status quo in which short-term bottom-line accountancy is deemed better than longer-term preparation for change. The ROI obsession of Friedmanism demands can-kicking in general, and low estimation of human suffering.

2. The Miltonian model of taxation and reward ensures that, far from wealth ‘trickling down’, it gushes up: the anthropology insists it should, because we are appetitive hunter-gatherers. That growing disparity of wealth – and the pauperisation of the middle 30% so clearly seen everywhere from Athens via London to Cleveland – reduces mass consumption, drives down demand, and directly creates job losses which – again  – are only rarely replaced. It is the single biggest reason why Western economies are not responding to stimulation.

3. The ideologues in economics cannot deal with the huge factors changing the game globally in business over the last thirty years: Chinese abandonment of Maoism in favour of mercantilist growth; the fall of the Soviet Union and its eventual replacement by a wild west baronial economy based on the geopolitical use of energy and corrupt creation of property/financial assets; the breakthrough in communications – driving production success in Asia, and unbeatable uses of commercial and financial espionage by Chinese and Russian technologists; the giant leaps in computer science, causing corporate investment crime to rise, and small investor involvement to fall, among the world’s main bourse centres; and last but not least, the creation by frontal-lobe compelled investment bankers of a belief in derivatives, bet insurance and criminal manipulation being perfectly safe and economically functional – despite their growth to between fifteen and thirty times the size of the physical world gdp.

4. A crazily lax policy on migration into already hard-pressed welfare systems by soi-disant ‘liberals’ over the last two decades – policies that can just as easily be interpreted as an attempt to almost literally breed a new electoral franchise for left-of-centre political groupings.

Pause here now for the Miltstones to clamour that “Friedman would never have approved of the misbehaviour by investment bankers”. Perhaps not: but could he not see that deregulating sociopaths results in disastrous over-confidence? Did he understand that little about neuroscience? Could he not project beyond his academic economics department and see that this would produce Sovereign costs, higher taxes, poorer welfare services and thus ever-lower consumption alongside dangerous social instability?

And much as Dan Hannan – along with the other New Conservative fanatics like Gove, Delingpole, Johnson, Hunt and Fallon – can’t accept is that there’s a very short but not very sweet answer to that question: “No”. Milt didn’t get that because he was a narrow academic who spent his later years spouting aphorisms with all the productivity (but none of the wit) of Mark Twain. The only way Dan can defend his economic hero is to tweet Friedman’s fortune-cookie superficiality endlessly; and when he runs out of these, drivel on about Adam Smith and Burke who, let’s get real, didn’t know what a dark liquidity pool was, so why on Earth should anyone be interested in their feelings about tyranny and international wealth?

Hold hard again a few seconds as the Miltongs storm back in with “Friedman wanted to abolish the Fed Reserve, and would’ve seen Bernanke as a traitorous criminal”. Sorry fellas, but the exact same answer applies: had Friedman never studied politics? He was Ronald Reagan’s economics advisor for years (his advice fed the American debt/deficit disaster like no other) so did he never meet any politicians? Did he never spot that the only thing they care about beyond money and strange pussy is votes? Why in God’s name did he imagine Greenspan just let the machine run on out of control – because he was a Democrat or something?

QE, money printing at the ECB, and lunatic Sovereign borrowing were the absolutely inevitable outcomes from Miltonian deregulation. Put hardsell bankers and power-mad financial bureaucrats together with megalomanic politicians trying to buy votes: what do you get? A car-wash flunkie in Oporto could tell you “A marathon of can-kicking disaster like we have at the moment”. But poor little Milt and his idolators couldn’t see that truck coming down the road.

Let me tell you why Friedman was, at the end of the day, just another ideologue with one idea, and a mind closed to either (a) its flaws or (b) alternative ideas. Because he was a glorified quant in a higher-education talking shop. Milt the sort of nerd I called a Graphucker: an econometric generating bullshit-theory academic obsessed with his own narrow circle, but devoid of awareness about the need for a multivariate grasp of disciplines when dealing with contemporary societies. He didn’t get corruption, or the idea that deregulation merely gives the nod to the Murdochs, Blacks, Hunts and Blairs of this world to slither from under the stone, and take their place in polite society without fear of retribution. He blasted the regulatory twerps that were, again, inevitably spawned by the deregulated Greens, Diamonds and Madoffs. Today, Dan Hannan suggests that the regulators are the problem, not the crooks. At times, the denial beggars belief.

Milt and the Friedmanites see themselves as the economic supergroup for the 21st century, but they remind me more of duffle-coated 1950s students playing trad jazz. The thing that ties Ban the Bomb marchers and the neocons* together is a risible level of naivety about human nature. Just as many of the women at Greenham thought the Soviet military machine had no designs on the West, so now the Chicago School has failed utterly to grasp the Hobbesian nature of uncultured – dare I say decultured – Man.

Why do these people think white collar techno-crime has gone through the stratosphere…because all middle-class professionals are nice? How do they feel about prime-time ambulance chaser ads from lawyers on the telly? What’s their position on doctors pocketing salary increases while dropping weekend working? Do they clock any of this going on? What’s their answer, if not regulation?

The answer, dear reader, is revitalisation of cultural ethics. Now that’s a toughie. Without religion – or some other higher-order guidance equipment – how do you do it? I don’t know – although I think about it a lot. But I will tell you one thing: not only do Friedman, Keynes, Marx, the Fabians, Thatcher, Josephs, Hunt and Hannan have nothing to offer on this one either: they’ve refused to recognise that it’s the issue in the first place. So week in, week out, those of this ilk who are still with us defend indefensible psychos on the grounds of them being the product of their narrow ideology….and thus by definition, correct. Aaaaarrrrrrrrg.

For over half a century or more now – pretty much since the reformist Labour ideas of Richard Crosland were being formulated in The Future of Socialism – and the Kennedy Democrats began to think about the New Frontier – the application of eclectic philosophy to the development of Western civilisation has been both tramline and superficial. Even worse, among both liberals and conservatives, the windscreen view has been abandoned almost entirely in favour of the rear-view mirror. Most of our societies are woefully split to the point of Mexican standoff or mutual mudslinging: our politics are as stagnant as our economics which are in turn as amber-trapped as our social theories. Listening to Harriet Harman on the subject of gender and children, one is struck by how little she must have read about behaviour therapy and neuro-wiring since 1970. Listening to Dan Hannan, one is equally astounded at the feeble grasp of social anthropology. Listening to Ed Balls on fiscal management, it is as if the revolution in mass employment had never taken place.

So poor was the creativity applied to macro-commentary by 2002, New Labour ‘strategists’ – the ultimate oxymoron – were beginning to talk bollocks about ‘the end of political change’ and ‘the victory of tactics’. Even more dreadful than such pondlife assertion was the complete lack of any media-based guru dismissing these apparatchiks as loons with zero-consequences thought-patterns. Unable to apply any insight to why the New Labour or Bush GOP gesture-spin machine was the last thing anyone needed, the Democrats turned to the beef-free sandwich Barack Obama, Britain’s Tories to the Blair-worshipping David Cameron.

Maybe it was a victory for tactics, but if so it was Pyrrhic. These empty suits (and their EC equivalents in Brussels-am-Berlin) are delivering us with suitably blind conviction unto the greatest econo-fiscal disaster in history. And the education system that once snared every dictatorial attempt to grasp yet more political power has melted down into a candle-stub of conformist learning and sponsored depoliticisation. The West faces a dire future armed only with a quite staggering suspension of snake-oil and tainted well-water for fuel: directionless tacticians recruiting dated ideologues in order to rationalise policies none of those ancients would’ve recognised. No wonder the global gearbox has seized up.

Ideology will always become – unless it evolves like a living organism adapting to environmental change – the ultimate enemy of ideas. It will be the destroyer of genuine creativity, the executioner of the visionary, the censor of the empirical, and the father of dictatorship. My message to Dan Hannan – and Joe Stiglitz, Ed Balls, George Osborne and Wolfgang Schäuble – is this: forget the past giants, they have nothing to offer us in this crisis. Grow some fresh brain tissue and some balls. Open your mind to revised interpretations. Have some new ideas. Because the refusal to do so, while it may garner praise from peers or get you votes, can only doom all of us to a new dark age.

Last night at The Slog: Why Dave Whelan is my hero, and Rupert Murdoch isn’t

71 thoughts on “MESSAGE TO DAN HANNAN: In the tyranny of the status quo, there is no difference between Chairman Mao and Chairman Milt

  1. YOU ARE COMPLETELY WRONG ABOUT MONETARISTS WE GOT EVERYTHING RIGHT IN THE RUN UP TO AND IN THE (INITIAL) SOLUTION TO THIS CRISIS. (QE HAD ITS LIMITS AS WE POINTED OUT) FRIEDMAN WOULD NEVER HAVE CONTEMPLATED THE IDIOCY OF THE EURO NOR THE POLITICAL PROMOTION OF SUB PRIME MORTGAGES IN THE USA AND THOSE ARE THE TWO GREATEST CAUSES OF THE PRESENT CRISIS. HE TOTALLY REJECTED THE FASCIST EU RODNEY ATKINSON

    • Rodney the Earth is not flat,just your economic trash
      Thatcher said this could not happen because today’s economist had learned the lesson of the 20’s & 30’s
      Obviously she was wrong,that’s because you do not understand yourself let alone others,people like me are seen has the enemy,that is because you know in your heart that you are wrong & have lost the debate,so no debate is the answer,but like first world war generals you continue to sent cannon fodder out to face the music,shooting those that desert,because you know only that the Earth is flat & that their is no other way.step aside whilst you still can,I am your friend & Humanitarian not your enemy
      I am Human slightly Christian of British origin & i am never ever white
      Johnn the answer to your hours of thought to OUR problem is common sense & hope

      • And again everyone…hilarity is unchained…more capital letters, this time from an anonymous email to me:
        MR WARD, WHAT A COMPLETE LOAD OF BOLLOCKS YOU WRITE.

        —————————————————-

        MR HANNAN IS A SUPPORTER OF THE AUSTRIAN SCHOOL, NOT FRIEDMAN.
        AND OF COURSE NOT YOUR BELOVED KEYNESIAN.
        ————————————————————–

        I ASSUME MR HANNAN HAS BEEN IGNORING YOU AGAIN ON TWITTER, SO
        YOU’RE DOING WHAT YOU ALWAYS DO: ATTACK HIM ON YOUR SOAP BOX.

        IT’S TIME FOR YOU TO GET A LIFE.

        So that’s me told then…..I love it: trawl Dan’s tweets and you will find the biggest single category by far are ‘quotations’ – and within that the biggest author is Milt Friedman.

        “Ignorance is this,” as somebody should’ve said. ;- )

    • Capital letters have their uses, if only to abbreviate mortgage-backed securities (MBS), credit default swaps(CDS) and other toxic financial paraphernalia.

      Re: your post Rowan (sorry, Rodney), the most relevant abbreviation would seem to be LED (light emitting diode) which, on most computers, tends to indicate that a key labelled ‘caps lock’ has been inadvertently engaged.

  2. John,
    A superb posting, many thanks for all the work you put into them.

    Joe Stiglitz was on Newsnight a week or so ago, spouting off again about the problem with the Eurozone being that its auterity is not working and it should be more stimulative like the USA. I was amazed that he got away with it and wasn’t taken to task over the record number of US people on foodstamps, labour participation rates at 40-50 year lows and a stock market that is at nominal record levels because of the inflationary shenanigans of the Fed, and sod the citizenry.

    I’ve argued(and some!) with friends that we NEED a proper deflation, it’s part of ANY system to have cycles of growth and retraction. If it’s not done voluntarily (but in a managed way) it will be FORCED, there’s no way out.

    DavidC

    • You’re delusional.
      Compare the proportion of the population who are unemployed in Spain, or Greece, to the USA.The US looks quite pretty. And in case you haven’t noticed, the “inflationary shennanigans” haven’t caused inflation.

      The very last thing we need is de-flation. It would make the problem debts much worse, because they’d be harder to pay off. And finally, what do you think we”ve been going through if not a cycle of retraction? Things have got worse as a result, not better.

      • Hmmm..
        ‘the “inflationary shenanigans” haven’t caused inflation’…
        May I recommend a visit to websites such as shadowstats.com or other sites that deconstruct the ‘official’ figures on matters such as inflation, unemployment, GDP and the like.

      • There is no “shadowstats” for the UK.
        Although there’s an article on google where he’s predicting hyper inflation for the US in 2011.
        Tell me, what year is it in your world?

  3. Humanity in its current guise has reached the end of the road! The future is pure creativity and unfortunately 99.9% of humans at present are not aligned to it, this is mainly due to the reasons you outlined above about the arseholes running the show (Or at least they think their running the show)

    Evolution by design is whats happening so nothing is bad as its all part of the ingredients necesary to make the future.

    As for Obama and his Marxist ideology, look a bit closer at Obamas face and then at Karl Marx pictures…………see the family resemblance?…………Uncle Karls dream is coming true.

  4. John you do pick the strangest of people to admire..i cant stand the pair of those twats, sorry but i cant. 1 dan crawlarsed on FOX SNOOZE and rubbished the NHS using outrageous lies 2 liddle claimed that anyone who was severly ill just had the sniffles and was a malingerer sponging off the state..he is about as liberal as littlejohn….sorry but i have to say ‘pass’ on these two…

  5. Unfortunately John, I think that this ‘new dark age’ will be Islam and this ideology reflects perfectly your description of the living organism not adapting to environmental change. The loss of our ‘cultural ethics’ as you so correctly describe has left us weak, vulnerable and for the large part of our population, uninterested beyond the next episode of the X Factor revealing a society which is blind to the biggest threat facing our civilisation, broken as it is. I think then that Uncle Karl’s dream will turn into a nightmare when our ‘leaders’ realise just what their dalliance with the multiculti experiment reveals.

    • Shazza don’t be brainless. Study Islamic banking practice, there is a lot to like about it; for a start the requirement that the purpose of a loan be morally acceptable would have completely precluded the speculative stupidity that started this mess in the first place.

      My girlfriend has a car loan from an Islamic bank here in Australia – cheapest rates. She was asked ” what will you use the car for?’ in the approval process, I guess if she had said “to drive to my job in a brewery” instead of “to drive to the school where I teach”, she wouldn’t have got the loan.

      • There’s an immense gulf between Islamic banking practice and much of other Islamic practices, as exercised in the past and today. Banking apart, if comparing and contrasting the moral acceptability of islamic practices with those of the West, I think you may be on somewhat shaky ground.

      • Walrus – puerile argument. Hitler built the autobahns, Mussolini got the trains to run on time; because I approve of good roads and punctual trains, doesn’t mean I want to live under Nazism or Fascism. QED

  6. This is one of the main reasons why we are in the shit so deep.
    “…..that any company’s sole responsibility is to its shareholders.”
    That is the equivalent of the Nuremberg defence as far as I am concerned, which was, as we all know, a pot of poo.

  7. Very interesting post.

    I have come to the conclusion that it is all far more simple than we
    think. In the enormous global investment banks, what happens is that a bunch of morally bankrupt scumbags with lots of qualifications join in the hegemony for them : i.e. a place where they can make unreasonable amounts of money, probably bilk out of their national taxes, and spend a lot of time talking bollocks about whichever past-tense economist they know a bit about. This is to frighten off the little people who are ignorant of such things. These grand people are unchallenged because they are completely protected by their hegemony who wouldn’t be stupid enough to argue the toss over anything. So, they are in fact baseline criminals with no sense of attachment to any one place or nation. It is depressing beyone all measure to think that the actual numbers of these people are not huge. With the right impetus, they could be trounced.

    The Regulators do bear a responsibility because although they don’t earn big salaries, they are a woeful, ignorant incompetent bunch of useless tine servers who – of course, don’t get sacked either. The junior staff are so totally ignorant of the financial markets that there is absolutely no point whatsoever talking to them. (The City of London police, are by comparison, helpful and quite enthusiastic).

    What is outrageous is that not one government has prosecuted any of these disgusting venal scum.

    And they don’t seem to recognise that their electorates would have felt very much more positive about them if they had.

    • LG
      `And they don’t seem to recognise that their electorates would have felt very much more positive about them if they had.`

      Then they wonder why extremist parties are on the ascendancy across Europe.

      • ZeusG : consequently, are we to deduce that what politicians (not us) actually want is either a ) extremism, or b) they just want totalitarianism with them in the big seats. i think it is the latter.

    • “Complicated” is always used by people that would secrete a basic belief in the shit pile they have created. Thus modern wars are “complicated” = oil, identity or both. Modern societies are “complicated” = democracy vs capitalism. Humanitarianism is not “complicated” is it?

  8. Hannan always seemed to talk sense in my opinion …problem being that`s all he ever does. He has a nice little earner in the European theatre which allows him to spout insurrection ….sound and fury signifying nothing as the Bard would have it.

  9. John,

    I cannot help but admire this piece because I despise Friedman. I have long since held that your weakness is modern economics because you repeat so many Milton Canards. Just as Gold used to be money, but not the same thing, so is debt money, but not the same thing.

    This is why I advocate Modern Money Theory with a Job Guarantee for all. If the JG doesn’t float your boat ( though why it wouldn’t I can’t imagine) there is Modern money Realism. All written by real iive economists and is evolving as we speak.

    There is another way and it does not involve demonising either islam or the poor. Some quite pathetic posts on here from people who should know better. Fear is the principle weapon of the Friedmanite loons I urge you not to fall for it.

    Right wing economics and left wing politics is not new and has a name. We all know what that name is.

  10. Ok lets quickly debunk the “revitalise cultural ethics with religion or some higher order”. Religion is an abdication of humans innate morality. Religion hijacks this morality and claims it for itself in the process of manufacturing mindless morons

    My take for what it’s worth is that the only way to improve our cultural morality is to include people, to make them feel they are part of something as opposed to being on the receiving end of something

  11. Superb piece of writing JW…

    This brought back memories of a lecture I attended at Essex university on economics given by our Physics professor who had an MBa.
    He taught a concept called ‘satisfice’ – the concept that any corporate body had a responsibility not only to maximise profit but also be mindful of its need to recognise the social and societal impacts of it functions.

    Oddly I thought this concept was mainstream but now few people I discuss economic issues with have even heard of the term ‘satisfice’.

    • It was pointed out to me on a Management course that maximising profits is a short term objective and can destroy a company in the medium to long term. Cutting stock levels, training, maintenance and investment will all boost short term profits but do not make for company longevity.

  12. Remarkable combination. Of knowledge and mental gymnastics
    I very much agree well done for piecing it all together

  13. They’re just puppets, John. If they don’t say what they’re told, they’re out of a job and no way of paying the mortgage or their children’s private education.

  14. Not sure that any one body or broad group could have identified the potential full force of the coming global information exchange back in the 60’s-70’s-80’s and to where it would lead. Then get the message out there. Obviously, it required a little bit more of a steadying hand at all times.

    There are some aspects of the current economic environment, such as leveraging, hft algos, manipulation and the lack of overall oversight that are just inexcusable. I don’t understand why TPTB, for it is their doing, aren’t dissecting and unraveling the poisonous practices, now, before bringing us down to earth.

    WE ARE HERE NOW.
    Things will not be the same again. I hope the future is a little more tuned to the needs of the small guy, his fellows and keeps the best of what has been achieved to date. SWEEP THE REST UNDER THE CARPET.
    Anyone got an ‘ism out there that will fit the bill of requirements?

    • Maybe another -ism is not the answer. A firm “set of values” on which we all agree upon. And a “set of measures/procedures” that will have the flexibility to adapt to problems and needs, but at the same time not stray from the “set of values”.
      And we need inspired leaders to carry the torch, through the dark paths of this course. And the everyday heroes that will widen the way, clear the obstructions, take care of weak and the wounded.
      It won’t be an -ism. If it ever happens, it will be a higher state of conscience and purpose.

      Then again, maybe a cataclysm is more probable…sweeping everything – carpet included :-i

    • I don’t like ideologies and isms .All of them look to me equally grim , anti-human and humourless .They all lead people to do unthinkable and amoral things.They all manipulate and abuse language .The only good thing about this mess we find ourselves today is that some stupid people have been put to places to destroy lots of them .Perhaps some of the isms served some historical purpose at some time .But they killed -or they would have liked to ,given the chance- people en masse , abused lots of my favourite words ,wasted a lot of paper that could be used for better things like drawing or maths solving . I like people like Grillo that can make a party-ideology out of his dislike for them.
      In the words of Abbie Hoffman “all isms should be wasms ”
      I read this blog because it offers common sense , flexibility,speaks the truth by saying no to obvious lies and absurdities and injustices ,offers humour of course and dares to point at a lot of our ills and annoyances .
      @Nick i agree with you in what we need .We also need to be inpatient and want it now.We need these leaders to be bold and daring , they have to seize this opportunity.

  15. I suppose we are all cherry pickers whether it be from economics, history or religion. I have noticed over the years that the picking which is used to buttress a person’s beliefs tend to reflect their own personality. Benevolent people usually do not to become fundamentalists. Those who do from my experience usually see the world in black & white which enables them to ignore the obvious complexity, therefore making it easier for the rigid minded to propose simplistic solutions & to ignore & treat any dissent as heresy.

    Friedmanites & their like it seems to me lack empathy & see themselves as superior, spending most of their time looking down on their fellow humans. Lacking this human quality, one of those that separates us from animals, they will if allowed, create a dog eat dog world in which they are the chosen ones & as Mr. Atkinson’s presumably better half stated recently on this blog, if we dissent we deserve to starve.

    If you care to read a selection of Adam Smith quotes you will find some that do not match the philosophy of the neoliberal Adam Smith Institute, for instance:

    ‘ No society can surely be flourishing & happy, of which the far greater part of the members are poor & miserable ‘.

    ‘ As soon as any country has all become private property, the landlords, like all other men, love to reap where they never sowed, & demand a rent even for it’s natural produce ‘.

    ‘ To feel much for others & little for ourselves; to restrain our selfishness & exercise our benevolent affections, constitute the perfection of human nature ‘.

    • Smith also pointed out to Wilberforce that a free man earning his true value would benefit the wealthy man far more than holding him in slavery,value is the important word,commerce boosted for a short while on the abolition of slavery ( has predicted by Smith)) & later the people rising out of poverty in the industrial revolution,both led to more dynamic economies,only for the wealthy to become jealous of the honesty of their people’e endeavours

  16. Good article, JW. In your last paragraph you have a message for a number of people. Trouble is,I don’t believe that they have the answer, in fact I just don’t believe anything they, or any of the people you mention say any more.
    As for Gove, I just read in the Torygraph that he says he would vote to leave the EU if a vote was held tomorrow, but that he will neverless vote against the amendment to the Queen’s Speech, in line with what his boss has told him to do. So there you are, no real convictions, toe the line & keep the job. They are all towrags.

  17. John, I think your main point is that you can never ignore human nature and how it will misapply all wisdom in the service of its own desires. All that greedy businessmen needed was to be told that the “invisible hand” of economics meant that pursuing your own interests automatically meant benefit to all. And lo, the invisible hand grasped the invisible erection and set to work.

    Perhaps there’s a Darwinism in intellectual circles: the theories that serve the projects of the powerful are the ones most likely to survive and breed followers. Maybe the history of economic ideas runs alongside the history of special interests.

  18. My Father was an industrialist. He use to say that there were a few certainties in life – death, taxation and that all economist were wrong.

    Milton was wrong and so was Keynes. Perhaps we have grown averse to ‘booms & busts’ but that is the cycle of life. By trying to prevent the latter, as people like Greenspan did in the early years of the century, they created the mother of all busts. Gordon Brown was a complete idiot and Balls talks a load of nonsense when he advocates more spending. If this would work why has Japan not boomed for the last 20 years ?

    The Euro is another issue. There was have collective self-delusion on a grand scale. How could you expect the diverse economies of Naxos, Nice and Nuremberg to walk in harmony. It was a nonsense, so why did so many people believe it was possible ? And why do they now still believe, when the evidence is all around them, that the project can ever succeed. But I suppose it all depends on how you define a success.

  19. Andy spot on, all economists are prats, and Gove (for whom I had a lot of respect) has just become a wimp,. Yes, if there were a referendum I would vote to exit but I will abstain next week! Grow one Govey.

  20. All these Friedmanites, Hayekians, Marxists etc remind me of the old Chinese communists waving their little red books at each other. “It’s all in here, and nowhere else” they seem to be saying.

  21. I just want to add my thanks for this analysis, John. It is like reading a history book in which everything about a past era is set out with the wisdom of hindsight. It is much harder to stand back and achieve that perspective while we are still living through it all, yet you have managed to do it. Thank you.

  22. If anyone thinks that the financial markets are “free and fair” in the spirit of what Milton Friedman believed, then I have a bridge to sell you.

    The major error that Friedman and other economists still make was pointed out by Francis Fukuyama some Ten years ago: Trust and cooperation in society are treated as valueless which is just plain wrong because the level of trust dictates transaction costs.

    No trust and you end up having to spend ten thousand pounds on a carefully worded contract to try and protect yourself in case the other party defaults. Back in the old days, your word was your bond and transaction costs of doing business were close to zero. I still remember my Dad “putting to bed” our businesses spare cash with a simple phone call each night.

    So today no one trusts any of the central banks or the big merchant banks. The markets: shares, finance and commodities are a casino.

    The only safe investment is one you can stow under your bed.

    That is why no one is investing. They don’t dare.

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  26. This seams like a nothing more than a rant to me. There are many untrue claims.

    Some examples:

    “It is Friedmanism that insists markets must decide”
    – This is a misrepresentation of Friedmans stance. Friedmans basic argument is that markets performs best when only two parties are involved. If the actions taken by these two parties negatively affect a third party, who has not voluntarily agreed to be part of this transaction, Friedman would indeed agree that this is a marked failure. However he was sceptical about the governments ability to remedy these failures. He argued that often, not always, the measures taken by government would do more damage than the damage introduced by the marked failure in the first place. Conversely he argued that there were cases in which government intervention was preferred. For instance he was in favour of a tax on pollution.

    Also monetarism in itself contradicts your statement. Monetarism requires a central bank to expand or contract the money supply in order to combat inflation. This is quite the opposite of letting the marked decide.

    “a theorist who is gradually being proved wrong about pretty much everything he posited”
    – Everything? Can you provide me with any academic source backing up the claim that the majority of the economics profession has rejected close to all scholarly works produced by Friedman?

    “Pause here now for the Miltstones to clamour that “Friedman would never have approved of the misbehaviour by investment bankers”. Perhaps not: but could he not see that deregulating sociopaths results in disastrous over-confidence?”
    – You need to substantiate this – “Deregulating sociopaths”? What does this even mean? One can only guess that you are asserting that deregulation of the financial sector lead to the 2008 financial collapse. If that is the case, shouldn’t you at least be able to point out which exact deregulatory policies caused this?

    Also, in general you provide no sources backing up any of the claims which you make in this piece. Why is that?

      • Thank you for your reply.

        I am sorry for not supplying any sources myself – I thought that Friedmans stance on these issues were fairly well known.

        Anyways, here he is on free markets and third party externalities:

        http://www.digitalnpq.org/archive/2006_winter/friedman.html

        “Free markets work best when the transaction between two individuals affects only those individuals. But that isn’t the fact. The fact is that, most often, a transaction between you and me affects a third party. That is the source of all problems for government.”

        In a 1977 Q and A he said:
        “I don’t want to give any subsidy to pollution. On the contrary I would like to tax those activities that create pollution. But we’re going about it in a very foolish and unwise fashion: We are going about it by trying to regulate the equipment that people use. And that’s a very bad way to do it. Far better to impose an affluent tax and then leave it to the ingenuity of people to minimize the cost.”

        So there were indeed cases in which he believed that marked failures should be dealt with by government intervention.

        That being said, I admit that Friedman was not right all the time. He has advocated some policies that were indeed not a success: starve the beast.

        Anyhow, now I have provided some sources for the statements that I have made. But seeing as you are the one making a whole bunch of different assertions, shouldn’t you be able to back up these using at least some academic sources?

        My critique was in response to this specific post, if you felt that other posts would help in substantiating your points, why didn’t you link to any of these from this post?

        Now, I’ve read the post that you linked to in your response. But I feel that it fails to address my questions. It seems to be more of the same:

        “Pretty much everything Milton ‘Father of Neolib’ Friedman suggested is, if you read the foregoing carefully, doomed to produce socio-economic disaster. This is of course what we have rapidly building up now.”
        – This is just en assertion. You fail to substantiate this.

        “Friedman repeatedly said ‘the weak must go to the wall’ – because he thought commerce had responsibility only to its shareholders, not society. But the weak didn’t go to the wall in 2008: both then and still now, the banks have been a massive drain on taxpayers. The world banking system has been a 24/7 welfare scrounger for just over five years.”
        – “the weak must go to the wall”, when did he say this? I admit that the financial crisis is a difficult topic and honestly I do not know what Friedman would have advocated – one might be able to get an idea from reading A Monetary History of the United States, 1867–1960. Though I am fairly certain that he would be against scott-free taxpayer bailout. As for what caused the financial crisis, the jury is still out – it seams that many factors played a role. Also why didn’t you answer my question about how deregulatory policies caused the financial crisis?

        “The final irony is that real capitalism is about risk and reward, but neoliberal multinational thinking focuses on risk aversion through monopoly.”
        – Again you have no sources backing this up – it is just an assertion.

        “My ideal society would be one in which there is far more business mutuality and far less multinational bourse influence. One where the power of central politicians was massively reduced, where rich business interests were kept out of the process…”
        – On this we are actually in agreement. Great. How would you achieve these goals?

        Btw. you never mentioned which source you used in arriving at the conclusion that the majority of the economics profession has rejected close to all scholarly works produced by Friedman?

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