Revenge of the bankrupt pensioners

This (via O&M), if true, is serious news. People should know that they are taking a risk when they invest their money somewhere. You can’t kidnap and torture your financial advisor just because he didn’t give you sound advise. I know I shouldn’t be laughing. But I simply can’t help it. The whole story seems so crazy.

A group of well-to-do pensioners who lost their savings in the credit crunch staged an arthritic revenge attack and held their terrified financial adviser to ransom, prosecutors said yesterday.

The alleged kidnapping is the latest example of what is being dubbed “silver crime” — the violent backlash of pensioners who feel cheated by the world.

“As I was letting myself into my front door I was assaulted from behind and hit hard,” the financial adviser James Amburn, a 56-year-old German-American, said. “Then they bound me with masking tape until I looked like a mummy. I thought I was a dead man.”

He was freed by 40 heavily armed policemen from the counter-terrorist unit last Saturday. The frightened consultant was in his underwear, his body lacerated by wounds allegedly inflicted by angry pensioners.

Gloom

To put things in perspective, a couple of paragraphs from 18th century French economist Turgot. From the Mises blog-

The general freedom of buying and selling is therefore the only means of assuring, on the one hand, the seller of a price sufficient to encourage production, and on the other hand, the consumer, of the best merchandise at the lowest price. This is not to say that in particular instances we may not find a cheating merchant and a duped consumer; but the cheated consumer will learn by experience and will cease to frequent the cheating merchant, who will fall into discredit and thus will be punished for his fraudulence; and this will never happen very often, because generally men will be enlightened upon their evident self-interest.

To expect the government to prevent such fraud from ever occurring would be like wanting it to provide cushions for all the children who might fall. To assume it to be possible to prevent successfully, by regulation, all possible malpractices of this kind, is to sacrifice to a chimerical perfection the whole progress of industry; it is to restrict the imagination of artificers to the narrow limits of the familiar; it is to forbid them all new experiments; it is to renounce even the hope of competing with the foreigners in the making of the new products which they invent daily, since, as they do not conform to our regulations, our workmen cannot imitate these articles without first having obtained permission from the government, that is to say, often after the foreign factories, having profited by the first eagerness of the consumer for this novelty, have already replaced it with something else. It means forgetting that the execution of these regulations is always entrusted to men who may have all the more interest in fraud or in conniving at fraud since the fraud which they might commit would be covered in some way by the seal of public authority and by the confidence which this seal inspires, in the consumers. It is also to forget that these regulations, these inspectors, these offices for inspection and marking, always involve expenses, and that these expenses are always a tax on the merchandise, and as a result overcharge the domestic consumer and discourage the foreign buyer. Thus, with obvious injustice, commerce, and consequently the nation, are charged with a heavy burden to save a few idle people the trouble of instructing themselves or of making enquiries to avoid being cheated. To suppose all consumers to be dupes, and all merchants and manufacturers to be cheats, has the effect of authorizing them to be so, and of degrading all the working members of the community. [emphasis mine]

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From an ET interview of former RBI governor YV Reddy-

I think we can see some contrasting situations. While the UK is more transparent on public ownership, the US is somewhat reluctant. There is an increasing reference to the Swedish experience. When Sweden had a banking crisis, its government took over the banks temporarily, cleaned them up and handed them back to the private sector.

But, I think, globally there is no consensus on how these things should be treated. My understanding is that there is a consensus that banks need to be treated as public utilities. Once you term something as a public utility it has to be owned and managed by the government. Otherwise, it has to be intensely regulated. I think the banking industry is likely to be treated as a public utility.

My monopolistic “public utility” managed fourteen power cuts in a single day. The situation is only going to get worse.

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I didn’t know Swapan Dasgupta could write like this. He sounds like an out-of-power US Republican discovering the virtues of free markets, and predicts an economic collapse of the UK, and India-

Since they discovered the welfare state as an alternative to Soviet-style Communism, socialists have successfully spread the message that a “caring state” is more important than either families or social communities. In Britain, the state intrudes into every sphere of life from healthcare and education to providing unemployment benefits and pensions. It even tries to prescribe social attitudes. The result is a gargantuan bureaucracy and government spending that equals half the GDP of an economy that shrunk 3.5 per cent last year.

Britain is approaching an economic nightmare. But it is curious that its tax-and-spend profligacy is the ideal of those who tom-tom “inclusive growth” in India. Last week, Rahul Gandhi admitted that 90 per cent of welfare spending is frittered away in waste and corruption. However, rather than balk at this outrage, both he and his economist Prime Minister have preferred a bigger role for government over more incentives to individuals and families. The PM doesn’t believe that a low tax regime is a moral imperative of good governance; to him good economics is mega spending.

In comparative terms, India is still a notch below Britain in both prosperity and economic promiscuity. But if a fragile and self-serving coalition assumes power after May 16, increases budgetary expenditure dramatically – which it surely will do-and adds to the already unsustainable fiscal deficit, Indians may once again experience that sinking feeling of the 1970s. The entrepreneur-driven national exuberance of a year ago may well be subsumed by a sense of helpless decline.

Actually, it will be worse than Blighty. The British state is well-meaning but bloated, plodding and intrusive; India’s will be uncaring, inefficient, corrupt and increasingly criminal.

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Cynicus Economicus is angry-

Most alarming of all, the greatest and most listened to cynicism is coming out of China – who see the QE policies of Western governments for what they are – harbingers of inflation. How desparate is it when it takes a totalitarian state to ram the truth home?

This is why I am writing an unusually angry post. I am sick of the lies that issuing forth, and I am sick and tired of the way in which the insiders appear to win, regardless of the cost to the rest of the economy. I have watched in horror as these bailouts have chewed up the wealth of the Western economies, both present and future wealth. I have watched in horror as governments have issued ever more debt to support their profligacy and support insolvent banks. I have watched in horror as central banks have commenced monetising government debts, and likely engineering inflationary defaults whilst risking eventual hyper-inflation.

Above all, it really does appear that governments and central banks are willing to sacrifice ever greater swathes of the economy to rescue incompetent and insolvent financial institutions. The only explanation that fits the facts is the grubby clubbiness of the system. It is not the great New World Order conspiracy, but rather the conjunction of interests between well placed individuals. Each, in their own way, moving forwards for their own personal gain. It is not the activity of great conspirators, but rather the collective movement of little men, of people who can think only of their personal gains. Money, vanity, power.

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Turgot is right about the government, isn’t he.

Moral judgments

Since the financial crisis began, I have noticed phrases like “free market fundamentalists” being thrown around, and an accusation being leveled against “unregulated” capitalism. Thousands of newspaper columns and hundreds of columnists have repeated the same thing over and over. And so have many other people and bloggers. The facts are crystal clear – there is no “unregulated capitalism” at play anywhere in the world, and the crisis was definitely not caused by any such non-existent entity; you could just as easily claim that Fred Flintstone caused the crisis. The fact is that the crisis was caused by government intervention in the economy; as long as “any” regulation exists, the government is in direct or indirect control of the economy. Once the government asserts its influence over the economy, its natural that crooks will rush towards it so that they can benefit by modifying the regulations to suit themselves. Such crooks are not capitalists. They are what I have already called them – crooks.

So what does that say about the people making such claims? (This question is very significant when it comes to morality, and instead of inventing an example, I will continue using the present one. Further, this article is why I thought I should write about it, and wgreen asks a similar question here.) The claim can only be made by the following people-

• Those who are ignorant of the state of affairs, either purposefully, or as a result of an error.
• Those who are aware of it but are lying through their teeth because it suits their ideology.

A moral judgment needs to be passed on each of these. I will come to the “why” later.

1. Those who are purposefully ignorant are immoral because they are guilty of evasion.
2. Those who, after careful thought, believe in an ideology that doesn’t respect individual rights are evil. They may “honestly” believe that egalitarianism is good, but that doesn’t change the fact that it isn’t. And the unprincipled from that lot may even lie to further their agenda.
3. Only those who are ignorant as a result of an error – in judgment, or brought on by lack of sufficient information/ incorrect information can be said to be moral, but this is not a license that is granted for perpetuity.

Note that there are always degrees when it comes to moral judgments – a murderer is worse than a thief. So is a man who holds that there is nothing wrong in murder (even though he hasn’t actually committed a murder).

—

Sometime in the 1980s, the “movement” around Ayn Rand’s philosophy split on a question of principles. One of the questions was that of passing moral judgments and whether “ideas” can be judged “good or bad/ evil” or whether they can only be “true or false.” Kelley said (see Appendix A)-

[E]vil and error are not the same.

The concept of evil applies primarily to actions, and to the people who perform them. Schwartz asserts that we should not sanction the Soviets because they are “philosophical enemies.” This is a bizarre interpretation of their sins. Soviet tyrants are not evil because they believe in Marxian collectivism. They are evil because they have murdered millions of people and enslaved hundreds of millions more. An academic Marxist who subscribes to the same ideas as Lenin or Stalin does not have the same moral status. He is guilty of the same intellectual error, but not of their crimes (unless and to the extent that he actively supported them, as many did in the 1930s, although even here we must recognize a difference in degree of culpability).

Truth and falsity, not good or evil, are the primary evaluative concepts that apply to ideas as such. It is true that the horrors of this century were made possible by irrationalist and collectivist ideas. Bad ideas can be dangerous; that’s one reason we shouldn’t endorse them. But they are dangerous because people use them to perpetrate evil. We are not Hegelians: ideas per se are not agents in the world. Truth or falsity is the essential property of an idea; the good or ill it produces is derivative. It is also true that a given person may adopt false ideas through evasion, which is morally wrong. But another person might adopt the same idea through honest error.

From my understanding of his statement, he’s making a “guns don’t kill people, other people do” argument. He says, then, that ideas don’t have a moral component to them – they can only be true or false. And that its actions that are good or evil; that its actions that can be morally judged.

Peikoff responded in a lengthy paper-

As one of his examples of an intellectually honest man, to whom others should show “tolerance” and “benevolence,” David Kelley offers not a groping teenager, but “an academic Marxist,” i.e., an adult who devotes his life to the job of teaching unreason, self-sacrifice and slavery to generations of young minds. When I speak of truth and falsehood in what follows, therefore, I am presupposing a definite (adult) context. I am speaking of truth qua truth (not of the arbitrary)—and of falsehood on the kind of scale and issues that preclude honest, short-lived errors.

[...]

In some contexts, a man is properly held blameless for an unreasonable idea, so long as he himself does not act on it. For example: if I conclude that, though you are innocent of any wrongdoing, your death would be a wonderful thing, but I then remind myself of your rights, hold myself in check and refrain from killing you, I may be free of blame and can even be given a certain moral credit: “He kept his idea within his own mind,” one could say, “he did not allow it to lead to the destruction of the innocent; to that extent, in actual practice, he was moved by the recognition of reality.” But this kind of analysis does not exonerate the philosophic advocate of unreason. In regard to him, one cannot say: “He implicitly advocates murder, but does not himself commit it, so he is morally innocent.” The philosopher of irrationalism, though legally innocent of any crime, is not “keeping his ideas within his own mind.” He is urging them on the world and into actual practice. Such a man is moved not by the recognition of reality, but by the opposite: by the desire to annihilate it. In spiritual terms, he is guilty of a heinous crime: he is inciting men to commit murder on a mass scale. Advocacy of this kind is a form of action: it represents an entire life spent on subverting man’s mind at its base. Can anyone honestly hold that such advocacy pertains not to “action,” but merely to the world of “ideas,” and therefore that verdicts such as “good” and “evil” do not apply to it?

Yet such is the essence of David Kelley’s viewpoint. “Truth” and “falsity,” he says, apply primarily to “ideas”; “good” and “evil,” to “actions, and to the people who perform them.” In regard to evil, he says, we must not be tolerant; but in regard to ideas, moral judgment is a mistake. In the cognitive realm, he says, the virtue to be practiced in regard to all comers, no matter what their viewpoint, is “tolerance” and “benevolence,” i.e., cool, open-minded, friendly discussion among civilized moral equals. Stalin, in this view, has killed people, so he is evil and intolerable; but Kant or “an academic Marxist”—he is merely a thinker of a different school, with whom one happens to disagree (and from whom, Kelley adds, we might even learn something “if we are willing to listen”). In regard to Kant and his academic progeny, therefore, moral judgment is inapplicable and even “hysterical.”

None of the excerpts do justice either to Kelley or to Peikoff. So reading their complete papers is recommended.

I agree with Peikoff that ideas “can” be moral or immoral and can thus be good, bad, evil etc. However I don’t agree with his narrow definition of “honest errors” (and therefore agree with Kelley – see Appendix B). I know from personal experience that errors are not the exclusive domain of youngsters, retards and illiterates. Depending on the kind of knowledge, the amount of material one has to wade through before reaching any kind of conclusion, and the ability that such a task demands, errors are more common place than Peikoff is willing to admit, particularly in the field of philosophy. I don’t refer to broad and thus simple principles – individual rights for example, but more technical and complex questions. If “such errors are not nearly so common as some people wish to think, especially in the field of philosophy” why is it then that two 40+ year old “rational” men who believe in individual rights are sparring over a question of “moral judgment?”

Note that Peikoff’s response is to Kelley’s brief paper. Kelley has written in depth about the subject of moral judgments in his book which I have linked to (but haven’t read beyond the two papers of interest.)

As for Schwartz’s addendum where he writes, among other things-

The Libertarian movement is not some innocuous debating club. It is a movement that embraces the advocates of child-molesting, the proponents of unilateral U.S. disarmament, the LSD-taking and bomb-throwing members of the New Left, the communist guerrillas in Central America and the baby-killing followers of Yassir Arafat. These views have all been accepted under the Libertarian umbrella (and remain accepted under it by everyone who still calls himself a Libertarian). It is these types of vermin that one is lifting into respectability whenever one sanctions Libertarianism—or whenever one maintains that ideas can be analyzed without being evaluated.

moral judgment doesn’t apply here like he thinks it does. He’s attacking an umbrella term. People cannot change that according to his convenience. Not everyone is C.S.Peirce.

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The “why.” A judgment has to be made because the Krugmans and DeLongs and Stiglitzs and thousands of other statist economists, philosophers and politicians are not indulging in this subterfuge and gross disregard for individual rights out of some “honest error” – they are knowingly supporting a stance that is anti-liberty in every conceivable way. And thus they cannot be given the “benefit of the doubt.”

The mother of all Stimuli

Its official. World governments are being run and advised by people who have escaped from asylums holding the criminally insane. How else can you have a proposal like this-

It has been on and off for months, but a key announcement in Alistair Darling’s budget in 10 days’ time looks like being a car “scrappage” scheme. The motor industry is in trouble and thinks the best way to reverse an alarming slide in sales is to give people who trade in old cars for new or nearly-new ones a £2,000 allowance.

As Cynicus Economicus asks, why not bomb cities instead? Why not evacuate, say, New York City and send in a bomber to carpet bomb the whole city? I agree with C.E.’s conclusion-

If ever there were an indication of the absolute bankruptcy of ideas to fight the economic crisis, an indication of the underlying idiocy of government policy, then surely this is it. They are acting to destroy wealth to ‘save the economy’, and doing so at the expense of the future economy. They are spending future wealth in order to destroy present wealth.

Quite simply, the mind boggles.

It does, indeed.

This one’s a gem

“Normally word perfect, Obama ummed, ahed and waffled for the best part of two and a half minutes.”