‘The Alternative Manifesto’ – Examining the diagnosis, and possible cure, of Britain’s ills

Dr Butler’s work is a follow up to his book “The Rotten State of Britain” – itself a fine book explaining many of the problems this country faces.

In “The Alternative Manifesto” Dr Butler concentrates on the terrible economic position that Britain finds itself in, what really caused this position and what should be done about it.

Unlike the United States there is little challenge in Britain to the establishment view that all our problems are caused by “greedy bankers” and “lack of regulations”. The “lack of regulations” point is utterly absurd as there are endless national and indeed international regulations (for example the “mark to market” rule was part of the international financial regulations agreed, years ago, in Basel, Switzerland).

And, as for “greedy bankers”, they are indeed greedy, but to blame their greed for the crises is like blaming the speculators of “charge alley” for the problems of Britain in the 18th century – many great figures of English literature did this (as to attack the wicked speculators diverted attention from the politicians who were paying many of the great figures in English literature), but that does not alter the fact that it was the “public credit” itself, the endless government borrowing, that was at the root of the economic problems and the political corruption – not the speculators in the debt, however wicked they may have been.

Even today with our fiat money and fractional reserve banking taking beyond any level of sanity – even the most crazy banker can only build a pyramid of debt on new money that the governments themselves have created, and indeed it is these governments who are normally the loudest voices demanding that banks “expand credit” – lend more money.

However, presently Dr Butler’s works are the only books dissenting from the establishment view (the view that the root of the problem is the greed of bankers and the solution is yet more taxes and regulations) that one can find in (for example) high street book stores.
This may be difficult for an American reader to understand, so I will explain a bit further. In a British book shop or supermarket book section you may find works by people who are regarded (and indeed regard themselves) as foes of the “liberal” left establishment – but they will not cover the basic economic crises that faces us. Britain has its Richard Littlejohn and J. Clarkson, but they are not really like America’s Glenn Beck.

Mr Littlejohn will attack “politically correct” (i.e. “identity politics” stuff whose origins lie in the Marxist Frankfurt school) regulations and thought police attitudes, and Mr Clarkson may broadcast a similar point of view on the BBC itself (which he is allowed to do because he also broadcasts nasty and dishonest attacks on the United States – American soldiers were cowards facing the Communists in Vietnam, the United States looted Britain during World War II, America was not on Britain’s side during the Falklands war….. and on and on), but neither man will explain the rise in the money supply or how this credit money bubble led to the economic crash, and how government bailouts will make things worse….. (although, of course, bailouts only make things worse over a period of years – in the short term bailouts put off a great slump, the liquidation of the vast black hole of debt Malinvestments, and may even produce a phony boomlet, and the short term is all that politicians tend to care about).

On the great crises of our age the “everyman” part of the British “right” (for want of a better term) has nothing to say. Nor is there (yet) any message from dissenting free market scholars – nothing like Thomas Woods’ (Austrian School) “Meltdown” or Thomas Sowell’s (more Chicago School) “The Housing Boom and Bust” – explaining how the government (and it did this in Britain as much as the United States) created a vast credit money bubble via the Central Bank and how regulations and government policy pushed this money into the real estate market in the United States (which was then passed on, in the form of securities, to Britain and many other nations).

Partly this may be because there are simply fewer pro free market scholars in Britain – but it also may be due to certain features of the British publishing and book selling trade. And, of course, the utter lack of any even vaguely pro freedom television or radio stations in this country – for those American conservatives and libertarians who complain about the various imperfections of Fox News my reply would be “you would soon miss it if you lived in a country without one”.

All these obstacles Dr Butler has managed to overcome – his works are available. Not just on the internet, but also in the ordinary shops and that is still important. One can find his “The Alternative Manifesto” not only in good London book shops such as Foyles, but also in the standard (and normally quite horrible) “Waterstones” that exists in the average British town although not yet in the (even worse) “W.H. Smith” book shops. It is up to us to buy Dr Butler’s work in order to show that the British people are not just interested in Barack Obama’s “Dreams from my Father” (I wonder how many people who have bought this work have actually read it – for example the anti British rant on the Mau Mau revolt in Kenya, in reality a revolt that was based on a weird mixture of disgusting tribal practices and Marxism) and other “celebrity” works.

Are we really just concerned with Barack Obama’s flat tummy (eat less, smoke more would seem to be the message if we are) and various female celebs’ plastic breasts? Do we not care at all about what problems we face – what caused them, and how to dig ourselves out of this mess?

Dr Butler does a good job explaining not only the absurd monetary policies that have brought us down, but also the fiscal policies (the wild taxation, and far wilder government spending) that would have undermined our economic prospects even if monetary policy had been sane.

We simply can not go on wildly try to reinflate the credit bubble – and trying to use government spending to try and buy prosperity (presumably under the delusion that some Galactic Federation exists that will bail us all out when the whole farce finally collapses) – and we can not go on ignoring the ever growing economic and social harm done by an out of control and “unsustainable” Welfare State (what the Economist and Financial Times would call “public goods” – on which the “essential spending” just happens to have to go up by a vast amount every year for ever, and which in no way shape or form ever lead to a broken country).

However, there are less favourable things that need to be said about Dr Butler’s latest book:

Firstly he has a tendency to go off at tangents – so do I (so I have sympathy with this), but some of the tangents are unfortunate. For example the causal light-hearted mention of human trafficking – it is not that Dr Butler really things that women being raped, brutalized, threatened with death, forcibly addicted to drugs and then basically used as human toilets for the most debased and vicious lusts of men, is a just a bit of fun. On the contrary, Dr Butler thinks such things are terrible – but they do not happen very often and the government is wildly overestimating how common they are in order to have an excuse for yet more power.

However, the left establishment are not very fair in their reviews (ask Glenn Beck or indeed any author or broadcaster outside the left) so Dr Butler should expect to get attacked for what he says (or rather what the left will pretend he says) about human trafficking. This part of the book needed either far more of a passionate attack on the terrible things that are done to some women – or just the use of the blue pencil on the whole section.

On the bad effects of government regulations on general life Dr Butler gives many good examples. The sort of thing that will be familiar to those who have read the writings of Christopher Booker (mostly in the Sunday Telegraph newspaper) and his friend Dr Richard North. And Dr Butler tries to get at the philosophy behind the various demented “health and safety” (and so on) regulations – although perhaps not as well as F.A. Hayek did (in his works on the decline of the traditional view of the role of law – see his “Constitution of Liberty” and “Law, Legislation and Liberty” which themselves party draw on the works of British writers such as A.V. Dicey and, rather more, Chief Justice Hewart’s “The New Despotism” 1929).

For an examination of the ideas that have made things worse in recent years the writings of Peter Hitchens are perhaps better than those of Dr Butler – but the articles and books of Peter Hitchens can seem “paranoid” to those who cling to the false hope that the political class has not been corrupted by collectivist ideas taught to them as students (indeed sometimes even as school children).

However, Dr Butler offers no real solutions to the problem of endless government regulations. He does not even suggest (as Booker, North, Hitchens and so many others do) that Britain leave the European Union, which would at least get rid of the tide of EU inspired regulations.

In fact Dr Butler simply seems to suggest that politicians, administrators and other members of the political class just become better people – “go thou and sin no more” may be fine theology, but it is not a political “manifesto”, particularly as the ideas of the political class have been taught teach them that they are not “sinning” at all. Indeed that it is their role to “nudge” (or shove, or…..) people to obey them in every aspect of life.

More broadly Dr Butler is far better on the causes of the present crises than he is on the solutions to it:

This is not to say that Dr Butler does not argue for policies. On the contrary, he produces excellent and well argued policies on such things as the flat tax (rather than the endlessly complex “progressive” income tax), the need to reduce taxation on investment (if Warren Buffet’s advice on the taxing of capital gains were followed there would not only be no more Warren Buffets it would also mean the destruction of what is left of investment in the Western world), and the need for real choice (not de facto state monopoly) in education and healthcare with the money being under the direct control of the individual not other people buying services in their name.

But, as Dr Butler would be the first to admit, most of these policies can be found in Milton Friedman’s “Free to Choose” (1980) or even in his “Capitalism and Freedom” (1962) – there is little specifically on the current crises, and little sign of understanding about how new evidence has complicated matters. For example, evidence (from the work of Charles Murray and others) that handing people money to spend on health and education (or food or whatever) is a wildly different thing from them earning money themselves and then choosing to spend it on these goods and services.

Even the flat tax proposal feels dated – as it ignores the work done on the perverse effects of one aspect of the “flat tax” proposal as it is normally presented. Namely the idea that people below a certain (reasonably high actually – although, to be fair, the figure that Dr Butler gives is a lot lower than some I have seen) level of income should not pay the tax at all (I know that government subsidizes many rich people to a disgusting level – I will deal with that further on).

This “let us get people out of the tax net” doctrine may be nice for people like me (I do not earn much – I never have and I never will). But for half of the American population to pay almost nothing of the main source of revenue for the Federal government (the income tax) is surely perverse in an age of one person one vote (it reminds me of Rome during the late Republic – where the mob paid no real taxes but got to vote for endless “bread and games”), and most flat tax proposals would take even more people out of the tax net.

It is surely no accident that most low government spending States in the United States either have no broad based income tax (Alaska, New Hampshire, Nevada, South Dakota, Tennessee and Texas – Washington State also has no State income tax but is not a low government spending State) or have a income tax that hits most voters (not just the rich and the middle class) – Alabama being the classic example of this.

The old way of financing American Federal government spending (in the days when it was about 3% of the economy, rather than about 30% of the economy) was via a tax on imports, which whilst terrible was better than taxing some people very highly and not (apart from with the Social Security tax of course) taxing the other half of the voters. It is a terrible mistake for America and Britain to build a “welfare underclass” as they have both done and (by phony “tax credits” and so on) are continuing to do.

A tax structure where everyone can vote – but only just about half of the voters pay much, will not work. Either at local or national level. Certainly the “rich should pay more than the poor” – but that should be in money, not as a proportion of their income. If it is as a proportion of their income also (due to “basic income” not being taxed at all) – then the point of the “flat tax” is lost, as lots of people will be able to vote for government spending that they do not think they will be paying for.

Of course they will indirectly pay for this spending (pay for it by general economic decline), but that is an effect that the disinformation machine of the left (of academia, the “mainstream” media and so on) will strongly dispute – it will lead to a California type situation where (contrary to the Economist magazine) the problem is not referendums keeping taxes down, but wildly high government spending (fully supported by the politicians in the State legislature and the academic, judicial and media parts of the establishment) with many voters (especially the recent arrivals from Latin America) told that only “the rich” need pay most of the tax burden – an impossible burden of government spending for any tax system to support in any case.

This is not to say that the policies that Dr Butler suggests would not be an improvement on we have now, but one must be careful to no longer hope for vast improvement from these policies in the provision of “public services” – and of course it does not really deal with the central problem of our time we can not afford this vast burden of government spending any more. Although at least Dr Butler knows this – whereas the establishment call every good or service a “right” that must be provided at the expense of the taxpayer. In the latest absurdity both the British and American academic, media and political establishments have declared that “broadband internet access” is such a “right”. No doubt the old promise of V.I. “Lenin” of gold plated public toilets will be introduced next week.

On how one should at first respond to the crises Dr Butler does not really dissent from the establishment – he supports both bailing out the banks and then increasing the money supply to try and restore demand.

Have no fear I am not about to launch into a massive Austrian School attack on Chicago School Monetarism. I am just going to make a political point.

One can not (with hope of success) support bailing out the banks (let alone subsidies for favoured corporations – which is what increasing the money supply really means) and then turn round and say “now we have got to get Welfare State Entitlement spending under control”.

As Bastiat noted a century and a half ago – one can not, politically, support subsidizing the rich and oppose subsidizing the poor. It will not work – so even if I accepted the economics of “bailoutism” (which, of course, I do not – no matter how terrible the liquidation of the vast black hole of debt malinvestments would be, putting it off does not make it less terrible, in fact it will make it even more terrible) the politics of it are absurd and self defeating. In the end there is a moral side to politics, one must have a code of honour (the Cameron crowd are laughing at this point – but you will find out that your “cleverness” can not help you in the long term). For if one has no honour one will be exposed as dishonourable – and one loses all moral credibility to do the hard things that must be done.

Or to put it in blunt language – one can not take the free bread out of the mouths of the poor (as the Welfare State, the “essential public goods”, has reached such a level of spending that will not be “sustainable” over the next few years – especially when the bubble economy finally does collapse) whilst one slips money into the pockets of one’s rich friends.

Perhaps Dr Butler feels some of this himself – for his “Alternative Manifesto” is rather light on specific ways to save money.

No doubt Dr Butler would support such things as abolishing “Regional Government” (indeed I strongly suspect that he is one of the people in the “think tank world” who has been arguing strongly for getting rid of “regional development agencies” “development companies” and other QUANGOs ) and hopefully Dr Butler would strongly support Britain leaving the European Union (although I can not find the place in this book where this is specifically argued for – which is odd as leaving the E.U. is also an essential precondition for any serious roll back of regulations). But such moves will hardly be enough.

And, whatever may have been the case in Canada, I can not really put much faith the chances of a new “Public Service Ministry” (a “Ministry of Administrative Affairs”? led by Jim Hacker?) to achieve anything. If I were to draw a lesson from Canada that might be applied to Britain, it would be that of former Premier Harris of Ontario – honestly argue for the real reductions in government spending (and do not pretend that this will lead to “better public services” or other such B.S.) and voters may rally to your cause.

Even some people who were openly told they were going to have their benefits cut or even abolished voted for Harris – they voted for him because they saw an honest man who was going to what was needed to save society (i.e. that network of civil interactions that make up a real society – for there is no such “thing” or entity called “society” that has resources to do things of its own, only real individuals and their work).

I am poor and I can tell anyone prepared to listen that many poor people are not rats or insects – we are men, and are prepared to respond as men if we are talked with honestly by people who do not hide the fact that we are to suffer. Rather than presented with pathetic attempts to deceive us by shifty Captain Hook style Old Etonians (there are good Etonians and bad – sadly the bad, the dishonest and dishonourable, are in the key positions presently).

In recent times public attention has been, quite rightly, drawn to the obscene costs of the bank (and other such) bailouts. Indeed this cost is even higher than is generally believed as the published numbers (for bailouts) do not contain the hidden subsidies. For example the old trick of sweetheart (low interest rate) loans for connected banks and other corporations – via the Bank of England (the “discount window” and other scams), or the 200 billion Pounds in “quantitative easing” new money.

In both Britain and the United States the practice is for government (via the central bank) to produce money, then “lend” it out (at near zero interest rates) to politically connected banks and other corporations, who then (in turn) lend it back to the government (via the Treasury) at a higher rate of interest.

This is such a disgusting (and dishonest) subsidy of the rich that it is difficult for me to find (non “Anglo Saxon”) words to describe it. And, of course, it means that the profits of banks and stock markets recently announced are one big fraud. Of course there are people who say that governments should just print “debt free money” and spend it – however such an open fraud could not last (the reason that Lord Keynes supported using the banking system to hide the monetary expansion fraud is because it can be made so complex that the public does not know what is going on).

Dr Butler main complaint about “quantitative easing” is that it was not larger – that it did not contain money for companies to play with (engage in malinvestments with) rather than just lend to the government to fund yet more wild government spending. This was the one point in reading Dr Butler’s work when the book left my hand and made contact with the far wall. I am no enemy of the rich (I hope what I have already written proves that), but to subsidize them on an even greater scale is utterly unacceptable (on economic, political and yes moral grounds) – indeed to carry on subsidizing them at present levels is also utterly unacceptable.

“But it is not just the rich who will be hurt by allowing the credit bubble economy to collapse Mr Marks”.

Quite so – and I personally may very well not survive such a collapse (if things do turn out badly for me I hope that I can at least find the courage to face my end with some scrap of dignity – but I may fail even in this). However, such a collapse will happen and every time the collapse is put off (by yet another bailout orgy of money supply expansion and government spending) the eventual collapse is made worse (and poor people like me are put into a position from which we are even less likely to survive). It is “later than you think” and the end of this credit bubble economy can not be long delayed – no matter how much effort is put into trying to create one last “crack up boom”.

That is the seriousness of the situation we face, a situation where people must come together in voluntary effort (civil interaction – the true meaning of “the market”, both “for profit” and in terms of mutual aid) in order to save what can be saved and to build new things after the tidal wave of liquidation has passed by. Any government interventionism (especially in the labour market) will just make mass unemployment (and the terrible poverty that will go with it) worse and last longer. It will prevent people helping themselves, and helping each other, in the terrible times we will soon face.

For all its other merits, I do not believe that Dr Butler’s work fully grasps the seriousness of the situation we will face in the coming years.