Filed under Current Affairs

An Interview with Daniel Hannan

Q. I’ve seen your speeches and have heard you presenting facts and sounding the alarms.  However it seems to me Europeans (politicians and citizens alike) just trod along as if the house is not actually on fire.  Is anybody listening to you over there in Europe where it counts?

A. No one is listening at all – except the majority of the electorate. A rift has opened up between politicians and people on the issue of the EU. Almost every time there is a referendum on closer integration, in pretty well any country, people vote ‘No’; yet their parliaments are usually in favour by around 80 per cent. Britain is typical. According to most opinion polls, roughly 60 per cent of voters want to leave the EU, but that position is shared by only 3 per cent of MPs. Why the division? Because politicians make the mistake of believing that, since the Brussels system has been kind to them personally, it must be good for their constituents. As Upton Sinclair once observed:’It is difficult to get a man to understand something when his job depends upon not understanding it’.

Q.  Why do the Eurocrats insist on bailing out Greece?  Do they really think that the Greeks are going to change their view of the world or their behavior simply because some Eurocrat in Frankfurt or Belgium demands they do so? (or the Italians, the Spanish and so forth) or is something else going on here?

A. The priority here is not to bail out Greece, but to bail out the euro. The people in Greece don’t believe that they’re being rescued. They understand perfectly well that the bailout money will go to European bankers and bondholders, but the repayment will come from ordinary Greek taxpayers. No wonder they are protesting. They – and the Irish, and the Portuguese – are being sacrificed in order to keep the euro going.

Q.  What’s the worst that could happen if we simply dissolved the Euro and went back to Francs, Drachmas, Lire, Guilders, and Marks ? – They were more romantic anyway.

A. More romantic and more efficient, since they allowed each country to set its interest rates and exchange rates according to its own needs. There are some technical difficulties in returning to national currencies – people would rush to put their savings in whatever money they thought less likely to devalue – but a partial and orderly unbundling of the euro is clearly a lesser evil than the generational poverty which keeping it going implies.

Q. What’s so good about Socialism?  Why is it that proponents of Socialism refuse to see its inherent problems?

A. Socialism has always struck me as being more about intention than outcome, about showing what a nice person you are rather than affecting real change. The survey that said it all was the one that showed that people who wear awareness ribbons and wristbands are less likely to give to charity than people who don’t. There’s always been an element of that in socialism. ‘Whaddaya mean, why don’t I give to charity? I’m already calling for higher taxes!’

Q.  Two of the best things to come out of the ascent (and failure) of Barack Obama is that more and more Americans are seeing (many for the first time) what it really means to have a man like this as President and many are now revisiting the question of exactly what is government supposed to do and what is it not supposed to do.  It reminds me a little of what happened in Spain with the Socialist Jose Luis Zapatero and his Socialists getting hammered in elections.  Is this a sign of hope for all of us?  Are the voters of the world finally realizing that Socialism simply doesn’t work or are we doomed to fight this charade forever?

A. I’m afraid it’s cyclical. Right-of-Centre governments generally win office when the other lot have left the treasury empty. They then patiently rebuild the nation’s credit, whereupon the electorate says: ‘Great – crisis over. Let’s have those nice, caring Lefties back again’.

Q.  Speaking of Obama, in 2008 Barack Obama won the American Presidency with millions of followers thinking he would deliver utopia.  Europeans swooned over him even thinking America had finally come to its senses and placed a “reasonable” man into the White House.   Not that is matters at all in our elections, but out of curiosity how do you think Europeans see Obama today now that he’s actually been in the White House for almost three years?

A. All American presidents end up being unpopular with the European Left. The same charges are thrown at Obama that were thrown at all his predecessors: the US is still in Afghanistan, Guantanamo is still open, the climate change treaties still unratified etc etc. The truth is that no country wins popularity by emulating its critics. You win respect by outperforming them. Or, at least, you did until your present leaders decided to spend, tax and borrow the US to ruin.

Q.  An England question.  England used to be a polite, mannered place with proud people.  Is it just my impression or does England seem rougher, more cynical, more tabloid.  What has changed in British culture over the past 25 years?

A. We’ve never been as polite as Americans think. We’re an earthy, violent, Hogarthian people, whose manners are simply a way of keeping our native bellicosity in check. One thing that has changed, though, is the expansion of welfare dependency. It has made us less independent, more whiney, less responsible. I hope, though, that that’s a remediable problem, and the current government is doing some useful things to free people from the squalor of reliance on benefits.

Q.  What open advice would you offer to American voters that think the European model of social welfare is the way to go?

A. It’s fine in the short term: long vacations, maternity and paternity leave, generous welfare entitlements. What’s not to like? The trouble is that, after a couple of decades, the money runs out. That’s the point we’ve reached now. In 1974, Western Europe accounted for 36 per cent of the world’s GDP. Today it’s 25 per cent. In 2020 it’ll be 15 per cent.

Q.  It seems to me Europe is cannibalizing itself.  With birthrates across Europe in decline, what kind of Europe are we looking at one or two generations from now?

A. We face a choice between massive depopulation and massive immigration. The former option needn’t be as calamitous as people think. Yes, the ratio of pensioners to working people will become harder to manage, but it’s much easier for a 70-year-old to carry on sitting in front of a computer screen than it was a hundred years ago for a 70-year-old to carry on mining coal. And, once that demographic bulge has passed, I can see advantages in Europe drifting back to the population level it enjoyed in the early twentieth century. My own constituency in South East England has become very crowded. Property prices are ridiculously high, people are having to commute for longer and longer, there is massive demand for schools and hospitals, the green spaces are disappearing under concrete. I could live with a slight easing of the population pressure!

Thank you Mr. Hannan for taking the time to sit for the Anthidote.com interview.  Poignant comments and please keep pushing.

Daniel Hannan is a writer and journalist, and has been Conservative Member of European Parliment for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the European Union is making its constituent nations poorer, less democratic and less free.  His latest book is “The New Road to Serfdom – A Letter of Warning to America

A Rebuttal to “How Rich is Too Rich” by Sam Harris

Sam Harris wrote a piece on August 17 on his blog entitled “How Rich is Too Rich?“.  It was a genuinely thoughtful piece with some great points but he lost my hope when he used the line “how much wealth can one person be allowed to keep“.  Allowed?  By whom?

And what about the other side of the “How Rich is Too Rich” coin such as “How Much Stealing is the Right Amount?” or maybe “How Much Waste is There in Government” or even “How Lazy Can You Be?

When it comes to private individuals generating wealth (even one dime) by performing a legal service or selling a legal product, the profit generated after belongs not to society but to the individuals and stakeholders that took the initiative to make it happen.

If we want to start throwing around the “allowed” word the very first place we should put that word is with the federal government.  We should not be asking how much Steve Jobs should be allowed too keep, but rather how much should the government be allowed to have from the taxpayers generating the wealth.

The US Government holds its position at the consent of the governed, and people are mad because government is using billions of dollars in taxpayer money to go way beyond the core purposes of government.  By and large Americans don’t have a problem with the concept of paying taxes, they have a problem with paying taxes when the tax revenue gets squandered.

Taxpayers who have trouble making ends meet are not thinking about Steve Jobs, Bill Gates, or anyone else like that, they’re thinking about their mortgage, their gas bill, groceries, medical bills, and other items that they could purchase if they only were “allowed” to keep more of their income.

They get mad because of the sheer waste all around them, such as this $600,000 gurgling toad sculpture.  How many tax paying households had to chip in to pay for this?  Don’t you think whatever monies were taxed and redistributed to purchase this commissioned work could have been put to better use by the people that earned that money?  There is an almost limitless supply of examples of government waste we could discuss – here’s 50.  It’s government that is “allowed” to keep too much money not individuals.

Sam posits a question and gives his answer.

“How many Republicans who have vowed not to raise taxes on billionaires would want to live in a country with a trillionaire and 30 percent unemployment? If the answer is “none”—and it really must be—then everyone is in favor of “wealth redistribution.” They just haven’t been forced to admit it.”

What about framing the argument this way?

How many Democrats who have vowed to raise taxes on anyone making over $250,000 would want to live in a country where employment goes to 30% because business owners limited to $250,000 in income have no incentive to grow past that – because anything over that amount would simply be confiscated?

Which do you think is a more likely scenario?  Clearly the second because nobody is close to an individual wealth of a triilion bucks, but we have all kinds of Democrats wanting to raise taxes on people who generate over $250,000 in income.

In Mr. Harris’ blog post, he brings up the news about Warren Buffett’s op-ed wherein he mentions he’s taxed at a lower rate than his secretary (and that many Conservatives pretend not to find this embarrassing).

This is comparing apples and oranges.  One is capital gains taxation and the other is ordinary income taxation. Mr. Buffett could always choose to pay himself ordinary income.  Why doesn’t he?  Mr. Buffett instead of pledging his billions to the Gates Foundation could choose to disperse with his wealth in some other way that’s not maybe as tax efficient.

Moreover, as this article points out, even if you flat out took all the money the super wealthy had you wouldn’t even put a dent in the problem. The root issue is not how much private people earn, it is the amount government spends.  This tired argument of taxing the hell out of rich people simply because they have it does not solve the problem.  Government must shrink.

And anyway, does anyone need a trillion dollars?  Of course not, but that’s not the point.  The point is does a need on my part create an automatic obligation on everyone elses?  If the answer is “yes”, then those people answering that way are in favor of stealing, they just haven’t been forced to admit it.

The problem we’re facing in the USA (and indeed the world) is that for many people the answer is “to hell with property rights, I want my stuff”.  They call this “social justice”.  But what is “just” about taking from your neighbor simply because you deem him to be more than satiated?

We’re all looking down the barrel of ugly arguments and scenarios these days not because of productive, job-giving, wealth creating entrepreneurs, but because of government fools who get in the way of free markets efficiently delivering solutions to people.  The very people government claims to help and champion are the very people that get wiped out by government.

Are free markets perfectly efficient?  No but they are far more efficient and “fair” than centrally planned economies where a few people pick winners and losers and there are only but a few winners. Remember fairness is a two lane highway.

In the USA we do have “crisis of inequality” and on a global level it’s even worse, but government interference, corruption, and waste only exacerbates the problem.  Americans (and likely most people in rich countries) do not want to live in a society with huge “inequalities” in wealth but the difference between Conservatives and Liberals is how we achieve that.  One could also easily point out that we have a crises of inequality in effort put forth by many people.

Offering 99 weeks unemployment checks or incremental welfare subsidies for every baby you have while on welfare only keeps people down when they might otherwise get up on their own.

The brutal truth is some politicians would have it no other way.  Until we elect people that limit government to what it is supposed to do instead of all of these superflous programs it won’t change too much.

If there is one place we should be pointing the “how rich is rich” question it is not at private individuals, it is at government.

Photo by Stuck in Customs

Buyer’s Market or Appraiser’s Market?

Anyone selling a property right now in the USA is dealing with such a dysfunctional real estate market that it’s almost impossible to see how it’s going to break free.  The government has got the real estate industry so messed up it’s sad.

In any marketplace, buyers set the price.  You can ask whatever you want for a product or service but in the end it is always buyers that determine the price.  No buyers, no sale.  But currently in the USA, buyers by and large are not setting the pricing of real estate, appraisers are – and this is not working.

Because of the fiasco of Fannie Mae and Freddie Mac, TARP, and financial institutions lending money to people who had no ability to repay it, the US real estate market took a severe blow over the past few years wiping out enormous amounts of wealth and equity.

Since then the government has put in place a mind-boggling array of new rules and regulations for lenders that almost nobody can understand and which are doing nothing to help break loose the stagnant values of homes.  The people who established the first round of rules that got the market into this mess have put in place even more rules that are keeping the market in shambles.

What do I mean?

A family wants to sell their home for $525,000.  A buyer comes to the home, likes it, puts in an offer for $500,000 and Buyer and Seller agree.  Buyer goes to lender for a a mortgage.  Lender sends in the appraiser who comes in at $375,000.  The lender tells the Buyer that they’ll do a mortgage but not for more than $375,000, and more likely not for more that $300,000 (80% appraised value), so if the Buyer wants to purchase the home he has to come up with $200,000 cash.  Not going to happen.

So what does happen?  The deal dies, the seller doesn’t sell, the buyer doesn’t buy, the agent makes no commission, the bank lends no money and makes no interest, the family is stuck, and everything just stagnates.

Where’s the problem.  Due to the bailout deals in the past few years, one of the new rules is that lenders now must send out the appraisers when buyers want to purchase property.  Almost nobody is allowed to deal direct with the appraisers, least of which the real estate agent trying to close a deal.

Very often the appraisers are coming from 50, 60, or 100 miles away to evaluate some property in a part of town they barely know.  On top of that, the appraisers income has been cut in half because while he used to be able to earn maybe $400 for an appraisal, now he only earns about $200 because some clearing house that ordered the appraisal for the lender takes a big cut.  All new government rules.

Now the appraiser comes to the property, takes some photos, looks around, measures things and looks at comps.  The comps stink.  What’s the appaiser do?  He mostly goes with the comps.  Why?

1. It’s safe

2. He can’t be blamed for coming in to high or too low.

3. He doesn’t really care, he’s not making the kind of money he used to anyway.

4. He truly has no idea right now how to properly justify the value of a property anymore outside of the comps….so appraisers just continue to mostly go with the comps.

Well if we now have a country full of homes that used to be worth something (and intrinsically still are) but are near other properties that had owner issues, we are never going to break out of the real estate funk unless buyers, and not appraisers, start making the market.

If a Buyer wants to buy your home at the price you want to sell it, you’d think there’d be a deal.  No way, not in 2011.  The bank sends in the appraiser and kills the deal.

Of course there is a place for appraisers, but ultimately Buyers have to determine the price of property otherwise there simply is no free marketplace.  With appraisers only or mostly going with comps, everything simply remains stuck when it doesn’t have to be that way.

 

 

Choices

 

With all of the talk in the USA about the debt ceiling and pending devastation if we don’t lift it, let us remember a few things.  The Congress makes the laws and the President decides what he wants to sign or not.  Yes the USA has raised the debt ceiling before, but the problem this time is that in the past 18 months Presdient Obama has spent trillions of dollars and has pushed the country to the extremes of what it can handle. He says Bush spent to much (which he did) and then proceeds to quadruple down on Bush’s spending.

President Obama caused all sorts of additional debts and damage (his spending) then comes to the citizens of the country lecturing us on how we have to get our fiscal house in order – all the while he continues to spend and resist cuts (real cuts). 

As I write this, the US House of Representatives has passed a measure to cut and cap spending and balance the budget.  If that Bill makes it to the President, the choice is his and his alone to sign it or to not sign it.

If nothing happens and the USA does in fact hit the debt ceiling, it is not the beginning of the problem – it’s actually the beginning of the end of the problem because it will be at that point that the USA has no choice but to start actually cutting spending.  The law of tha land will be the debt ceiling level and if Obama chooses to exceed it on his own or otherwise, he bears the responsiblity.  When Obama comes out and says that seniors won’t get their checks, or that military people won’t get paid, this is a.) his choice and b.) blantant pandering.

The President can CHOOSE to start cutting useless spending and keep critical spending in place.  He can easily make sure the interest on the debt gets serviced first, that medicare and the like get covered, and that military families are covered – but unfortunately the programs for Cowboy Poetry that Harry Reid thinks are so critical (see above video) are just going to have to go.  That and the literally tens of thousands of other wasteful programs that government has no business being in.

As far as I’m concerned, the House has done it’s job and has passed a bill that cuts spending.  If we go to the brink, it will be because the President of the USA wants to.  He comes to the American people everyday telling us about the looming catastrophe, but when he is presented with a solution to avoid it he refuses it.

 






Life, Liberty & the Pursuit of Happiness in Under 600 Words

 

Today is the 4th of July. This year it seems to me more people than ever are actually remembering what the 4th of July really is and why we wanted independence from a kingdom.  Since the election of Barack Obama it seems that we’re being sucked into a path back towards a kingdom, a place where a centralized power simply dictates what’s is and what shall be but for now has to do so with only the appearance of following the rules.

When Rick Santelli flew off the cuff in February 2009 about making a Chicago Tea Party he had no idea what he had tapped in to when he spoke those words.  Why did that resonate so much with Americans?  It was because he was genuinely pissed off and so were tens of millions of Americans that were watching their country start down a completely un-American path.  It was (and is) because America promises only three things to those who live here and those that want to come here – Life, Liberty, and the Pursuit of Happiness.

That’s it.  That’s all you are promised here and thankfully so.  You have a right to your LIFE.  You have a right to your LIBERTY.  And you have a right to pursue whatever it is that makes you HAPPY as long as it doesn’t interfere with the first two.  Inside liberty I would also put property rights.  Your property is your property.  Period.  There can be no uncertainty here.

The United States signed a Declaration of Independence because it wanted to be free from tyranny of the British Empire.  In fact the exact phrase in this Declaration is:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Think what it took to draft that document in the 1700′s.  Think about the sheer vision that group of people had to have to form such a foundation for a country.  Those men could have easily just taken control of the new USA and made it into their own family business like so many other countries.  Instead, they provided for a way to put the seat of power in the hands of the people being governed.  They provided that a government has any powers whatsoever only by the consent of the governed.

We (Americans) are not entitled to anything else outside of Life, Liberty, the pursuit of Happiness, and property rights.  There are plenty of countries in the world that offer government sponsored health care, education, and social “benefits”.  That’s nice but that’s not the USA, nor should it be.

You are not entitled to health care (because if you were you would have to force somebody to provide it – and that would go against their liberty).  You are not entitled to a home.  You are not entitled to an education.  You are not entitled to anything outside of your Life, your Liberty, and your pursuit of your own Happiness.

There is no reason for us to emulate France, China, Venezuela, or revert back to the way they do things in the UK.  The overwhelming social “benefits” of those countries are doing nothing short of strangling the people in those countries.

On this 4th of July 2011, let us really remember what today represents.  The very foundation of this country was a total and complete rejection of tyranny and of government control over the lives of private individuals.  We are to be free people, not subjects of the state.

 

 

The Consequences of Being Irrational

This week California Governor Jerry Brown signed into law a tax on Internet sales in California.  His thinking (and the “Board of Equalization”) was that if they would just mandate that taxes be paid on internet sales in California then the state could collect a $200 million it doesn’t currently collect.

Immediately thereafter Amazon.com email 25,000 of it’s affiliates a termination notice.  Good for Amazon and shame on the Governor’s office and the “Board of Equalization” (a faceless government name seemingly straight out of an Ayn Rand novel) for getting in the way of the free enterprise system.

Why do governments operate as if they live in a vacuum?  What did California government people think was going to happen?  It’s 2011, why do governments think that all they have to do is raise taxes to raise state revenue.  If they want to raise state revenue, they would lower taxes and generate more velocity of money (lots of repetitive economic activity) in their own backyard economy, which would in turn generate more tax revenue.

California seems to be doing everything it can do drive business and businesses out of California. This is just the most recent example of failed centralized economic planning from people not in the private market but who think they should have some all powerful dominion over the individuals in the private market that actually work productively and truly support families.

No entity is more irrational and nothing destroys like government.

The best line in this article on the story tells it in plain English – “Board of Equalization Member George Runner blasted Brown for signing the law. “Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called ‘Amazon tax’ is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states.”

Think about that.

Bureaucrats seem to have a very hard time understanding the unintended consequences of their “actions”.

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