The Small Saver, The Small Investor, The “Honourable Company” And Its Haileybury College – And All The EVIL As Well As DUMB “Corporates” Of Today, Run By MBAs. Plus The IAS, Their Academy, And The Revolution We Need In “Development Economics”

I began discussing the evils of the stock markets of today in this post, and went further yesterday. I will continue on the same theme today.

Today, with inflationism, the small saver is SCREWED.

Today, because corporates prefer debt to equity (artificially low – or even ZERO! – interest rates because of Keynesianism), the small shareholder is also SCREWED.

The corporates obey the “banksters.” FASCISM results. All corporates prefer to hire MBAs; and all MBAs are “trained” Keynesians. Methinks this choice is DELIBERATE.

Fascism proceeds – and because all “material rewards” lie in “rigging the system” to the benefit of your own company and, thereby, yourself, interventionist measures of all kinds are ENCOURAGED.

The beauty and MORALITY of pure Capitalism is actually UNKNOWN to them all – surely because of their MISEDUCATION.

Around 1600 or so, when the Honourable East India Company announced its First Voyage to the East, gold was money and money was gold. There was no Bank of England. They did not borrow, and preferred equity to debt because raising loans would have cost them Real Interest. So they asked for subscriptions, and they honestly declared and also justly shared all profits with their shareholders, because if they had cheated, none would have subscribed their Second Voyage. This is why “honesty is the best policy” in a Free Market, which is precisely where “cheats never prosper.”

The adventurous “ventured” their capital because they thought the prospects of handsome returns were reasonably good; and they also trusted the Honourable Directors of the Company, one of whom had already served as Lord Mayor of the Old City of London.

A century or so later, the Company began administering some parts of Bengal – and, over time, after correcting some early errors, a “covenanted civil service” was formed, whose “prophet” was John Locke. Thus, the emphasis of the civilian administration was Property: accurate land ownership records, titles, the prompt settlement of disputes, and also the prompt payment of taxes that were – and they prided themselves on this – “moderately assessed.”

These moderate taxes were invested in CAPITAL – “roads, bridges, canals.”

They did this because the peasant were all dirt poor, and they knew only these time-tested methods – tested in their own country – by which a poor population could accumulate capital, slowly but surely. Only then, they knew, could such poor people enter the market as consumers. And only then could the overseas trading company, which they served – though not in its trading activities – sell them anything. 

Note: NO WELFARE. Such weird ideas as to what a “civil government” is supposed to do did not exist then, and Locke’s Two Treatises on Civil Government is dated 1691. America was then being colonized. This book fired not only the Company’s “civilians” in India; it also inspired the Whigs. It was a “staunch Whig” of the next century, Adam Smith, who penned Wealth of Nations  - and this appeared in the same year that America won its independence from Britain: 1776. In this book, Smith outlined a “System of Natural Liberty,” with really very little for any “sovereign” to do. And he demolished all the mendacious as well as specious arguments favouring State intervention in foreign trade. Smith’s “duties of the sovereign,” for example, did not include the provision of money; nor did it include “making law.” The administration of Justice, yes; but no making of law; no NEW LAW (which is legislation). Those days, mass democracy was unthinkable, as was legislationism.

Smith died in 1790 – after producing four editions of this book. By 1800, its impact on the minds of the Honourable Court of Directors of the East India Company was complete and total – for which reason they established their very own East India College in Haileybury to train their own recruits in “political economy” – which is nothing but the ideas and principles of Liberty and minimal government. This subject was not taught then in either Oxford or Cambridge.

From 1700 to 1860 – when Haileybury was closed down by the Crown – the civil government of the Company was entirely based on the PRINCIPLES of classical liberal political economy, laissez faire, free overseas trade, and a minimalist government that performed only “basic functions,” and nothing more. It worked wonders – many grand new cities came up on the coasts of India, as well as in the interior, and many, many “princely states” came under this “strong moral influence.”

The peasants and ryots not only prospered because of the increased opportunities for economic achievement; they also received Justice – in the very Lockean sense of the word. Both were a first for them. “Where there is no Property there is no Justice,” wrote Locke.

They were taxed far less as compared to the Mughals. The added fact that these collections made by the Company were invested in Capital – roads, bridges and canals – as also in so many new cities and towns, all bursting with economic opportunities, enabled them to slowly accumulate wealth. The Company prospered as well – which provoked much jealousy and even envy back in England, evidenced most clearly in the long drawn-out parliamentary trial of Warren Hastings, who was finally acquitted, but was worn out by the ordeal.

The picture alongside is of a typical city slum in India – the sort of conditions in which over half of India’s urban population live.

WITHOUT PROPERTY TITLES.

How will all the “corporates” – the big companies who engage in “mass production for mass consumption” – begin to sell them their stuff?

Welfarism?

Keynesianism?

Interventionism?

Protectionism?

Environmmentalism?

DUMBOS – all these MBAs.

Recommended reads (for this section of this post):

1. My recent post on one of India’s “corporate biggies,” Gurcharan Das, and his “corporatism,” which is another word for FASCISM.

2. This HT column by a retired IAS officer, Harsh Mander, who “advises” Sonia Gandhi towards welfarism, which is “budget maximization” for his tribe, and tax-maximisation as well. Anyway, all this welfare is funded not by taxes, but by inflationism, which means they are "cheating the poor."

It is only because of such IAS bozos that today we have a “right to food,” a “right to education,” a “right to employment,” and even a “right to information” – but NO PROPERTY! Which means NO JUSTICE! And, therefore, NO LIBERTY as well.

I have an earlier post on the IAS Academy in Mussoorie, where I lectured twice a decade or more ago – and how shocked I was to find that their Professor of Economics is a Marxist-Ricardian, follower of Piero Sraffa of Cambridge, who was another of those “intellectual servants” of Lord Keynes. India had been “liberalizing” for long – and Maoism was being fought with bullets; yet, the IAS Academy was teaching this bull. I also related this experience during my one-and-only appearance on the Barkha Dutt Show – more than ten years ago.

Anyway, when I met the then Director of the IAS Academy, Wajahat Habibullah (“very close to Sonia Gandhi,” his Deputy told me, in hushed tones), exchanged pleasantries, during which I even presented his Academy with some books, and took the opportunity to refute many socialist beliefs, he told me: “We are knowledge-proof!”

I have therefore always loved the title Hayek chose for his last book: Fatal Conceit: The Errors of Socialism.

3. I have already referred my readers to Philip Mason’s Men Who Ruled India – written by a retired ICS officer.

4. To read an account by an academic historian of repute, I suggest S. Ambirajan’s Classical Political Economy and British Policy in India - which is available as a Google Book.

The Indian Council for Historical Research is a State-owned entity, like the Delhi School of Economics, the Indian Council for Social Science Research, and all the IIMs and IITs.

Today, almost all the PhDs in History awarded in India’s State-owned universities are on the “freedom struggle” – all the propaganda on Nehru-Gandhi and all that. Many theses are “copied.” And those who finally obtain these degrees get “government jobs” as university teachers.

The Establishment refers to the “Sepoy Mutiny” of 1857 as “India’s First War of Independence.”

But it was nothing but a mutiny – by “soldiers of a mercenary army” – that was sparked off by something that went woefully amiss in clearing the use of new cartridges for their Lee-Enfield rifles. There was no “mass discontent” among the people. Many white district officers and other Europeans were actually sheltered from the rebels by ordinary people. And as for the rebels, they perpetrated great atrocities on innocent English civilians, including women and children: Tantia Tope in Kanpur, for example.

There was no Curzon, and no Dyer either, during the Company’s rule. There was also NO POLICE. The Indian Police Act is dated 1861. There was no Indian Penal Code (1860); no Indian Evidence Act (1871) - there was only this vital "sense of justice" that prevailed because "Locke was their prophet," and it was John Locke who wrote, "where there is no Property, there is no Justice."

When an “Intelligence Bureau” was established, it was to find hard “evidence” on the THUGGEE GANGS who murdered and looted travelers on highways. It was headed by Sleeman – a Haileybury man – and he and his men expended enormous efforts in collecting and collating all the “evidence” so that many thousands of these murderous gangsters could be “convicted” in a court of law. The menace was wiped out – by law. Today, over 1000 Indians die on the roads in “traffic accidents.” The “criminal justice system” does not work, which is putting it very mildly. And as for Intelligence Bureaus – for they have multiplied – they have their heads deep in matters pertaining to “national security,” whatever that means, especially when thousands are needlessly dying on the roads and streets every single day, only because of State NEGLIGENCE of “public security.”

The “civil government” of the Honourable Company did not govern using “information” obtained by “spying” on the people. Its government was based on KNOWLEDGE – which provided them with GUIDING PRINCIPLES – and on Law. Thus was slowly built, in an area far exceeding modern, independent India, “an empire of laws and not of men.”

A NEW INDIAN CIVILISATION!

Curzon, Dyer, the nationalist uprising, the Hindu-Muslim communal divide, Jalianwallah Bagh – all these happened after the ouster of the Company, because of the “Sepoy Mutiny,” and the “excuse” this gave Parliament to takeover India in the name of the Crown.

Parliament was always jealous of the Company’s territory in India – and the opportunities it could give them for patronage.

Then, and only then, did all the horrors begin. Peaceful Crown rule lasted just about 50 years – for by 1905, because of Curzon, the “nationalist agitation” began, which finally ended in the horrors of “democratic and communal Partition.”

We are yet to recover from its effects.

Incidentally, the first action of the Crown in Britain was to CLOSE DOWN the East India College at Haileybury.

But Allan Octavian Hume, who “founded” the Indian National CONgress in 1885, was a Haileybury man. And this outfit, during his time, was staunchly liberal – in the old, classical sense. Just read this extract from Surendranath Banerjea’s Presidential Address in 1895.

In my view, the civil government of the Company in India was the BEST THING that EVER happened to this backward country, inhabited by a dispirited, ignorant and superstitious people.

The “civil government” of the Honourable East India Company in India was entirely “blameless” – and they ought to be historically “acquitted” exactly as one of their greatest men, Warren Hastings, was.

History – as well as Theory – are wrongly taught today.

By The State.

These two are the only means we have to know the world in which we live.

The “historical evidence” provided above – on how classical liberal political economy “developed” India between 1600 and 1850 – should therefore lead to a total and complete REVOLTION in “development economics”: the WRONG THEORIES that are the ROOT CAUSE of mass poverty, corruption, and tyranny as well.

The works of Peter Bauer, the great DISSENTING development economist, are vital today.

It is noteworthy that Margaret Thatcher once told an assembly of Third World Commonwealth “heads of state”:

GO AND READ PETER BAUER!

It was she who elevated him to the peerage – as Lord Bauer of Market Yard.

As a classical liberal economist looking for “solutions” to Third World poverty, Peter Bauer did not agree with all the rest, who invariably and almost entirely without exception, advocated STATE ACTION: development planning, development administration, and everything else that has not worked in India for 60 years and more. These State-directed measures also included “population control”: the babies are the problem! Bauer dissented on all these – each and every single one of them.

I like these lines of his best:

Poverty indicates just one thing – the absence of economic achievement. And economic achievements are made in markets.

It is his handsome bust, pictured above, that should grace every bazaar, everywhere in the Third World.

And if you are in Britain, do read his maiden speech in the House of Lords – and get SHOCKED!

The power of philosophy,

Floats through my head.

Light as a feather,

Heavy as lead.

Who sang that? Why, someone who smokes ganja, of course!

So, how about The Honourable Bhola Unlimited Company Limited - makers of Bhola Spliffs? 

Surely much better than the "rural development," "enironmentalist," and pro-UN ITC Limited, "protected" makers of swadeshi cigarettes? 

Read this post to know what ITC "cronyism" is really all about.

Genuine Capitalism - And Shareholders, Public Limited Companies, Stock Markets, And "Distributive Justice"

When a "public limited company" is established, comprising a Board of Directors, to whose "prospectus" the public "subscribes" by buying shares, and the Capital collected is then invested in an enterprise whose profits are shared after open accounting at an Annual General Meeting - the entire exercise aims at "distributive justice."

That is, various people have invested varying amounts towards this "speculative venture," and the profits, if any (for losses can always accrue) must be justly "shared" between them - the "shareholders" - according to the size of their investments. This is an entirely "moral gain" they have made. It is not the "sharing of plunder" as between bandits and robbers. It is verily Shubh Laabh.

If we look at History, and we should, because only then do we know how all this began, we find that the Honourable East India Company asked for subscriptions to its First Voyage - and then, when that was successful, its Second Voyage, and so on. Records were scrupulously kept - indeed, all these records still exist. This is how distributive justice was done "honourably."

Today things are very, very different in stock markets - and some of the perversity that has emerged was discussed yesterday. In brief: Companies prefer debt over equity since borrowing is cheap and easy for them; and share markets are "manipulated" by cronies of central banks. Today, I will discuss all these matters in detail.

But before proceeding, let us note that the modern welfarist-inflationist-Keynesian world is one with a very different "ethic": and that is "redistributive justice," which is also called "social justice." It is nothing but THEFT. These expressions justify all the "legal plunder" that is going on.

Capitalism is about Private Property, Private Money, and Private Ownership of Capital. In the column linked to above, I have written, "it is obvious that a socialized, centralized and state-owned and -directed fiat money and banking system is nothing but communism in thin disguise."

Capitalism is Individualism.

To begin: Capital, Income, Value, Time, Arithmetic - these are all "mental categories" embedded within the "logical structure of the human mind." It is because of these categories that our minds follow "laws of thought" - and so we "accumulate capital" and build civilisation quite "naturally." That is how "cowboys" and sheep farmers built America, Australia and New Zealand, by counting their herds, and making sure these were growing. Nomadic herdsmen of yore did much the same - because they too possessed the mental category of Capital - and that is how ancient civilisations came about. Just go through the Old Testament to know how animals were wealth in those times. And Carl Menger's Principles of Economics contains a chapter on the "Origin of Money" that begins with how animals were "capital-on-the-move" for ancient nomads; and how animal hides were "money" to them. The word "buck" refers to the hide of one particular animal that was widely used as money in early America.

(For a full discussion of these concepts, click here.)

Since Time is also a "mental category" - which is why percussion is the oldest music - we have the market phenomenon of Interest. We prefer present goods to future goods - and are guided in our savings as well as borrowings by the market phenomenon of Interest.

Today, with easy money and even "zero interest rates" - supposedly to "stimulate" the economy - companies prefer debt over equity. Many firms are "leveraged." And SAVERS are losing! This is the IMMORALITY of inflationism. The result is widespread "capital consumption" - which is the highway to "de-civilisation."

Thus, when the stock market "index" is referred to as a "sign of economic health" - DON'T BELIEVE IT. If savings are being eroded, if production is in decline - then the economy must decline. And civilisation must, too.

Sound money means DEFLATION: if gold were money, its value would rise - and all prices expressed in gold coin would steadily fall. They do so quite "naturally," anyway, because of bigger production scales and technology as well. But that is what deflationary conditions are about.

I have discussed sound money and free banking under the laws of the "natural order" already - so, today, all I wish to focus on is the fact that when credit cannot be created out of thin air, as today; and when a 100 percent reserve will have to be kept against note issue by every private banker; well, it should be obvious that borrowing capital will cost much more than it does today - which is ZERO. Thus, companies will have to perforce rely on equity. Only then will there emerge an "equity culture." And an "enterprise culture" as well. That is, instead of all the cronyism and corruption of today. FASCISM - if you ask me.

Thus, under deflationary conditions, whereas "term deposits" with banks will earn reasonably good interest, in the case of "demand deposits," for which full backing in specie will have to be retained, the depositor may even have to pay for the bank's services.

Only then will there will emerge a widespread equity culture - as against today, when term deposits as well as life insurance and other long-term savings LOSE VALUE; and much of the public capital is malinvested in government bonds!

Government bonds are "permanent irredeemable debt." The interest on them is "guaranteed" alright - but since the State does not earn anything by investing this money, and only consumes it in welfare/warfare, the entire interest burden falls on taxpayers. The bondholder is not taking speculative risks in the market - without which no "economy" can grow. All that is happening is widespread capital consumption - which will lead to massive economic failure. 

Soon. 

Do read this column by Niranjan Rajadhyaksha of Mint quoting from the latest report of the Bank of International Settlements, in which they say "monetary stimulus" is the train-wreck we are looking at - and the comment below the article, attributed to one "Natural Order," is mine. I have said: "Shut down the BIS!" And let the Swiss revert to a Gold Franc. 

With sound money and free banking - under the ordinary commercial laws of property and contract - the resulting deflation will yield for any society that opts for such a rational, as well as moral, economic and legal system, the following great benefits:  

EQUITY CULTURE

ENTERPRISE CULTURE

CAPITAL ACCUMULATION

CIVILISATION

A widespread equity culture means nothing other than that the "means of production" will be owned by The People - who are all the "ordinary shareholders."

These big enterprises will engage in "mass production for mass consumption" - and, once again, the biggest beneficiaries will be the same ordinary people, in their capacity as "consumers."

Leave aside the fact that we humans are natural-born capitalists, with our very brains wired for wealth-creation: Whatever be the propaganda of the leftists, Pure Capitalism - as outlined above - is the BEST economic system for the "working classes."

If there are no "serfs" in the West today, this is only because of modern Capitalism - and its completely moral "Distributive Justice."

Recommended read: My post "Say's Law versus the Marxists," part of a long series on this vital law of markets, mistaught universally today, thanks to the Keynesians.

Will stock markets in genuine capitalism require "State-appointed regulators"?

NO.

As with the Honourable East India Company's First Voyage in 1605 or thereabouts, all that is required is the "private law" of Contract. This is the "Share Certificate" with the shareholder's name upon it, signed by an authorised representative of the public limited company, which is a "corporate entity," or a Legal Individual, in the eyes of the law. The terms and conditions on this share certificate are "private law" between the two parties to this contract. Only in case there is a dispute - and this dispute is not privately settled, which is extremely rare - does the matter need to be taken to a court of law. But State-appointed stock market regulators armed with democratic legislation are NOT required.

With all the malpractices currently underway in regulated stock markets all over the world, "insider trading" is nothing but NONSENSE designed to divert attention from the real crooks: the "banksters."

All shareholders are "speculators" - and all rely on "fragments of knowledge," which include privately shared or even secret information. This is why the financial press sells. And this is also the reason why genuine capitalism means protection of privacy - and not its blatant violation, as today, by State-employed gangsters. This, while they hide behind an "Official Secrets Act"!

Let us now turn to the popular, and much coveted educational "degree" in Business Management: MBA.

Millions - or maybe even hundreds of millions - of MBAs worldwide are IGNORANT of all that I have written above - only because they have never studied Economics: in particular, Ludwig von Mises' Human Action: A Treatise on Economics, which runs to over 1000 pages, and does not contain even one word on stock markets. After all, this is a treatise on PRINCIPLES - and on "market phenomena" such as Interest, the spontaneous emergence of money and suchlike. There is nothing really special about the stock market - it is just another market, and the same principles apply.

But Mises, in this book, does say the following on MBAs, in the longest chapter of the book, titled "The Market":

It is often asserted that the poor man’s failure in the competition of the market is caused by his lack of education. Equality of opportunity, it is said, could be provided only by making education at every level accessible to all. There prevails today the tendency to reduce all differences among various peoples to their education and to deny the existence of inborn inequalities in intellect, will power, and character. It is not generally realized that education can never be more than indoctrination with theories and ideas already developed. Education, whatever benefits it may confer, is transmission of traditional doctrines and valuations; it is by necessity conservative. It produces imitation and routine, not improvement and progress. Innovators and creative geniuses cannot be reared in schools. They are precisely the men who defy what the school has taught them.

In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained. A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy. The most successful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social function of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.

The State-owned Indian Institutes of Management (IIMs) were established during our socialist heydays - and, even today, there are very competitive entrance examinations to these, as with the other "elite" educational institutions of this socialist State: the Indian Institutes of Technology.

The IITs only taught "science" - and never produced any "technology," ever, because that requires, capital, capitalism, and markets.

Interestingly, IIMs always preferred IIT grads as students: and, I do believe they did so because their intention was to fill corporates with managers infected with a "social engineering" virus. Such minds who do not see the beauty and morality of true Capitalism would naturally believe that their role in life lies in "rigging the system" for their companies. They would inevitably turn into FASCISTS.

The forgotten man who developed the first "School of Scientific Management" was Frederick Winslow Taylor - and his principal focus was on things like "time and motion studies," by which he and his students could be usefully employed on shop-floors to "raise productivity." The "science" lay in reducing both the time as well as the number of physical motions required to complete any operation by a worker. The objective: raising human productivity.

In India, from when these IIMs were established, right till today, we as a nation have very low productivity - and we waste Time on a colossal scale.

So, do study Human Action - on your own. Self-study.

Homeschool your children.

Stay far away from anything connected with the Ministry of Human Resource Destruction.

The Good, The Bad, And The Ugly: Take #2

The Good:

The Keiser Report on Russia Today this morning began with Max and Stacy rejoicing over the fact that theirs had topped a list of the “World’s Most Dangerous Financial Reports.”

Why? Because they expose all the ugly corruption and evil goings-on in the financial world – and nail all the crooks.

For example: Max recently interviewed the head of a British association of SAVERS – and thus, to anyone who watched that episode, it became quite clear that savers are hurt by fiat money expansion, which THEY call “stimulus.”

The Keiser Report OPPOSES the “status quo” – and is therefore deemed “dangerous.”

These are the GOOD GUYS.

The Bad:

1. Swaminathan Aiyar’s column today is ominously titled, “Bad News: World is sliding into a new recession.” He begins by asserting, “A classic indicator of a global recession is a crash in commodity prices.” Are the prices of gold and silver crashing? And are paper money values rising? What about all the “agricultural commodities”? Aiyar only talks about oil, of course, which is heavily interfered with by The State – and not only our State.

Aiyar then baldly displays his Keynesian thinking – if you can call it by that splendid word: “There is a standard remedy for recessions. Governments cut interest rates, provide easy money, and run large fiscal deficits to revive demand.” He then bemoans the fact that this was tried in 2008 – and omits to mention that because “this remedy is far worse than the disease,” its effects are now unraveling.

Regarding the EUSSR and the Euro, he says what has happened is only because the member-states did not abide by their Maastricht Treat obligations – and concludes that “the real problem is the structural madness of creating the Eurozone, a monetary union without a political union.” He wants a centrally administered EUSSR!

As far as India goes, he concludes that the only solution is “fresh elections and a fresh government.” As with the EUSSR, we too need a New Central State!

BAD – because he is a STATIST, and all his “solutions” lie in POLITICS. He is a STATUS-QUOIST.

2. Gautam Chikermane is Executive Editor – Business, of the Hindustan Times, and there is a two-page feature in today’s edition of this newspaper on the current economic collapse titled, “Down, Down, Down.” His column on these pages, from one glance at the title itself, shows that this “business editor” is actually a “welfarist” – which means he is another of those Keynesian-inflationist-socialists. He insists that we Indians must move “From ‘restart reforms’ to ‘reforms must reach’” – and he wants the rural poor to be “reached” by The State with State-funded hospitals, schools, and suchlike. I found his sub-title provocative: “Unless 850 million Indians who live in under $2 a day are assured basic amenities, all the urban reformist talk is just that – talk.”

Methinks even the (remaining) rural poor want to live and work urban – and they all are FED-UP of politicians who promise them all this welfare bull; that is, they HATE all this false “political talk.”

Chikermane is NOT a “Business Editor”: he is just another of those “political hacks.”

Anyway, on one side of the second page, HT has published five boxed opinions of other “great minds” that I am sure their Business Editor personally “selected”:

1. Yashwant Sinha wants more legislation; State road building (the idea that State spending will “boost the economy”); “political consensus” among parties; and he even thinks clearing “multi-brand retail” is a “controversial issue.” He doesn’t use the expression “economic freedom,” of course. Nor the great word – PRIVATISATION.

2. MS Swaminathan, agricultural scientist and population alarmist, wants “better education” for rural youth; incentives (from the State) to “retain youth in agricultural enterprise”; food security; public health; and, of course, State intervention to halt “unsustainable exploitation of natural resources.”

3. Adi Godrej, the “industrialist,” wants the State to “clear 50 large projects.” Keynesian stimulus!

4. M Govinda Rao, who heads the State-owned National Institute of Public Finance – and he only talks about juggling revenues and expenditures.

5. And finally, a “businessman,” who wants “easy availability of credit.”

This last opinion is a very Keynesian prop to all the other views expressed on this two-page feature: thus, while The Good Max Keiser interviews a representative of savers and his audience gets to learn where exactly the Keynesian stimulus hurts, The Bad Gautam Chikermane features a borrower!

With inflationism, while savers lose, borrowers gain. They borrow at today's prices, and then repay their loans many years later, by which time their debts are worth much less. Big businesses, and all "corporates" - they are all borrowers. With sound money, they would much prefer equity to debt.
 
Today, because of fractional-reserve banking and credit creation out of thin air, the corporates are more-or-less entirely funded by practices that would qualify them as "cronies." 

With sound money and free banking under law - the laws of the "natural order" - the real investors would be ordinary shareholders; and stock exchanges would operate honestly. Which means these ordinary shareholders would gain - and not the "banksters." (As in "gangsters.") Central banking is a "cartel" of member-banks. Both the money as well as the credit are fraudulent.


The poor saver-investor loses - and corporates "obey" The State. Not the small shareholders. The poor lose their savings. The rich live off borrowings that keep on increasing - quite like The State itself. All are considered "too big to fail."


The small guys fail.

Without inflationism, the savings of the poor and the middle classes would rise in value, they would accumulate capital and invest - including in the stock market. Today's stock market data does not indicate sound economic health because much of it is "manipulated" by cronies of the central bank - which is something Max Keiser exposes all the time.

So, for all his "concern for the poor" - those who live on less than US$2 "paper money" per day - Chikermane is woefully IGNORANT.

BAD!

PS: I have an earlier post on a Chikermane column.

The Ugly:

The ugly stuff in the news today is all from Rio+20: one Brazilian who “led the talks” calling for the strengthening of the United Nations Environmental Programme. And about how “rich nations” will HELP “poor nations” towards the great goal of “achieving a sustainable and green economy.” With paper notes, of course!

Actually, these “Third World Leaders” of the G-77 who go about BEGGING before the “developed nations,” and who practice as well as teach anti-market and pro-State “development economics,” should themselves switch to the Gold Standard – and, in time, their nations, and all the very poor people living in them, will “accumulate capital,” will “save and invest,” and in time theirs would also become a “flourishing civilization.” That is, DEVELOPED.

I once again quote the last para from my column advocating this for India:

Any nation can unilaterally revert to the gold standard whenever it chooses. If we do so, our rupee, now pegged to gold, will always appreciate against the rest of the world’s fiat papers. This will help us become big importers. And cheap imports, including of capital goods and components, will make our manufactured exports competitive in terms of technology, quality and price. Our banks will attract the world’s savings, and we will possess capital, the vital ingredient of “capitalism”. All prices will steadily fall and the consumption of the poor will rise in leaps and bounds. This is the power of “sound money”.

Pachauri was there at Rio+20 – and the “new city” in which his organisation’s headquarters are located – the Capital of this Third World nation – the plush and centrally air-conditioned HABITAT CENTRE, is one in which the “human habitat” is so utterly deplorable that, amidst millions of unowned acres of wasteland overgrown with utterly useless keekar bushes, over half the city’s population inhabit slums. Pachauri “protects” this “green environment.” His TERI “teaches” the personnel of the State’s Forest Department.

And I read that Yogi Deveshwar, Chairman ITC, the cigarette quasi-monopolist, who is a former head of Air India, and who therefore must be very “cosy” with The State, received a big award in Rio from many UN agencies for ITC’s “rural development.” 

ITC’s “ancient headquarters” are on Chowringhee, Calcutta – a British-built city, of which this is the widest street, with the broadest footpath ever to be found in India, opposite which is nothing but wide, open, green space: The Maidan.

UGLY!

Do read my recent post on why Rio+20 is EVIL – written as a response to a published statement at the conference made by a former PM of New Zealand who chairs UNDP today. This is the UN's "development programme" - and I have called for shutting it down.

We Don't Need No "Heads Of State" - Neither Here, Nor There, Nor Anywhere

India is to get a new President soon, through "indirect elections," and some 5,00,000 votes will decide on a "Head of State" for over 1 billion people.

The US presidential elections have been in the news for quite some time now; and the "procedures" that are being followed - party primaries, caucuses, delegates - these are also about "indirect elections."

The Swiss are a study in contrast: the rest of the world never hears of their presidential elections; Swiss citizens themselves are proud of the fact that they do not know the name of their Head of State; they are famous for their "direct democracy"; and the "republicanism" of Geneva was admired throughout Europe aeons ago - which is why Adam Smith travelled all the way there, to "breathe that free air."

Of course, even in Switzerland, much has changed - and Mises noted the growing trend towards centralisation of power while he lived and taught there during the war years. Today, Switzerland is where the WTO is headquartered, mixing politics and diplomacy with international trade; where the World Economic Forum (WEF) meets and does the same; and from where the UN-propaganda of the International Baccalureate issues forth to miseducate young minds all over the world.

And, since MONEY & BANKING are The Biggest Problem facing humanity today, let us not forget that the Bank of International Settlements is headquartered in Basle, Switzerland; that the Swiss franc is no longer legally defined in gold of precise weight and fineness; and that Swiss banking is not what it used to be, either.

The conclusion to draw is that Political Science is not any "science," really; it is only History.

Bernard Crick's In Defence of Politics therefore begins by stating that the author's intention is to "make some old platitudes pregnant." 

This means nothing but History - and Crick goes all the way back to ages past, to when the very word "politics" was coined, to define this "civilising activity by which a moral consensus emerges" as:

THE PUBLIC ACTIONS OF FREE PEOPLE

Crick is a Fabian socialist of the LSE, better known for having penned Orwell's biography, and it is extremely noteworthy that there is a chapter in this book titled, "In Defence of Politics against Democracy."

And I, sitting in socialist, democratic India, wrote a piece originally titled "The Death of Politics" - about Manmohan Singh, Sonia and all that - which you can find here. I also have a very popular post that answers an important question: "What is an Indian 'Political Party' today?"

Further, I recently wrote a post on Politics, contrasting Crick's views with those of a British Cabinet Minister in Gladstonian times, and with the thoughts of Anthony de Jasay who, like me, is strongly against whatever politics is all about in the modern world.

What we really have around us today are these WORDS whose origins lie far back in History - and whose meanings have become completely and totally distorted: like "democracy," "politics," and "republicanism."

And when we contrast democracies of the modern world like the USSA, India and Switzerland, what we achieve are mere historical studies - of particular practices, in particular moments of time, in particular geographical locations.





Centralisation, Legislation, Interventionism, Central Banking, Bureaucratisation, Welfarism - all these are responsible for the mess the world is in today.

Just look at the EUSSR! 

Centralised in Brussels, with their own European Central Bank. "Monetary Union." Funding "welfarism" throughout the region. And the inevitable CRASH.

In India, just some months ago, I wrote that the Union Budget is "High Treason." Some years ago, on another Union Budget, I wrote that this was nothing but a "Monster's Budget." Our centralised management of the "national economy" has crashed all our "private economies," for sure; and ours just happens to comprise mainly very poor people.

Similarly, the President of the USSA seems to be utterly "lawless" - and here is Ron Paul calling for an end to the "unconstitutional use of drones." There is lawlessness in other areas, too - from declaring war, to the authority of the US Federal Reserve to issue paper dollars, to even their utterly depraved "War on Drugs."

And I really wonder what "republicanism" has to do with monuments like Mount Rushmore - pictured right at the top of this post - which idolises four former heads of their centralised State.

"When words lose their meanings, the people will lose their freedoms."

I could only find this extract from Lewis Carroll's Through the Looking Glass - and my reader ought to go through the entire passage to understand exactly what has been going on, for a very long time, and that too, in England:

“When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

’The question is,’ said Alice, ‘whether you can make words mean so many different things.’

’The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.”

Republicanism - well, Ludwig von Mises was schooled in an "elite" Vienna gymnasium, where he studied Latin and Greek, and thus read all the classical  literature that, in his own words, formed "the bedrock of republicanism." He added that is was none other than the Iron Chancellor Otto von Bismarck who feared and hated this literature - and sought to have it removed from all schools. Bismarck, of course, was the first "statesman" in the world to introduce "socialist welfarism."

An older post of mine on why the West got lost, because of State education, I wrote:

Why are the ideas of Liberty so scarce among "educated" westerners today? Why did that young German I met the other day sing praises of a "social market"? One clear answer does emerge in the following extract from Ludwig von Mises' The Anti-Capitalist Mentality (pdf here: go to Chapter 4, pages 55-56).

In dealing with the liberal social philosophy there is a disposition to overlook the power of an important factor that worked in favor of the idea of liberty, viz., the eminent role assigned to the literature of ancient Greece in the education of the elite. There were among the Greek authors also champions of government omnipotence such as Plato. But the essential tenor of Greek ideology was the pursuit of liberty. Judged by the standards of modern institutions, the Greek city states must be called oligarchies. The liberty which the Greek statesmen, philosophers and historians glorified as the most precious good of man was a privilege reserved to a minority. In denying it to metics and slaves they virtually advocated the despotic rule of a hereditary caste of oligarchs. Yet it would be a grave error to dismiss their hymns to liberty as mendacious. They were no less sincere in their praise and quest of freedom than were, two thousand years later, the slaveholders among the signers of the American Declaration of Independence. It was the political literature of the ancient Greeks that begot the ideas of the Monarchomachs, the philosophy of the Whigs, the doctrines of Althusius, Grotius and John Locke and the ideology of the fathers of modern constitutions and bills of rights. It was the classical studies, the essential feature of a liberal education, that kept awake the spirit of freedom in the England of the Stuarts, in the France of the Bourbons, and in Italy subject to the despotism of a galaxy of princes. No less a man than Bismarck, among the nineteenth-century statesmen next to Metternich the foremost foe of liberty, bears witness to the fact that, even in the Prussia of Frederick William III, the Gymnasium, the education based on Greek and Roman literature, was a stronghold of republicanism. The passionate endeavors to eliminate the classical studies from the curriculum of the liberal education and thus virtually to destroy its very character were one of the major manifestations of the revival of the servile ideology.

It is a fact that a hundred years ago only a few people anticipated the overpowering momentum which the antilibertarian ideas were destined to acquire in a very short time. The ideal of liberty seemed to be so firmly rooted that everybody thought that no reactionary movement could ever succeed in eradicating it. It is true, it would have been a hopeless venture to attack freedom openly and to advocate unfeignedly a return to subjection and bondage. But antiliberalism got hold of peoples’ minds camouflaged as superliberalism, as the fulfillment and consummation of the very ideas of freedom and liberty. It came disguised as socialism, communism, planning.

"Greek city states" - that is where "republicanism" came from. 

History. 

And we find similarities in other historical epochs - from the Italian city states of Machiavelli's time to the Hanseatic League that once straddled the whole of Europe. Hong Kong, Singapore, the Emirates - these are modern city states, though not exactly republican.

Free trading and self-governing cities and towns - that is the way in which humanity had to head.

With private law, private money, and private everything.

All commerce - and very little politics.

Mayors, yes - but selected from among the richest bourgeoisie, so they perform civic functions without salaries, without ever becoming "tax parasites." 

The historical example I have found is that of the Lord Mayors of the Olde City of London, who have done precisely this for over 800 long years. There is an essay on this "One Square Mile of Liberty" in my online publication that "explores civil government."

This One Square Mile is no longer what it used to be, of course, because of Keynes (and other crooked bankers before him).

But, once upon a time, it was the Epicenter of British "John Bull" Capitalism, that which made the British Empire straddle the world.

With false money - and all the commercial immorality that follows - all is inevitably lost.

My Song of the Day: "I am a man of the past, living in the present, walking in the future" - one of the tracks in the great Peter Tosh collection pictured below.

The "Public Nuisance" That Is Modern Politics - Only Because Of "Democratic Legislation," The TOOL Of Interventionism: Take ##2

Continuing from where I left off yesterday, let me begin with the opening line of Hayek's "The use of knowledge in society":

What is the problem we wish to solve when we try to construct a rational economic order?

And let us ask ourselves the other, related question:

What is the problem we wish to solve when we try to construct a rational political order?

And, to begin with, let us note that, because of interventionism through democratic legislation, what used to be called "maintenance of law and order" - to be accomplished by a "local constabulary" - has now become the tyrannical and corrupt "law enforcement."

The older expression indicates that there used to be a recognition of a "natural order" within society - and my recent post has revealed why this is so, through an exposition of what a truly "scientific" Sociology, a Science of Society, is all about.

It was Peter Bauer who alerted us to what was really happening in socialist, democratic India - to what he called "the politicisation of economic life." The root cause: State intervention in business, justified by an ideology that claimed for this socialist, democratic State "the commanding heights of the economy."

And, in the USSA, it was Mises who pointed out that democracy was being destroyed by interventionism, and "representatives of the people" had all become "representatives of special interest groups."

Because of interventionism - or legislation, if you prefer - life was being completely and totally politicised, for all. Recently, Californians got together to campaign for cannabis legalisation - and lost. Huge amount of politics - and money as well as energy were lost. Anna Hazare's campaign for whatever magic bullet he has in mind is just another example of this, in India.

Much "public disorder."

Same with "labour legislation" - and its consequence, disorder in "industrial relations."

"Politics is The Problem..." as I titled a recent, popular post.

Let us now turn to "political ideals." These are, from the days of the Whigs, "Liberty, Justice and Economy" - the last referring to minimum taxation, which can only be when their "civil government" was also minimal.

And if we look at "democratic ideals" - then these are nothing more that that "we rule ourselves," which is Liberty. Yet, there is an important corollary to this that we forget nowadays - the "diffusion of power." In other words, the citizens are all quite powerful in themselves, and no one possesses too much "political authority" to rule over the rest.

None of these "ideals" are to be found anywhere in the modern, democratic world: liberty, property, justice, economy - they have all gone down the drain, only because of the curse of legislation, the tool of interventionism, that which empowers bureaucracies.

I have directed my reader's attention to my column advocating a "private law society" earlier, and even quoted from it yesterday.

Today, let me focus on what Justice is all about - as opposed to centralised legislation-making by a centralised body of elected representatives, through majority vote.

The following expression is repeatedly used in Philip Mason's The Men Who Ruled India to describe the ideals of the "covenanted civil servants" of The Honourable East India Company - that they prided themselves in being "minutely just, and inflexibly upright."

Minutely Just - which means nothing more than each and every single dispute being treated as an unique and non-repeatable event and promptly settled. "Locke was their prophet," says Mason - and thus it was the Protection of Private Property that they considered to be the most important task of their "civil government."

The method of settling disputes under private law is "historical" - with lawyers scouring the books to find decisions in past cases with similarities to the present one. It is NOT "new law binding on all" - which is legislation. Very rarely does a judge set a "precedent" - and only then does the law proceed, by one small step only.

I have also provided a long quote from Mason's book in my recent post on the Af-Pak region, on what a British colonial civil servant achieved in that area - without the use of force. In brief: the field-by-field demarcation or properties, an agreement on taxation, and on Law as well. Public Loyalty to their civil government as well as a willingness to pay taxes - from a previously "lawless" people, settled in a "high desolate valley, where every man went armed and no one had ever willingly paid a tax."

In modern, independent India, rural violence is almost always because of "land disputes." And the IAS "district spender" is a welfarist!

Let us now turn to the Indian cops. They were not created by the Honourable Company - but by the Crown, in 1861. It was Peel who had set up the "Bobbies" of Metropolitan London a few decades earlier - and History records that these unarmed constables were "jeered at on the streets" when they first made their appearance.

Indian cops are NOT a "public service" by any stretch of the imagination. That they are more of a "public nuisance" is evidenced by the recent public outrage in Bombay over the "moral policing" exhibited by one particular cop.

This cop is "empowered" by what? - "democratic legislation," of course.

What about road traffic deaths - that exceed 1000 per day, the equivalent of three Jumbo jets crashing?

In the meantime, these cops prattle on and on about "the myth of national security."

They engage in "snooping" activities on private citizens - empowered by legislation.

"Business secrets" are essential in any market society - while the democratic ideal is that there ought to be "openness and transparency in public life."

In India, things are the other way around - and "politics" is all about closed door meetings of "party high commands."

Privacy - that is another aspect of Private Property, and civil governments must protect this, not violate it.

Socialism is "legal plunder" in many ways - because of legislative interventionism.

This is why we in India suffer from the following:

1. MASS POVERTY
2. WIDESPREAD CORRUPTION
3. CHAOS

We have no "economic freedom" - but we have The Vote!

Which means you cannot open a beer bar without let or hindrance - but you can vote: and for what? Why, WELFARE, of course!

Ironic.

I conclude this post with some observations on Manmohan's agreement to bail out Europeans with US$10 billion, equivalent to 100,000 crore rupees (10 crore = 1 million). This, while even the Germans are refusing to bailout the Greeks! We Indians are now going to bailout the Greeks, the Spanish, the Italians, the Portuguese, the Irish... And this is the "international politics" of central bank cartels. They engage in worldwide inflationism and co-ordinated devaluation.

The following quote from Manmohan's speech at Rio+20 is revealing:

Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion.

It only proves what I just said: "They engage in worldwide inflationism and co-ordinated devaluation."

The rupee has plunged even further against the US paper dollar today.

FINANCIAL CHAOS!

UNLAW - because money has no "legal definition," as I pointed out in this column calling for a "return to the Gold Standard."

All central banks are creatures of legislation - and "legal tender" is really "legal plunder."

And what is WELFARE funded through inflationism?

"Cheating the working classes," which is what Mises said Keynesianism is really all about.




Cheats. Liars. Tyrants. Ne'er-do-wells. Pure Evil. Corrupt.

What is the modern, socialist-democratic, interventionist State?

In brief: It is nothing but a bunch of power-crazed "inhumans."

A very good description of the difference between Us and Them comes from this post on LRC today, by Michael S Rozeff:

In response to my post on psychological control of information flow, a blog contributor whose name I'll keep anonymous tells me that "These animals are masters at fiddling with people's heads." I agree with this.

But now this remark makes me understand and say more explicitly why this is the case. Let's go back to the distinction between makers and takers, taxpayers and tax feeders, the ruled and the rulers, we the people and the state, those who do not have power to aggress and those who wield power. These two groups have different aims and different production functions. Ordinary people produce goods and services. By contrast, the "animals" want power, work for power, take power, and wield power. They are a different animal, a different kettle of fish. Each of these two groups works in different ways, each specializing in what they do. The power-wielders develop, learn, and apply the techniques of fiddling with people's heads. Whose heads? Mainly those people whom they rule, but also everyone around them, including other power-wielders with whom they compete. We who produce goods and services for others are competing in entirely different ways than the power-wielders. We compete in supplying what others want. The power-animals compete in techniques of control. It's not surprising that they are masters at it. This is what they do with their lives. They specialize in creating facades, cover stories, lies, manipulations of opinion, doctoring of reality, and so on.

A major problem is that we who are ruled, until we learn better, assume that most people are like us — working to produce goods and services for others. We then assume that the people in power in government are doing a similar job, but on different kinds of goods like "security," "justice," "law," and so on. They perpetuate this myth with such terms as public goods, public service, public servants, sacrifice, general welfare, common defense, etc. They appeal to the nation, tribe, freedom, God, the flag, law and order, and all sorts of other such emotionally-charged triggers in order to achieve support for sanitized versions of what they are actually up to. The books that actually reveal what these animals are up to and how they behave are largely kept out of high school and college curricula. Meanwhile, the media constantly transmit enough alternative stories and noise to  neutralize revelations. The net result is that truth competes with sanitized and self-serving fictions, and the latter, concocted and put across by experts at fiddling with our heads, often predominate.

Therefore, I do believe that, if I were asked to issue a "statutory health warning," it would read as follows:

Voting Is Injurious To Health.