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...their knee at the same time, do you think it might catapult them all off to Poland or similar where they'd no doubt find their authoritarian meddling in other peoples' lives more acceptable and satisfying?

Haroon Siddique and Matthew Tempest
Wednesday July 18, 2007
Guardian Unlimited

Gordon Brown today announced the second review in two years into whether cannabis should be reclassified, in response to concerns that its current status does not reflect the drug's dangers.

Mr Brown announced the review, which will look at whether cannabis should be reclassified as class B again - rather than its present class C - at prime minister's questions.

Of course a "review" is also an opportunity to persuade of the opposite case, though anyone who received the government's reply to a pro-legalization petition the other day will know just how prejudiced they are heading into this latest review.

In 2005, 10,000 11- to 17-year-olds were treated for cannabis use - 10 times the number a decade ago.

Yeah - you know what - reclassifying will not make any difference in a black market where pushers don't really care about the age of their customers. Decriminalizing and penalizing people extremely harshly who sell to minors would.

But I'd love to know where this 10,000 figure comes from - before it becomes a matter of popular "fact" created by a political spin doctor. Officially there were just 946 mental health admissions related to cannabis in total in the UK in all age groups in 2005-6. So it seems extraordinary that, given the most common juxtaposition is between mental health and cannabis, that ten times the total number of mental health admissions can be attributed to youngsters suffering other problems as a result of the drug. By contrast, there were 5700+ hospital admissions of under 16 year olds due to alcohol abuse in the same year.

Plants are increasingly cultivated to include high levels of the active ingredient of cannabis, THC, delta-9-tetrahydrocannabinol, which encourages addiction and can cause a range of symptoms, from short-term memory loss, anxiety and panic attacks to triggering schizophrenia.

They are so cultivated because of the illegal market in which they operate. Where pushers and growers want to get the maximum value they can out of as little as possible to minimize their chances of being caught. It's not that difficult to measure the THC in any one strain or plant. So decriminalizing and forcing people to sell only with a statement of how strong it was would solve that one too. You don't expect people to be drinking pints of full strength Whisky when they go out for small beer do you? That's what the criminal nature of the market is forcing on cannabis consumers.

Prohibition has not worked and never will work. However unlikely, every review of the situation is an opportunity to persuade of the better course. Jacqui - read this first. On the other hand, given that most of us are criminals anyway, maybe if you stick to the paper clips and I'll stick to unwinding after work with a joint we'll all get along fine.

Technorati Tags: drugs laws, gordon brown, liberty, prohibition

This posting has been a very long time in the making. In fact, as is usual, I've been more than normally ponderous about our political system since the local elections and it has prevented me doing anything else. I wanted to be careful about what I say, lest I be seen simply as having sour grapes at having lost - but I hope you will see that far from it, I am hopeful of achieving more, and for others moreover, outside the formal government structure than inside it.

I have fallen out of love with democracy; at least the corrupt, broken, power-hungry, centralizing, suffocating, nanny state, infantilizing political game we seem to have wandered into at some point.

Whether it's Labour's desperation to beat me that made them put out a leaflet that can only have been intended to damage my personal standing and reputation negligible though it may be already, the various tit-for-tat accusations that ran right through the Crewe by-election and the London mayoral elections, Westminster's divorce from the rest of the country as regards how much they get to spend of our money feathering their personal nests and how much we should know about it, it stinks.

I was watching again the "Open Minds" interview with Milton Friedman the other day and when it was put to him, as in J S Mill's formulation, that democratic government is the way in which we put good, ungreedy and unselfish people in charge to prevent bad, greedy and selfish people from taking over his response was simple: "government is an institution whereby the people with the greatest drive to get power over their fellow men get into the position of controlling them".

And who can argue, in the system we now have. The prize is enormous. Whoever lies his or her way to number 10 has the prospect of controlling nearly half of our entire national income. The mechanism of getting the top jobs is a sham - none of them in my opinion are competent to claim more wisdom than sixty million others of us that makes them able to take such a responsibility and they're only ever elected by a few thousand of those sixty million. Even in local government, tied up as it may be in red tape and Whitehall edicts, still the unscrupulous seem to make it to the top - look at Oxford Labour's own little lotacracy.

Tony Blair seemed to think he was virtually messianic, and now he believes apparently that he can solve all the world's problems now that he is no longer encumbered with such a small salary as the UK Prime Minister and the petty problems of Britain. But it doesn't matter who it is, Blair may have brought it to a head but neither Brown, Cameron, Clegg, Blair or whoever else may come next, has the capacity or competence to decide so much for so many.

And I don't think that I can suffer under this system much longer. If I was a young Muslim I'd probably be rounded up and accused of being "radicalised". Well I am radicalised. Radicalised and angry. It's a good job they've imposed a ban on unauthorized demonstrations outside of parliament, else I would hire a bunch of JCBs and lead a crowd to dismantle the Palace of Westminster stone by stone and cast its occupants into the river and hope they all wash up somewhere halfway up the Amazon where they would not be found for half a millennium - well actually I probably wouldn't, because I don't have that sort of courage, but I curse Guy Fawkes for having failed his opportunity!

In the local elections, nearly 70% of people did not vote. Even in generals, nearly 40% didn't vote last time. The Libertarian Party believes that this is a vast pool of voters who would readily switch to their, and my, image of a new Britain, with renewed freedoms and less state intervention. But I'm a Liberal, if not especially a Democrat, and my party is one of the three larger parties the LPUK blames for the lack of imagination in political discourse that has created this situation. And indeed, our regular flirtations with vaguely socialist redistribution policies rather than liberal level playing field policies, do seem to make us bed-pals with the two conservative parties trying to maintain their duopoly. Do I have to make that leap into the unknown of the Libertarian Party in order to have some hope for change? Or can I pursue change, with a reasonable hope of getting it, through a party so deeply embedded in the political "game" as the Lib Dems?

In 1745 David Hume suggested that one day we may come to the conclusion that our current system of government needs complete overhaul. I for one have reached that point. And David Hume's prescription in the "Idea of the Perfect Commonwealth" seems to me to be vastly superior to the decrepit institutions and structures we currently have to endure. I'm not sure any of the current setup is salvageable. That current setup is coercive, corrupt and centralized. It is now clear, more than ever before, as Rousseau said, "The English think they are free. They are free only during the election of members of parliament."

ID cards, the surveillance state, the lost war on drugs, the uneven playing field allowing monopolization and exploitation, drinking on the tube, detention without charge, foreign wars in support of oil hungry allies, petty bureaucrats spying on our every move, raiding our bins, taxing us through the nose. Is this what J S Mill was suggesting? Our parliamentary system was created in times when communications were difficult. Yet even then they took less power to themselves than now, when we are all a phone call or internet connection away from forging links with millions of other individuals on this planet.

The time has come for mutualism instead of representative government. People getting together either locally or in geographically dispersed interest groups focussing on particular problems in those communities. Refusing to accept that all the answers can come from a clunking fist in London or his puppets in the Town Hall.

But how do we do that, without turning spin into revolution?

Sir Josiah Stamp, reckoned at the time to be the second wealthiest person in Britain, sometime Bank of England director, Chairman of the LMS railway and Liberal economist, winning a 1912 prize for an essay about taxing the "unearned increment" instead of incomes, is quoted as saying:

"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money ."

Particularly apt this week I should say. You see, what's been happening this week should make most of us take to the streets in demonstration and revolt; if only we understood our unwitting role in the gargantuan pyramid selling fraud that's been playing out in global financial markets this last few weeks and who, ultimately, is going to pay in the fall out.

Follow the money trail...

The economy needs money to function just as we need air to breathe. The more we produce, the more money we need circulating to consume that production. That production is our collective creditworthiness - the measure of how much wealth we are all creating and swapping with each other. We trust the money that facilitates those swaps because we are told to. The green/blue/purple crinkly stuff, of which there exists less than £50 billions' worth, says on it "I promise to pay the bearer on demand the sum of..." as that most potent national icon, the monarch, smiles benignly up at us in reassurance.

So, do we have a benign national institution that keeps watch on economic activity and creates the currency to match our national creditworthiness? Do we hell. We have an Old Lady that the monarch once gave a monopoly to to create money and sell it back to him who can no longer be bothered to do the job and has subcontracted it to private banks. She keeps an eye on all the economic activity and so on, she has all the figures and tools needed to do as good a job as anyone else, but instead of actually creating money into productive circulation she lets that cartel of private bankers know how much she thinks should exist by telling them the rates of interest they should be charging for actually lending the money into circulation. They create nothing except numbers. Pixels on a computer screen that we all trust we will be able to turn into those "promises to pay" whenever we need it.

These bankers, being a conservative breed at heart, not wishing to lose their investment, look to lend to those most likely to pay them back with interest. But even making such a risk calculation based on the prospective borrower's ability to repay, they look also to take some security, something they can sell to get as much of their money back as they can if the borrower finds he can no longer repay. And what's the safest security? Safe as houses? Well, houses of course, or more particularly the land value it sits on (a house, like any other capital good depreciates and needs constant maintenance to hold its value).

There's very little, in the ordinary course of things, less likely to go south in value than land, except perhaps very small specialized bits of land like gold and other rare natural resources. Keeping those rates low makes the money borrowed more affordable. More people think they can afford it. The banks lower the interest cover they're prepared to take by increasing the multiples of income people can borrow. Still the insatiable economy needs more money circulating, so the banks, usually not the front liners with big reputations to keep, go chasing more and more marginal borrowers. The house price/land value increases make people who don't own nervous that they never will if they wait as prices rise, so the age old human natural inclination to want to "own" the place you live in takes over and you stake more than you could comfortably afford in less benign economic conditions on getting your foot on that housing ladder.

The more front liner banks are however prepared to back up this borrowing with "managed risk" packages of these loans. But when the Old Lady gets a bit nervous about inflation at the centre of this web and decides money should be more expensive and the cartel operators duly follow suit, whilst those of us with enough simply cut down on spending now to afford the higher interest payments, those of us who were only just able to afford to get on the ladder at the lower rate now find it impossible and stop paying. The image from "Life in the Freezer" comes to mind of chin-strap penguins trying to get ashore on a south Atlantic rocky crag where the unfortunates that only slightly mistime the wave scrabble about and fall back into the thrashing ocean.

The security, the house and its land value, takes a while to turn into liquid cash, the buyers of the "managed risk" packages that back up those loans see the prospect of getting the yield they expected diminishing and tighten their belts. This whole house of cards rests on every card in it honouring their obligations every night and so suddenly the Old Lady awakes, reaches over to the button that is all it takes to create credit into the system and rather than the private bankers see their stockholders losing their investment the retail debts of dubious morality they marketed and created are magically covered.

Excuses, excuses...

Of course the banks and monetary authorities give out all sorts of excuses that, because of the mystery they have created of smoke and mirrors and the awe with which we will believe the sort of people who are obviously so brilliant they merit multi-million pound a year bonuses and management fees, us mere mortals swallow out of fear of recession, slump, unemployment, meltdown...

The "sub-prime" market is made up of feckless folk who really should have known better that they really couldn't afford to borrow. They fail to explain that it is being relentlessly sold to them through aggressive marketing and in the hype that they might miss the bandwagon if they don't sacrifice now to get on the rapidly rising housing ladder, rising of course because of the amounts of money they've created over the past few years chasing the monopoly of desirable locations. Not only are these sub-prime chin-straps cast back into the tumultuous briny, but they are pulled down by the under-tow. Not only have they lost their home, and whatever credit rating they had achieved, but now they probably also owe money on something they no longer own. They are not just back at square one, but off the game board for a good long while.

The liquidity injection protects the creditworthiness of the pound in your pocket. They fail to tell you that its creditworthiness has only been compromised because the subcontractors that actually create the vast majority of it took bad investment decisions in the pursuit of ever more profit for their shareholders.

That we're all protected because we are all, or nearly all, shareholders in banks through our pension funds. They fail to tell us that the vast majority of non-housing financial assets are held by a tiny minority of the wealthiest people on the planet and that the bottom third or so of folk, including, most likely, the hapless sub-prime mortgage market, do not own any financial assets. Besides, the propensity in the UK for pension funds to hold bank shares comes at least in part because through all the special privileges involved in creating our money stock out of nothing and the protectionism in having a sugar daddy in the form of a lender of last resort that will ensure the whole thing doesn't go down the tubes they are usually a pretty dependable investment.

That we need to prevent a run on equity markets becoming a rout. Of course they tend not to point out that the underlying business prospects of the companies facing huge write-downs in their values because of the "dash to cash" to shore up the credit markets have usually not changed. That these values are being slashed by large volume gamblers for whom the shares in those companies are little more than poker chips to buy and sell, swap into other assets and so on in technical trading, game theory scenarios and arbitraging between all but unrelated markets.

And that, dear reader, is why the collective noun for bankers is "wunch".

A call to arms...

This kind of money system, based on debt and causing the very asset price bubble that brings about its own collapse is first and foremost unsustainable. Every time there's an expansion it's the big players, those on the inside of that smoke and mirror fraternity, that gain by skimming off the cream from their ever increasingly precarious plate spinning, and those on the outside, with everything to lose, who get dumped on. And our governments collude in this iniquity.

If it weren't for this last fact, that it's always the little man that loses in this, I'd be hoping and praying this weekend that the whole house of cards does collapse this time and we are forced to find a different way to monetize our national creditworthiness for the future without creating these artificial asset bubbles and mountains of debt.

Yet there are a couple of ways to use the current turbulence to effect far-reaching changes so that our money system becomes more stable. Depending largely on whether you view the world from the market or the state point of view:

We could on the one hand break the link between the state and the real creators of credit, the commercial banks, by refusing to be the lender of last resort, by completely privatising currency so that what and whose money we use and trust most will be down to which of the commercial banks are best managed. Instead of Dollars and Yen, Pounds and Euro we might use Barcs or Honkers, BOSses, AirMiles or CitiCash right around the globe. Those with a favour for market solutions would point out that this removes the state protectionism, removes trade tariffs (by abolishing national currencies in favour of competing, global, commercial currencies) and crucially does not involve anything that could be connected to government.

On the other hand, for those of a more statist constitution, or perhaps just too timid to sever the ties between crown and the "coin of the realm", there's another possibility - the C H Douglas style national credit authority. Controlled by statute rather than by government, such a body would do as the Bank of England does now in monitoring economic indicators and deciding whether there should be more or less money in the system to cope with the economic climate. But instead of subcontracting the power of new money creation to a cartel of commercial interests, they would create all new money and be the lender of first resort to a banking system reduced to brokering loans between people who have cash to invest and people who need that investment. The national credit authority makes a profit as it does so on the lending of newly created money that costs it little or nothing to produce that can then go to its shareholders - the people of Britain, as a dividend, or our representative, the government, as money to spend.

And we could begin to make this latter change right now, with no legislation needed and no expenditure required. Instead of buying back all the liquidity central bankers have put into the system these past few days when markets stabilize, they could just increase the reserve requirements by the same amount, forcing the commercial banks to keep the debt-free money and restricting the new debt-money they can create on the back of it. Over time this reserve requirement could be increased until the majority of money is created by the national credit authority in response to economic growth needs.

But in order for there to be a will for such a thing to happen, people need to understand how skewed towards those who already wield wealth and power the current protectionist system is, and who loses...us. Nearly all of us. So why aren't we marching? We aren't even daring to discuss it. We're accepting that the situation financial markets are in today is because of feckless borrowers wanting to better themselves beyond their means. And that we all have to take a bit of pain for the irresponsibilities of our fellow borrowers.

And THAT, dear reader, is also why the collective noun for bankers is "wunch".

Technorati Tags: credit crunch, debt money, fiat money, monetary reform

Congratulations, Rose Hill (“Housing Scheme Wins Approval”, p5, 8th Nov); maybe soon you’ll begin to see improvements.

But Alex Hollingsworth claiming we are “getting £20m of affordable housing for £1m” displays the sort of muddled accounting that makes one wonder whether he understands what he is spinning. The city, up till now, owns that land on behalf of the people of Oxford. They are giving all that land away.

The half that is going to be private housing is lost forever to this common wealth. That is the true price of this development – maybe £10m of community owned land being privatised, enclosed it used to be called, in order to pay the build costs of maybe another £10m on the redeveloped affordable housing. And the city is pumping in a million pounds of cash as a sweetener on top of that! The council may think that’s a good deal – but land traders and other local authorities think it’s a “steal” for the developer.

The Orlits saga has rumbled on for so long, so I’m sure nobody wants it delayed longer, but other mechanisms may have delivered better value, permanent affordability and community ownership. But it would be more accurate to say that OCHA is gaining about £10m of affordable housing, plus land, for a giveaway of about £11m in public assets…forever. As I say, congratulations!