mutualism

Internet Outlaws

Jock — Mon, 17 Nov 2008 22:57:43 +0000

For those of you highly skeptical of my prediction that the internet will cause the nation state as we know it to be unable to tax fairly incomes or transactions in goods and services and so cease to exist in its current form , here's a slightly different angle on it at Reason...

It seems to have finally dawned on the US government that whatever laws and regulations they pass, they will not be able to ban offshore internet gambling:

The government concedes "there are no reasonably practical steps that a U.S. participant [financial institution] could take to prevent their consumer customers from sending restricted transactions cross-border."

In other news this week about the internet and real life colliding, we also had Second Life being cited in a divorce case in the UK and a Japanese woman sued for murdering her husband's online persona.

Which are you going to be - more restrictions, ultimately futile; or building new mutual institutions to help deliver public goods in an era of a reduced ability to collect tax? read more »

Libertarians: torch bearers for big business?

Jock — Tue, 11 Nov 2008 02:00:43 +0000

You know who you are. Those liberals (in particular) who always claim that "libertarian free markets" will result in a corporate plutocracy, or that the current turmoil in world financial markets (yes, it's still going on you know!) is a result of "libertarian free markets". Here, especially for you (but of interest to others I hope too), is a brilliant explanation of how this mutualist understands that free markets benefit people, not corporations.

CORPORATIONS VERSUS THE MARKET; OR, WHIP CONFLATION NOW

by RODERICK LONG - LEAD ESSAY - November 10th, 2008

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

Read the rest... read more »

Repent! For the end of the state is nigh!

Jock — Mon, 03 Nov 2008 16:44:27 +0000

The End is Nigh
Originally uploaded by Martin~

Or, why I am really a "geo-mutualist" and why I think you should be too!

The revolution has begun. In fact it's been building for at least twenty years. When history looks back it will not probably be able to identify a particular date, but it could do worse than choose Christmas Day 1990, the day a humble academic computing geek communicated with his server in something nobody had really heard of called "hyper text". Finally there was something useful to do with the "internet" that would eventually draw in users from well outside of the ivory towers and military research facilities that developed it. Users in every corner of the world; users of every age and race; users of every background.

And what will history say about this revolution? Will it be seen as a great leap in human freedoms, capable of finally fulfilling Cobden's vision that "peace will come to earth when the people have more to do with each other and governments less"? Or perhaps that it heralded an era of unprecedented interference in our lives by governments?

Actually, I think it is a one way bet; that eventually it will be a revolution in human freedoms, in co-operation and in innovation. Such are the players in this brave new world; hackers working to bust the Great Firewall of China and liberate a fifth of the world's population for example; Kenyans being the first to be able to make payments quickly and simply by mobile phone; privacy technologists working to keep us one level of information security ahead of the law; game players investing ever more realistic virtual worlds; their individuality and very lack of co-ordination in many cases makes it inevitable.

What politicians can do, however, is either to make the transition long and painful, or to smooth its passage for the "good of mankind" so to speak. We can choose to stick by the state and try and keep it working just as its citizens are less and less tied to it, which will inevitably lead to more and more monitoring and restrictions; or we can choose to look at how to build alternative civic institutions and mechanisms to fulfill our needs in an era when the state has much less power to intervene at least without the force that is endemic in state action becoming more and more obvious to the point of rebellion against it.

So what is the great weapon of mass destruction that is going to bring low the state as we know it? Why, tax, of course. I'll let you into a little secret: in order to function a state needs to be able to tax: in order to tax it needs to have the ability to track transactions or peoples' wealth and changes therein. And from the taxpayer's point of view, there is every incentive to try to minimize their tax liability. Up until now, or very recently, it has been only the global super-rich who have had the means and sufficient incentive to take advantage of loopholes and allowances that enable them to choose the lowest tax jurisdiction in which to crystalize out their tax liability.

But thanks to the global and interpersonal nature of this most recent communications revolution we are on the cusp of mechanisms being easily available to the big majority of people that will enable us to minimize our "financial footsteps". When most of us only ever relate to the majority of our money through pixels on a screen or numbers on a bank statement - a small minority of trade now relies on real metal or crinkly coloured paper currency - what does it matter what those pixels are called; pounds, dollars, euro, yen? What about a completely new, essentially fictitious currency perhaps, like the "Linden Dollars" of "Second Life"?

Add e-Bay and Tesco to Second Life for example and one could imagine a world in which most of your financial transactions are conducted entirely in cyberspace, in virtual worlds that know no territorial boundaries or tax regimes (or at least that could be relocated into a sympathetic tax jurisdiction quickly if necessary), but with delivery of goods and services in the physical world. That's not to say giants like Tesco and e-Bay would necessarily be best, or would necessarily even survive the upheaval.

Those widespread international (and local) interpersonal (and business-to-business) mechanisms for sophisticated modern-day barter are now within reach and threaten the very raison d'etre of many of our longest standing institutions - banking and currency, transnational corporations built in an era when intermediaries were necessary to trade with far off lands, and ultimately the basis on which the state is founded - its monopoly of taxation. At the same time we can form non-geographic communities of genuinely voluntary co-operation in which we can build trust relationships, quasi-legal ways of dealing with disputes and so on that make trade possible with people a few short years ago we would have never had a hope of even communicating with.

So, which side are you going to be on - freedom and co-operation or ever more intrusion, regulation and restriction? And how long have we got?

Some of these technologies fall into the category of "overestimated penetration at 2 years, underestimated at 10 years." I think the state will be lucky if it has another decade of relatively easily collected taxes based on productivity, sales and incomes. If people want the state to be able to function beyond that, without increasingly authoritarian intrusion into our economic lives, we need to be looking now at how to make it pay its way through user fees for any value for money services we want it to provide. And as soon as it does of course it must also open itself to competition - else it's a monopoly again whose only rationale is to use its discretionary power to rip off the very people who both fund and use its services.

Unsurprisingly any of the various forms of land value tax will do to start with and would be especially beneficial implemented soon, near the bottom of the crash in land values currently underway. The present situation in financial markets offers an ideal opportunity for new means of trading without the sort of money so invidiously inflated and deflated by the banking cartels. Again, these alternatives could operate either on a local scale or in an international, or non-geographic trading community. Land has the singular benefit of being immoveable. You can't virtualize land as easily as you can income - for we all still need to have a base somewhere.

There's another major reason for helping this process away from the power of and dependency on nation states rather than fighting it - the state is expensive. The sort of redistributive measures required to ensure that everyone gets a fair crack at opportunity - the level playing field - are getting more and more expensive. Our interventions into the affordable housing market for example, in the form of subsidy, will continue to rise when land values rise, subsidizing the already-haves in the name of assisting the have-nots. Far better to try to ensure the fairest of level playing fields for all than trying to play uphill on a steepening playing field.

So, when you find me criticizing the state and its acolytes, it's less about what has gone on in times past - I would say times of missed opportunity for sure - but more on how we will be able to live in future, a future I think is pretty inevitable, in which the very idea of a state with the power to tax fairly will be severely compromised. The elephant in the room needs to be dealt with, and dealt with soon. Will it be freedom, or more desperate attempts to maintain the ailing state structures? You choose! read more »

geo-libertarian, internet, monetary reform, mutualism, surveillance state, tax

For those of you who think you know all there is to know about libertarianism because neo-liberal Ronald Reagan said...

Jock — Sun, 26 Oct 2008 22:29:32 +0000

...that "government is the problem", or because anti-regulator Alan Greenspan named Ayn Rand as his biggest political influence, it's time you did some reading.

Each year the Libertarian Alliance awards the Chris R Tame Memorial Prize (named for the late founder of the Libertarian Alliance) for the best essay on a title chosen by its Director, Dr Sean Gabb, and this year's winner was announced this weekend at the Libertarian Alliance annual conference at the National Liberal Club - more on which in upcoming posts.

The Libertarian Alliance is the biggest grouping of the broad church known as Libertarianism in the UK, and this year's essay title was set just ahead of the main round of recent financial market troubles but focussing on the common idea that Libertarians would demolish the state, leaving what we currently know as big corporate capitalism to run amok. The full brief for contestants ran as follows:

Essay Title: "Can a Libertarian Society be Described as 'Tesco minus the State'?"

Explanatory Note

Many socialists and conservatives regard libertarians as cheerleaders for big business. Our belief in free enterprise is understood as support for the bigger, and therefore the more successful, corporations - General Motors, Microsoft, HSBC, Tesco, and so forth - and for an international financial system centred on the City of London.

Some libertarians are happy to be so regarded. They dislike the way in which big government provides opportunities for big business to acquire privileges that shelter it from competition. Even so, they believe that a world without government, or a world with much less government, would be broadly similar in its patterns of enterprise to the world that we now have. It would be much improved, but not fundamentally dissimilar.

Other libertarians disagree. They regard big business as fundamentally a creation of big government. Incorporation laws free entrepreneurs from personal risk and personal responsibility, and allow the growth of large business organisations that are bureaucratically managed. These organisations then cartellise their markets and externalise many of their costs. The result is systematic distortion of market behaviour from the forms it would take without government intervention. These libertarians often go further in their analysis by denying the legitimacy of intellectual property rights and ownership rights in land beyond what any individual can directly use.

Where do you stand in this debate? Are you broadly comfortable with a global capitalism that is raising billions of people from starvation towards affluence. Or are you a radical with a vision of a society that has never yet been tried and is as alien and even frightening to most people as anything promised by the Marxists.

You tell us.

No go and read the winning essay. Congratulations go to Keith Preston, for his entry entitled "Free enterprise: the antidote to corporate plutocracy"

But if you are too lazy to read the whole lot (c 3000 words - so no more than one of my usual posts!), it concludes...

"An economy organized on the basis of worker-owned and operated industries,peoples’ banks, mutuals, consumer cooperatives, anarcho-syndicalist labor unions, individual and family enterprises, small farms and crafts workers associations engaged in local production for local use, voluntary charitable institutions, land trusts, or voluntary collectives, communes and kibbutzim may seem farfetched to some, but no more so and probably less so than a modern industrial, high-tech economy where the merchant class is the ruling class and the working class is a frequently affluent middle class would have seemed to residents of the feudal societies of pre-modern times. If the expansion of the market economy, specialization, the division of labor, industrialization and technological advancements can bring about the achievements of modern societies in eradicating disease, starvation, infant mortality and early death, one can only wonder what a genuine free enterprise system might achieve, and would have already achieved were it not for the scourge of statism and the corresponding plutocracy. "

Now, you may still not be convinced that "government is the problem", but do us the decency of not conflating "deregulation" with "evil right wing global corporatism" and blaming "libertarianism" for the great big pile of dog-doo the state and economy is in right now. Especially those of you who claim to be Liberals, fellow travelers of Libertarianism for the past 150 years. read more »

Say hello to the "Community Finance Partnership"

Jock — Wed, 22 Oct 2008 23:52:25 +0000

A week or so ago Mike Killingworth challenged us on Liberal Conspiracy to show what "Lovable Banking" might look like in response to the daily emerging news that we've been shafted regularly by the banking system since, oh, at least 1695. Some of you will know that I have long taken an interest in things like local currencies and mutual finance and perhaps also that I've been looking into the use of the Limited Liability Partnership structure as a way of building multi-stakeholder less toxic alternatives to purist shareholder capitalism.

Well a couple of weeks ago I was contacted out of the blue by a chap, Frank Churchill, also in Oxfordshire, who has been looking at similar structures. In his case originally I think as a less toxic alternative to developing world microcredit systems (did you know that the effective interest rate including all charges and so on on Grameen or Kiva micro loans can get as high as 80%!) and as a way of monetizing voluntary work - mainly involving carers. We've both been steadily battling along on our own on this, trying to understand the structures and build solutions to common issues around them - in my case, mostly things like affordable housing and supporting local businesses.

And so we've got together and are, hopefully, on the verge of setting up a "think and do tank" (to coin a strap line from another - less popular amongst liberal economics followers - organization, the New Economics Foundation; but don't let that put you off - some of the issues are the same but we believe the responses are more mutual and liberals than theirs) in the form of a "Community Finance Partnership".

The Limited Liability Partnership structure was created, ironically perhaps, to get the professional firms such as accountants and lawyers out of being personally liable for the debts of their partnerships - the vast accountancy partnerships in particular were worried about the sort of "Enron scenario" of being held liable for multi-million pound lawsuits and were threatening to move their registered offices away from the UK if we didn't give them limited liability. But inadvertently they have created a beautifully simple mechanism for bringing all the parties to an enterprise - the providers of capital, landlords, customers, workers and suppliers and so on - in, if they wish, to share in the risks and the rewards of pooling their contributions to the success of that business as partners.

A partnership agreement can involve different classes of partner receiving different shares of the profits depending on the worth of their input to it - just as a co-operative structure does. Companies may be partners, or even other LLPs as well as individuals. And the partnership itself is tax transparent so each partner is responsible for accounting for the profit or loss in their own tax affairs. Some of you will be aware that I think limited liability in general is a Bad Thing that takes the personal responsibility away from business owners, but in this case it matters very little since every connection with the business could become a partner and share that responsibility explicitly.

The Community Finance Partnership can we believe fulfill a great number of roles, offering a portfolio of products for consumers and a steady return based on those to investors - the aim is to produce an index-linked rate of return in the form of a "rent payment" for the use of the capital partners' (investors) funds. "Customer partner" products might include interest free mortgages - called Property Investment Partnerships, personal loans such as with Credit Unions and business finance "repaid" through a portion of the successful businesses' turnover.

One "flagship" product we are hoping to develop is the idea of a local complementary currency, probably in the form of a Nectar-like loyalty card system that businesses with a base in the geographical area can buy into and which would be able to monetize currently unpaid work like volunteer carers whose value to the local community and especially health services is enormous. The possibilities are almost limitless. For example another idea would be to finance the equivalent of PFI schemes - for example if Oxfordshire County Council wants to rebuild some schools, but with local investors sharing in the reward. And such a structure could be used to provide the mutual finance system for universities I mentioned earlier today.

Think a cross between a loyalty card system, a credit union (more on the US or Irish style than the British), a mutual building society but with the ability to lend to business and not just on homes, and possibly a friendly society offering local mutual insurance and pension products. It's early days yet, and we're still working up what each product would look like in financial terms and the sort of prospectus we'd be able to offer investors, but I'm very excited about it! We think the time is ripe for a return to more human scale financial institutions that people can become a part of on a local more human scale. read more »

monetary reform, mutualism

Degrees of Mutualism

Jock — Wed, 22 Oct 2008 23:51:28 +0000

It seems slightly odd to me that I have only ever written once about Higher Education policy, given that I am a governor of my university, and hear about it all the time in meetings. But it has become a big issue at the moment in the Lib Dems, and seems to have been one of the major discussion areas at the Liberal Youth conference over the weekend, so I thought it might be time for me to jot down a few thoughts.

One thing that seems clear, and I believe this is common currency in university board-rooms across the country, is that the current muddled system cannot go on. 98% I believe it is of courses are charging the full top-up fees, and even they do not make up for the real terms fall of over 60% in funding per student over the past decade and a half or so.

On top of that, it fails to create any kind of price mechanism where people might be able to see what value a university or rather its applicants put on a particular course at a particular institution. It is a nonsense to think that three grand at The New University of Bloggshire is as good value as three grand at one of our world leading institutions like Oxford, Cambridge and Imperial. Instead we rely on very subjective analyses of the National Student Satisfaction Survey and even that is difficult as the organizers may put a good course in a subject area in which an institution is not so excellent and devalue that one course.

What also seems clear is that the value of a first degree is, shall we say, not as high as perhaps it was when all those who say "I got university free, so I'm damned if I'm going to see the next generation up to their necks in debt" went to university. It is a very generous sentiment, and, whilst I didn't in fact go to university I do recognize the hypocrisy - had I taken my school teachers' advice I would have had free higher education and a living grant too. That may not of course be the fault of the Higher Education Institutions so much as primary and secondary education - I don't suppose many students in my day would have had to be taught remedial English and maths at university as we are told some are today in order to get the most out of the Higher Education experience. Additionally, many more students than previously feel the pressure to do second and subsequent degrees in order to stand out in the job market as perhaps a first degree would have done for them in previous generations.

I think the majority feeling in those university board-rooms is that they would prefer to see the fees cap lifted completely when the opportunity arises sometime after 2010, even though by that time many may not want to charge too much so as to be in competition for a smaller number of students when the 18 year old cohort dips significantly in around 2012. We are also on tenter-hooks waiting to see how economic troubles in the wider world will affect student numbers - in previous recessions there has been a boost to Higher Education as people out of work re-train, but faced with fees and debts and an even more uncertain economic outlook, we wonder whether this will be the same this time round.

So, regardless of how our policy affects students themselves, the universities are in an ever more uncertain position. Whatever option we choose, we must see to it also that universities get sufficient funding. There will be no merit in having free Higher Education if the universities themselves cannot deliver that within the budgets allowed.

Anyway, I wanted to suggest an idea with this post. It's somewhat half formulated, and I certainly have not tried to run any figures on it yet, but I hope you might get the idea and maybe be willing to help develop it in the comments.

I have always regarded universities as social enterprises, mutual institutions of a sort. Indeed I once tried to persuade Brookes to adopt a more overt mutualism in its management structure. During the Great Depression in North America, when students were still having to pay fees but had very little money left for anything else, many embraced mutualism as a way to get through. This was the era in which the co-op meal plan, the co-op houses and halls of residence, and the university credit unions burgeoned. Partly as a result of this they have a much stronger alumni culture than we have here.

A credit union type system could be used to enable universities to charge a full market rate for their courses whilst financing all students "needs blind" so that they do not have to pay anything until they are earning. These credit unions would enable alumni (and possibly applicants before they are at university) to save, with interest, in less toxic investments than they have been in the banking system of late while funding current students through university and who would then be expected, as part of their "pay back", to join and save, investing in the next cohort of students, when they graduate.

On top of this we need a package of measures perhaps to encourage the development of low cost co-operative halls of residence and mutual housing societies to prevent the basic accommodation needs of students becoming the £5-7,000 per year drain that the big corporate halls providers expect to charge and the private rented sector delivering second class housing for students. read more »

Mutual Ownership and the house price downturn

Jock — Sat, 27 Sep 2008 13:08:41 +0000

This is something I've been meaning to write for months, but was particularly prompted to do so by a program on BBC last week about surviving the house price downturn. One guy had built himself a property portfolio worth about £8m (about £5m of which was debt) from a standing start renting a single room in a three bedroom house share five years ago.

He stated, correctly of course, that any numptie can make a killing while everything's rising, but it takes skill to do so in the uncertainty we are now in. His current ploy is to drop leaflets on people in areas where negative equity may be about to bite offering stretched home owners the chance to sell out quickly to him, at a deep discount, but continue renting the same home and with a guaranteed option to buy back again at a pre-agreed premium when things look better.

This sort of thing has long gone on, particularly in the "right to buy" market - albeit with some differences - unscrupulous bucket shop lenders go round offering to lend those who would not get a mortgage enough to buy their council home who then have trouble with their mortgage payments, they offer them a "rent-back" deal which is only just less than the mortgage payments so what they were paying £70 a week for as a council house in which they had no equity was now costing them double that still with no equity.

Anyway - many of you will know that I "run" a group called Oxfordshire Community Land Trusts , which is a mechanism for delivering more affordable housing for the "intermediate market" - those stuck above the income levels that would justify the deep subsidy of social rented housing but below a level that they can afford to get on the ownership ladder. Basically it works by the CLT owning the land and not crystalizing out the gain in land value on every transaction. People pay what they are judged to be able to afford rather than related to the home they need - I would pay nearly full market rates for a one bed flat whilst a family on half my income would get their three bed needs met on half my payments. But I would get twice as much equity as they do. Effectively we are all subsidizing each other through the Mutual Home Ownership Society that takes on the long term debt for the development and which all the residents join.

And earlier in the year we were asked whether this was still an attractive option in a falling market. Obviously it changes the landscape somewhat. Now perhaps more of a problem is that people who could afford to buy outright are unable to get mortgages through no fault of their own. Indeed this could be a boon to the CLT market, because we could find ourselves with more better off residents who would therefore be able to subsidize even lower income houses (it all works on averaging out the total payments you see).

But also by tweaking the model, from a development model to an acquisition model, I believe we could help out those over-stretched households currently prey to the man I mentioned above and with a long term benefit to the success of future CLT projects. In this scenario, the CLT would buy up houses and convert them into mutual ownership. The occupant instead of having to rent from the profiteering speculator landlord would get to keep whatever equity their current circumstances allow them to commit to with the CLT effectively holding the balance. As circumstances change, the household could buy back extra equity (without themselves actually having to borrow anything - Mutual Home Ownership looks more like rent from the occupants' perspective).

What we need to make this happen is access to funds - not necessarily large funds - just a revolving facility that allows us to step in quickly when a household is in distress and lenders start to take action against them - we get them the money to pay off all or most of their distressed borrowing and then the Mutual Home Ownership Society borrows against its commercial facility to take on the house itself with the household's new calculated affordable commitment.

Who has such funds? Well, local authorities have a duty nowadays to try to prevent homelessness, not just deal with it after the fact. Such a scheme has got to be a more efficient use of public money than say, Vince Cable's idea of getting councils to reward previous speculative build by buying direct from builders and converting them to social rented housing (I don't think it's a bad idea - just that mine is better!). Even existing lenders might find it more attractive to convert the loan to a MHOS than to repossess. In the longer run the CLT ends up with more freehold land that would eventually, when the housing on it has reached its planned end of life be theirs to redevelop in the interests of the local community at that time and in the meantime the distressed owners get to keep their existing home, albeit with lower equity levels and lower debt levels.

Dare I even suggest that this might be a better way to spend $700bn than rewarding the bankers who helped cause the problem in the first place? Julia Goldsworthy , get in touch if you want to know more! read more »

Private charity, voluntary co-operation or state welfare

Jock — Thu, 25 Sep 2008 20:56:26 +0000

One of the most common points of disagreement between, let's call them "state-interventionists" and "non-interventionists", is the claim that "non-interventionism" would leave the poorest in society on the scrap heap with no welfare, no support. That the much vaunted idea of "non-interventionists" that "private charity" or "voluntary co-operation" would take the place of state welfare is just an impossible pipe dream. So determinedly do "state-interventionists" believe their own claims that they frequently castigate "non-interventionists" as heartless uncaring selfish individualists who would rather see others die than pay taxes. One quote from a Lib Dem Voice "discussion" just today will give you the general idea:

"Well none of them [Libertarians] are serious, because it an incoherent philosophy....send the kids back down the mines, it’s only a lifestyle choice."

And to an extent, I used to believe that propaganda. As a geo-libertarian of course I do have an answer of sorts - the basic income derived from land user fees (which would on their own create an almost unimaginably more equitable society in any case) would cover the basics of life for everyone, and give everyone an incentive to top it up with as much or as little work as they can manage.

But a recent discussion on a "non-interventionist" mailing list I've been frequenting recently has challenged the basic assumption of this debate for me. Would people really not contribute voluntarily to the upkeep of others if you don't have a government apparatus threatening them with the confiscation of their property and ultimately the loss of their freedom unless they pay their taxes?

It is a strange proposition. Governments for at least the last sixty years have been supporters at some level or another of some form of state welfare. They may argue about how much is appropriate but the fact is, people have overwhelmingly voted for a state that takes money from you in order to give some of what's yours to someone deemed "less fortunate". We even have a cliche about the inevitability of death, and taxes.

We have tens, maybe hundreds of thousands of people who do voluntarily give up their time to care for another. Most people are someone's relative, someone's friend, someone's colleague. And whilst I recognize that some do not have such support networks and would still require some form of collective support, most people do not want to see their friends and relatives on skid row or worse.

One has to wonder whether the interventionist route actually makes things worse. And in how many ways. When we look at our pay packets do we not think often that we've given quite enough for the support of others through our taxes thank you very much. National Insurance and Income Tax between them effectively make the worker near forty per cent worse off. I know what I would do with an extra forty per cent each month. It would pay the interest bill on the piece of land we have just acquired for our first Community Land Trust for a start.

Other taxes and protectionist policies keep the prices we pay for basics artificially high and create incentives for companies to produce cash cows rather than exciting developments. I'll bet if we didn't guarantee one pharmaceutical company a contract for however many millions of doses of Metformin diabetes pills every year a dozen others would have put the effort in to find a cure, not a chronic treatment regime.

The attempt to do welfare as a "universal" system, with the same rules for everyone, means a bloated bureaucracy enforcing inflexible regulations. If welfare were, say, to be dealt with at the parish level, and the barriers to job creation caused by taxes eradicated, I'll bet you more people would be found some work, appropriate to their abilities, even if it didn't give them everything they need and then people would feel much better about helping them out with the rest - because they were trying to help themselves as best they could. We have no way of measuring that at a national level really.

We have a Professor here at Brookes, a chap called Steven King. His area is the History of Welfare mostly in the 18th and 19th centuries - probably the period which received wisdom says was the harshest environment if you were poor or hapless. But I was fascinated by a lecture he gave a couple of years ago on being elevated to the professoriate (you are elevated to that aren't you?). Apparently when parishes were responsible for pensions, those who actually got a pension - those whom their own peers and neighbours if you like knew had simply tried and been unable to support themselves (in common parlance I guess the "deserving poor") would get on average 75% of the average working wage for their area. For others there were varying levels of support down to a pretty basic safety net that was intended to be subsistence rather than comfortable for those they felt were "swinging the lead".

And then there's the problem of administrative costs. If I had an extra 40% in my pay packet and was going to give it away, I'd know that the people or organizations I was giving it to would get all of my donation. I'll bet for the 40% the state apparatus take off me in taxes, probably half actually gets to someone who needs it, to direct service delivery, if that.

So, given all those disadvantages of, and the singular advantage that people actually vote for, this tax based welfare system at some level or another, is it not just possible that by doing away with all that coercion, all that centralization, all that unproductive bureaucracy, the people who get to keep what they earn would be quite proud to "do the right thing" by their neighbours and communities? If they vote at the ballot box to have money taken off them by the state for things they obviously believe are necessary, would they suddenly feel they were not necessary or that they should not contribute towards those same things without the threats of the state? Isn't that a totally illogical position? You'd vote for it but not do it if the people you vote for didn't force you to do it?

And so, at the very least, would it not be at least a courtesy to accept that Libertarianism is an optimistic creed; that it is positive about humanity's innate ability and even need to help each other. You may call that a naive optimism. But I'd rather be a glass half full freedom lover than the glass half empty authoritarian approach that says humanity will not help itself unless it is forced to do so by the agents of a state apparatus that may, just may, cause more problems than it actually solves. Libertarian is not a "devil may care/beggar thy neighbour" philosophy but one that places the utmost faith in people, as individuals, to know and do what is right.

And as to whether it is a "coherent philosophy" or not, I submit that "non-interventionism" is the only truly coherent philosophy in the game. For once you admit the state can do one thing better than we can through voluntary co-operation, you inevitably end up in endless arguments between factions about just how much the state can do better, and the ultimate end of that arms race is totalitarianism - that the state can do everything better than voluntary co-operation. Which is manifestly not true. read more »

"Corporatisation" of government functions does not transfer responsibility

Jock — Sun, 24 Aug 2008 04:10:40 +0000

...and is not "liberal" either.

There are often attempts by ministers (Jacqui Smith is mentioned in Sunday's Independent for example about the recent prisoner data loss) to shirk their responsibility for government cock-ups. There are also left wing commentators who crow that these incidents are clear proof that "neo-liberal" policies of "privatising" government functions are evil and should be stopped; that the "free market" does not work in the public sphere.

But I don't consider such contracting out of work as either liberal nor as implying that ministers are no longer responsible for their incompetence. Nor, even, are they truly "privatisation". To me the doctrine that says some things are better done by profit motivated companies (or other, non-government organizations) does not mean merely sub-contracting to a government service level agreement.

Yes, such arrangements may save on costs or similar. But all they are doing is delivering the same policies and procedures designed by government. This is the "corporatisation" of government. It is inherently protectionist - the government grants usually monopolistic contracts to firms, sometimes even, like Capita, that started life as a bunch of civil servants deciding they could do better for themselves by making a profit out of what they do.

No, real privatisation, so called "liberalisation" of government functions, should mean the state divesting themselves completely from interference in that policy area. For example, just because DVLA contracts out its computer systems and administration does not mean the registration and licensing of vehicles and drivers has been "privatised". Not bothering with a DVLA at all and allowing insurance companies to work out ways of ensuring the drivers and vehicles they are prepared to insure comply with what they consider to be safe would be. i.e. a different way of working, free from government entirely, and open to proper competition where new ideas and ways of achieving similar ends can be developed. Finding new structures, free from the dead hand of government to do the things we need, rather than what politicians think we ought to need.

Similarly with ID cards or passports - it is not "privatising" simply to contract out the development and implementation of a government policy to profit making firms. Indeed, this is anathema to true economic liberals - for it is corporate welfare, money for old rope if you like. My idea from yesterday about getting rid of government validated passports entirely and instead letting people buy their own guarantee of identity if and when they need one using a new mechanism such as digital certificates would be liberal; the true privatisation of functions the state previously chose to regulate and deliver itself.

And of course, such liberalisation may not end up being delivered by "for-profit" corporations at all.

So Jacqui, stop trying to hide from your responsibilities. You have cocked up just as surely as if the person with the memory stick were your permanent secretary. You are incompetent. Indeed doubly so - for not only have you failed to do your job, but you've even failed to make sure the simpler option - getting someone else to do it for you is done properly. You should go. read more »

Hari's Game: not even in the right ballpark

Jock — Tue, 19 Aug 2008 06:07:50 +0000

There's been a bit of a giggle going round the blogs over Johann Hari's three point plan for revitalizing our democracy. The Centre Forum's Free Think blog described them, I hope with tongue firmly in cheek, as "radical"; they do not even trim the overgrown leaves of our democracy, let alone get at the root of the problem. Tom Papworth offers a characteristically more critical appraisal and says much that I would have said about Hari's ideas themselves ('boneheaded' and 'rent seeking').

But as his suggestion about compelling students to take a newspaper rather shows, Hari is one of the current establishment and it is that centralized establishment that is at the heart of the problem. Our politicians are so remote that we are being told we must rely on people like him, who few of us will ever know personally well enough to tell whether they're honest or not, in the pockets of the trough feeders, or even at the trough with them, to interpret accurately what's going on it the Westmonster village. This is not democracy in anything other than name.

If we want to make politics the topic of discussion around kitchen tables, in the pub or at coffee after Mass, democracy needs to come down to that level. Street level democracy. Most of the parties witter on a lot about "localism" (I notice "localism" seems to have replaced "devolution" largely in their lexicons), perhaps especially the Lib Dems, for whom devolution of power to the lowest practical level is part of the pre-amble to our constitution, the touchstone of our supposed beliefs. Yet even we don't really explore really radical alternatives.

And that's what we need. Our system of democracy was designed in an era in which central government didn't actually do a lot compared with today. Our "representatives" (of curse really only the representatives of the landed population) got themselves elected by a few sheep and packed off to Westmonster for whole sessions at a time - you could hardly hold surgeries in Edinburgh one evening and be back at Westmonster the next.

The civic movement grew up as a more local parallel system often in response to industrialization and urbanization and, at the height of its power was responsible for most welfare, health and education provision, policing and most local infrastructure like sewage, water supply and later still energy supply, whilst private interests built inter-city infrastructure such as toll roads and later railways. And even that was a centralization of power in cities from the previous parish system - you can still go round and see "Parish School" above the doors of those Edwardian school buildings - Glasgow has some particularly good examples. Until as recently as, I think, 1938, Oxford, for example, had at least three pretty well autonomous local authorities responsible for different parts of the city. A few years before that it still had separate public boards to deal with public health issues and so on.

Now, whilst we live in a fast moving globalized world, I question whether we actually need to rely on one representative for sixty odd thousand of us each packing off to Westmonster and fighting for our local hospitals, say, with a bloke from Hull, or having our policing priorities set by a woman from Redditch. I don't much care how they see such things in Redditch or Hull, it's Oxford I'm interested in and all these decisions ought to be more, much more, accessible to me made by much more locally accountable people. Even many of Westmonster's international negotiating functions are much less needed today. We trade for ourselves with people and businesses all over the planet. The sense that we need a national level broker wheeling and dealing in what is almost always rent-seeking and protectionist ways is diminishing rapidly.

Now there are two approaches to devolution and subsidiarity I'd suggest. The one, it seems the preferred one at Westmonster, amongst all the parties, is for we, the people, to wait for the crumbs to fall from the top table. Look at the department for Communities for example. It is this part of centralized government who announces initiatives, looks for councils to fight amongst themselves for a share of the resources to pilot them and ties them up in knots reporting back on outcomes so that "Communities" can decide whether to make those initiative compulsory on the rest of the local authorities, continue funding them and so on. I suggest that this gradualism is an excuse for the centre holding on to power. Each successful initiative dictated from above is a reason to keep these trough feeders where they are. Any ubnsuccessful ones of course are the fault of local authorities themselves or even ourselves, showing us not ready for such freedoms in their eyes.

But far better to my mind is actually reinventing our democratic structures fit for the modern era. Hari, I think, is wrong to say that nobody talks about government and politics. I hear people all the time complaining about politicians. It is, perhaps, comforting even for people to moan about government and politicians - we are able to assign responsibility for cock-ups to someone else. Someone far away in Westmonster and usually, since only about one in six hundred of us actually gets to vote for the individual who will become Prime Monster, someone we didn't put in power. Even local government does it, though often this is with half an eye on political gain at that higher level - persuading your Tory borough's population that something is Labour's doing at Westmonster is part of the "game" of getting a Tory MP elected next time, or vice versa. It is no wonder people are cynical and disengaged, if that's what they are.

And so I'd like to introduce you, if you haven't already heard about it, to the idea of "cellular democracy". Some commentators in the US (where they already have substantially more local freedoms than we do to innovate and compete with other localities of course), in what I see really as a modern development of Hume's "Perfect Commonwealth", suggest that democracy is no longer at a "human scale". Because we elect to remote bodies people we are likely never to meet (at least for more than their allotted ninety seconds on your doorstep when they want your vote) the system itself inflates the cost of democracy. Parties have to spend lots of money getting a nationwide message out. We rely on people like Hari, whom we don't know, to provide commentary and interpretation. Most importantly, perhaps, parties form their policies not around what is good for particular communities but around what is acceptable to the floating voters in a small number of marginal constituencies.

The idea is that we turn our system on its head. We say, as so many politicians like to claim to believe, even if their actions speak to the contrary, that government literally comes from the people, that we cede only so much of our individual sovereignty to some collective body as is necessary to meet those needs we are incapable, for reasons of economic efficiency usually, to provide for ourselves. You have the principal tier of government at a local level. A very local level. A street or small neighbourhood. Usually of no more than a few hundred residents. Candidates are likely to be known, approachable - you bump into them walking the dog or standing at the bus stop. They get their message across to you through real local contact - not some party worker umming and erring for a few seconds on your doorstep or increasingly over the phone, facelessly. Some even suggest that, like a party caucus in the US, these elections could be by show of hands once a year at a local meeting. In a sense, to the successful candidate, knowing who didn't vote for you gives you an incentive to find out why and work with those neighbours, for they will all be neighbours on whatever issues put them off voting for you.

And that's the only vote you get - except for the right of each five hundred strong neighbourhood to recall their representative. By default it is in the remit of those very local authorities - perhaps twenty members each elected by five hundred residents to meet all the needs of that community that must be delivered through collective action, voluntary co-operation. When they find that they cannot possibly meet some need for their 10,000 strong community - they couldn't, for example, justify building a large general hospital just for their small community - but they could decide to join up with other communities to form a second tier of government, to whom a representative will be delegated by the first level authority and a by-election held, or the runner up, or an alternate, would take their place on the first tier authority. These higher tiers need not even be geographically linked. They may decide to join up with others on particular functional issues. Take the hospital again, here in Oxford the John Radcliffe hospitals serve folk from Buckinghamshire, Northamptonshire, Berkshire and so on so even ceding more control to a body based on the boundaries of Oxford or Oxfordshire does not serve all its users.

If a higher tier wants to raise some money, that request is passed down through the various levels and discussed in these local caucuses. People can really decide whether these higher tiers are offering them value for money, or whether they could meet those needs for themselves better. Each higher level authority, however, is only ministering to the needs of its member authorities in turn so it should be easier to follow the money trail and identify whether something is in fact good value for you, the individual, or your small neighbourhood.

Some will say this gives rise to all sorts of problems about "free loading" - communities that decide not to participate in higher level authorities but gain the benefits of their collective efforts. In such a case, perhaps the authorities that have collaborated could decide to charge more for people from the community that didn't collaborate on a particular facility or policy to access that facility - they will, I am sure, soon find it would be better to join to get the "members rate". But ultimately, one has to ask whether "free-loading" is any worse a problem than the egregious rent seeking and bloated costs of our existing system.

Wouldn't Barrie's Palace of Westminster make an interesting "novelty hotel" - just like Oxford's former prison has here. Or perhaps just a prison. That would be quite fitting, considering everything its occupants have stolen from us for decades. David Hume said that we ought to be ready with new ideas of government for the day when, perhaps, by common consent the existing system is seen as broken. I suggest that the epochal changes in communications and trade that have been made in the past twenty or thirty years is just such a moment, and if we are not to lose our democracy through lack of interest on the part of the electorate, it is more urgent than ever. read more »

localism, mutualism