March 2009

31 March 2009
Some thoughts on money

This partly comes from my reading of Murray Rothbard’s “The Mystery of Banking” and a comment I left on Brian Micklethwait’s blog.

Two ideas.  What money really is and what we have come to understand as money.  And the connection?  What we have come to know as money is a perversion of a perversion of that original idea.

The original idea is simple enough.  Money is metal.  Sometimes gold, sometimes silver.  Sometimes cigarettes (which is not a metal at all) but that’s another story.  The point is that a metal like gold is very useful as money: it’s scarce, it’s consistent, it’s durable, it’s divisible.  And that, at root, is all you need.

Until you try to use it that is.  Say, you’re selling Mars Bars and some bloke tries to buy one of your Mars Bars with a lump of yellow metal which he claims to be gold.  How do you know it is what he says it is?  How do you know it hasn’t been mixed with something else, something cheaper?  Sure, there are some tests you can carry out but you need equipment and that is likely to be expensive and bulky and time-consuming to use.  Not really the sort of thing you want to be having to take down to Tescos.

The answer to this verification problem is, of course, coinage.  You take your metal down to the mint, they weigh it, melt it down, add some alloy and stamp it out with some pretty, hard to reproduce pattern.  In other words they brand it, in just the same way that Cadbury’s brand bars of Dairy Milk.  And with much the same effect.  Now everyone knows what they are getting.

At which point we get the first perversion.  Enter the state.  For reasons that are not entirely clear the state has always claimed a monopoly on minting coins.  Roman emperors have their heads on the currency.  It is not difficult to see why.  States always need to raise money.  There are two ways to do this.  The first is taxation.  But taxation is a pain.  You need agents and sometimes people shoot these agents.  The second is inflation.  You take a coin, you melt it down, you add some base metal and you mint two new coins.  Bingo, you’re twice as rich.  And states have been doing this since time immemorial.

The next perversion comes with storage.  If you’ve got a lot of gold you don’t really want to keep it at home - someone might steal it.  So, you take it down to a secure store - known at the time as a goldsmith’s.  And in return you are given a receipt.  Now obviously this receipt is a rather valuable piece of paper, so it has to have many of the properties of a coin - hard to reproduce pattern etc.  The point is that if the receipt is good enough the bearer has a choice.  Yes, he can use it to redeem his gold, or, he can use it as money in its own right.  It is literally as good as gold.

At which point we get the second perversion.  The goldsmith realises that his receipt is now being accepted as money.  This means that year on year only a small portion of the gold in storage will ever be redeemed.  So, he decides to print up some new receipts and lend them out in the hope that there will never be a time when he has to redeem all the receipts (or notes) at once.  On the face of it this sounds like fraud - but your high street banks are doing this every day (or rather were until the credit crunch struck).

Actually, this is a bit of an aside because the really important thing is what happens next.  The government gets involved.  It starts issuing its own notes - in Britain this began with the Bank of England in the 1690s.  Then it bans anybody else from issuing their own.  First by banning the practice within 65 miles of London and then everywhere else.

Now, from the state’s point of view this is not a perfect solution.  The notes are still redeemable for something real - namely gold.  So, what they do is to suspend redemption in time of war eg Napoleonic Wars, First World War, on an apparently temporary basis and then progressively put up ever greater barriers to redemption.  In the 1920s when Britain went back on the gold standard the kicker was that normal everyday citizens could no longer redeem their notes.

And then, as they did in Britain in 1931, they break the link with metal entirely.  The perversion of money is complete.

29 March 2009
In praise of The Professionals

The Professionals, ah yes, Bodie and Doyle, Bonehead and Foil, bubble perms, flares, dodgy leather jackets, Capris and RS2000s (thrashed).

A bit flash when it’s not totally brain dead. Not really our kind of show.

Well, over the last few weeks, with the aid of the repeats on ITV4, I’ve been able to reassess the bien pensant view of the 1970s cop/shy show.

And guess what?  I, and they, were wrong.  It’s brilliant.

Good plots, good characterisation, well acted, well scripted.  And brain dead?  Heck no.  This is a show that is constantly examining the dilemmas and ironies present in the exercise of state power.

The repeats have also provided a good opportunity to reassess the relative acting merits of Lewis Collins and Martin Shaw.

The general view is that of the two only Shaw was the proper actor.  Which is odd because it is Collins who nails his character right from the beginning while Shaw is constantly struggling.  In his defence Doyle - the heavy with a heart - was always going to be a struggle for actor and scriptwriter alike but still…

Anyway, time for those immortal opening titles:

13 March 2009
Sometimes, when I am confronted by one of those thornier political issues I ask myself: "What would happen if there were no government?"

I mention this because that was the question I found myself asking the other day when listening to a radio discussion on civil liberties - specifically about what to do with terrorism. The discussion was between a "civil libertarian" on the one hand - all against snooping - and an authoritarian on the other - all in favour.

I found it a rather confusing debate because while I was in theory rooting for the civil libertarian - a bunch I've never particularly liked - I found myself agreeing far more with the authoritarian.

So, I asked the magic question. What would happen if there were no government?

Answer? Simple. Roads would be privately owned and road owners would have every incentive to ensure their roads were terrorist free. Therefore, they would simply ban anyone they suspected of harbouring terrorist sympathies - not unlike the way the Bluewater Shopping Centre banned hoodies a few years ago. My guess is that this would lead to some lookism plus and ad hoc system of passports and people vouching for one another.

But not a lot of snooping.