George Osborne talks capitalism

28 Jan 2012

News: It’s a crisis of confidence, not of capitalism (George Osborne, Financial Times)

Here is a shortened and tided up version of the article:

There have been many parallels drawn recently between the current economic situation and the 1930s. But has capitalism really failed as it did in the 1930s, requiring a whole new economic paradigm? Or are we, on the other hand, simply experiencing a broad crisis of confidence in the competence of democracy in general, a crisis which can be overcome without profound changes to our fundamental economic model?

Travel to China and no one is talking about a crisis in capitalism. Free enterprise has lifted hundreds of millions of people in China and many other developing countries out of grinding poverty. The Chinese government is not worried about incomes stagnating under capitalism, on the contrary it is worried about the growing political aspirations that prosperity brings to the people.

In the west, however, there is no shortage of political expression, and that makes us venerable to self doubt. I very much believe what we are experiencing today is a crisis in the general competence of democracy, not a 1930s style crisis in capitalism itself. In fact, my argument is that the way to address the crisis is not to run away from capitalism but to run toward it.

So let us focus on the problems of democracy generally, let us look at how this crisis of confidence manifests itself.

First, there is the widely felt anger at the rising incomes of a wealthy few when the incomes of the majority have fallen. I always thought it was wrong for the last government to allow banks to pay bonuses in 2009 when taxpayers had only months earlier spent vast sums bailing them out. It was reward for failure which undermined a central premise of free markets. My government is focusing on greater application of free-market principles, fighting against vested interests and preventing this kind of anomaly.

Second, people are starting to doubt the rewards of globalisation. The last government constructed ever larger welfare systems to redistribute income. Some redistribution is desirable, but by taxing and spending too much the last government did enormous damage to our country. My government is concentrating on devoting more of our precious resources to investing in the good schools, world-class universities and research and development that will enable us to charge more for our labour and make us winners not losers from globalisation.

Finally, we must confront the fears that western political systems are gridlocked and unable to think long-term. Paralysis in the US Congress and slow progress in the eurozone have not helped. We in the UK have our own problems but we have not fought shy of taking bold decisions, and I believe these decisions have inspired confidence in our ability to act. We need further bold decisions in the UK on controversial issues such as airport capacity, regulation and nuclear energy if we are to stay competitive. And the west as a whole needs to take bold steps to support enterprise if we are to bring greater prosperity.

That is why my government says let’s have the courage to deepen our single market and strike trade agreements with the likes of India, Japan and Singapore. Let’s have the confidence to open up our infrastructure to investment from sovereign wealth funds and not use national security as an excuse for protectionism. Let’s have the self-belief to open our economies to competition, not hide behind the crypto-protectionist language of reciprocity. Let’s work to strengthen institutions such as the World Trade Organisation and the IMF, to show global markets are governed by global rules.

What we are witnessing in the west is a crisis of confidence, not a crisis of capitalism. The open society has always had enemies. Our economic fortune depends on us confronting and defeating them.

What do you think of that article? Let's go over the most important point, namely:

Do we have a 1930s style crisis of capitalism requiring a whole new economic paradigm, or not?

Let's talk about how George Osborne answers that question in a minute, right now lets think about how smart people like you and I should answer that question.

One way is that we can come up with a whole new vision and then see if we like the new vision more than the old one. That's the default mode of the Western mind, we are vision people who like to have a feel for the long term totality. That gives us a lot of boldness, because once we get the vision we can go all out. The problem is that we can get stuck, we end up like rabbits in headlights when we are confronted by something too big to handle. Right now, for example, the new vision is so far away from where we are now that people can't let go of their ego enough to embrace it.

The Chinese, on the other hand, are famous for "pragmatism". They find the whole idea of "isms" quite alien, if you ask them for advice they will start looking for problems in the existing system, and they will say if your model doesn't cope with x it's clearly wrong so go and tweak it. The don't have our clear vision of good and bad, they are detached not emotive, flexible not dogmatic. Like the scientist they are calculated, cautious and invariably right at least in the short term timeframe. Ideally the West and East can learn from each other in a controlled way, at least I think that's the potential for humanity but it requires piety on our part which is what we most lack today. Anyway, the pragmatic calculated way gives the Chinese an advantage because they don't get caught like rabbits in headlights, but it does mean they can't move anywhere near as fast as we can move in the West when we are fired up properly. Deng said "feel for the stones when crossing the river", and leaping across rivers is really dangerous for the Chinese because they just aren't as good as we are at seeing into the future, so they can do crazy things like the Cultural Revolution. Since Deng, China has been moving very cautiously, but notice that they are constantly moving along whereas we in the West think we have the answer and sit there for decades in love with one idea until one day it all goes wrong and we have a crisis and change our entire life. Remember Aesop's fable, the hare and the tortoise story sums up the West and East way of evolution.

So I can talk about the problems of capitalism in two ways, I can try and inspire you with a whole new vision (as in this article about state investment for a profit), or I can point out to you little problems which make you rub your eyes (as in this article about rational expectations and toothpaste).

But what does Osborne say? "Travel to China and no one is talking about a crisis in capitalism. Free enterprise has lifted hundreds of millions of people in China and many other developing countries out of grinding poverty. The Chinese are not worried about incomes stagnating under capitalism..."

What he is doing is trying to prove the effectiveness of capitalism in the West by pointing out that it works in the East, which would prove nothing even if it were true. But the remarkable thing is, of course, that it's completely insane because the competition to the Washington Consensus is the Beijing Consensus, in other words the reason the world is tuning it's back on capitalism is because they think Chinese State Capitalism is better.

I can't really put into words how stupid this argument is. Ordinary people say "oh he is a politician and they are always playing tricks", but farmers don't play tricks with farming, and plumbers don't play tricks with plumbing, and scientists don't play tricks with science. When we say politicians play tricks we mean their job is divided into two, one part has do with the real world and is objective and real, and the other part is like comedy, a knack for mind games. But the politician who mixes them together is not a like a funny plumber who lightens the mood by cracking jokes whilst he works, he is like a bohemian plumber who jokes with plumbing itself so nothing works. This kind of joking around destroys all professionalism and mental discipline and turns something that should have truth and justice into lies and evil. Is Osborne consciously lying? No, that's the mistake of the conspiracy theory maniacs. The truth is more terrifying, he has been playing games for so long his mind has simply collapsed. I wouldn't be surprised to hear a plumber making this kind of argument about China, but that's because he is a plumber and knows nothing about socioeconomics. But the argument is so technically ridiculous it could only be formulated by someone who has either never studied socioeconomics at all, or someone who is so mentally retarded they couldn't make any progress whatsoever in their studies.

If you read the Financial Times you can see dozens of appalling articles about capitalism by the so called elite, but this George Osborne article takes the prize for most retarded, especially in this central point about the righteousness of capitalism demonstrated by China. I won't bother talking about the rest of the article, but if you follow it through you will see it's just sliding around and hitting notes which excite little people but don't justify anything. For example, inequality is one of the biggest problems of capitalism, and his throw away comments about bankers bonuses may stimulate some idiots, but they are totally mindless in the context of the serious issue at hand. His writing is appalling, it typifies the short sound byte twitter style sentence structure of the real kool-aid drinker, I had to clean it up to make it coherent and readable.

The only person in the FT who has written a decent anti-capitalism article so far is Jeffery Sacks, but if you read what Larry Summers wrote, for example, he at least dug down into the problem and made some half true half interesting augments. If you read Larry Summer's article you feel the way you do when a kid who is learning something makes an effort and gets lost, you feel sorry for him and you want to help. Osborne hasn't done that at all, he is like a lawyer who has gone to court and wheeled out one character witness, and the witness he has chosen is the lead witness for the prosecution case who claims his client is guilty! This is the whole point Socrates makes, you can either study objective real world truth or you can study cave wall mind games, but the latter will rot your brain as surly as junk food rots your body. Like in Ancient Athens, the Western liberal arts elite have collapsed intellectually, like Socrates said the higher you go the more stupid they get, their wisdom is all an illusion, the Emperor's aren't wearing any clothes.

I am deadly serious when I say George Osborne, after David Cameron the most important man in the UK, has absolutely no idea at all what he is doing. The only reason the general public can't see it is that they have spend so much time watching "World have Your Say" they have forgotten how to think rationality about socioeconomics, they have no training in the difficult art of philosophy, politics & economics at all. But that is coming to an end, realise that the average man picked up on the problems of capitalism before the Financial Times started writing about it, and George Osborne picked up on it last. Think what it means when Joe Blogs sitting at the Dog and Duck with a pint of bitter in his hand figures out socioeconomic issues quicker than the elite who run the world, don't you see it means the elite are even more clueless that ordinary people, and yet ordinary people are basically completely clueless, which means the elite are a sort of negative intelligence. Now the people are starting to see that, and that puts us where Germany was in the 1930s when the Germans realised their liberal intellectual elite were not actually intellectual, but rather complete fools, and they started looking for new leadership.

The UK simply cannot survive with it's entire political establishment, most of its journalists, and a lot of it's CEOs in this state of chronically unprofessional bohemian mindlessness. If you are a young trader SELL SELL SELL THE UK, but if you are someone of importance for gods sake you have a duty to try and save the lives of sixty million people. We don't need to let the masses know how mindless the elite have become, the last thing the Western world needs when it is in this appalling condition is a mob revolution, but we do desperately need a secret silent elite revolution or everyone is dead. Someone smart and influential needs to start taking control of the elite, we desperately need that famous Hollywood idea of the secret society, the crazy illuminate conspiracy theory the little people imagine, which in fact did to some extent exist in the past as the Golden Dawn / Rosicrucians, and on which Freemasonry is modelled. Without such an enlightening force the Western world is finished.