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  Road to the Middle Class
Wednesday November 26, 2014 
by Christopher Chantrill Follow chrischantrill on Twitter

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The Shallow Conceit of the North London Luvvie

BACK in the 2000s Ross Ashcroft was briefly a BBCer and then an assistant theater director. But after the crash of 2008 he has reached for bigger things and in 2012 released a documentary on all the troubles of the world, entitled Four Horsemen. It got tons of awards at film festivals. It's available on YouTube.

You would expect that it to be pathetically banal and devoid of almost anything that might qualify as an idea. Why would it? You tell me. Where in the world would a theater person in today's London ever run into someone with an idea that wasn't safely approved by the left-wing culture that dominates the minds of everyone in the arts?

But let's take a look at Four Horsemen anyway.

The Four Horsemen of this modern apocalypse are: the rapacious financial system, escalating organized violence, abject poverty for billions, and exhaustion of our natural resources. Filmmaker Ashcroft reviews these problems in four sections of his documentary.

6:30 Empires. Empires do end, and the west has not yet come to terms with its fading supremacy. And it makes sense, from Gen. Glubb's life cycle of empires, 250 years from pioneers to conquest, commerce, affluence, intellect, and ending in decadence. Imagine an overextended military, conspicuous consumption, living off the state, and an obsession with sex. And debasement of the currency. In our decadent age everyone scrambles for the spoils amid the distraction of bread and circuses. And the baby boomers did it! Meanwhile millions of people go to bed every night hungry. So why are we still struggling to distribute wealth fairly?

16:45 Banking. Is the problem "systemic?" We review the evils of fractional-reserve banking, fiat currency, and we get the usual focus on greedy bankers and Goldman Sachs, and the evil of forcing mortgages on poor people. It's all based on the notion of "growth forever." Did you know that 97% of the money in the world is "debt?"

50:51 Terrorism. Ashocroft's got a "root cause" explanation of terrorism. The "inherent iniquity in our system of money, banking and politics has not just had consequences domestically," but also globally. Terrorism is thus a push-back against western neo-colonialism. First there's the military and its contractors, then the consultants and contractors that get the contracts from foreign aid and World Bank loans. But the aid benefits the local elites, and the people have to pay back the debt. Then there is Chile. Yes, we can still haul Noam Chomsky in front of the camera to remember that the US intervention in Chile in 1973 amounted to terrorism. But with all this outrage is it any wonder that people have no recourse but to resort to terror?

1:02:52 Resources. We have got to the end of the benefits of economic growth; the more we grow the more we create poverty. It's a question of competition vs. cooperation. We need a progressive move from globalization to localization, production not consumption.

1:13:00 Progress. There's a tendency to Hollywoodization these days. Everything must be a story with a beginning, a middle, and an end. There's got to be a villain, and usually a sacrificial victim. So it's hard to see that the system is flawed.

So what's to be done? We need to make societies more equal and reduce income difference; that will help solve environmental problems. We need to understand that the problem is pretty simple. It's about power, and its about democracy. So we need to sweep away the disinformation of neoclassical economics and the academic gatekeepers with the cleansing truth of the internet. And we need to question the system of fiat money. It all comes down to a three point plan:

  1. Return to gold as the basis of money, and maybe stage a debt jubilee, since debt is slavery.
  2. Tax consumption instead of labor.
  3. Return to a system with workers owning the place where they work and produce.
It's hard to know where to begin in analyzing such a precipitate of shallowness, but let's start with the three point program.

Yes, going back to gold and ending fractional-reserve banking is a great idea, but it's a good idea to realize why we have a fiat currency and persistent inflation. The reason is that governments are forever running out of money, or crashing the economic system with their economic interventions. The easiest way for a government to "get out of a jam" is to print money, devaluing debt and stealing the savings of ordinary people. Any big government program, whether a war on fascism or a war on poverty, ends up with a lot of government debt, and ends up with some kind of debt default.

That's why banks are such a problem, whichever party is in power. Ever since the Dutch invented the National Debt in the 16th century the government's debt has been the foundation of the credit system and the credit system has been the foundation of the rest of the economy. The banks are merely intermediaries between the government debt and the rest of the economy. The reason that bankers seem to be manipulating the system is that they are being tossed around by the machinations of the government's debt and cheap money operations. The first and most important government program is the program to sell the government's debt; that debt gets sold to bankers who are directed to use government debt for their reserves. Over time, the government regulates the banks in more and more detail, and over time the bankers learn how to manipulate their masters in the phenomenon we call "regulatory capture." Thus "greedy bankers."

In the run-up to the Crash of 2008 the government manipulation was particularly egregious because the US government had developed a policy over decades to extend "affordable housing" to subprime mortgage borrowers (i.e. minorities). The government mortgage twins, Fannie Mae and Freddie Mac developed policy to force banks to originate more and more subprime (i.e. low down payment, low credit rating) loans. But who would buy these loans from the banks and Fannie and Freddie? Simple. The investment banks like Goldman Sachs repackaged the loans and with a bit of financial trickery and sold securities that were rated AAA and could therefore be bought by pension funds and insurance companies. It all worked as long as the band kept playing.

If you read old stuff like Lombard Street by Walter Bagehot you get to understand how how the credit system works. It needs two things. And it needs debtors that can make their payments. And it needs debt that is properly collaterialized, so that the principal can be repaid if the debtor fails to service the loan.  When you get a situation where either of the two requisites are in question then you get a crisis of confidence; people start to wonder if their counterparty is sound or whether they might fail in a crash. So when the government floats about a trillion dollars in mortgages that are badly collateralized to borrowers that can't afford any downturn and maybe even can't afford to make payments right now... Well you get a financial system that is extremely fragile and will crash as soon as things start to go south and people really start to worry and take their money out of the market. Of course, you'll expose all kinds of bad apples when the market crashes, but the villain at the bottom of the story is not the greedy banker but the government that's mucking about with the credit system to give money or affordable home mortgages to its supporters.

So that's why we have fiat money. What about taxing consumption instead of labor? It's a good idea; that's what we all had in the 19th century during times of peace. But when the government gets above a certain size, consumption taxes become a real burden on the poor. And then you need to start taxing income. We could only return to a consumption tax system if we reduced government down to about 10-15% of GDP instead of the 35-40% of GDP right now. We could do it if we ended government pensions including Social Security, government health care such as Medicare, and government education.

The final item in Ashcroft's plan is to let the workers own the factors of production. There is already a government program to encourage this, the Employee Stock Ownership Plan or ESOP. But critics say that it's not such a good idea for ordinary employees to own a share in their employer's business. What happens if the company goes broke? Then the worker loses his job and his savings. There is another way to do this: privatize Social Security and let workers buy ETFs featuring the S&P 500 and the NASDAQ 100. Then workers get a part ownership in the income-generating potential of the whole economy. It's called diversification.

Now let's go back to the Four Horsemen.

Rapacious Financial System. The only way to fix this is to downsize government radically, so that government and its financing needs do not bulk so large in the financial picture. We have crazy banks because we have crazy governments.

Escalating Organized Violence. Yep, it's a problem, but it's localized at the borders of Islam. The Muslim peoples, particularly the Muslim Arabs, are having a horrific time, partly due to the west carving the Arab lands up a century ago at the end of World War I. Part of it is due to the pre-individualist, tribal society in the Middle East. Probably we are going to face a world war over Islam, and it ain't gonna be pretty.

Abject Poverty for Billions. Actually, people in the world are emerging from poverty at an astonishing rate, led by the economic growth in China and India. There has never been anything like it, ever. But then, as Deirdre McCloskey says, there has never been anything like the Great Enrichment of the last two centuries from $1 per capita per day to over $100 per capita per day in the rich countries, ever. Here's the chart on declining world poverty from the conservative think tank AEI. Don't trust the conservatives? Here's the word from the World Bank.

Exhaustion of Natural Resources. Trust the north London luvvies to be the last to know about the fracking revolution. Back in 2011 when, presumably, Four Horsemen was in production the revolution in shale oil and gas energized by horizontal drilling and hydraulic fracturing was already common knowledge. There isn't a crisis in natural resources. And if we should start to run out we have our internet billionaires that can't wait to live out their boyhood sci-fi fantasies and go mine the asteroids.

That leaves just one thing, the Glubb theory of empires and our terminal "age of decadence." To have a north London luvvie worrying about that is, well, it's a start. But, in my view, the "root cause" of decadence is the problem of creativity, the people in the arts. In my world view there are three kinds of people: Slave People --  peasants and workers; Responsible People -- knowledge workers, business people, and merchants; and Creative People. The Creative People are the big problem because they cannot be happy unless they can do something original and creative. Almost anyone can be a slave; almost anyone can learn to be responsible. But with creativity, many are called but few are chosen.

The great problem of the modern world is what to do about disappointed creative people, and to stop them before they pull down the temple in impotent rage. You could start with the problem of a 90 minute documentary that is beautifully crafted but that retails a nonsensical farrago of half-digested north London conventional wisdom.


perm | comment | Follow chrischantrill on Twitter | 11/26/14 1:34 pm ET


Dr. Ha-Joon Chang, Renegade Economist? Oh Please!

ONE of the talking heads on Ross Ashcroft's Four Horsemen documentary is Dr. Ha-Joon Chang, an economist who's a Reader at the University of Cambridge in England. In this video under the "Renegade Economist" brand Dr. Chang rehearses lefty talking points on "neoliberalism." I didn't really know what neoliberalism was when I watched the video; I just knew that it was a term that lefties swung ...

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perm | comment | Follow chrischantrill on Twitter | 11/25/14 12:13 pm ET


Piketty: Deirdre McCloskey Weighs In

BACK in the spring the intellectual world was convulsed by a book about capitalism written by a Frenchman, Thomas Piketty. The book, Capital in the Twenty-first Century argued that the return on capital was always bigger than the economic growth rate (expressed as r > g) and this would mean that the rich would forever get richer and richer. Since the left is currently focused on "inequality" ...

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perm | comment | Follow chrischantrill on Twitter | 11/24/14 12:36 pm ET


Georg Simmel: Numbers and Social Life

WE moderns like to think that we invented numbers. Back in the old days life was organic and natural, centered around the family and the village collective. But Georg Simmel in The Sociology of Georg Simmel translated by Kurt. H. Wolff reminds us that enumeration was not an invention of the absolute monarchs and their bureaucracies. Numbers in social life go further back than that. But the ...

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perm | comment | Follow chrischantrill on Twitter | 11/23/14 8:52 pm ET


|  November blogs  |  October blogs  |

 DOWNLOAD

Download latest e-book draft here.

 MANIFESTO

A New Manifesto
A spectre is haunting the liberal elite—the spectre of conservatism.

 DRAFT CHAPTERS

The Crisis of the Administrative State
It wasn’t supposed to be like this.

Government and the Technology of Power
If you scratch a social reformer, you will likely discover a plan for more government.

Business, Slavery, and Trust
Business is all about trust and relationship.

Humanity's Big Problem: Freebooters and Freeloaders
The modern welfare state encourages freeloaders.

The Bonds of Faith
No society known to anthropology or history lacked religion.

A Critique of Social Mechanics
The problem with human society reduced to system.

The Paradox of Individualism
Is individualism the gospel of selfishness or something else?

From Multitude to Civil Society
The larger the government, the smaller the society.

The Answer is Civil Society
In between the separated powers.

The Greater Separation of Powers
If you want to limit power then you must limit power.

Conservatism Three by Three
Conservatism, political, economics, and cultural.

The Culture of Involvement
Imagining lives without the welfare state

The Poor Without the Welfare State
Can the poor thrive without the welfare state?

The Middle Class Without The Welfare State
How would the middle class live without all those middle-class entitlements?

From Freeloaders to Free Givers
The path to the future lies through moral movements.

The Real Meaning of Society
Broadening the horizon of cooperation in the “last best hope of man on earth.”

conservative manifesto

Opeds


 AAM BOOKS


AAM Book of the Day

Crunden, R.M., Ministers of Reform: the Progressives’ Achievement in American civilization, 1889 - 1920


AAM Books on Education

Andrew Coulson, Market Education
How universal literacy was achieved before government education

Carl Kaestle, Pillars of the Republic
How we got our education system

James Tooley, Reclaiming Education
How only a market in education will provide opportunity for the poor

James Tooley, The Miseducation of Women
How the feminists wrecked education for boys and for girls

E.G. West, Education and the State
How education was doing fine before the government muscled in


AAM Books on Law

Hernando De Soto, The Mystery of Capital
How ordinary people in the United States wrote the law during the 19th century

F. A. Hayek, Law Legislation and Liberty, Vol 1
How to build a society based upon law

Henry Maine, Ancient Law
How the movement of progressive peoples is from status to contract

John Zane, The Story of Law
How law developed from early times down to the present


AAM Books on Mutual Aid

James Bartholomew, The Welfare State We're In
How the welfare state makes crime, education, families, and health care worse.

David Beito, From Mutual Aid to the Welfare State
How ordinary people built a sturdy social safety net in the 19th century

David Green, Before Beveridge: Welfare Before the Welfare State
How ordinary people built themselves a sturdy safety net before the welfare state

Theda Skocpol, Diminished Democracy
How the US used to thrive under membership associations and could do again

David Stevenson, The Origins of Freemasonry
How modern freemasonry got started in Scotland


AAM Books on Religion

David Aikman, Jesus in Beijing
How Christianity is booming in China

Finke & Stark, The Churching of America, 1776-1990
How the United States grew into a religious nation

Robert William Fogel, The Fourth Great Awakening and the Future of Egalitarianism
How progressives must act fast if they want to save the welfare state

David Martin, Pentecostalism: The World Their Parish
How Pentecostalism is spreading across the world


 READINGS

The Will To Power
Mona Charen helpfully lists Obama's previous violations of settled law.

Ten Reasons Why I Am No Longer a Leftist
We rushed to cast everyone in one of three roles: victim, victimizer, or champion of the oppressed.

The DC Dem leaders hate Obama
Now they tell us.

Energy Boom Can Withstand Steeper Oil-Price Drop
names of smaller oil companies in shale plays.

The highly sophisticated hacking of Sharyl Attkisson's computers | Fox News
Sharyl Attkisson on agenda-driven journalism.

> archive

 CCWUD PROJECT

cruel . corrupt . wasteful
unjust . deluded


 


 THE BOOK

After a year of President Obama most Americans understand that the nation is on the wrong track. But how do we find the right track? Americans knew thirty years ago that liberalism was a busted flush. Yet Reaganism and Bushism seemed to be less than the best answer.

But where can we turn? Where are the thinkers and activists of the old days? Where do we find the best ideas? And how do we persuade our present ruling class to loosen its grip on power so that we can move the locomotive of state back onto the right track?

With all of our problems it seems like the worst of times.

In fact, this is the best of times. Under the radar a generation of great thinkers have been figuring out what went wrong and conjuring up visions of a better future. This book, "An American Manifesto: Life After Liberalism" is an introduction to their ideas, and to the great future that awaits an America willing to respond to their call.

Although this book is addressed to all Americans, conservative, moderate, and liberal, and looks to a nation that transcends our present partisan divide, I must tell you that liberals will have the most difficulty with the book. The reason is simple. I am asking liberals to give up a lot of the power they have amassed in the last century. But we are all Americans, and we must all give up something for the sake of the greater good.

 THE BLOG

I am Christopher Chantrill and I am writing this book in full view. I'll be blogging on the process and the ideas, and I'll be asking you, dear readers, to help. Read the blog. Read the articles as they come out on American Thinker and ponder over the draft chapters here on this site.

Then send me your reactions, your thoughts, and your comments. You will help more than you know.

 TAGS


What Liberals Think About Conservatives

[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. “Racist, sexist, homophobic, anti-choice fascists,” she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican


US Life in 1842

Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism


Taking Responsibility

[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050


Society and State

For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008


Socialism equals Animism

Imagining that all order is the result of design, socialists conclude that order must be improvable by better design of some superior mind.
F.A. Hayek, The Fatal Conceit


Sacrifice

[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values


Responsible Self

[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.


 

©2014 Christopher Chantrill

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