A fun­da­men­tal as­sault on free­dom

Financial Mirror (Cyprus) - - FRONT PAGE -

Of all ba­sic free­doms, one of the most fun­da­men­tal of all is the free­dom of the in­di­vid­ual to or­gan­ise his or her re­la­tion­ship with time. The way we or­der our af­fairs with re­spect to the all too brief time al­lo­cated to us on this earth is a pro­found right that we all should be al­lowed to ex­er­cise un­hin­dered. In short, every­one should be free to choose whether to be an ant or a grasshop­per.

When it comes to eco­nomic mat­ters, the tool we use to or­gan­ise our time ra­tio­nally is the in­ter­est rate. If in­ter­est rates are high, if I am young, or if I have my chil­dren’s fu­ture to pro­vide for, I may de­cide to save more and to con­sume less. Con­versely, if in­ter­est rates are low, if I have no chil­dren, or if I have lim­ited life ex­pectancy, I may choose in­stead to be a grasshop­per.

But if in­ter­est rates are at zero or neg­a­tive, then I am forcibly de­prived of this free­dom of choice. I am com­pelled to be­come a grasshop­per, whether I want to be one or not. Zero or neg­a­tive in­ter­est rates col­lapse the fu­ture into the present, and by do­ing so an­ni­hi­late this fun­da­men­tal free­dom.

In the first in­car­na­tion of so­cial­ism, so­cial­ist gov­ern­ments con­sid­ered it quite “nor­mal” to re­strict the free­dom of their cit­i­zens in the ge­o­graph­i­cal sphere. So-called so­cial­ist coun­tries, whether of the Na­tional So­cial­ist branch or of the Marx­ist church, al­ways and ev­ery­where pre­vented their own cit­i­zens from leav­ing the coun­tries of their birth. To do so they built walls, not to keep for­eign­ers out, but to keep their own peo­ple in—which is not the same thing at all. Slaves their peo­ple were born, and slaves they had to stay. Noth­ing could be fur­ther from the ideals ex­pressed by John Locke more than 300 years ago or by the found­ing fa­thers of the United States al­most a cen­tury later.

Hav­ing failed mis­er­ably two decades ago, the so­cial­ists, arm­ing them­selves with an­other form of sci­en­tific so­cial­ism called “Key­ne­sian­ism”, have now de­cided that you and I are ut­terly in­ca­pable of or­gan­is­ing our own re­la­tion­ships with the time that is granted to us.

By say­ing that the eco­nomic sys­tem suf­fers from an ex­cess of sav­ings—one of the great­est id­io­cies ever ad­vanced by econ­o­mists, on a par with the iron law of salaries or everde­creas­ing profit mar­gins—gov­ern­ments are grant­ing them­selves the right to in­ter­vene in our time pref­er­ences.

Need­less to say, the tech­nocrats re­spon­si­ble for what will surely turn out to be one of the great­est eco­nomic disas­ters of our times have ab­so­lutely no idea, nor have they done any stud­ies to demon­strate, whether this high-handed in­ter­ven­tion will ever lead to fa­vor­able re­sults. They are sim­ply con­vinced that you and I are in­com­pe­tent, and that they know bet­ter.

In re­al­ity, any­one with a solid work­ing knowl­edge of re­al­world eco­nom­ics could have shown years ago that their at­tempts would fail. I can say this with con­fi­dence be­cause five years ago I pub­lished a re­search re­port called “The High Cost Of Free Money”, in which I ar­gued that ab­nor­mally low in­ter­est rates would lead to a col­lapse in cap­i­tal spend­ing, a col­lapse in pro­duc­tiv­ity, a de­cline in the struc­tural growth rate of the econ­omy, and a mas­sive in­crease in the Gini co­ef­fi­cient of in­come in­equal­ity. The all too prob­a­ble re­sult of this in­ter­ven­tion would be an eco­nomic dis­as­ter, and the emer­gence of pop­ulist pol­i­tics and dem­a­gogues ev­ery­where.

Tech­ni­cally, these poli­cies have in­deed proved a dis­as­ter, but there is a more pro­found ques­tion that no­body ad­dresses. The abil­ity to or­gan­ise my time as I choose is the very essence of free­dom. This free­dom has now been taken away from me by a co­terie of tech­nocrats, who are not only un­elected, un­ac­count­able and in­com­pe­tent (the three usu­ally go to­gether), but to whom this power has never been granted by any cit­i­zen.

What we are wit­ness­ing is noth­ing less than the end of our right to or­gan­ise our lives as we see fit in re­la­tion to time, and this must mean the end of democ­racy.

Of course, I can still take a plane; no walls have been built to pre­vent me from leav­ing my own coun­try. But free­dom has two com­po­nents: the free­dom to move ge­o­graph­i­cally, and the free­dom to do as I please with my time. A silent coup d’etat has de­prived me im­por­tant—of the two.

Per­haps some­body should ask the Supreme Court in the US whether neg­a­tive real in­ter­est rates are com­pat­i­ble with the US Con­sti­tu­tion. I would ven­ture that philo­soph­i­cally they are not.



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