The thing about musical instruments, in general, is that they’re bloody expensive. Sure, there are cheap guitars, cheaper ukuleles and even cheaperer tin whistles. The problem these instruments have is that most people are unable to pick them up and start playing them. They require practice and the acquisition of the knowledge on how to play them, either from teachers or the cheapskate way of using whatever free shit you can find on the internet.

For the absolutely broke, there’s the cheapest instrument of them all – and, in fact, the most complicated, most versatile and most powerful – the human voice. Sadly this era of professionalised music and the selection of several thousand of the absolute best singers from a human population of over 6 billion has given most people an inferiority complex, that ‘singing’ is only for those with professionally trained voices. Plus, of course, we don’t value what we haven’t paid for. Our voices came free… what use are they to anyone?

As a compromise, for the princely sum of £1.50, you can buy a kazoo. Anyone can play the kazoo, but it works, again, through singing. You do most of the work, the kazoo just makes it sound awesome.

Enter then, stage left, the Vuvuzela. A cheap moulded piece of plastic that, when blown into, emits possibly the lowest quality, least pure, least… well.. anything.. B flat note ever heard by humanity. What it lacks in quality, it makes up for in sheer unadulterated volume. Blow one straight into someone’s ear and you’ve damaged their hearing forever, unless they’re already in a Metal band and therefore have no hearing to speak of anyway.

It’s got another advantage, too. Everyone  - and I mean everyone – is born knowing how to play the Vuvuzela and, even better, you already know every single song you can play on it – after all, there’s only one.

The song is called, “Look at me, I’m an annoying tit”. It’s an uplifting anthem in celebration of finally reaching the lowest – and I really really mean the lowest – common denominator imaginable. In a world of Vuvuzelas, the maestro and the pleb exist side by side, equal at last. It creates a world where everyone can have a go, no training, talent or money required – the damn things are the cheapest possible instrument conceivable. They are to music what Ikea Lack tables are to furniture – the basic essence of the thing reduced to the absolute, absolute minimum. Even a choice of note is considered a decadent, materialist and socially divisive western luxury.

Normal music is played by some sort of musician and listened to by others. In the crowds of football stadiums, how do you ensure the entire crowd can sing the same song? Simple! You all sing the, “Look at me, I’m an annoying tit” song.

All individuality removed, all identity removed, human beings reduced to identical noises in a swarm. The dream of equality realised at last.

It is, quite possibly, the most terrifying thing I’ve ever seen.

So how is wealth created? Wealth isn’t merely cash. You don’t simply print bank notes and announce yourself to be wealthy. Wealth, real wealth is measured by value.

We all know that when a bank lends money, it conjures most of the cash out of the thin air, which sounds alarming… but it is hopefully repaid in full with interest in due course. The loan is supposed to be spent on things of value that generate – or save – more than the amount of the loan plus the interest.

In this way, wealth is created. Simple, right? A loan represents future wealth, future value. You borrow money to buy a car, you’re left with a unit of value – the car itself.

So, say a bank conjures money out of thin air for me, I spend it on a machine that allows me to make bottle caps, I then sell the bottle caps which eventually pays off the loan and then the rest, for me, is profit. Wealth has been created – represented by the existence of the machine and the bottle caps it produces.

So far so good.

The people who made the machine are paid for their work building it, too, as are the people who made the parts and those who processed the raw materials and those who mined those raw materials. The people who handled the payment of the machine are paid, as are the people who brought it to my bottle top factory, as are the people who designed the brochures and the web site, and the sales staff who gave me the information I needed.

The people who risked their own money putting together a team of people to design and build the machine get to take a bit of profit, although only as much as they can get away with without losing out to a competitor. If no-one had bought their machine, they would have lost it all. They deserve their reward. Their efforts have also created wealth – a factory producing bottle top machines, and with it employment.

Every single person who’s been paid along the way gets to spend their money on food, on clothing, on putting a roof over their heads and in acquiring whatever else they wish or can get with what they have. This, in turn, creates demand for food, clothing and consumer goods – including bottled beer, with some rather funky bottle tops.

It works because the people in the banks try to make good lending decisions. They want to be sure that the money they lend creates value, creates real wealth, because this is how they’re certain they’ll make their money back. They lend money to make it, and people borrow money to make it. Typically loans are ‘secured’ against some real existing wealth – property of some kind – so that if the loan is not repaid there is still real wealth to show for the cash.

Now, in the credit crunch, when the banks were (and in some cases still are) refusing to lend, you can see how this causes a major problem for any economy that depends on it – and why it caused such a catastrophic contraction in our economy.

The reasons for their non-lending boil down to demands from the Government to increase the amount of cash they hold in their reserves and uncertainty that the wealth against which loans are secured have any real value at all. Housing that no-one will buy, for example, is very poor security indeed.

The credit crunch itself was caused by banks neglecting this most basic duty of theirs: Lending only when they are certain to get the money back, to take only good, well calculated risks. It turned out that too many loans were secured against very bad risks that other people had taken, resulting in everyone realising there was no security in the system at all whatsoever – and it nearly brought down our entire economy.

The Government’s solution was to use its own power as a Nation State to borrow and spend, thus hopefully stimulating demand. It gave people jobs directly, in the hope that they would continue spending money somewhere. It paid money to buy cars from people and destroy them, thus literally destroying wealth in the process. It printed money and used it to buy toxic assets from the banks to help them get their balance sheets in order.

Nothing it has done has replaced that carefully targeted injection of cash for the purpose of generating wealth in the same way that banks do to business. The same amount of cash lent to the entire private sector should always generate more real wealth than the same money borrowed by the Government to spend on random projects for the sheer hell of having some sort of economic activity. The decisions made by politicians will always be inferior to the combined decision making process of everyone else acting in their own self interest.

All this borrowing they’ve done, like any loan, needs to be repaid by someone. The difference, and the main difference between borrowing to invest by the private sector and borrowing by the public sector is that the private sector borrows in order to make money. The public sector borrows simply to dump cash in the system in the hope that it inflates the GDP figures, or to spend it on services that, in themselves, have no ability to create further wealth.

It is, ultimately, the private sector that has to generate the wealth to repay these loans – if it can. The Government, by its very nature, has no means of creating wealth itself. Every pound the private sector needs to spend on servicing this loan made to them against their will is a pound that cannot be spend on something that might have created a job, or been used to create more real, concrete, measurable wealth. This is the ‘opportunity cost’, and it is this great unknown, the ‘what could have beens’ that we are increasingly losing the more the Government borrows.

That’s why some of us are bothered by the deficit, you see?

The point of this post is to attempt to tackle this idea that it doesn’t matter whether it’s the public sector borrowing money and spending it, or the private sector borrowing it and spending it – it’s all just cash and it all goes around just the same, creating demand for food and clothing etc. But there IS a difference, and that difference is everything. It is the difference between real growth – increasing wealth – and simply trading other people’s ability to create wealth in the future for short term political gain.

Well, the Guardian didn’t want to let my last “controversial” piece for them stand on its own. They asked Michael Burke to respond, which he did – with, unsurprisingly, a defence of the implied ‘positive liberties’ that come from the huge redistribution of wealth by the State.

Quotifying:

Cutting taxes while cutting services only increases the freedoms of the rich. Freedom from unemployment, ill-health, illiteracy and low educational attainment are the liberties that are paid for by a strong public sector and progressive taxation system.

Phew, where to begin?

Okay: Freedom ‘from’ unemployment is an obligation and a duty on someone else to provide a job, whether or not the individual can do any work that’s actually worth doing. The Government doesn’t actually provide ‘Freedom from unemployment’ except to a chosen few whom it recruits into its own ranks, which makes it rather too arbitrary to be considered a true ‘freedom’.

Freedom ‘from’ ill-health is an obligation on others to pay for health care, and while there’s great merit in the ‘free at the point of use’ model from the point of view of consumers of health services – paying for your health care over the course of your life, not when you need it – I disagree with Michael that running the NHS as a monolithic, heavily unionised non-profit organisation under political control guarantees the most efficient or best health care for patients. We still have some of the worst cancer survival rates in Europe, for example.

Freedom ‘from’ illiteracy is an obligation on others to pay for schooling, but sadly this particular ‘freedom’ is not one enjoyed by all:

The number of children achieving the expected levels for writing at age eleven increased from 54% to 67% in 2006, but this figure plateaued and remained  the same (67%) three years later in 2009 [Source: The Literacy Trust]

Crucially, only 86% of children reach the required level of reading ability to follow the lessons at secondary schooling. So much for the freedom from illiteracy, and subsequent freedom from ‘low educational attainment’.

The point I’m making here is that implied in Michael’s argument is the assumption that these public services deliver what’s promised without any negative consequences at all, that it does, in fact, deliver us from these various ills and problems with the only true sufferers being ‘the wealthy’ whom we are supposed to regard as sub-human anyway, so it doesn’t matter.

He’s also being a bit slippery by referring to “cutting taxes while cutting services”. Cutting services, literally, would be to say “the Government will stop doing X, saving Y”. Cutting the amount of funding for services, on the other hand, implies “The Government will continue doing X, but do it for Y”. They are not the same thing.

If Michael wishes to make a case for public services in the cause of freedom, that’s fair enough, but it is wrong to argue that cutting taxes is entirely pointless for everyone except the wealthy, as if ‘the wealthy’ (in which he includes anyone ‘not poor’) are somehow not relevant to the economy, that money in private hands is somehow lost to the ‘real’ economy. It’s simply ignoring the opportunity costs of State spending, focusing only on what the State might lose if they don’t do it without paying attention to what the private sector – or individuals – lose if they do.

It makes the assumption that private sector industry and commerce will happen no matter what burdens are placed upon it, or that actually such things do not matter at all anyway. That strikes me a dangerous assumption to make, to prioritise these positive liberties at the expense of strangling the ‘golden goose’ that really pays for the whole thing.

The amount of spending by the Government has increased by 54% since 1997, while services have not become magically half as good again as what they were. Increased State spending has only one absolutely certain outcome – increased taxation. Services may improve or worsen. Your milage may vary.

Valuing public services is not an argument that legitimately justifies the current level of taxation and spending, or the repressive controls on the economy and on individual economic activity.

I’ve not covered the ‘how it’s paid for’ bit in this post – that’s for another time. Argue the merits of positive liberties if you so desire, but don’t expect people to believe that there’s no price to be paid.

Historically speaking, Diane Abbott is the first black woman to stand in a leadership contest of a a major political party, and I know for many this will be a significant and wonderful thing. Cath Elliott over on the Guardian says “So what if Diane Abbott’s nomination is tokenism?” for this exact reason.

She writes:

We’ve got a predominantly white male parliament; a predominantly white male Cabinet; there are two middle-aged white men in the running for the Liberal Democrat deputy leadership, and if Abbott hadn’t made it, we’d have had four middle-aged white men in the running for the Labour party leadership. And yet despite all this evidence to the contrary, some still like to claim that we’re living in a post-feminist, women-really-can-have-it-all society now.

And so, the answer to her problem, the problem of people thinking we’re living in a “women-really-can-have-it-all” society when it’s simply not true is to create the illusion that it’s true, making everyone relax, stand down and feel that the job’s done? I don’t get it.

Because, when you really look at what happened, of all the women in the Parliamentary Labour Party only ONE had the courage to stand, and even then Diane only stood because no other women would. Why didn’t Harriet Harman stand? Why didn’t Yvette Cooper? Seriously, why did these women not even try? They’re fit enough to run Government departments, but not fit to run a political party for reals? That’s the real question that needs asking. That’s what Cath should be writing about, not celebrating this cheap stunt done in her name.

This isn’t a victory, Cath. This is you being presented with a lovely, fluffy, feel-good hand to talk to while the true macho face of Labour listens to something else.

Over on Liberty Central at Comment is Free, I’ve returned to the theme of ‘the new front in the battle for liberty’ except this time concentrating exclusively on economic liberty. I called it, “The Liberty that dare not speak its name” but they’ve called it “The unfashionable cause for the left: economic liberalism” I can live with that.

I’m crazily happy about this piece. It’s a bit old-school for me, in many ways. I realised I’d slipped into the comfortable world of civil liberties where agreement is surprisingly easy to reach from people from across the political spectrum and hesitated about writing about economic liberty when, for me, it underpins any true freedom. It might be bread and butter stuff for many who read this blog, but there’s an audience out there that really does need persuading, and cor blimey I’m going to try, ‘guv.

Some may be puzzled by the reference to ‘The Left’ here. It may seem odd but I’ve been mulling on this for a while and decided not to fight the BBC’s interpretation of the Left/Right Axis, which is preoccupied entirely with social attitudes, whether one is individually socially conservative or liberal. If that’s the axis, it is to that left that the arguments for economic liberalism must be made.

All credit to the Guardian, they’ve published it and I’m very glad they did.