So the great unwinding is finally happening...the time has come for the prudent and responsible to emerge from obscurity; or maybe not? As put by one reader of the FT Alphaville section (http://ftalphaville.ft.com/blog/2008/11/19/18402/bailout-me/): “So I’ve cautiously decided to keep my cash on deposit in the bank - taxed at 40%, not only do I have to put up with falling interest rates and a depreciating currency but as a tax payer I will be bailing out all the people who told me: ‘You are an idiot, because what you don’t understand is that house prices only ever go up’”
Precisely. Why should the cautious now help to subsidise the fast cars and expensive holidays that certain individuals purchased with debt secured on inflated assets? Many borrowed money and overspent without regard to prudence; thus implicitly forgoing future consumption. It’s now time for these individuals to save and repay their debts. If they can’t repay with current income, then they should lower their living standards and/or liquidate their assets. However, government action across the world seems bent on bailing out these poor souls by paying their debt with other people’s money. In other words, a policy of “the gain is individual while the pain is socialised” has now been institutionalised.
Another mistake. If individuals are spared from the consequences of self-inflicted actions, the necessary learning process will not take place. Lessons must be learnt for mistakes to be avoided in the future. True, there might be grievous instances of injustice which can and should be covered by a safety net, but these represent a small minority.
Similarly, companies and their senior management have to pay for past mistakes. I remember advising corporate CFOs to lock-in long term committed facilities to finance long term assets, yet many refused because this implied a higher cost in commitment fees. Those that took such advice are sitting pretty while the ones who didn’t are now clamouring for government rescue packages. I don’t think the latter will be returning their 2003-2007 bonuses anytime soon. Why should taxpayers then shoulder the consequences of their bad management? I take the point that systemic risk should be avoided, but companies that access public funding should, as a condition precedent, remove all the top management which led them into the situation in the first place. Only then will the lessons be learnt.
Thursday 20 November 2008
Wednesday 15 October 2008
The chickens have roosted...
Well, it has been some time since I updated this blog and many of the things that were predicted have finally occurred. However, the speed of it all has certainly been surprising. When I wrote some months ago that the virtuous circle which had fed global growth in the last few years could easily turn into a vicious one, I had no idea of the scale of this viciousness. The extent to which wealth has been destroyed is vast- pity those poor pensioners in defined contribution systems! Today, Bear Stearns, Lehman, Merrill, AIG, Fortis, Dexia, Hypo Real Estate, Washington Mutual, Wachovia, Alliance & Leicester, Bardford & Bingley, Morgan Stanley and Goldman Sachs have either disappeared or been transformed. Expect more consolidation.
Some commentators argue that there has been a complete “market failure”; I would argue exactly the opposite. There has been a clear and blatant “failure of regulation”, especially in the US, where politicians have interfered with the Federal Reserve and Government Sponsored Entities in order to pursue a lax monetary policy which would statistically noteworthy but unsustainable GDP growth data and, ultimately, votes. One only has to review past press articles on FNMA and FNMC to note how politicians took measures so that these institutions would provide access to credit to all segments of the population; including those who, it turns out, were not creditworthy.
In those jurisdictions where central bankers, in their supervisory role, were really independent, the scale of the shock has been much smaller. In Spain, for example, the central bank did not allow local players to use off balance-sheet SPVs to fund credit in order to engage in capital and liquidity arbitrage. Why? Because it was pretty obvious that this was exactly what these vehicles were engaged in. The creation of a parallel banking system was not permitted. As a result, Spanish banks have serious credit issues arising from their real estate portfolio but they have not experienced the pain of some of their foreign brethren. Some cajas or mutual savings banks, however, given their limited ability to raise capital and, in some instances, political interference, are likely to fare much worse than the banks.
Other commentators have mentioned diminishing competition as a concern, given the level of concentration in some markets- in my opinion, this is a minor issue. Sure, the UK clearers are consolidating but note that one of the consolidators is Spanish. It’s really about time that European countries got their act together and encouraged cross-border mergers. I would hazard that we will see more of these in the coming 5-10 years and eventually see a pan-European competitive arena.
Ultimately, however, there is still impending doom in the form of inflation. Globalisation has allowed developed economies to import deflation from low cost countries while pursuing an expansive monetary policy, but now that emerging markets are exporting inflation, it is only a question of time before it feeds into developed markets. I can only imagine that an expansive monetary policy combined with rising inflation will have serious implications on the value of money. Most people remember the 1929 US stock market crash as the aftermath of the Roaring 20s, but events in the Weimar Republic had an even more significant impact. Let’s hope we don’t end up like Germany in the 30s.
And on that happy note, hope you are all having a swimmingly good time...
Some commentators argue that there has been a complete “market failure”; I would argue exactly the opposite. There has been a clear and blatant “failure of regulation”, especially in the US, where politicians have interfered with the Federal Reserve and Government Sponsored Entities in order to pursue a lax monetary policy which would statistically noteworthy but unsustainable GDP growth data and, ultimately, votes. One only has to review past press articles on FNMA and FNMC to note how politicians took measures so that these institutions would provide access to credit to all segments of the population; including those who, it turns out, were not creditworthy.
In those jurisdictions where central bankers, in their supervisory role, were really independent, the scale of the shock has been much smaller. In Spain, for example, the central bank did not allow local players to use off balance-sheet SPVs to fund credit in order to engage in capital and liquidity arbitrage. Why? Because it was pretty obvious that this was exactly what these vehicles were engaged in. The creation of a parallel banking system was not permitted. As a result, Spanish banks have serious credit issues arising from their real estate portfolio but they have not experienced the pain of some of their foreign brethren. Some cajas or mutual savings banks, however, given their limited ability to raise capital and, in some instances, political interference, are likely to fare much worse than the banks.
Other commentators have mentioned diminishing competition as a concern, given the level of concentration in some markets- in my opinion, this is a minor issue. Sure, the UK clearers are consolidating but note that one of the consolidators is Spanish. It’s really about time that European countries got their act together and encouraged cross-border mergers. I would hazard that we will see more of these in the coming 5-10 years and eventually see a pan-European competitive arena.
Ultimately, however, there is still impending doom in the form of inflation. Globalisation has allowed developed economies to import deflation from low cost countries while pursuing an expansive monetary policy, but now that emerging markets are exporting inflation, it is only a question of time before it feeds into developed markets. I can only imagine that an expansive monetary policy combined with rising inflation will have serious implications on the value of money. Most people remember the 1929 US stock market crash as the aftermath of the Roaring 20s, but events in the Weimar Republic had an even more significant impact. Let’s hope we don’t end up like Germany in the 30s.
And on that happy note, hope you are all having a swimmingly good time...
Thursday 29 May 2008
If it's free, it's not valued...
At a recent dinner, a dear friend explained to me that his views on economics were liberal (in the English sense) but that he viewed the US healthcare system as a failure in that it did not provide universal access to healthcare! The US Medicare and Medicaid programmes do provide coverage but only for retirees and people below the poverty line. He then went to defend the Canadian and Continental European systems as examples of well-run healthcare systems.
As usual, defenders of tax-funded universal healthcare demonstrate a basic misunderstanding of economics (he is a journalist). They view healthcare as a "right" instead of what it is...a transaction which is subject to the same economic forces as any other (supply and demand!). As a consequence, any service which is free or supplied at less than cost tends to lead to shortages and rationing. Both the Canadian and Continental European systems demonstrate such trends in the form of waiting lists. Hence, a patient who requires surgery has to wait for critical weeks to obtain surgery; weeks during which illness progresses and often leads to terminal conditions. It is not suprising, therefore, that many Canadians often cross the border to the US to obtain healthcare rather than be subject to potentially fatal waiting lists.
In Spain, the previous government tried to introduce a one-euro fee for visits to consultants and then rapidly withdrew its proposal after social outrage. One only has to visit a public hospital to witness the queues of patients lining up for imaginary illnesses. Many retirees often visit their consultants once a week- if it's free, why not? Like other "free goods", demand is virtually unlimited, while supply is only forthcoming at the price where it mobilises resources. Witness the recent shortage of water in Barcelona as an example. No doubt my friend would defend that water is also a "right"...which is why there are shortages. After all, someone has to pay for a supplier to offer it. There are numerous studies which show that demand for healthcare falls dramatically when a price signal is attached to it, without any impact on the overall healthcare of users. Thus, catastrophic healthcare insurance (which would cover expenses from USD 2500 onwards, say) would save governments inmeasurable resources to spend on other more useful matters (how about improving productivity?).
The problem with the "catastrophic coverage" system is that, in most countries (including the US), healthcare insurance can be provided by companies as a non-taxable payment in kind to employees. As a result, employees often choose coverage with a lower deductible, given the tax benefit (subsidy) obtained; which leads to higher demand for healthcare as well as higher (pre-tax) premiums. Thus, when a person loses his/her job, the cost of maintaining former insurance (without the tax benefit) can be prohibitive. However, the cost of catastrophic coverage is reasonable (e.g. USD 29/month with a USD 250 euro deductible and capped at USD 1 million for a 30yr old non-smoking female).
Tax-funded healthcare systems, therefore, tend to lead to lower quality and higher cost delivery of healthcare. It also leads to disincentives to care for one's health (why should I stop smoking or eating fatty foods if the consequences are paid by everyone). In my opinion, compulsory catastrophic insurance combined with voluntary supplementary care would lead to a more efficient allocation of resources. If it's free, it's not valued...
As usual, defenders of tax-funded universal healthcare demonstrate a basic misunderstanding of economics (he is a journalist). They view healthcare as a "right" instead of what it is...a transaction which is subject to the same economic forces as any other (supply and demand!). As a consequence, any service which is free or supplied at less than cost tends to lead to shortages and rationing. Both the Canadian and Continental European systems demonstrate such trends in the form of waiting lists. Hence, a patient who requires surgery has to wait for critical weeks to obtain surgery; weeks during which illness progresses and often leads to terminal conditions. It is not suprising, therefore, that many Canadians often cross the border to the US to obtain healthcare rather than be subject to potentially fatal waiting lists.
In Spain, the previous government tried to introduce a one-euro fee for visits to consultants and then rapidly withdrew its proposal after social outrage. One only has to visit a public hospital to witness the queues of patients lining up for imaginary illnesses. Many retirees often visit their consultants once a week- if it's free, why not? Like other "free goods", demand is virtually unlimited, while supply is only forthcoming at the price where it mobilises resources. Witness the recent shortage of water in Barcelona as an example. No doubt my friend would defend that water is also a "right"...which is why there are shortages. After all, someone has to pay for a supplier to offer it. There are numerous studies which show that demand for healthcare falls dramatically when a price signal is attached to it, without any impact on the overall healthcare of users. Thus, catastrophic healthcare insurance (which would cover expenses from USD 2500 onwards, say) would save governments inmeasurable resources to spend on other more useful matters (how about improving productivity?).
The problem with the "catastrophic coverage" system is that, in most countries (including the US), healthcare insurance can be provided by companies as a non-taxable payment in kind to employees. As a result, employees often choose coverage with a lower deductible, given the tax benefit (subsidy) obtained; which leads to higher demand for healthcare as well as higher (pre-tax) premiums. Thus, when a person loses his/her job, the cost of maintaining former insurance (without the tax benefit) can be prohibitive. However, the cost of catastrophic coverage is reasonable (e.g. USD 29/month with a USD 250 euro deductible and capped at USD 1 million for a 30yr old non-smoking female).
Tax-funded healthcare systems, therefore, tend to lead to lower quality and higher cost delivery of healthcare. It also leads to disincentives to care for one's health (why should I stop smoking or eating fatty foods if the consequences are paid by everyone). In my opinion, compulsory catastrophic insurance combined with voluntary supplementary care would lead to a more efficient allocation of resources. If it's free, it's not valued...
Monday 14 April 2008
Ministry of Stupidity
If it wasn’t tragic, I would think it was comic. Mr. Rodriguez (a.k.a. “Zapatero”) has decided that Spaniards require further ministerial indoctrination. We have recently been blessed with a brand new Ministry for Equality.Its role is not very clear but that is beyond the point...the fact is that we now have another chauffeur-driven, budget-wielding, incompetent politician with no significant track record of any sort beyond many years of carefree expenditure of taxpayers’ euros. The fortunate recipient of this taxpayers’ largesse is a young woman by the name of Bibiana Aído. She is only 31 years old but has already profited from many years of public larceny. Before her designation she was the “Director for the Andalucian Agency for the Development of Flamenco of the Council for Culture of the Andalusian Regional Government”, where she spent almost three meaningful and productive years. She was recently acknowledged in the press for singing the praises of Mr. Rodríguez during the recent election campaign: “Oh, Jose Luis, smile! You have a clean smile that favours you so much”. Anyway, enough said about this aspiring looter: maybe I do bear some grudge for not having achieved chauffeur-driven status after many years of work.
Let’s move on to the mission that Ms. Aído has been charged with. Ministry of Equality...hmmm. I suppose “Equality” is a concept that no-one can object to, at least on initial reflection. I suspect, however, that Mr. Rodriguez and I disagree as to what we mean by equality. As a good socialist, Mr Rodriguez and his young henchwoman Ms Aído defend equality as an enforced concept. We must all be equal: but equal to what or to whom? No doubt that Mr Rodriguez and his fan club already have a view as to their ideal “equal”. It is probably not dissimilar to the “equal” that Stalin and Hitler portrayed in their propaganda. The new socialist “super-person” of the 21st Century that we must all aspire to be. Therefore they are sure to legislate that we are must all be or act “equal”...the choice to be different, to be independent, to have free will, has to be eliminated. This socialist concept is based on the false premise that either we are all equal or that we aspire to be equal. In fact, I have news for you...we are not and we do not (at least I don’t). People have different abilities and aspirations based on genetic and environmental factors: some of us are better suited at some things than others and we have to match our aspirations to these- I would love to run 100m in less than 10secs or get a Pritzker Price in archictecture but neither speed nor technical drawing are my fortes. To legislate specifically for equality is the same as to legislate for the sun’s disappearance- idiotic and doomed to failure.
The definition of equality that I relate to is associated with the availability of opportunities/choice for all via the creation of an enviroment which encourages the elimination of entrenched privilege of all types; ie. the establishment of a society where each person can pursue their individual aspirations according to their desires and abilities, based on a minimum framework of laws. I don’t think we need a Ministry for Equality for that; in fact I don’t think we need any more ministries, thank you.
Let’s move on to the mission that Ms. Aído has been charged with. Ministry of Equality...hmmm. I suppose “Equality” is a concept that no-one can object to, at least on initial reflection. I suspect, however, that Mr. Rodriguez and I disagree as to what we mean by equality. As a good socialist, Mr Rodriguez and his young henchwoman Ms Aído defend equality as an enforced concept. We must all be equal: but equal to what or to whom? No doubt that Mr Rodriguez and his fan club already have a view as to their ideal “equal”. It is probably not dissimilar to the “equal” that Stalin and Hitler portrayed in their propaganda. The new socialist “super-person” of the 21st Century that we must all aspire to be. Therefore they are sure to legislate that we are must all be or act “equal”...the choice to be different, to be independent, to have free will, has to be eliminated. This socialist concept is based on the false premise that either we are all equal or that we aspire to be equal. In fact, I have news for you...we are not and we do not (at least I don’t). People have different abilities and aspirations based on genetic and environmental factors: some of us are better suited at some things than others and we have to match our aspirations to these- I would love to run 100m in less than 10secs or get a Pritzker Price in archictecture but neither speed nor technical drawing are my fortes. To legislate specifically for equality is the same as to legislate for the sun’s disappearance- idiotic and doomed to failure.
The definition of equality that I relate to is associated with the availability of opportunities/choice for all via the creation of an enviroment which encourages the elimination of entrenched privilege of all types; ie. the establishment of a society where each person can pursue their individual aspirations according to their desires and abilities, based on a minimum framework of laws. I don’t think we need a Ministry for Equality for that; in fact I don’t think we need any more ministries, thank you.
Wednesday 2 April 2008
The "originate to default model" and its unsavoury characters
I’ve spent enough time in banks and a brief but intense stint during Enron’s twilight to understand the huge unravelling of the farce cum accident-waiting–to-happen of the current banking crisis. Commercial banking has always been regarded as the backwater of financial services until some bright investment bankers decided that they were going to turn a traditional and sleepy banking model into a money-making machine.
Historically, commercial bankers had a deep and ingrained sense of credit risk derived from the knowledge that they were investing other people’s money; usually deposits. As a result, loans were carefully monitored and handed out cautiously. Leverage was treated as a dangerous and addictive treatment and, as such, was to be administered sparingly. Assets were booked on the balance sheet and kept to maturity. If a loan went bad, the banker was undoubtedly affected. That is, until the “i- bankers” arrived and decided that through the use of debt capital markets, financial institutions could offload this exposure to unsuspecting investors. Thus the “originate to distribute” model was born...
The new operating model consisted in hiring aggressive, young and naïve bankers (akin to sales reps) whose sole role was to push money out of the door. This role was supported by a clique of product specialist whose letimotif was to distribute the rubbish that was originated to unsuspecting investors. These product specialists came in different flavours: one was the syndication specialist who usually onsold the rubbish to less sophisticated banking institutions and the other was the debt capital markets specialist who created securities backed by rubbish as collateral. Both systems created moral hazard by decoupling the credit risk from its associated rewards. Banks found they could engage in almost risk-free lending.
The process described above created a “virtuous” circle in which extremes soon started to flourish. Originators became more naïve, loan documentation became weaker, credit spreads fell lower and the borrower held all the negotiating power. The approach across banks was: “Who cares? We’re not keeping this crap anyway...” Meanwhile, borrowers had a field day, low income households went on a spending spree supported by debt secured on credit-bubble inflated assets, private equity firms added “value” through leverage, the financial services sector had a field day... and in ten years the “originate to distribute” model mutated into the “originate to default” model. Now that the loans have been originated the time has arrived for them to default. Who’s first in line? (i) Countries: Spain, USA, UK, Ireland and China as the big beneficiary of spending but also a major creditor; (ii) Sectors: Real Estate, Automobile, Infrastructure, Financial Services and any sector depending on high leverage or cheap financing.
Who are the industry characters that have flourished in this environment? I could name a few but I am sure it is not necessary. If you are in the business you will recognise them. Ego-driven, mediocre, social psychopaths, good communicators, with an unrelentless focus on short-term earnings and a lack of ethical or moral standards to constrain them; fuelled by compensation mechanisms which reward today’s income but do not penalise for disaster tomorrow. The new “masters of the universe” seem in hindsight to have been “the masters of disaster”.. Few people, including myself I’m afraid, had the courage to stand up to these bullies while the going was good. It’s high time they were let go...
For an interesting read try: http://www.ft.com/cms/s/0/d3321cc4-ffef-11dc-825a-000077b07658.html
Historically, commercial bankers had a deep and ingrained sense of credit risk derived from the knowledge that they were investing other people’s money; usually deposits. As a result, loans were carefully monitored and handed out cautiously. Leverage was treated as a dangerous and addictive treatment and, as such, was to be administered sparingly. Assets were booked on the balance sheet and kept to maturity. If a loan went bad, the banker was undoubtedly affected. That is, until the “i- bankers” arrived and decided that through the use of debt capital markets, financial institutions could offload this exposure to unsuspecting investors. Thus the “originate to distribute” model was born...
The new operating model consisted in hiring aggressive, young and naïve bankers (akin to sales reps) whose sole role was to push money out of the door. This role was supported by a clique of product specialist whose letimotif was to distribute the rubbish that was originated to unsuspecting investors. These product specialists came in different flavours: one was the syndication specialist who usually onsold the rubbish to less sophisticated banking institutions and the other was the debt capital markets specialist who created securities backed by rubbish as collateral. Both systems created moral hazard by decoupling the credit risk from its associated rewards. Banks found they could engage in almost risk-free lending.
The process described above created a “virtuous” circle in which extremes soon started to flourish. Originators became more naïve, loan documentation became weaker, credit spreads fell lower and the borrower held all the negotiating power. The approach across banks was: “Who cares? We’re not keeping this crap anyway...” Meanwhile, borrowers had a field day, low income households went on a spending spree supported by debt secured on credit-bubble inflated assets, private equity firms added “value” through leverage, the financial services sector had a field day... and in ten years the “originate to distribute” model mutated into the “originate to default” model. Now that the loans have been originated the time has arrived for them to default. Who’s first in line? (i) Countries: Spain, USA, UK, Ireland and China as the big beneficiary of spending but also a major creditor; (ii) Sectors: Real Estate, Automobile, Infrastructure, Financial Services and any sector depending on high leverage or cheap financing.
Who are the industry characters that have flourished in this environment? I could name a few but I am sure it is not necessary. If you are in the business you will recognise them. Ego-driven, mediocre, social psychopaths, good communicators, with an unrelentless focus on short-term earnings and a lack of ethical or moral standards to constrain them; fuelled by compensation mechanisms which reward today’s income but do not penalise for disaster tomorrow. The new “masters of the universe” seem in hindsight to have been “the masters of disaster”.. Few people, including myself I’m afraid, had the courage to stand up to these bullies while the going was good. It’s high time they were let go...
For an interesting read try: http://www.ft.com/cms/s/0/d3321cc4-ffef-11dc-825a-000077b07658.html
Thursday 6 March 2008
My vote in defense of freedom
It has taken me almost a week to recover from the depression brought on by watching the candidates of the two largest Spanish parties debating on TV. A succession of vacuous economic data, accusations, and tirades was matched by an almost complete lack of concrete proposals and illustrations as to what each candidate really represented. My conclusion after the debate was that it didn’t really matter who won- it was going to be the same animal with a different fur. It also reaffirmed my belief that government needs to be small. The smaller it is the less chance these people have of screwing things up.
I would have expected a debate between two candidates defending two radically opposed views of the world. The first, inherited from Marxist beliefs which holds an ideologically appealing but empirically impractical view of the world, and a second, defending freedom of the individual to manage his life in a way he thinks fit, devoid of constraints imposed by a few who claim to interpret the will of the many. I support the latter view, not because I think it is the best political system in the theoretical vacuum of a political sciences faculty, but because my experience has led me to believe that it is the better system in an imperfect world.
My views also stem from a deep desire to avoid being told what to do by an empty, all encompassing entity which needs to constantly limit individual liberty to feed itself, in a perverse vicious circle. I detest the concept of Big Brother depicted in Orwell’s 1984 novel. However, I can understand and respect naiveté and gullibility. This is why so many students are interventionists- they are young and have limited practical experience thus defending ideologies which are appealing in theory but impossible in practice.
But, I abhorr hipocrisy. The sight of an experienced politician defending the collective good when the ultimate aim is to defend his individual well-being is enough to make me choke. I almost collapsed when a succession of so-called artists recently decided to defend the political option which is more likely to maintain a system which consists in taxing the whole of society so that a few bureaucrats with exhibionist leanings can pose on the photo shoots of the yellow press in exchange for generous dollops of public money. Who is this gauche caviar with Swiss bank accounts and mansions in exclusive neighbourhoods to demand my vote? I work hard in a company which sells products in transactions which are uncoerced and unsubsidised. Why use my hard-earned tax euros to give them to the friend of whichever politician happens to be in the Ministry of “Culture” so that they can make films that nobody wants to see? I’ll use my hard-earned money to see films that I want to see- thank you very much.
There is a huge irony in that precisely the people who have benefitted from liberalism are now crying foul and asking for more interventionism. A major part of the reason why they have done so well in the world is that the last few decades have involved a scaleback in intervention and now they want to go back? The collapse of Communism and the resulting positive impact on so many people’s wellbeing should really have demonstrated this. I would suggest that interventionists (be they left or right) spend some time living in countries like Myanmar, Cuba or Venezuela to get a real taste of what the practical execution of utopian ideals leads to.
So; after the above tirade, who am I going to vote for? I will place a forlorn and hesitant ballot with Partido Popular’s name inside the box. Why? Basically because it is the lesser of the available evils. The few people who are truly libertarian and believe in individual rights and freedom can be found in the Partido Popular. Yes, the are completely outnumbered and outmanoeouvred by the conservative interventionists but it is the only party where some of its members have ideas which resemble mine. Hopefully, one day, their voice will be heard.
I would have expected a debate between two candidates defending two radically opposed views of the world. The first, inherited from Marxist beliefs which holds an ideologically appealing but empirically impractical view of the world, and a second, defending freedom of the individual to manage his life in a way he thinks fit, devoid of constraints imposed by a few who claim to interpret the will of the many. I support the latter view, not because I think it is the best political system in the theoretical vacuum of a political sciences faculty, but because my experience has led me to believe that it is the better system in an imperfect world.
My views also stem from a deep desire to avoid being told what to do by an empty, all encompassing entity which needs to constantly limit individual liberty to feed itself, in a perverse vicious circle. I detest the concept of Big Brother depicted in Orwell’s 1984 novel. However, I can understand and respect naiveté and gullibility. This is why so many students are interventionists- they are young and have limited practical experience thus defending ideologies which are appealing in theory but impossible in practice.
But, I abhorr hipocrisy. The sight of an experienced politician defending the collective good when the ultimate aim is to defend his individual well-being is enough to make me choke. I almost collapsed when a succession of so-called artists recently decided to defend the political option which is more likely to maintain a system which consists in taxing the whole of society so that a few bureaucrats with exhibionist leanings can pose on the photo shoots of the yellow press in exchange for generous dollops of public money. Who is this gauche caviar with Swiss bank accounts and mansions in exclusive neighbourhoods to demand my vote? I work hard in a company which sells products in transactions which are uncoerced and unsubsidised. Why use my hard-earned tax euros to give them to the friend of whichever politician happens to be in the Ministry of “Culture” so that they can make films that nobody wants to see? I’ll use my hard-earned money to see films that I want to see- thank you very much.
There is a huge irony in that precisely the people who have benefitted from liberalism are now crying foul and asking for more interventionism. A major part of the reason why they have done so well in the world is that the last few decades have involved a scaleback in intervention and now they want to go back? The collapse of Communism and the resulting positive impact on so many people’s wellbeing should really have demonstrated this. I would suggest that interventionists (be they left or right) spend some time living in countries like Myanmar, Cuba or Venezuela to get a real taste of what the practical execution of utopian ideals leads to.
So; after the above tirade, who am I going to vote for? I will place a forlorn and hesitant ballot with Partido Popular’s name inside the box. Why? Basically because it is the lesser of the available evils. The few people who are truly libertarian and believe in individual rights and freedom can be found in the Partido Popular. Yes, the are completely outnumbered and outmanoeouvred by the conservative interventionists but it is the only party where some of its members have ideas which resemble mine. Hopefully, one day, their voice will be heard.
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