Last night, yours truly, along with a number of other Cobden Centre supporters and assorted free marketeers, listened to Toby Baxendale talk about a radical proposal to sort out the UK national debt. He talked about a good many other things, but the centrepiece of his talk was how, as part of a key reform, we could slash the debt burden and save future generations from the crippling expense of the current debt.
What interested me, beyond the core of Toby’s talk, was the reaction from the audience. A number of people I spoke to – their conversations are off-the-record so I will not name them – told me they were skeptical about Toby’s reasoning on the national debt point, although they accepted that, at face value, there may be a vital point they were missing. I must say that I am not entirely convinced myself but that may because I have not understood the point and need to do a bit more thinking and reading. In particular, there is a worry that the Cobden Centre might appear, unless we thrash these issues out clearly, to be pitching some sort of “magic bullet” solution. And I am sure that Toby does not regard there being anything magical about honest money.
One simple issue that arises from any plan to wipe out a lot of debt is the law. In debt restructurings, for example, one point that bankers have to deal with is the seniority of debt holders. The UK’s national debt is held by a variety of different people, foreign and domestic; it is held by a variety of institutions. Any plan to adjust debt, or cut it, has to take into account the kind of people who hold it and any contractural issues that may arise. It may sound nick-picky but it is the sort of detail that is actually very important in resolving debt issues at the corporate level, for example.
I was mightily impressed by the few words of Steven Baker in reference to his maiden speech on the issue in the House of Commons. It almost seems too good to be true that we have a sitting MP who actually understands, and wants to spread understanding of, these issues. (The fact that Steven has actually had a serious job as an engineer is also a refreshing change). For far too long, the free market position has suffered from a lack of articulate defenders in parliament (there have been honourable exceptions, such as the late Nicholas Budgen or Jock Bruce-Gardyne). Simply conveying the message that states make a mess of money is a key argument to make. It would be good for other MPs and commentators in the mainstream media to be more acquainted with the Austrian school. There are already signs that this might be stirring: consider this article on banking by Dominic Lawson, who seems to have inherited his father’s grasp of good economics.