In yesterday’s Telegraph, William Hague tells the Government’s business critics to stop complaining and work hard to deliver jobs. However, Mr Hague forgets that a day’s hard work is rewarded with a day’s pay: if that pay is in a money which someone else is producing at near zero cost, the value of hard work is undermined.
People who are slogging their guts out to make ends meet in an environment of rising living costs are bound to take the Telegraph’s reporting of Mr Hague’s remarks badly, and rightly too. The comments on the article are well worth reading.
The original interview is here and there is some good in it:
Things went “wrong over decades”, the Foreign Secretary suggests, with the idea growing that people could “live on expanded debt forever, rather than having to earn what we spend.”
I have argued again and again that 40 years of credit expansion — lending money into existence well in excess of real savings, trebling the money supply under New Labour by expanding debt — is the fundamental cause of this crisis. It is the reason why the distribution of prosperity in our country is manifestly unjust, why wealth is concentrated around London and why the financial, building and state sectors are so dominant in our economic system.
In The Ethics of Money Production (PDF), Jörg Guido Hülsmann writes,
The prevailing ways of money production, relying as they do on a panoply of legal privileges, are alien elements in the capitalist economy. They provide illicit incomes, encourage irresponsibility and dependence, stimulate the artificial centralization of political and economic decision-making, and constantly create fundamental economic disequilibria that threaten the life and welfare of millions of people. In short, paper money and fractional-reserve banking go a long way toward accounting for the excesses for which the capitalist economy is widely chided.
Elsewhere in the book, Hülsmann explains the depth and extent of the damage done by money which is produced by expanding debt. At last a senior member of the Government is beginning to discuss similar ideas.
Senior politicians must realise that hard work cannot produce prosperity without the right institutions. In addition to Adam Smith’s “peace, easy taxes and a tolerable administration of justice”, hard work must be rewarded with honest money which holds its value, not money which the commercial banks and the Bank of England can produce at the touch of a button.
Money loaned into existence in ever greater quantities caused the present crisis. It has given us a society based on crushing burdens of work in exchange for rewards which quickly disintegrate. That is the problem which must be solved if hard work is to have proper meaning and if we are to have a moral and just society which delivers prosperity for all.
This article was previously published at stevebaker.info.