Take a look at this man, and gaze on honest greatness:
People divide themselves into capitalists, socialists, and communists. Often they don’t know what these phrases mean, and fudge the differences. I prefer the terms free market versus un-free market. Capital does not create a free market: indeed, a prinicle goal of capitalists is to exploit stickyness in the market to maximise gain. The goal of a free-market believer is to eliminate this stickyness, thus minimising the return on capital in any given market by maximising entry.
I write this blog today because of three things: the first was the news at christmas that around 3000 individuals in London (“the city”) will receive a xmas bonus exceeding £1 million. Perhaps £6 billion in one month.
The second, brought to mind by this, and my negative reaction to it*, was my relative enthusiasm for Michael Milken, even when he was being hounded by the media: an enthusiasm born out by it subsequent deeds. Here was an innovative man, not using force or trickery, and moving capital to places it was most efficient: making us all richer. I loved it.
But this year’s news didn’t remind me of Milken. It reminded me of wise words from a hero of mine: Thomas Jefferson. And now I have found them together with the man.
Here then are those words, coming true in front of us. They are:
|“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” – Thomas Jefferson.|
* Why negative? Just because these earnings are due to a stickyness in the market: many large deals can be done by a few individuals, and taking only a few percent leads to very large individual returns. One wonders what the barriers to entry in this market: and the answer is that the barriers are banks which simply don’t hire people who’ll take less pay: they have no need. Just, i guess, as the university in which I work would not hire a good overseas candidate who offered to do the work for half my salary). So, the simple answer is: not enough competition. Interestingly, a recent BBC4 radio interview on this topic with a finance house owner paying these large bonuses ended with him being asked what he would say to a nurse earning £20,000. he said. I can say nothing. There is nothing i can say that would not make me look like a fool. All I can say is that we pay a lot of tax, and I hope it gets put to good use. Very honest response, I thought. All i hope is that barriers to entry to banking are lowered, and this will save all these souls the yearly anguish before they descend on Kensington to consume bottles of Dom.