Philosophy & Politics

I recently heard a former central banker (not British) tell the story of a conversation he had with a Non-Exec Director of a bank, who had formerly worked for their government's finance department. The central banker asked the Non-Exec if he didn't find the burden of managing the risk overwhelming compared to his former job with the government. The Non-Exec replied that he had thought he would, but was relieved to discover when he joined the bank's board that his responsibility was limited to ensuring that the bank complied with the regulations, on the assumption that the regulations would prohibit excessive risk-taking.

Ed Miliband, interviewed on the Andrew Marr show, has just said about the MPs' expenses scandal:

"What people thought was, there are a set of rules in place and they are scrutinized by the House of Commons authorities, and people rightly thought, well look, that is the system that we have, that is the judgment that is made."

Tessa Jowell and Theresa May have just made similar points on The Politics Show. Given the continued delusion of most of our politicians and commentariat about the effect of regulation, corrective efforts will be concentrated on coming up with a "better" set of rules, probably more complex and chaotic (in the usual entropic manner of political "improvements"), which will turn out to be just as capable of abuse or otherwise unacceptable as the current rules.

The lesson the central banker drew from his conversation was the right one. It was that where you apply regulation, people delegate responsibility to the regulator, and stop applying their own judgment. If you want people to be responsible, you need to have a minimal set of rules, with harsh penalties for the consequences of breaking them or making poor judgments (e.g. no bail-outs). The central banker removed most of the regulation of banks in his country, and replaced it with a requirement on Directors to sign off every three months that they regarded the risk position of their bank as sound. The bank directors naturally thought this was most unfair, but the result of them being personally responsible and therefore taking a personal interest in the risks associated with the banks' activities is that the banks in that country are in a very much better condition than the banks in the UK, US and elsewhere, where bank directors throught their job was to push the risk as far as possible within the rules allowed by the regulators, while regulators thought their job was to allow as much latitude to banks as possible within the rules laid down by government.

The credit crunch and the MPs' expenses scandal are symptomatic of the dominant but bogus political and economic philosophy of modern times, which manifests itself in large and small ways in almost every aspect of our lives. It is the "Third Way" philosophy of government interventionism, corporatism, managerialism (or whatever you want to call it - they are all aspects of the same thing). We have replaced personal responsibility and harsh penalties for poor judgments that produce harmful consequences, with the idea that government should take responsibility for all of us, and can and should prevent harmful choices being made.

Politicians are keen on government laying down the rules about every little aspect of our lives, but they are not so keen on taking personal responsibility for the effect of those rules. Responsibility for application of the rules is therefore offloaded by modern governments to unaccountable public-sector organisations, further diluting any sense of personal accountability, which is the key force motivating prudent behaviour.

Freedom and Responsibility. That is what we are missing, what no political party is offering, and what we need. It should be the name of a new political movement: Freedom and Responsibility.

Just came across this lottery-funded scheme:

You'd think, with a name like that, this would be a spoof, or at least an ironic reference. But apparently not. They appear to be "serious".

Is this the apogee of the New Labour philosophy?

This is a mantra of the right. Martin Vander Weyer voiced a fairly standard version in today's Sunday Telegraph:

Those reductions of state provision will be met in part by a reinvigorated voluntary sector, to which the retired and unjobbed middle classes will happily turn their energies. In the new austerity era, local community activity of all kinds could become "the new shopping" or "the new going on holiday". It is even possible to imagine a return to a lost age - an idealised version of the late Fifties, when Harold Macmillan told us we'd never had it so good - in which neighbourliness and mutual respect will count for more than greed and envy

This is pretty standard fair for the Conservative Party now, who are very keen on the "Third Sector" delivering more of what the state currently delivers. Even my friends at the IEA and other classical-liberal think-tanks support the replacement of the state by voluntary and not-for-profit groups in many sectors, including health and education.

Just one problem. The Third Sector cannot fund itself. It has to be paid for, from that small proportion of proceeds that can be spared in a competitive market by businesses and their employees. By definition, the Third Sector is dependent on outside funding, whether as a charity or a not-for-profit organisation. The availability of that funding is closely linked to levels of prosperity and disposable income. The straitened circumstances (such as at present) in which we are likely most to rely on these organisations, should they take over from the state, will be circumstances in which these organisations cannot raise enough money to maintain the services that they were able to provide in better times.

Many on the right like to rely on the deus ex machina of the voluntary sector to pretend that we can reduce the size of government and still have as generous social provision as before. This is a lie.

Even when times were good, if we relied on the voluntary sector to provide services, market information would be as obscured as it is in the public sector. And little money would be freed (we might expect it to be a little more efficient than the state, but those who have seen how charities are run would not expect a huge improvement); it would simply be diverted from the tax bill to the charitable-contributions item of domestic spending. In reality, of course, we would all find, if we weren't feeling flush, that this was the first item of expenditure that could be cut back.

That is exactly what is happening at the moment. How could anyone have imagined otherwise? If we don't have enough money to pay the bills, charitable contributions will be straight out the window. And even if we have some residual income after necessary expenditure, if we are insecure about our jobs or the economic future generally, then we will be inclined to save that residual income rather than give it away.

The reality is this: the state will have to become less generous, and the Third Sector will not fill the gap. We have been living beyond our means, and taking for granted the cheap availability of goods for which we will have to pay more in future. These taxpayer-subsidised goods will have to be moved into the market and we will find that, priced rationally, we can afford less of them.

I have been having a debate with Paul Lockett on Tim Worstall's site, which I have found very interesting and illuminating. The topic was the TPA's green-tax-calculator, and what it said about costs of carbon in this country. I claimed that one thing it showed was that road-use is overcharged and domestic heating is undercharged. Paul gave some very interesting reasons, which I hadn't considered before, why road-use is not as overcharged as I (and I suspect many others) tend to think.

He has certainly persuaded me of his basic point, which (if I have understood it correctly) is that the crude comparison that many of us make between costs of construction and maintenance of roads on the one hand, and revenue from vehicle excise and fuel duty on the other, cannot be taken as a rough indicator of the extent of overcharging (whether for "green-ness" or any other attribution), because there is an element of charging for the use of a scarce resource (road-space) within that balance. As you can see from the exchanges on Tim's site, I still think that there are reasons to believe that the government is charging us more than a market price for use of the roads, but I guess we won't know unless we actually move to full road-use pricing. In my opinion (and this is something I didn't put into the debate, because I am happy to accept the concept, if not the reality of road-use charging), the transaction costs and civil-liberties implications of road-use charging exceed the economic benefits of more accurately tailoring charges to supply and demand, so in a sense, I hope we never find out whether we are being over- or under-charged. But it is an interesting thought experiment.

Anyway, I expanded the debate into a question of the merits (or otherwise) of government auctions, on the basis that the question of whether there was a high initial capital value in a road-use charging system would depend on whether the market created by the government was truly competitive or embedded monopoly privileges. I (unwisely) cited the 3G auction as an example of a bad government auction of monopoly rights. Paul observed:

"I find this comment extremely odd. What else would you propose to do to allocate the use of spectrum, which is a scarce resource? The government hasn’t created a system where competition is limited in the case of spectrum, it is inherently limited."

To which I replied:

"I agree with your distinction between natural scarcity and artificially-enhanced scarcity. This wasn’t the best example for me to pick. I should have used the example of the Non-Fossil Fuel Obligation, which was the first case where I became aware of this problem, but it’s rather obscure. In the case of NFFO, government created artificial scarcities of unknown quanta for a dutch auction. Their monopoly position was so effective that they drove prices down strongly. The problem was that it was so effective and people were thus so desperate to win one of the unknown number of contracts that would be let for their technology, that the optimists bid down the price below where most projects were viable and many realists were shut out. NFFO ended up being a tremendously successful way of driving the price down to a level at which it prevented development of the thing it was supposed to encourage.

The 3G auction nearly had the same effect, delaying roll-out, and nearly bankrupting some of the winning optimists and shutting out some of the realists. But in this case, the water is muddied because the scarcity, as you say, is genuine. Someone would have taken the profits from the excess of demand over supply, and who better than the government on our behalf? All the same, I would have structured it in a different way, separating the natural-monopoly infrastructure-provision part from the service-provision part more clearly (analagous to the structure of the electricity industry in that brief halcyon period after supply and distribution had been split but before Sir Callamity McCarthy* allowed the competitive market to be undone by vertical-integration), and creating a more flexible market for accessing the infrastructure. This would have maintained the competitive threat from new entrants and removed the need for regulation of this part of the business, with tighter but limited regulation (of compliance with the rules, not of prices) over the natural-monopoly part. Having the revenue from sale of bandwidth-rights come in to the infrastructure-provider rather than the government in the first place would make the provision of that infrastructure well-funded and relatively low-risk, which would have helped to get the systems built, rather than being delayed by cash being sucked out of the system by the government maximising its revenue at auction. The risk and benefits could be further shared with society, by government-underwriting of minimum returns for the infrastructure-provider (highly unlikely ever to be needed), and provision for a proportion of profits above the minimum returns to go to the Treasury. This would have kept the cost of money as low as possible, getting the systems built, maintained and expanded as quickly and cheaply as possible.

You may say that if idiots want to overbid (or under-bid in a dutch auction), that is their lookout, it is the market working as intended, and not a sign of a bad mechanism. But we see it time and time again where government is letting contracts for monopoly positions. We have seen it in many public-sector construction projects, where standard practice is to bid a non-viable price in order to win the contract, and then hope to claw it back by renegotiation once the project is under way and the government is frightened to let it fail or be further delayed. That is the real reason why so many of these projects go over-budget and over-time - they were never going to come in on-budget and on-time. The amazing thing is that some occasionally do, not that so many don’t.

The incentives in government-auctioning are to drive honest men out of the market and encourage the crooks. It also tends to inflate ultimate costs, because it is more expensive to put right something done badly than to get it right in the first place. The government is in a unique position, and should try as hard as possible to design mechanisms that ameliorate this impact, even at the expense of reducing the amount of revenue raised. But of course, the public-choice incentives for the government strongly encourage the opposite behaviour."

I have created this post, partly because it is a topic on which I have strong negative experiences (in NFFO) that I wanted to highlight, partly because I don't feel that I have properly explored the alternatives and whether they are any better, and partly so that, if the debate on this subject were to continue, it wouldn't have to divert the debate on road-use charging on Tim's site.

* I was going to explain in a note who Sir Callum McCarthy is, but the incompetent, lackadaisical, credulous fool deserves a post all of his own.

Noticed this poster at a tube station today:

My immediate thought was: none of your bloody business.

(After a moment's additional thought, perhaps I should moderate that to: none of your bloody business between the two on the right, and between all three if you internalize carbon externalities with a mechanism more rational than the EU-ETS.)

It turns out that this is part of a series. The others are shown below.

EUobserver points out that these exaggerate the powers of the European parliament. Typical euro-deception. But would it be better if they didn't?

Is this the Euro equivalent of a dollar vote? In free markets, how much gets produced of which goods is determined by the dollars (or other currency) that customers spend (vote) on the products.

In the EU, it seems, how much gets produced of which goods is determined by the political trade-offs between politicians returned as a result of an election on multiple issues.

In a free market, we will gradually discover what works in which circumstances, and are free to have horses for courses, and to change the balance in response to changing market information.

In the EU, the parties who form the ruling coalition (and their electors) are assumed to have 20:20 foresight, deciding what immature technologies will be best for all of us, and imposing them on us by legislation, with all the associated responsiveness and flexibility.

It tells you something about the mindset of the Eurocrats and politicians that they think this is the job of the European parliament, and that the suggestion that they have this power will attract people to the project.

If this is a Euro vote, I don't want it, and I don't want other people to have it either. I want us to cast dollar votes for economic choices. Political votes are to decide those rules that we need for effective cooperation, on questions that cannot be decided more efficiently by dollar votes.

• £150m (almost half the total cost of the scheme) for the M80 PFI scheme in Scotland
• £500m as a starter for the M25 widening, with possibly more to come.

It is not clear how these projects meet the EIB's objectives, but very clear how they meet the Government's political objectives. How much money is being laundered through the EIB to bail out the Government's favourite projects and corporate friends?

It seems I am not the first to notice that the EIB is being used primarily to bail out projects favoured by its shareholder-governments, most of which have little relevance to the supposed objectives of the bank. See CounterBalance and CorporateWatch.

Good call.

Indeed. Heavily over-priced at that.

Alistair Darling, explaining that the downside of reduced bonuses in the City is reduced tax revenues, said (on the Andrew Marr show this morning):

"that's why our income as a country has gone down".

No Alistair. That's why your income as a government has gone down. Government income is not the same thing as national income, and government is not the same thing as country. This confusion is at the root of the Labour delusion.

Or are you claiming that City bonuses drove national income? And if so, why are you trying to make dramatic reductions in City bonuses?

What does it mean if a government has to go to the IMF for funds?

• The government couldn't run a balanced budget.
• The economic outlook was so poor that there was little prospect of the budget coming back into balance over a reasonable timeframe.
• The government couldn't raise taxes sufficiently to bring the budget back into balance over a reasonable timeframe, without doing more harm than good to the economy.
• The government wouldn't cut public spending sufficiently to bring the budget back into balance over a reasonable timeframe.
• Lenders were so pessimistic about the government's ability to bring the budget back into balance over a reasonable timeframe that they were not willing to lend as much to the government as it needed to cover its net obligations.
• The central bank was so pessimistic about the government's ability to bring the budget back into balance over a reasonable timeframe that it was reluctant to print enough money to pay for government debt (because of fears that, when it came to unwind some of the monetary expansion, the gilt market would be flooded with a combination of central-bank assets and government new issuance, making the unwinding impossible and collapsing the value of new and existing gilts). 
• The government was so cowardly, that it would rather turn to the IMF for expensive funds and instructions on what it must do to balance its budget, than figure out, implement and take responsibility for the necessary cuts itself.

No shame in going to the IMF?

Only for a government that has no shame.

Much too late, but I had to get it off my chest...

Why do all the journalists and opposition politicians seem simply to have accepted Tom McKillop's version of his discussions with Lord Myners about Fred Goodwin's pension? One of them is lying, but the fact that McKillop's letter is the most recent version is hardly a reason to trust it.

Better to look at people's incentives.

What would be Myners' incentive to hear the full details of Goodwin's pension arrangements, sign it off without question, and then pretend that he had been fooled?

Compare that with McKillop's incentives to hand his old pal a parting gift on their way out the door, and stitch up the Government in the process?

And look at their records.

You may not like or agree with Myners, but his record suggests that he has wanted to do his best for what he viewed as the public good. He could have an easier and more profitable life doing other things. It is hard to see how he is in this for the money or popularity.

Compare that with McKillop's record as chairman of RBS...

I know who I believe.

Are those who have swallowed McKillop's line still impressed by the status of a senior banker? Do they somehow imagine that the old honour code is in any way still alive, and that we should simply accept Sir Tom's word as his bond?

Besides each candidate's name on the ballot paper should be their declared annual budget. The successful candidate's budget will be raised from local taxes. There will not be any indexing. There will not be any expenses or other allowances - the candidate has to live within their declared means. If a candidate cannot live within their declared means, they can stand down and a by-election should be held.

This would focus candidates on how much money they really need to run their affairs. In office, it would focus their attention on not spending money they don't need to spend. The lack of indexation will give them a strong incentive to oppose inflationary measures. The public, not the MPs, will be the arbiters of what each MP deserves, and not on a uniform, collective-agreement basis (as at present), but according to the needs and merits in each case. Constituents will know that they got the candidate and the budget that they deserved. Good MPs may be able to put in a higher budget and still be elected, rewarding them for their effectiveness.

Of course, getting MPs to vote for this system may be quite tricky...

Tim Worstall covers the efforts by Dan Mitchell to persuade the American government to step back from its efforts to clamp down on tax havens. This is picked up and expanded at Sounds in the Hickory Wind (nice blog, added to the blog roll).

I agree with a lot of this, as I have already posted. But I think some nuance is needed.

Where do you draw the line on honouring sovereign rights and encouraging tax competition, which I agree with, and preventing complicity in the sheltering of criminal proceeds? We are investing in Switzerland at the moment, and the tax position is one of the many attractions, but that is a legitimate transaction, which I feel no need to conceal. Is not some degree of international cooperation to deal with illicit transfers warranted, and would not some degree of transparency be a part of that?

For instance, should we be pushing for a system where a foreign government would present evidence of criminality to a court in a tax-haven country, and if the court were satisfied that the evidence did demonstrate criminality, details of that person's transactions would be provided to the petitioning government, who would be able to launch proceedings in the tax-haven's courts for recovery of the funds, on an agreed basis? Wouldn't some treaty to that effect respect sovereign rights sufficiently, but cut down the rampant laundering that is going on in some of these locations?

It occurred to me, as I wrote the last post, that we have a problem with terminology.

I am sure I have been as guilty as David Cameron of lazily attacking bureaucracy. And attacks on red-tape are commonplace amongst the right.

But the left have an easy defence. They challenge critics to provide examples of this bureaucracy and red-tape. And it often proves surprisingly difficult to come up with really bad examples.

I think that's because we picture bureaucracy and red-tape as the effect of form-filling, pencil-pushing jobsworths. But that's not where the greatest negative impact on our lives springs from, though it seems closely associated in our minds.

I think what we are really talking about is the effect of bad rules and incentives. These are often very bureaucratic, but it is not in the bureaucracy that their harm lies. The harm lies in their arbitrary and unmerited effect on our position relative to others.

For example, I wrote recently (not for the first time) about the negative impact of a particular grant decision. These negative effects are legion in those parts of society and the economy where grants or other subsidies are handed out (and that's pretty much everywhere, nowadays). They are usually horribly bureaucratic but they would be equally harmful if they were not.

We lost out because a competitor knew how to manipulate the system to get money out of the government. They doubtless had to fill in acres of forms to get the grant, and provide a distorted picture of what they planned to do (or plan actually do the wrong thing) in order to maximise their chances of qualification. But we would have been just as upset if all they had had to do had been to tick a box. It wasn't the bureaucracy that hurt, it was the commercial advantage achieved not through being more efficient but being better at brown-nosing the politicians and civil servants, or simply by falling into a category of which they approved.

There will never be a system where there will be enough money that everyone can be handed money equally, whether they tick a box or fill out a hundred-page form. The object of the exercise for the government is to prefer some applicants over others, and the outcome will always be unfair, and usually uneconomic. No amount of effort on our part will be able to overcome such advantage, which makes us question whether effort is worth expending. That sense of powerlessness is frustrating and depressing. That is what we are angry about.

This effect is repeated ad infinitum in our industry. I'd say we learn of something like this on an almost daily basis. I think it's likely that people experience similar unfairness and disincentivisation in other walks of life and in their home lives as well. And it is this that they are referring to when they complain about bureaucracy and red-tape. What they really mean is arbitrary rules from which they lose out and which they are powerless to counter.

What we want, then, more importantly even than fewer bureaucrats, is less picking of winners, through grants, subsidies, tax and benefit rules, regulations, school-selection procedures, etc. The bureaucrats will fall away with the discarded or simplified schemes, but that is not the important part. The important part is the simplification and reduction of government intervention.

Plenty of people hated Maggie, but plenty of people admired her too. Jim Callaghan and John Major may have been failures, but this was tempered by a sense that they were decent men trying, however ineffectually, to do the right thing. When one sees the response to Michael White's comments on the Dan Hannan speech, it is clear that even Guardian-readers, many of them self-declared in the comments as socialists or Blairites, agree with many of Dan's points and feel that much of what he said spoke for them.

It is clear to those of the right that whatever Brown claims to have implemented, it is not capitalism or free markets as they know it. And it is equally clear to the left that it is not anything like the socialism that they dreamt of. The Third Way turns out to be No Way to run a country.

Is there any former Prime Minister who has been regarded with such united contempt after he left office as Brown will be when we get the chance to get rid of him?

BBC journalists were reporting last night that Gordon Brown, who is apparently an avid student of history, was explaining how it was important to reach agreement at the G20 on a broad, fiscal stimulus, or it would be like 1933, when failure by the governments to reach agreement led to the Great Depression.

This seems somewhat inconsistent with the line that we have seen repeated by many journalists, particularly in the BBC, that recovery began in 1932, with the introduction of the New Deal.

So we started recovering in 1932 from a Depression that began in 1933, did we? Do the Brownite/Keynesian crowd have no shame in their manipulation of history?

And where is the BBC's coverage of Dan Hannan's speech to Gordon at the European Parliament, which is currently the most-viewed video globally on YouTube? Fox News have covered it, but our media...

We know that what follows is typical of how they see the world, but rarely do we see it spelt out so clearly. In the recently issued consultation on a Heat and Energy Saving Strategy, the Government details (p.13) "What we have already achieved" in this field:

• The Act on CO2 help line
• The Carbon Trust and Business Links ("supporting businesses to accelerate the move to a low carbon economy")
• The Energy Performance Certificate (EPC) on properties
• The EU-ETS (European Union Emissions Trading Scheme)
• The Climate Change Levy (CCL, and associated Climate Change Agreements)
• The Carbon Reduction Commitment (CRC)
• The Carbon Emissions Reduction Target (CERT)
• A £1 billion fuel bills package (to "help householders who are struggling to pay their fuel bills")
• £350 million for the Community Energy Saving Programme (CESP)
• £950 million on the Warm Front scheme to improve the properties of low-income households
• The Decent Homes programme for the social-housing sector, which has "generated investment" in insulation and energy-efficiency of £5.6 billion since 2001.
• Mandatory sustainability standards ("Quick Wins - Buy Sustainably") for government procurement
• Salix Finance, a public-funded company that "accelerares public sector investment in energy-efficiency technologies through invest to save schemes."
• Higher efficiency standards in the Building Regulations, moving to zero-carbon standards by 2016.
• European product standards (e.g. for labelling electrical equipment)
• Voluntary Agreements with energy suppliers to "promote energy services and savings".

Truly, a mountain of money, legislation and quangos.

But strangely, there is no reference, within this list of "achievements", to the effect that these measures have had. No quantification of how much more efficiently we heat ourselves and how much energy we have saved. Could this, in some way, be related to the fact that there has been little change in the amount of energy we use to this end?

These "achievements" are followed by a short list of estimates of how many properties have installed condensing boilers and small-scale renewable generators, and how many have had improved insulation. But there is no virtue in this spending if it has not reduced energy-consumption. If people have responded by heating their property to tropical temperatures and leaving the windows open at night, these installations are no achievement, they are a massive waste of energy and public money.

There seems to be a confusion in government circles between means and ends. Legislation is not the achievement. Nor is spending. Nor is bureaucracy. They are the means by which one hopes to achieve one's ends. Listing their policies and spending as their achievements highlights the mindset that predominates in this government.

There is a movement developing in the States to send tea-bags to senior Democrats (including the President) and to hold local "Tea Parties", in reference to the Boston Tea Party, in objection to the massive Obama programme of bail-outs and public "investment". One could quibble about the precision of the analogy, but in essence it's a nice way of using American history to draw people together and illustrate the dangers of heavy-handed government. The Americans intuitively treasure this tradition and distrust the state.

I was trying to think what historical event we would use in the UK if we wanted something similar to symbolize the people rising up for liberty and against tax-unfairness and oppression by an overmighty state. After thinking about this for a couple of weeks and discussing it with a few friends, I don't think we have such an event in our history. Which tells you something about Britain, doesn't it?

I reckon a couple of factors are significant: (a) our establishment has generally known just how far they could push their authority without causing rebellion, and (b) where there was resistance, the opposition was usually led by another bunch who were just as authoritarian. There are probably many other factors, but whatever they are, they all combine to make us a particularly supine (what we might like to think of as "phlegmatic") lot.

The upshot is that British classical-liberalism is like the frog in the slowly-warming pot. And the water is reaching boiling point.

Can anyone think of a suitable event?

Sir Paul Judge was on Andrew Marr's show this morning, promoting his new party of independents, the Jury Team. I have posted the following on their website:

If I vote for my local Jury Team/Independent candidate at the next election, what policies should I expect to be implemented by a Jury Team government?

This works for individual protests in individual constituencies, but it doesn't work for a national organization aiming to put up as many candidates as possible.

And by the way, Sir Paul Judge repeatedly refused to address a mistaken claim that he had made about costs of carbon, so the idea that an organization funded by him will be cleaner and more open is laughable. Let's see if your commitment to transparency includes leaving this in.

Just thought I'd stick it up on here, in case it goes AWOL from there. And in case there is any doubt, I have taken a snapshot of the site with the comment (not that I don't trust Sir Paul, or anything...).

The incident began in summer 2006, when Sir Paul parroted BA's claim that the carbon impact of flying could be offset for £1/hour of flying. There are many different views one could take on climate-change, from scepticism to alarmism, but what no one of any intellectual calibre has claimed is that climate change is a real problem, but it will be dirt cheap to address it. It certainly wasn't a view for which there was any credible intellectual or market support at the time, but it was a remarkably convenient myth for BA to peddle.

When my father wrote to him to challenge this claim, he repeatedly refused to respond. We chased him from the original letter in July 2006 until April 2007, when we gave up on ever getting a response. You can decide whether that is the sort of man who you would trust to be genuinely interested in honest dealing, as he claims is his only motivation in setting up this new party.

Gordon Brown wants us to make a mental connection in some way between our financial troubles and the competitive tax regimes in countries like Switzerland.

I have just come back from Switzerland, where we are looking at investing. The attractions are many, but include the fact that Switzerland is not in the EU (and if the opinions of my contacts are representative, are likely to remain so), the stability of the economy, the security of one's money from expropriation, the more rational attitude to planning, the highly devolved nature of its democracy, and the relative restraint they show in government expenditure.

The Swiss tax-take as a proportion of GDP is a good five percentage points lower than ours. When you consider the obstacles they face in the provision of public services, and the much higher quality and better value in those services, that is amazing.

Imagine how expensive British government would be if every village had to be reached by miles of winding hairpin bends up precipitous slopes, assaulted with snow and salt in winter, and Mediterranean temperatures in summer.

Imagine what the bus services would be like.

Imagine how our trains would run, and what they would cost, if most of our major cities were separated by vast mountain ranges requiring tunnels many miles long. 

Imagine the excuses of the politicians for the state of an economy that enjoys few natural resources, no direct access to the sea for trade, and wholly surrounded by a mammoth competitor determined to inflict the costs of its social model on you.

And yet, with few of our advantages and many disadvantages, the Swiss run a more successful economy, with better public services, lower taxes, a higher quality of life, and greater social cohesion, than we can dream of.

How do they do it? Gordon would like us to believe that it is because money is pouring in from abroad because of the tax regime. And the tax regime in parts of Switzerland is certainly cheaper than ours (each canton sets its own tax levels in significant aspects, so there is no universal rate). In particular, inheritance tax can be low (zero in some areas) and tax on employment is generally lower than ours. That may have something to do with their high levels of commercial continuity and reinvestment of capital, and high levels of employment.

But those low taxes are not particularly funded to a greater extent by inward capital flows than are our more plentiful government extortions. As one of my contacts pointed out when I compared the level of investment in Austrian and Swiss ski resorts, the Austrian government has ploughed hundreds of millions of schillings and euros into supporting investment by their tourist industry, and yet find themselves facing a repeat bill as the equipment ages and needs replacing before the nation has begun to recover its costs. The Swiss, if they want to build a lift, have to raise the finance privately. Hence, they build less, but they try to build only what is viable. That (and similar attitudes across the economy, other than in agricultural support, where they are more profligate even than the EU) keeps the tax bills down, at the cost of placing a greater responsibility on the Swiss population not to be self-indulgent at taxpayers' expense and only to pursue investments that can be justified in hard economic (rather than woolly social) terms. How unreasonable of them to make themselves an attractive destination through the illicit means of prudence and hard work.

In any case, Gordon shouldn't be throwing stones in his highly-elaborate fiscal glasshouse. Under Gordon's watch, Britain enjoyed a huge surge of inward "investment", largely based around the City's financial services to Russians, Arabs and others who had been notably successful in exporting the loot from the expropriation of their countries' natural resources.

Two sure signs of massive in-flows of wealth into a country are asset-price bubbles and a strong currency. On that basis, until the bubble burst, the UK was clearly being more successful (with the help of monetary, fiscal and regulatory policy) at attracting dodgy money into the country. While our property prices were nearly doubling to reach absurd levels, Switzerland's property values increased on average by under 20%.

The reality is that Gordon and his European pals are not motivated by righteous indignation, but by the pressing need to eliminate the few examples of countries whose more prudent economic management stands as a glaring reproach to our Great Leader's incompetence.

And this is the man that some European and British politicians are reported to want to make leader of an international financial regulatory body. In earlier, better times, he would have been left in a quiet room with a loaded pistol for what he has done to our country. Can we at least not reward the greatest incompetent in our political history with an extension of his powers? Surely there is some unoccupied Scottish island, from where he can cause no more trouble, on which he can be dumped and left to rot?

We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action... No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times.

Barack Obama in a couple of years' time? Gordon Brown now, if only (as he surely thinks would be best) he were running America too?

No, Herbert Hoover in 1932, talking about the magnificent programme of government-intervention that had prevented the Crash from deteriorating into a Depression.

When our intelligentsia talk about the current circumstances being the result of laissez-faire and the cure being a massive dose of interventionism, we appear to be in the "second as farce" iteration of history.