Steve Baker MP: It’s time to denationalise marriage

Steve Baker is the Member of Parliament for Wycombe.

It’s been said that marriage is a social institution and that society is entitled to change it. I agree and, for my part, I do not have any difficulty with same-sex couples establishing themselves in permanent, loving relationships known as “marriage”.

However, it is a mistake to believe that the Government, the state or Parliament is the embodiment of society. Such nonsense deserves to be abandoned in the graveyard of the statist Left. They may have believed Hegel’s “The state is the actuality of the ethical idea”, but who with any experience of its failures can think so today? 

And so we find ourselves in the throes of yet another pressure cooker: whether the law should be changed to recognise gay marriage. The secular liberal elite seems to understand neither a profound respect for the stability of fundamental institutions nor the notion that marriage is bound up with faith in God.

Steve Baker MP: It's time for currency choice - and Douglas Carswell’s 10 minute rule Bill on currency reform

Steve Baker is the MP for Wycombe

People today have unprecedented choice.  They can shop around online.  They can tune into numerous television and radio channels.  They can even decide between different hospitals for medical treatment. 

But why are people not allowed to decide for themselves in which currency to transact their business and store their own wealth? 

Today, Douglas Carswell introduces a Bill designed to make a range of different currencies legal tender in the UK.  It would mean that, with the click of a mouse, people would be able to store wealth and pay taxes in a range of different currencies of their choice.

This is not only about giving consumers and citizens more freedom. Establishing currency competition would help the economy too.

As the Chancellor has told us, our economy needs more saving and investment. However, with inflation running at around 5%, cash will halve in value about every 14 years. Why save at present interest rates?

Currency competition would protect us against inflation. As I have indicated before, inflation has been the pattern of the past 40 years since the Bretton Woods currency system ended. A paper from the ONS, Consumer Price Inflation since 1750, shows the situation starkly:

Money is primarily the means of exchange; therefore, a crucial secondary purpose of money is to store value. For a generation, money has failed to fulfill that purpose. It has been deliberately debauched through the expansion of bank credit.

It's an old and miserable story which must sooner or later end in crisis.  In his magnum Opus, Human Action, the economist Ludwig von Mises explained how economic boom and bust is the “unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion.” 

“There is” he went on “no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

As Keynes explained in The Economic Consequences of the Peace, debauching the currency through monetary mismanagement robs savers, unjustly distributes wealth and undermines the free market.

For too long, state planners have mismanaged our money.  Under governments of both parties, they have – as all planners tend to – got wrong what they were supposed to get right.

Competing currencies would allow families concerned about rising inflation in Britain to plan their financial future using a currency that was not halving in value every 14 years.  Businesses concerned about rising prices could protect themselves. 

I am proud to be supporting Douglas Carswell's Bill. It is an idea with a sound pedigree. In 1976, Hayek argued that competing currencies would be more practical than a "utopian" European currency.  Indeed it was Conservative government policy in 1989.  In November of that year, the Treasury published a paper titled An evolutionary approach to economic and monetary union which stated that;     

The evolutionary approach maintains national monetary policies within the context of a strengthening ERM, and allows currencies to compete to provide the non-inflationary anchor in the European Monetary System. This approach is centred upon national monetary authorities. It thus minimises problems of political accountability and harnesses the strengths of national monetary traditions to Community objectives. It permits an evolutionary and robust way forward which can develop with the grain of economic and financial integration in Europe.

As the Eurozone continues in crisis and as the Pound continues to lose value at a rate well above target, Douglas is wise to bring forward this measure which could deliver honest money: money which holds its value and serves as the basis for the Chancellor's economy built on save and invest.

Steve Baker MP: The Fed is very nearly bust and it is probably not alone amongst central banks

By Steve Baker MP

A review of the US Federal Reserve’s own document: “FEDERAL RESERVE statistical release, H.4.1: Factors Affecting Reserve Balances of Depository Institutions and 
Condition Statement of Federal Reserve Banks”, issued on August 23rd 2011, reveals some interesting information about the state of the Federal Reserve, the US central bank: it's very nearly bust. As it is indirectly the lynchpin of the global financial system, that matters to the UK.

The size of the Fed’s balance sheet is now about $2,843 billion, up from about $800 billion three years ago. The huge increase in the Fed’s balance sheet stems from bailouts, quantitative easing, and other central bank “liquidity” operations. There's been a massive change in the structure of the Fed's assets too.

The Fed’s capital base is $71 billion. That represents about 2.5% of its assets, or a leverage ratio of 40 times its capital. This ratio would have been considered unthinkable prior to the crisis: it is about four times greater than that permitted by the new Basel proposed rules for commercial banks and simply demonstrates that the bailout format and quantitative easing do not make these problems go away. If the patient has been incorrectly diagnosed, taking the wrong medicine will not cure him.

Steve Baker MP: Egypt teeters, exposing lessons for the UK

Under the auspices of the Iman Foundation, Syed Kamall MEP and I travelled this week to Cairo to promote pluralism and the principles of a free society. We delivered two successful seminars on democracy, freedom and tolerance - one for senior political and academic figures and one for young activists - in addition to meeting members of Egypt's political class. These seminars followed Syed's previous work in Cote d'Ivoire based on Principles for a Free Society, a short book written by British academic Dr Nigel Ashford.

Egypt has about 28 significant parties with more than a hundred further relevant registered organisations. Many seem to have coalesced around characters, not political ideas. This may be normal for a fledgling democracy but it leads to high levels of fragmentation between and within parties. For example, the Gathering Party includes Marxists and liberals, secularists, Christians and Muslims, united around a programme based on equality which may go beyond the essential moral, political and legal equality required for a free society.

Steve Baker MP: It's time for flat taxes

I appeared recently on The Daily Politics to advocate tax simplification. In the way of things, the Beeb only used the section where I straightforwardly called for lower, flat taxes. I didn't object - I'm serious: low and flat taxes would be better for everyone.

Our austerity programme only deals with the deficit over five years, not the debt. We know we must lift our country's economy and spirits in the context of an awful legacy. We know the public must continue to pay the British state's inflated bills. We know we must create jobs. A flat tax would be an efficient way to set about it.

According to The Adam Smith Institute, countries which have introduced flat tax have increased tax revenue. The better off pay a lower rate than before, but higher total amounts and a higher percentage of the total tax take as the economy flourishes.

A flat tax would deliver simplification – an aim expressly included in the Coalition Agreement. It would do away with a huge amount of HM Revenue and Customs' bureaucracy and wearisome headaches for millions of taxpayers. Capital stashed away would return from abroad. In a low, flat tax environment, many people would revert to simply paying the tax instead of buying expensive avoidance schemes from experts.

Steve Baker MP: Accounting has never been so exciting!

By Steve Baker MP

There is a growing awareness that one of the main contributors – if not the main contributor – to the severity of the financial crisis was the system of accounting rules under which UK banks continue to operate. In particular, the culprit is the system of International Financial Reporting Standards (IFRS), an EU-sponsored regime which has applied to UK and Irish banks since 2005. It's something Howard Flight covered in Fixing the Accounting Botch here on ConHome and which I highlighted with a ten-minute rule bill, which appeared on the order paper for second reading on Friday.

The IFRS regime has required banks, amongst other things, to book unrealized gains (or losses) on certain items, leading to banks manufacturing fake profits based on dubious financial models and then paying bonuses and dividends out of those fake profits. Indeed, it may have led some banks to make distributions that were illegal through conflicting with existing UK companies law. It led to poor provisioning for expected losses; this allowed credit to be mispriced, with risky assets portrayed as safe until the crisis hit and the true risks (and losses) involved were revealed.

Steve Baker MP: Bailouts are a dead end but bilateral debt cancellation could transform the European crisis

Last time the Commons debated financial stability in Europe, I quoted that great French liberal political economist Bastiat; in his essay, The State, he wrote:

The state is the great fiction by which everyone seeks to live at the expense of everyone else.

He was right. We delivered ourselves into this crisis through decades of deficit spending, debt and currency debasement, backed by state power.  Now, the European nations plan to underwrite one another's risks in the knowledge that the web of debt between them would make any default viciously dangerous.

But what if bailouts, deficits, stimulus packages and easy money are a dead end? What if the only just, moral and sustainable way to obtain the goods and services we need is first to produce and then exchange? What if taxpayer-backed loans and contingent liabilities prolong and deepen the agony of adjustment to the realities of life in this messy, dynamic world of scarce resources and infinite wants?

Steve Baker MP: Who drafts Government bills?

Samizdata reports an exemption for MPs from tax avoidance law, contained in Section 554E (8) of the Finance Bill, writing "Taxes are for the little people, of course." The Telegraph's Ian Cowie writes,

New tax year, same old MPs. After Budget promises to tackle tax avoidance, Parliament is passing legislation to block several loopholes – but an obscure clause specifically exempts MPs from these new restrictions.

Yes, really. Anyone who thought the denizens of Halitosis Hall had learned their lesson after the MPs’ expenses scandal will be disappointed. But it seems politicians still cannot get their heads round the childhood adage about sauce for the goose and gander – or why their constituents are fed up with buying them duck houses.

I am furious. Who could possibly think that special tax treatment for MPs is a good idea? Who could possibly think that MPs would get away with it if they tried it?

But wait. Who drafts Government bills? Not back-bench Members of Parliament... In whose interests is it to keep Members of Parliament up to their armpits in the brown stuff? I smell a rat.

There should be no special treatment for anyone before the law, least of all those who make it.

Unfortunately, as anyone who has read Hannan and Carswell's The Plan will know, this isn't the first example of special treatment for MPs. Beyond the freedom to speak in Parliament with impunity, all legal privilege for MPs must end. We must suffer the same pain and inconvenience as the rest of the people of this country.

I have written to the Chancellor, asking him to remove this provision. I hope colleagues reading this will do likewise.

Noon update: It has been suggested to me that this provision stems from the fact that we are paid by IPSA but not employed by IPSA.  At any rate, the Treasury should explain.

Steve Baker MP: On April 15th, Atlas will shrug

By Steve Baker, MP for Wycombe.

I don't much like Ayn Rand's writing or her philosophy, Objectivism. I didn't much enjoy Atlas Shrugged. I certainly do not like the attitude to other people which her followers so often display.  And yet, there is value in her work. For example:

The purpose of morality is to teach you, not to suffer and die, but to enjoy yourself and live.

And:

Then you will see the rise of the men of the double standard- the men who live by force, yet count on those who live by trade to create the value of their looted money- the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law- men who use force to seize the wealth of disarmed victims- then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

As an articulation of what goes wrong when the attempt is made to coordinate society by force, what misery is created when people are taught to live in ceaseless guilt, how hopeless is our situation if we surrender reason, it is a masterpiece. As an articulation of the timeless morals which have sustained human society, it leaves something to be desired: magnanimity.

Ironically, Aristotle, who made magnanimity “the crowning virtue”, was the only philosopher to whom Rand would acknowledge a philosophical debt: it appears she missed that in his writing.

However, if one considers the book and the philosophy as a resentful rejection of the “progressive” philosophy which destroys society — faith in the omnipotence of the State — it makes sense. Consider this from John Galt’s speech:

Yes, this is an age of moral crisis. Yes, you are bearing punishment for your evil. But it is not man who is now on trial and it is not human nature that will take the blame. It is your moral code that’s through, this time. Your moral code has reached its climax, the blind alley at the end of its course. And if you wish to go on living, what you now need is not to return to morality — you who have never known any — but to discover it.

We cannot go on resenting private profit as we cannot go on fearing to live. Social progress will come when people have more to do with one another and governments less; the necessary system of independence, interdependence and mutual cooperation to create this big society is the free market.

Steve Baker MP: It's time to bring casino banking into the light

By Steve Baker MP

Last year, I learned how derivatives can be used by banks to manufacture the illusion of profit. Tomorrow, I am introducing a ten-minute rule bill which would bring this casino banking into the light.

My colleage Gordon Kerr, a financial engineer, explains in How To Destroy the British Banking System –- Regulatory Arbitrage via ‘Pig on Pork’ Derivatives:

Nine years ago I worked as a structuring engineer in a three-man team within the investment banking unit of a major British bank. One of us was very bright. He stunned me one day with an idea as to how we could:

1. Produce immediate (but illusory) substantial profits for our bank, thus ensuring that we would enjoy generous personal remuneration;
2. Generate ‘virtual’ share capital to boost our bank’s capital reserves;
3. Leave the actual investment risk exposure and profit expectation of our bank almost exactly the same after the transaction as before it.

Was this idea the kind of rocket science derivative engineering that justifies master of the universe labels for the three of us who designed and implemented it? No: it was extremely simple. Here’s how it worked. We transmuted some loan assets into a derivative transaction for regulatory purposes, whilst leaving the actual loan arrangements unaltered.

The rest of that article sets out the details.

My Financial Services (Regulation of Derivatives) Bill seeks to require banks operating in the UK to prepare accounts which present derivatives and other financial exposures at the lower of historic cost and mark to market values.  That simple change would improve accounting transparency and help regulators to protect taxpayers. It would refocus banks on making productive loans instead of operating the derivatives merry-go-round.

In my speech on Tuesday, I will set out in detail how that merry-go-round works. I will indicate how my Bill would begin to correct one of the most damaging and least understood aspects of the banking system by bringing casino banking into the light.

Steve Baker MP: The Big Society is The New United Kingdom

By Steve Baker MP

I have written before of my support for the Big Society idea. For me, it is about the nature of good relationships between individuals, the foundation of a healthy society and civilisation.

But this post is not about my views. It is about the ideas of my constituent David Jefferies who, at the end of a surgery appointment, handed me the following article which he intended to send to David Cameron.

As you can see from his remarkable biography at the end, David Jefferies' life has spanned the heights and the depths. In his own words, after a business failure he "lost his family home and has experienced life on the edge of society: homelessness, poverty, the benefit system and the provisions of the state retirement system." And yet, as you will see, David has not lost his faith in other people.

In context, I found David's article deeply moving. I don't completely agree with him - I don't like his idea of Big Society project offices -  but I didn't want to let it simply join the torrent of correspondence and good ideas which flood into Number 10. I wanted to let it stand as one apolitical man's testament to the value of David Cameron's big idea. In his own words...

The Big Society is The New United Kingdom

The United Kingdom is more traditionally thought of as the union of England, Wales, Scotland and Northern Ireland. However, In the present day context, society has shifted its focus from the settlements which gave us territorial agreements and, barring a few exceptions, over 400 hundred years of peaceful coexistence.

Today, the character of the United Kingdom is a tapestry of many hundreds if not thousands of minority groups where individual people are often members of multiple groups through both electronic and personal membership. The Big Society is a vision and also a process through which the energy and character of minority groups can be blended into a whole new United Kingdom.

Left unguided, today’s society is on course to fall off the edge into a period of some chaos. In 2010 the political map began to redefine itself, the electorate finally said NO to the two party system which had run out of steam and was hugely in debt. The voters forced the politicians to recognise that their priorities were not about being the “Top Dog” they were about solving the problems of a country which was economically and socially bankrupt.

Steve Baker MP: Britain’s low-carbon transport future will rely on petrol and diesel

When Norman Baker delivered his recent statement on the sustainable local transport White Paper, I was surprised he said: “our transport decarbonisation strategy centres around the progressive electrification of the passenger car fleet”.

Of course, I understand why the Government is attempting to promote the use of electric cars and to decarbonise our transport system at taxpayer expense. There's a consensus among certain political elites about what's best for us all but it appears we won't choose to do as others think we ought, so force will be used instead. And we will all pay for its administration. This much is to be expected. However, that particular line of the statement irritated me for two specific reasons.

First, inasmuch as the Government may have a passenger car fleet, it does not own my car, or yours. I feel quite certain that the Minister meant all the passenger cars in the UK, so the phrase chosen indicates a certain frame of mind which ought to give us all pause for thought.

Second, if I wanted an electric car, I would buy one. I enjoy driving and I am glad my car has a 2.3 litre engine with a high-output turbo. It's what I wanted. I like track days and long drives in the mountains. It's a joy and manufacturers like, for example, BMW and Peugeot know it: I am not alone.

I cannot conceive of choosing an electric car. I want one that enables me, for example, to drive to the Alps where I can enjoy roads like the Stelvio Pass (right). I like driving 400+ miles without needing fuel and then filling up in a few minutes, not overnight. I don't share the emerging vision of long-distance travel between city centres by high-speed rail plus local travel by plug-in car. I like the countryside and my liberty and, given recent reports that the drought in the Amazon released as much CO2 as the annual emissions of China and Russia combined, I'm not convinced any of us deserve the birch for choosing a car with a little character.

Steve Baker MP: The EU is not yet beyond ridicule

I enjoyed delivering a brief polemic against EU spending in yesterday's debate on the 16th consecutive failure of the EU budget to pass audit. Over 90% of EU spending was "materially affected by error" but I shared three stories which were apparently within the rules.

• The €500,000 payment to two fishermen to scrap their boat in the interests of reducing overfishing, which cleared their debts and paid for a new, smaller boat in which they continued fishing.
• The astonishing €8.5 billion spent failing to improve infrastructure in Sicily.
• An incredible €2.5 million to support an Austrian nomadic contemporary dance troupe.

These were just three examples selected from a briefing by the superb OpenEurope. My constituents should not be paying for this and yet we find we cannot legally withhold their money from this asinine bureaucracy.

It would be too easy to declare the EU beyond ridicule but it simply isn't. Here is a joke I received from a stalwart Wycombe Conservative this morning:

A farmer named Bill was overseeing his herd in a remote mountainous pasture in Scotland when suddenly a brand-new BMW advanced toward him out of a cloud of dust.

The driver, a young man in a Brioni suit, Gucci shoes, RayBan sunglasses and YSL tie, leaned out the window and asked the farmer, "If I tell you exactly how many cows and calves you have in your herd, will you give me a calf?"

Bill looks at the man, obviously a yuppie, then looks at his peacefully grazing herd and calmly answers, "Sure, why not?"

The yuppie parks his car, whips out his Dell notebook computer, connects it to his Cingular RAZR V3 cell phone, and surfs to a NASA page on the Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo. The young man then opens the digital photo in Adobe Photoshop and exports it to an image processing facility in Hamburg.

Within seconds, he receives an email on his Palm Pilot that the image has been processed and the data stored. He then accesses an MS-SQL database through an ODBC connected Excel spreadsheet with email on his Blackberry and, after a few minutes, receives a response. Finally, he prints out a full-colour, 150-page report on his hi-tech, miniaturized HP LaserJet printer, turns to the farmer and says, "You have exactly 1,586 cows and calves."

"That's right. Well, I guess you can take one of my calves," says Bill.

He watches the young man select one of the animals and looks on with amusement as the young man stuffs it into the boot of his car. Then Bill says to the young man, "Hey, if I can tell you exactly what your business is, will you give me back my calf?"

The young man thinks about it for a second and then says, "Okay, why not?"

"You're a Member of the European Parliament", says Bill. "Wow! That's correct," says the yuppie, "but how did you guess that?"

"No guessing required." answered the farmer. "You showed up here even though nobody called you; you want to get paid for an answer I already knew, to a question I never asked. You used millions of pounds worth of equipment trying to show me how much smarter than me you are; and you don't know a thing about how working people make a living - or about cows, for that matter. This is a flock of sheep...

Now give me back my dog.

All very well, but the joke is on us. And not just in relation to what the EU spends, but also how it forces us to live. At least we live in a democracy and have positively chosen this destiny for ourselves... 

Enough is enough. In or out?

Steve Baker MP: We must robustly and resolutely condemn fraud and error in the EU budget

Steve Baker is MP for Wycombe.

Today in the House of Commons, MPs will be asked to spend 90 minutes debating and delivering a verdict on the following Government motion (emphasis mine):

That this House takes note of the Unnumbered Explanatory Memorandum dated 25 November 2010 submitted by HM Treasury on the implementation of the 2009 EU budget, the Unnumbered Explanatory Memorandum dated 24 November 2010 submitted by the Department for International Development on the activities funded by the Eighth, Ninth and Tenth European Development Funds in the financial year 2009, European Union Document No. 12393/10 and Addenda 1 and 2 on Protection of the European Union’s financial interests, European Union Document No. 13075/10 and Addendum, relating to an Annual report to the discharge authority on internal audits carried out in 2009, the Unnumbered Explanatory Memorandum dated 22 October 2010 submitted by HM Treasury on the European Anti-Fraud Office’s tenth activity report for the period 1 January to 31 December 2009, and European Union Document No. 16662/10 and Addenda 1 and 2, Commission Report to the European Parliament and the Council on the follow-up to 2008 Discharge; and supports the Government’s continued engagement with its EU partners to improve financial management of the EU Budget.

Not exactly a full-throated expression of principle, is it? You would barely know that one of the main topics of consideration is an EU report highlighting, yet again, that EU spending is riddled with fraud and error.

EU spending, of course, that is financed in no small part by the hard-pressed British taxpayer.

The report in question is from the EU’s Court of Auditors and deals with the 2009 EU Budget specifically – a Budget that the UK poured £11.8 billion into. The areas of spending that the Court was able to give a ‘clean’ opinion, when looking at whether the spending was according to the applicable rules and was correctly calculated, represented only 8.3% of EU spending that year. The remainder was, in accountant-speak, “materially affected by error”.

In other words, 91.7% of this public money was given out inappropriately.

Radio 4 Analysis tonight - Radical Economics: Yo Hayek!

My colleague Jamie Whyte – author of Bad Thoughts: A Guide to Clear Thinking and Head of Research and Publishing at Oliver Wyman – has created a Radio 4 Analysis documentary on the Austrian School of economics: Yo Hayek! I gave an interview.

The title is inspired by EconStories rap anthem Fear the Boom and Bust:

It's my view that a new orthodoxy is emerging in economics, one which is based much more closely on the human condition and the realities of social cooperation among individuals in society. Examples of the new orthodoxy include Jesse Norman MP's Compassionate Economics and The Big Society, plus work from academics like Roger Köppl, author of Big Players and the Economic Theory of Expectations, and Mark Pennington, Robust Political Economy.

Central to the new orthodoxy is a systematic treatment of human action: that has long been available in the work of the Austrian School. I am delighted Radio 4 have made this programme: the public conversation is moving on.

The programme will be transmitted tonight at 8.30 pm on Radio 4. More details are available here.