The British Labour Party and economic decision making

It appears the British are getting ready to elect a Labour Party government which is hoping to introduce some “structural” changes to economic decision-making.

This blogger believes economic changes are urgently needed but also figures the changes proposed by the Labour Party will only change the faces making decisions and will do nothing to change the well-being of English people.

0*V_sRwC4Rvi4GfN3ZWhen socialists realize that central planning does not accomplish what they want they try to reform by decentralizing the central planning. To see how the British are likely to try this, see this article in The Economist.

The main issue in capitalism versus socialism is who gets to make decisions about what economic projects are undertaken and who gets to do them.

There are three main ways in which this decision-making can be done.

The first is that major decisions are made by bankers who get to do this via their control over money creation. Fractional reserve banking means bankers create money when they make loans and this gives them a great deal of power to decide what projects go ahead and by whom. The capital in capitalism comes from the money created when loans are made. Even small decisions like who gets to build housing and who gets to buy the houses are made by bankers when they approve the loans and mortgages. Any meaningful reform will require changes in the way in which money is created. There are ways to do this. Not only will bankers object to the loss of power but a lot of people have an emotional committment to money and will fiercely oppose changes. Another strong feature of this system is that governments pass legislation that restricts competition and allows some people to make profits. This system we call capitalism.

The second approach to decision-making is called socialism or central planning. Decisions are made by political leaders or their bureaucrats. Socialists like to use words such as “democratic” and “public interest” but in reality make decisions according to their own values and interests. Because of this socialist economies tend to be an inefficient use of resources. Decision making is still made by a few people even if they claim it is on behalf of others.

The third way of making decisions is a true market or perfect competition. We like to think our economy is based on markets but a lot of it is based on legislation that restricts competition such as patents, copyright,licensing and tariffs. In North America one area of life in which competition is allowed is religious services. As we are committed to freedom of religion the government does not interfere. One often hears of people who go church shopping.

Greens often say they want an economy based on small business but they also automatically reject everything said by economists. This is unfortunate because economics has worked out the theory of small business and can say exactly what to do.

In order to have perfect competition all participants in a market, sellers and purchasers, must be so small that no one can influence the price by increasing or decreasing the amount they buy or sell. There must also be perfect knowledge. All participants need to know all prices. Entry to and exit from an industry needs to be easy which means there can be no patents or copyright.

For the purposes of this post decision-making is made by customers who vote with their buying decisions. Price changes are signals to producers to increase or decrease production.

One of the reasons this blogger likes the true market economy is that it allows a lot of decisions to be made by individuals. One of the problems is that individuals to not have a lot of power. People with common vested can form powerful lobbying groups and can get governments to pass legislation which restricts competition and provides them with excess profits.

Socialists talk of giving workers influence over economic decisions, but their proposals give decision-making to boards or councils. Workers are also consumers and with a market system they will have the same influence as all consumers. A market system also allows for a great variety of products. For example, if schools were based on a market there could easily be schools based on different educational philosophies and parents could choose which they wanted for their children. A voucher system could ensure that all children got an education.

Socialists also argue that capitalism encourages greed. This may be true when decisions are made by bankers, but in a true market there are no profits, just wages and a return on investment. If there are profits being made in an industry, more people will go into it until there are no profits.

If the British Labour Party gets elected and is successful in changing the “structure” of their economy, they may change the size of a few of the units for which decision are being made. However, they will still be steering the same ship in the same ocean. Jeremy Corbyn is not radical or brave enough to change the way in which money is created or to drop a committment to economic growth, both of which are urgently needed to protect people from an economic collapse.

 

 

 

 

 

 

 

 

 

 

 

Monopoly education, unions and parental responsibility

A bitter teachers’ strike in this blogger’s corner of the world, British Columbia, Canada illustrates how public education has become monopoly education and has taken from parents responsibility for schooling their children.

 The founders of this country believed that all children should have an equal opportunity for schooling and established publicly funded schools.  Through the years this has developed into a huge infrastructure and bureaucracy.  We now have a legal requirement that parents must send their children to school.  There are a few private schools and some home-schooling but the public school system is an effective monopoly. 

We also have the British Columbia Teachers Federation which has used its strength to appropriate the monopoly profits for its members.  Education is such an emotionally important thing that in the past the threat of a strike has been enough for the government to give in.  This strike, now resolved after two weeks before the summer break and three weeks in the new school year,. has shown the lack of alternatives.  Public  education has become monopoly education with all the problems associated with monopolies including high prices and mediocre services.

The current strike appears to be a conflict between the union and the government over who is going to control the education system and especially spending decisions.  It appears the government is taking a stand and refusing to put lots more money into the system.

I believe education is first of all a parental responsibility, something which has been forgotten as the BCTF and the government fight for control.  Most parents have the skills and knowledge to teach their children but chose to hire others to do that for them.      Parents should have the right to determine curriculum, the philosophy of education and which teachers educate their children. 

One way to accomplish this would be a voucher system which would allow parents to decide which school their children would attend according to their values.  This would be true to the wishes of our founding fathers and most of us that all children should have an equal opportunity for an education.  It would also transfer decision making and power from the bureaucracy to parents.  Expect the people currently employed in the system to scream.

Other occupations thrive on competition. If teachers had to compete for students they would be innovative and find the stimulation invigorating.  Most of them would be more satisfied and pleased to see what it does for students.

This blogger’s recent experience of schools has been limited to an annual Christmas concert at the local elementary school, but during the strike  I was hearing complaints from teachers of up to five or six special needs students in each class.  I am horrified.

This may be an old issue already won by parents who want their children to be treated as normal and included in the normal school system.  This should be revisited.  We want all children to be educated to their full potential but not everyone has an equal potential.  Trying to teach children of vastly different potentials in one classroom must be asking for problems. How well do students learn from a teacher who is about to have a nervous  breakdown?

While this post was waiting for its final editing the strike was settled and monopoly power reigns supreme.  Poor students,

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

School vouchers and public schools

Here’s a link to a report that mothers are generally in favor of a voucher system for schools in which parents are given a voucher and can use it for education at a school of their choice.

The idea behind public schools is excellent but one that has gone in a different direction.  All children should have the opportunity for the best possible education.  This has not always been the case and in many parts of the world still is not the case.

The result  (at least in British Columbia) has been  schools run by a huge bureaucracy and controlled by people who claim to be professionals.  (True professionals have specialized knowledge they can use to help one out of a crisis situation.)

A voucher system should allow for schools based on different curriculum, different teaching philosophies and different approaches to discipline.

Education should first of all  be the responsibility of parents. A voucher system would return that responsibility to them and allow them to determine how they want their children to be educated.  It would still allow the state to ensure that all children get educated.

Education is much too important to leave to a monopoly.

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