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Lord (Robert) Skidelsky is the biographer of JM Keynes. Keynes is, as regulars here know, a man generally regarded as the "dark knight" of economics, a man who made intellectually respectable notions that had been often regarded as little more than the ploys of quacks and charlatans. Books by Henry Hazlitt and William Hutt, for example, have in my view pretty much demolished his central idea: that the way to get out of a recession is for governments to print money in large amounts and hopefully, when the sun comes out from behind the clouds, to turn on the monetary and fiscal brakes later on. It is an approach that was destroyed by the stagflation of the 1970s, when a combination of high unemployment, out-of-control trade union power, low growth and skyrocketing prices forced policymakers to seek alternative sources of wisdom, in the forms of Friedman, Hayek and the rest. However, the attempts by governments to revive their economies in the past few years have given what I consider to be a spurious impression that Keynes' ideas are still appropriate to our time. I disagree.

Skidelsky argues that the current Tory/LibDem coaltion government is making a fearful error in trying to reduce debt and spending. He also argues that what the world needs right now is a new sort of Bretton Woods agreement, moving on from the original deal as signed in the 1940s at the end of WW2. That agreement achieved, among other things, strict controls on capital flows between nations. It is hard for younger people to realise that it was not all that long ago that it was illegal, for example, for Britons travelling abroad to take more than a small amount of money out of the country without explicit consent. This is serfdom: if people are banned from taking money from place A to B even if they have earned it, then what is the difference between that and a serf seeking the consent of his lord before moving to another village down the road?

And in any event, as Lord Skidelsky knows only too well, the BW agreement eventually failed because of a combination of forces: rising government deficits, rigid, unionised labour markets and inflation (caused by things such as Vietnam War, the Great Society welfare policies in the US and UK); the oil crisis of the early 1970s, and developments such as the offshore Eurodollar market, which encouraged a relatively unregulated, vibrant financial market that made BW increasingly hard to operate. The stresses proved too great; the US finally severed any link between the dollar and gold during the Nixon presidency, and Bretton Woods was dead. A good summary of how it all went wrong can be seen in this recent book by Deepak Lal.

Keynes was not completely wrong on all the topics of the day, and to his great credit, the post-war settlement did include attempts to foster free trade and reduce protectionism, which policymakers realised had been such a disaster in the 1930s. But the idea of governments spending vast sums of central bank funny money as a way to deal with the results of previous monetary excess looks less and less wise with every day that passes. Keynes still has his devotees, such as Paul Krugman, but his ideas are not, by and large, what are needed to get us out of our current predicament.

(22)

The first I heard of it was here, where there was a piece about how this guy had been mocking this guy, guy number two being Tate Galleries boss Nicholas Serota. Serota faces cuts in state funding for The Arts, i.e. for himself and his enthusiasms, and he is not happy. He calls this "blitzkrieg", clearly having never heard of Godwin's Law. So, the pips are starting to squeak. Maybe this Cameron chap is not quite as bad as Perry de Havilland says.

The last time I read the Guardian very regularly was in those far off days before the internet, for its cricket coverage. Critics of pieces like Serota's might be allowed about one or two short letters, next to three or four longer and very supportive ones, or ones claiming that the idiot argument in question wasn't idiotic enough. How times have changed. What struck me most about this week's Serotage was the number of commenters who weren't impressed by his arguments.

Which can be summarised as: The Arts is (a) good, and (b) good in particular for "the economy". But if The Arts is so good for the economy, why does The Arts seem to depend for its very survival on state subsidy. If the economy loves The Arts so much, why can it not pay for it? Cutting subsidies for The Arts would be a mere pinprick for The Arts if The Arts was economically successful, not a blitzkrieg.

Subsidised art - The Arts - does indeed depend upon a continuing flow of subsidy, but art itself is a far sturdier thing. Many commenters said how much they dislike The Arts of the sort that Serota presides over. Fair enough. I dislike Serotanism not so much because I hate The Arts as because I love art, and think that The Arts gets in the way of art far more than The Arts contributes to art, in much the same kind of way that I think subsidised car companies were bad for the British car industry, or that I think that NASA has got in the way of and continues to get in the way of space exploration. The Arts crowds out art, in other words. Serota thinks that art depends on The Arts. Well, as several of those commenters pointed out, he would, wouldn't he?

If I understand Mr Cameron's attitude correctly, he will be rather pleased about this particular squeaking by this particular pip. You see, he will say to the poor, in answer to their squeaks about the cuts they are now facing. Consumers of and practitioners of The Arts are also suffering. We are spreading the pain.

But will Cameron contrive any kind of economic recovery, or merely a softer-than-might-have-been landing into the swamp of permanent economic stagnation, followed by more sinking? Are these cuts really cuts as in less state money, or merely cuts as in not as much of an increase in state money as had been hoped for? My opinion about that being that the first can, for those directly involved, feel a lot like the second, as more people get sucked into the state money business and away from having productive lives. Between them, all these people do go on getting more and more, but for many an individual state money chaser, it may really be a cut. And even dashed hopes must feel a lot like genuine cuts, if you have already spent the money you had hoped to get.

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In case you missed it, Apple is already the second biggest corporation in the world in terms of capitalization and is poised to pass Exxon as number one, possibly this winter with the iPad this year’s most coveted Xmas gift. The Silicon Valley company is sitting on some 50 billion in cash, pretty well positioned to do whatever it takes to maintain their technological/aesthetic edge. That’s one helluva long way from two young guys in a garage, tinkering with a computer. It’s close to the most extraordinary business story of all time.

- Roger L. Simon. Today I wrote out a cheque for a new super-fast computer, but not an Apple Mac, a PC. But, what kind of purgatory would the PC be in now, without the Mac keeping it semi-honest and semi-friendly and semi-nice-to look-at? Thank you Bill Gates, but thank you even more: Steve Jobs.

(8)

I have been seeing a great deal of these folks lately.

6 km/sec aluminum slugs fired by a railgun built by a small company. Is that cool or what?

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This just in from a Jane's newsletter:

Nation state may be behind computer worm attack on Iranian nuclear plant. The first known example of a computer worm designed to target major infrastructure facilities has infected the personal computers of employees in Iran's Bushehr nuclear power station. The malware, known as Stuxnet, is capable of taking control of an industrial plant by targeting weaknesses in systems designed by German company Siemens that are used to manage water supplies, oil rigs, power plants and other utilities.

I pretty much thought this had to be the case. The problem is, this is a double edged sword. Stuxnet has been seen in the wild enough to be picked up and reported on by Symantec. That means it has also been picked up by white and black hats alike and will be reverse engineered and used for other 'payloads'. This is the inherent problem with the viral software attack. Once you use it, you might as well have posted the source code with a Gnu Public License on it.

So, now that we have proof by example that embedded process control systems can be hijacked by a virus, we had better start worrying who else is going to get targeted by slightly modified versions.

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“It is true that individual financial institutions made bad decisions. In my opinion, they should have been allowed to go out of business—that would have been the proper way for them to be handled. However, their decisions were secondary to government policy. It should be remembered that the Federal Reserve owns the monetary system in the United States; we do not have a private monetary system. In 1913, our monetary system was nationalized. If you’re having problems in the monetary system—which is where the problems in the economy began—they are, by definition, government problems. This is analogous to interstate highway bridges falling down: If interstate highway bridges were falling down, everyone would recognize that the government owns the highways and conclude that this is a government-caused problem. Well, the government owns the monetary system, and the errors by the Federal Reserve are the foundations of the financial problems we’ve experienced.”

John Allison, former CEO of BB&T;, who is that rarity in financial services, a genuine free marketer who knows what the prime cause of the credit disaster has been.

(The quote is taken from an interview of Allison by The Objective Standard, a fine magazine. Most of the articles are behind the subscriber firewall.)

(15)

It looks as if some reporters who wrote about the late British comic actor, Norman Wisdom, have learned - assuming they actually gave a shit in the first place - that using Wikipedia as your source for information is a high-risk strategy.

Doh.

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This is a headline in the leftist New Republic magazine, over an article lauding any kind of US government spending, by Jonathan Cohn:

"Wanted: More Fraud, Abuse in Government Spending"

Here's a paragraph to show just how far down the Keynesian rabbit-hole parts of the pro-stimulus crowd have gone:

"But efficiency isn't the Recovery Act's primary purpose. Reviving the economy is. And that's required spending a vast amount of money very quickly--a goal that, inevitably, is at odds with spending the money carefully. Or, to put it another way, a stimulus that threw a little more money away might have created more jobs."

So "throwing away" money - which is ultimately not the government's to "throw away" but belongs, or is claimed, from individual citizens - "creates" jobs, does it? So if the US unemployment rate is stubbornly holding just below 10 per cent - a miserable result - then what is needed is yet even more spending, more money printing. These guys remind me of what was said, not always fairly I might add, of WW1 generals, who, when faced with the failure of their latest mass infantry assaults against the German army in Flanders, were urged for one more push, one more bout of bloodletting and hence on to victory.

Einstein once defined madness, I recall, as the repeating of an error and failing to learn from such errors over, and over again. By that measure, parts of the media and commentariat in the US are out of their conceited, Keynesian minds.

(19)

Geert Wilders is on trial today for telling it like it is with his film 'Fitna'.

If you are a blogger, read up on the subject and get out the support. Europe may not have Freedom of Speech with teeth in it, but perhaps you can provide that poor benighted continent with implants.

(3)

Patrick Crozier reports on another ripple spreading outwards from the Cobden Centre:

CNBC is much better than the BBC. But that is not saying much. For the most part it offers up a stream of Keynesians with a smattering of Monetarists.

So, imagine my surprise when I turned on today to hear someone talking sense. Real, proper, honest-to-Godness, complete, free-market, Austrian sense. I even spent the next half an hour glued to the show just so I could catch his name.

I succeeded. The guy's name is Sean Corrigan and he works for these people.

Oh, and he writes for the Cobden Centre. ...

Corrigan is indeed excellent, as I found out for myself when I heard him speak at a Cobden Centre organised meeting at the IEA. What marks him out from other people who have jobs as Somethings in the City is that whereas most such persons are only now asking themselves: "What the hell just happened?", Corrigan was asking himself: "What the hell is happening?" about a decade ago or more. And, as Patrick Crozier notes, he got the answers right too.

Unlike, says Patrick in his immediately following posting, George Osborne.

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Godwin doesn't apply where people really are laughing along about exterminating their opponents.

- House of Dumb. I agree. It's okay to call people nazis if they did it first.

(6)

A half brick. That's about how musical I am as.

So I'm no judge of an orchestra, but Simon Heffer in the Telegraph seems to think the New Queen's Hall Orchestra is pretty good. The unusual thing about this orchestra is that it does not receive Arts Council funding.

I have to say that the fact that it gets some of its money from the patronage of the Duchess of Cornwall means that it cannot claim to be entirely independent of the State, since I presume she gets much of her money from the Civil List. But there you go. If one has to have state subsidies for the arts it is much more in the proper style that the dosh should come from the bejewelled hands of the former mistress, now wife, of the Prince of Wales than by filling in a grants form. I rather hope she hands over a velvet bag of gold sovereigns instead of writing a cheque.

I digress right royally. Here is what Simon Heffer writes about the orchestra's founder, John Boyden:

He has serious convictions about arts funding – in particular, he believes that the market for orchestral music is so distorted by public funding that innovation is almost impossible. Until the Arts Council's predecessor began funding orchestras just after the war, serious music depended on ticket sales and the patronage of the wealthy. Before the late 1940s, the LSO (a company owned by its players) paid dividends. Now it receives £2,355,836 (in 2010/11) from the Arts Council alone.

Mr Boyden believes that by keeping the price of tickets artificially low, the gap between an orchestra and its audience has become a gulf. He believes that other orchestras use their Arts Council funding to undercut orchestras such as his, taking up residencies in the provinces that are only made possible by the taxpayer's largesse. The state does not contemplate pulling the plug on these famous institutions and, as a result, everything in the orchestral world is static. Mr Boyden argues, with some justification, that the last piece of new music to seize the public imagination was Britten's War Requiem 48 years ago – because the music now written for these orchestras is created to satisfy not the musical public, but the taste of a handful of bureaucrats.

(11)

I see that former Velvet Underground drummer Moe Tucker was spotted at a Georgia Tea Party protest, telling a local reporter that she is “furious about the way we are being led towards socialism.” Prefix magazine calls this “depressing” news that will “bring you down” before the weekend, because it’s incumbent upon all musicians - especially those in seminal proto-punk bands like VU - to have roughly the same, boring lefty politics.

- Michael C. Moynihan, linked to and already picked out as a nice little nugget by Instapundit, which is where I saw it. I know, I know, who gives a defecation what ex-music-celebs think? Or for that matter current actors. Well, I like it when they talk sense, if only because the people who talk nonsense get so miserable and angry about it.