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Dear Paul A. Volker, et al,
I write, not to present a detailed analysis, rather, I wish to direct your ongoing thinking towards a wider viewpoint than that already expressed within. To that end, and by pure chance, I discovered the following in an old book I purchased a few weeks ago:
“To statesmen, whether of England or of the new Englands across the oceans, the importance can hardly be over-estimated of a sound appreciation of the nature of that remarkable economic evolution in the course of which the great English speaking nations have, so to speak, become charged in our time with the trial of the experiment – let us hope also with the solution of the problem - of freedom and democracy, using the words in the highest political sense as the antipodes of Paternal Government and Communism.
Perhaps, without presumption, it may be said that the future happiness of the human race – the success or failure of the planet – is to no small degree dependent upon the ultimate course of what seems, to us at least, to be the main stream of human progress, upon whether it shall be guided by the foresight of statesmen into safe channels or misguided, diverted, or obstructed, till some great social or political convulsion proves that its force and its direction have been misunderstood.
….. But still the deep sense I have endeavoured to describe in these few sentences of the importance of a sound understanding of English Economic History as the true basis of much of the practical politics of the future will be accepted, ……..
It is simply an attempt to set English Economic History upon right lines at its historical commencement by trying to solve the still open question whether it began with the freedom or with the serfdom of the mass of the people – whether the village communities living in the `hams’ and `tons’ of England were, at the outset of English history, free village communities or communities in serfdom under a manorial lordship; and further, what were their relations to the tribal communities of the Western and less conquered portions of the island.
On the answer to this question depends fundamentally the view to be taken by historians (let us say by politicians also) of the nature of the economic evolution which has taken place in
There are two very important aspects that stand out within Seebohm’s thesis; that our economic cultural heritage stems from much more than 2,000 years of evolution; from slavery, through serfdom, into freedom, and that all of the progress was made through the process of ownership of very small, privately owned, local community enterprises. In ancient times starting with the simple practice of gaining ownership of very small plots of land upon which to grow crops for onward sale; while in more modern times, we can see that that simple concept was extended to become the foundation for the small, local, free enterprise businesses; providing prosperous employment for the citizens of each local community.
It is my contention that the grass roots, free enterprise, very small, private business; form the foundation for the rest of the wider economy; that every aspect of the continuing success of Group of Thirty entirely depends upon their return to prosperity.
Group of Thirty have had the good grace to openly admit:
“There are deficiencies in the systems that should channel savings from households and corporations into an adequate supply of financing with long maturities to meet the growing investment needs of the real economy; that long term finance should be supplied by entities with committed long-term horizons.”
Your report concentrates upon every aspect for the ongoing survival of the existing financial community; in a sense, quite right too. That is your primary responsibility; but as we know full well, your sometimes excellent report is a wish list and even with the very best efforts of everyone involved; it might take decades to fully implement.
My duty today is to change your perspective.
Your natural working environment is at the top; both literally and operationally. Your viewpoint is from the highest aspect of the debate; but as I see it, what you must now do is take yourselves right down to the ground, the pavement or sidewalk of your financial economy and look down at the invisible foundations.
All your problems stem from far below your natural working horizon; down at the smallest business structure, (the same one that Seebohm illustrates), the villager that has thrown off their serfdom and set out to embrace the freedom of being their own boss.
In past history it was the very simple process of gaining access to a small strip of land adjacent to their village, on terms that allowed them to prosper; that through their hard work, they could better themselves. Over many centuries; they evolved the underlying rules to ensure they owned the rights to their means of economic progress; they became free to manage; managers that owned their business. Their long term freedom was firmly embedded into free enterprise. That strip of land eventually becoming a share in a free enterprise.
In which case, the most important lesson is to remember that to enable the continuance of a free nation; the foundations of the economy must be, (not should be), must be; built upon an ongoing acceptance of the principles of free enterprise for the millions of first stage business founders. It is their supreme example, to every other member of their local community; of the long term benefits of hard work and enterprise; that form the foundations for any successful free nation or group of nations. It is their needs that you must concentrate upon; not yours.
Today, as a direct result of what were, I am sure, unintended consequences of financial policies pursued by institutions under your direct control; and taking account of the structural difficulties built into the present economic model; there are now somewhere near 100 million inappropriately, under and unemployed “serfs” within the Western economies. Ergo, we are facing the potential reversal of thousands of years of economic history.
Moreover, and again, with the greatest of respects; you do not have to hand the necessary resources, particularly with regard to people with deep experience of free enterprise down at that level, to enable you to deliver a rapid reversal back onto a stable path forward.
Another aspect is that you do not have what one might describe as good old fashioned business control over your situation. You are constrained by being unable to act without political input; which is surely why, again and again within your report, you used the word “should”. I discovered this when attempting to gain help from both the Bank of England and the European Central Bank. Both institutions are similarly constrained; nothing gets done without political agreement and consequent direction. That then begs the question; do any of you have the necessary authority to implement new thinking?
By the same token, surely, is it not fair to say that you cannot, at your level, produce such a report and then stand idly by to watch continuing destruction of the underlying foundations of your free market economy? Time is not on your side.
You are the directors of the financial industry; you have no option but to step forward and take charge of the creation of the solutions.
There is no one above you to implement your findings.
What you have to learn to understand is that without your input, guidance and direction; we here on the outside are powerless. That, while you will, indeed must, inevitably, concentrate upon your own needs and responsibilities; you must also accept that those of us on the outside need your help. May I be so bold as to suggest that; if you delegate the solutions to the renewal of the foundations of the economy, to those of us that have long carried the torch for the previous failure to invest; you both free yourselves to concentrate upon the needs of the wider financial system; while allowing those of us with the detailed knowledge of the underlying difficulties; to establish the new institutions you have accepted must be created.
We cannot do that without you; you will lack credibility without us. We must work together.
No, I do not mean fancy conferences, huge public debates; instead, we need an open door to a direct conversation with your authority; a workable interface, between the innovators outside and the financial structures inside; always remembering that we are free to move very quickly indeed, if adequate resources are made available.
So, why not try some new thinking?
Yours sincerely,
Chris Coles
The Capital Spillway Trust