WEBVTT NOTE Law v. Legislation: A Hayekian Entrepreneur in London 1 00:00:00.000 --> 00:00:08.000 A milestone in the revival of the Austrian School came in 1974 when Hayek received the Nobel Prize in Economics. 2 00:00:08.000 --> 00:00:12.000 No longer could the economics profession dismiss the Austrians out of hand. 3 00:00:12.000 --> 00:00:19.000 Now they would need, however grudgingly, to read Hayek's work or at least learn about it. 4 00:00:19.000 --> 00:00:24.000 In the intervening years, it's safe to say that Hayek's reputation has been secured. 5 00:00:24.000 --> 00:00:33.000 Some of his insights have even become commonplace, the nature of law and its role in the development of the entrepreneurial market process, 6 00:00:33.000 --> 00:00:38.000 and how legislation impedes the market process are two of these. 7 00:00:38.000 --> 00:00:45.000 To commemorate his achievements and build on his foundation, we offer the F.A. Hayek Memorial Lecture. 8 00:00:45.000 --> 00:00:51.000 We are delighted to have Mr. Toby Baxendale deliver this year's Hayek Memorial Lecture. 9 00:00:51.000 --> 00:01:06.000 Mr. Baxendale is the founder of Billfield's Food Company Limited. Established in 1992, Billfield supplies most of the upscale London and southeast hotels and restaurants exclusively with their meat, poultry, game and deli items. 10 00:01:06.000 --> 00:01:20.000 Additionally, he owns Direct Seafoods and Dry Stores Direct, which sells select spices and Oriental products. Mr. Baxendale earned his BS with honors in economics from the London School of Economics. 11 00:01:20.000 --> 00:01:34.000 In October of 2001, he presented a series of lectures on entrepreneurship and Austrian economics to the European School of Management, Economy 21st Century course at Oxford. 12 00:01:34.000 --> 00:01:41.000 In 2002, he funded the Distinguished Hayek Visiting Fellowship at the London School of Economics. 13 00:01:41.000 --> 00:01:48.000 Professor Roger Garrison gave the inaugural Hayek Memorial Lectures on his book, Time and Money. 14 00:01:48.000 --> 00:01:56.000 Mr. Baxendale will speak on the topic, Law vs. Legislation, a Hayekian entrepreneur in London. 15 00:02:06.000 --> 00:02:09.000 Well thank you Professor Harbner for your kind words there. 16 00:02:09.000 --> 00:02:15.000 I suppose Lew has very kindly invited me to come here in my capacity as an entrepreneur 17 00:02:15.000 --> 00:02:35.000 I'm an entrepreneur who's also got some connection with the Austrian School and one of the great pleasures of coming here, because we all tend to be fairly off-piece thinkers, we're not part of the mainstream here, is everyone's got a little interesting story as to how they've come to find the Austrian School. 18 00:02:35.000 --> 00:02:39.840 I'll start really with my first entrepreneurial activities 19 00:02:39.920 --> 00:02:42.400 and then come to how I found the Austrian School 20 00:02:42.480 --> 00:02:45.520 and what insights I have as an entrepreneur and a businessman 21 00:02:45.600 --> 00:02:51.160 as to why the Austrian School is the correct school of economic thought. 22 00:02:51.240 --> 00:02:55.280 So, anyway, if you imagine, in the 1980s, 23 00:02:55.360 --> 00:02:59.880 there was a great polarisation in politics. 24 00:02:59.960 --> 00:03:03.400 I'm sure it was the same over here as well. 25 00:03:03.400 --> 00:03:09.800 as well, you had Ronald Reagan trying to roll back the frontiers of the state and to break 26 00:03:09.800 --> 00:03:17.940 the sort of social democrat consensus that existed. In the UK we had Margaret Thatcher 27 00:03:17.940 --> 00:03:25.120 and she was elected on the platform of smashing the trade unions who were effectively ruling 28 00:03:25.120 --> 00:03:31.880 the country and establishing freedom of contract as a right rather than monopoly union privileges 29 00:03:31.880 --> 00:03:38.280 as the central core thing that was driving the economy. So it was a great time to be 30 00:03:38.280 --> 00:03:42.120 just becoming politically aware. 31 00:03:42.120 --> 00:03:44.480 I was absolutely 32 00:03:44.480 --> 00:03:48.520 enthralled by Margaret Thatcher's appeal to the enterprise economy 33 00:03:48.520 --> 00:03:51.720 and at age thirteen, when I was at boarding school, 34 00:03:51.720 --> 00:03:53.920 my first entrepreneurial insight was to 35 00:03:53.920 --> 00:03:59.380 I set up an insurance company. What used to happen and 36 00:03:59.380 --> 00:04:08.380 Well, what used to happen is if you got caught smoking or drinking or doing any other kind of activity that was banned by the school authorities, 37 00:04:08.380 --> 00:04:15.380 they were very generous with you. I was at a Quaker school. They used to just have to pay a fine first time around. They wouldn't tell your parents. 38 00:04:15.380 --> 00:04:24.380 So what I did is I insured everyone. I insured everyone against getting their fines. 39 00:04:24.380 --> 00:04:34.380 I'll take their money and then pay out in the eventuality, I'll take a few pounds and then pay out the big fine when they got caught. 40 00:04:34.380 --> 00:04:42.380 But the problem was, my business, I think it lasted 10 days, it might have been 12 days. 41 00:04:42.380 --> 00:04:49.380 We all went on a school trip to Cambridge, we were about 12 miles away from Cambridge, the school was, 42 00:04:49.380 --> 00:05:02.380 and got completely and utterly wrecked and drunk, punting on the river Camel and went back to the minibus to be taken back to school and of course we're all busted 43 00:05:02.380 --> 00:05:16.380 and that was it at that point in time, so I was required to pay out, you know, and unfortunately though I'd spent all the money, you know, at one point in time 44 00:05:16.380 --> 00:05:23.380 So that was my first business venture and unfortunately it was a failure. 45 00:05:23.380 --> 00:05:34.380 And on a side point, a very interesting side point, being a Quaker scholar I actually got the restitution was being beaten up by my fellow Quaker students there. 46 00:05:34.380 --> 00:05:52.380 Anyway, I wasn't off put by my little capitalist ventures, you know, I thought we'll put them on the back burner now and maybe concentrate a bit more on studying 47 00:05:52.380 --> 00:05:58.380 and off I went to the London, where did I go to? 48 00:05:58.380 --> 00:06:02.380 Hammersmith and West London International College, 49 00:06:02.380 --> 00:06:10.380 which was a very highly regarded college in West London, 50 00:06:10.380 --> 00:06:13.380 but it was a hotbed of left-wing activity 51 00:06:13.380 --> 00:06:18.380 and I set up a branch of the Federation of Conservative Students there, 52 00:06:18.380 --> 00:06:20.380 I thought that would be the sensible thing to do 53 00:06:20.380 --> 00:06:30.380 We were really quite radical, there were four of us, against the 2000 assorted lefties of various descriptions. 54 00:06:30.380 --> 00:06:39.380 We used to organise speaker meetings but we could never really hold them because when you've got that weight and body of left-wing resistance, 55 00:06:39.380 --> 00:06:43.380 we were kind of just being pushed off campus all the time. 56 00:06:43.380 --> 00:06:48.380 So I used to hold my meetings at the Polish war centre in Hammersmith. 57 00:06:48.380 --> 00:07:00.380 And they were a very sound bunch of people. They were all former RAF pilots who'd been working on our side during the Second World War. 58 00:07:00.380 --> 00:07:04.380 And they were very case-hardened towards all these left-wing activities. 59 00:07:04.380 --> 00:07:12.380 And I was holding a meeting with the, he was either the then Foreign Secretary or Home Secretary Douglas Hurd. 60 00:07:12.380 --> 00:07:16.380 It was one of my speaker meetings at the Hammersmith Polish Centre. 61 00:07:16.380 --> 00:07:27.380 and the left-wingers came along and gave this massive demonstration against us calling us fascists, you know, we were always called fascists, all points in time we were fascists. 62 00:07:27.380 --> 00:07:35.380 And the Socialist Workers' Party came along and I don't know whether, you probably have never experienced this in politics, 63 00:07:35.380 --> 00:07:42.380 but the Socialist Workers' Party were really quite violent, they actually would want to have a proper punch-up, 64 00:07:42.380 --> 00:08:12.380 I don't want to drop a punch up, but the Home Secretary came along and the police sort of moved them on and we had our meetings and one of the chief sort of immigrants there from the Polish Centre got hold of me and said look, you must be a fairly sound guy here, my country has suffered from national socialism under the Germans and it suffered from international socialism under Stalin and one of the greatest campaigners 65 00:08:12.380 --> 00:08:15.380 And against this has been a chap called Hayek. Do you know anything about him? 66 00:08:15.380 --> 00:08:20.380 And I said, no, I don't know anything about him at all. No idea. Who is he? 67 00:08:20.380 --> 00:08:27.380 And this old gentleman took me off to a bookshop and we bought Dr. Amon Butler's first, 68 00:08:27.380 --> 00:08:32.380 well, it was a really nice little book, an introduction to the thought of Friedrich Hayek. 69 00:08:32.380 --> 00:08:38.380 And at 16 I was hooked. I was absolutely hooked at that point in time on Hayek 70 00:08:38.380 --> 00:08:41.820 and I really wanted to get in and understand more about him 71 00:08:41.900 --> 00:08:47.380 because he seemed to give a justification for the free market system. 72 00:08:47.460 --> 00:08:51.460 And I knew at that point in time that I wanted to study economics. 73 00:08:51.540 --> 00:08:55.420 But I thought, you know, where shall I go? 74 00:08:55.500 --> 00:08:59.460 Being fairly sure of myself, I applied for Cambridge, 75 00:08:59.540 --> 00:09:01.980 so I had the grades to get into Cambridge. 76 00:09:02.060 --> 00:09:03.940 LSE was my second choice 77 00:09:03.940 --> 00:09:17.940 And I remember going to my interview down in college at Cambridge and the master there was a chap called Hopkins and after my interview he said to me, 78 00:09:17.940 --> 00:09:32.940 Mr. Baxendale, I don't doubt your intellectual ability, I doubt your commitment, so I was doing other entrepreneurial things, I doubt your commitment and you are far too arrogant young man, far too arrogant to come here. 79 00:09:32.940 --> 00:10:02.940 Anyway, that set me on the path of LSE, so that's how I ended up at LSE, and I'm glad I ended up at LSE really, because that is my spiritual home, and it was correct that Cambridge swerved me and put me on the direction to LSE, but as I was going to LSE, I thought this would be wonderful, I'd be able to study Hayek and Lionel Robbins and all the great Austrians, because after all, Hayek was 80 00:10:02.940 --> 00:10:07.780 I was there for 21 years. Robbins must have been there for nearly 45 years. 81 00:10:07.780 --> 00:10:16.300 But to my shock and horror, I enrolled in the economics department and there was nothing, nothing at all. 82 00:10:16.300 --> 00:10:24.580 It was all, you know, Alice in Wonderland economics, really, of Keynes. 83 00:10:24.580 --> 00:10:29.900 So I moved out of that department because I couldn't get any sense there at all 84 00:10:29.900 --> 00:10:34.980 and went into the government department and studied philosophy and law 85 00:10:35.060 --> 00:10:41.060 under one of Michael Oakeshott's protégés, Dr Robert Orr, 86 00:10:41.140 --> 00:10:47.460 and studied British idealism of Collingwood and Oakeshott, 87 00:10:47.540 --> 00:10:52.140 which actually has a lot of similarities and parallels with Mises, 88 00:10:52.220 --> 00:10:56.780 but Mises wouldn't have even appeared on the Richter scale 89 00:10:56.780 --> 00:11:00.780 in any way, shape or form at the LSE. 90 00:11:00.860 --> 00:11:05.900 So, unfortunately, the only thing I did manage to study at the LSE on Hayek 91 00:11:05.980 --> 00:11:10.500 was his political philosophy going forward from 1945. 92 00:11:10.580 --> 00:11:12.300 So, you could get... 93 00:11:12.380 --> 00:11:16.380 It was respectable enough to be able to read and study 94 00:11:16.460 --> 00:11:18.980 the Road to Serfdom and the Constitution of Liberty. 95 00:11:19.060 --> 00:11:20.860 But that's as far as it goes. 96 00:11:20.940 --> 00:11:23.740 So, I left the LSE still with these questions in my mind 97 00:11:23.820 --> 00:11:26.380 as to why is Hayek called an economist? 98 00:11:26.380 --> 00:11:37.380 Why is he an economist? I've never seen any of his works and no one could ever show me any of his works and no one was really interested in teaching any of his works. 99 00:11:37.380 --> 00:11:44.380 So I made a mental note at that point in time to then refer back to Hayek at some later point in time. 100 00:11:44.380 --> 00:11:48.700 And I had already resumed my entrepreneurial careers 101 00:11:48.780 --> 00:11:53.860 and money-making schemes have become far more of interest to me 102 00:11:53.940 --> 00:11:57.580 than any politics or any academic studies. 103 00:11:57.660 --> 00:11:59.980 And really, the students in here, 104 00:12:00.060 --> 00:12:03.500 you'll love what I was doing when I was a student. 105 00:12:03.580 --> 00:12:09.420 At age 19, I was absolutely fascinated by society, it girls, 106 00:12:09.500 --> 00:12:14.340 very affluent, I don't know what they're called in this country, 107 00:12:14.380 --> 00:12:21.380 The King's Road is a very exclusive, affluent area and a lot of inherited money and wealth resides in that area. 108 00:12:21.380 --> 00:12:26.380 I managed to get into the country and I was fascinated by these beautiful ladies. 109 00:12:26.380 --> 00:12:31.380 They used to go to this nightclub called the 151 Club on the King's Road in Chelsea. 110 00:12:31.380 --> 00:12:36.380 If you know London, the King's Road is a very exclusive, very affluent area 111 00:12:36.380 --> 00:12:42.380 and a lot of inherited money and wealth resides in that area. 112 00:12:42.380 --> 00:12:49.340 So, anyway, managed to get into the club, took my way in, started talking to the owners and 113 00:12:49.340 --> 00:12:54.340 the owners were, well, one of the owners in particular was looking to retire, he just 114 00:12:54.340 --> 00:12:59.540 had a hernia operation and he wanted out and I thought, this is too much of a good opportunity, 115 00:12:59.540 --> 00:13:09.540 it really is an opportunity, I've got to buy this place, now how do you buy this place 116 00:13:09.540 --> 00:13:13.540 This is the case when you have no money, you know, this is a problem. 117 00:13:13.540 --> 00:13:19.540 But anyway, what I thought, if some of you are involved in politics, you'll understand this. 118 00:13:19.540 --> 00:13:25.540 There are always a few guys who are, you know, probably a little bit socially inadequate, you know, 119 00:13:25.540 --> 00:13:29.540 a bit, shall we say, sexually challenged. 120 00:13:29.540 --> 00:13:34.540 So I thought to myself, well, what I'll do is I'll have two individuals who I thought, 121 00:13:34.540 --> 00:13:57.540 They're rich and wealthy. I'll go and approach them and spin the line to them that, look, if they got involved in this nightclub, backed me, so I could have a few percent, my first little few percent of ownership, they'd vastly enhance their chances with the opposite sex, if they became involved. And that was it. They fell for it. 122 00:13:57.540 --> 00:14:12.540 They fell for it and we bought this nightclub in 1989 and it was the start of the LSE in fact. 123 00:14:12.540 --> 00:14:20.540 So whilst I suddenly went from having absolutely nothing to having a fabulous income and absolutely tremendously, 124 00:14:20.540 --> 00:14:23.540 I'd never seen money like I was earning. 125 00:14:23.540 --> 00:14:28.740 I was earning so then of course you know as soon as it was coming in it was going immediately out on 126 00:14:28.740 --> 00:14:38.260 fast women, fast cars, rock and roll lifestyle and everything like that but you know it was fun and 127 00:14:38.260 --> 00:14:46.100 I have to say though if my son who's now three years old ever decides to do anything like this 128 00:14:46.100 --> 00:14:50.300 and not concentrate on his studies and be a good boy and so on and so forth I'll take a very 129 00:14:50.300 --> 00:14:58.300 Anyway, I got away with it. We got my first little bit of ownership and it was wonderful. 130 00:14:58.300 --> 00:15:06.300 I used to go to lectures and then go to the night club, have a good time doing whatever I was doing, 131 00:15:06.300 --> 00:15:12.300 then a little sleep and then back into lectures again. So I had a whale of a time through university. 132 00:15:12.300 --> 00:15:37.300 the recession had really started hitting us and I thought, well, what I ought to do is divest, let's be sensible, let's try and put some money aside here, I'm spending it all on fast cars and women and so on and so forth, let's go and invest it in the future. 133 00:15:37.300 --> 00:15:44.900 And I chose a restaurant venture, again in Chelsea, in Lower Sloan Street, called La Casino. 134 00:15:44.900 --> 00:15:49.100 And the reason why I went for it is I thought it's got to be recession-proof, because it was only £5. 135 00:15:49.100 --> 00:15:54.100 Everything in there was £5. Everything cost £5 for a meal. You could eat anything you wanted. 136 00:15:54.100 --> 00:15:58.500 And it was packed, absolutely packed, and I thought this would be a good start point here. 137 00:15:58.500 --> 00:16:03.700 I can't really go wrong, but, you know, 1991 recession came in, 138 00:16:03.700 --> 00:16:11.060 London and the whole economy just tanked in London and things started going terribly wrong 139 00:16:11.060 --> 00:16:15.260 in the restaurant, it started becoming loss-making, so I had to think of how am I going to get 140 00:16:15.260 --> 00:16:20.980 out of this and what I used to do is I used to, after the nightclub, before the nightclub 141 00:16:20.980 --> 00:16:25.740 I'd go to the restaurant, then I'd go to the nightclub and then I'd go to the markets, 142 00:16:25.740 --> 00:16:31.620 the fresh produce markets in London of which there are three principal fresh produce markets, 143 00:16:31.620 --> 00:16:39.620 Billingsgate for fish, Smithfield for meat and Nine Elms Covent Garden for fruit and veg 144 00:16:39.620 --> 00:16:44.620 And I cut out our traditional suppliers and go to the restaurants in my own van 145 00:16:44.620 --> 00:16:48.620 and go to the markets in my own van and pick up all the fresh produce 146 00:16:48.620 --> 00:16:52.620 and I was saving about a thousand pounds a week for the restaurant 147 00:16:52.620 --> 00:16:59.620 which allowed it to trade out of the 1991 recession and then allowed me to offload it 148 00:16:59.620 --> 00:17:07.620 But we offloaded it, well I had two partners in there, offloaded it for a loss of 70,000 pounds 149 00:17:07.620 --> 00:17:16.620 and I had one of those very awkward conversations with the bank, age 21 which consisted of bank manager 150 00:17:16.620 --> 00:17:26.620 why should I fund this 70,000 pounds to get you out of trouble and sell the restaurant 151 00:17:26.620 --> 00:17:31.620 You know, you've got no income now, how are you going to pay it back? 152 00:17:31.620 --> 00:17:33.620 Perhaps I should just bankrupt you. 153 00:17:33.620 --> 00:17:35.620 And I said, well, I don't think that's wise. 154 00:17:35.620 --> 00:17:39.620 If you bankrupt me, you know, at the end of the day, it's blood on your face. 155 00:17:39.620 --> 00:17:41.620 You'll never get any money back. 156 00:17:41.620 --> 00:17:45.620 So what I did is I said to him, look, I'm saving a thousand pounds a week for the restaurant. 157 00:17:45.620 --> 00:17:50.620 If I go and offer my services to other restaurants as a buyer for them, 158 00:17:50.620 --> 00:17:53.620 then, you know, we've got a money-making operation here. 159 00:17:53.620 --> 00:18:01.460 and he accepted that and agreed a five-year loan repayment period for the £70,000. 160 00:18:01.460 --> 00:18:09.060 I paid it off in 18 months and we built a £20 million turnover business on the back of it since then, 161 00:18:09.060 --> 00:18:22.940 supplying hotels and restaurants and life's calmed down a bit, it's all very sensible now and very respectable and so on and so forth. 162 00:18:22.940 --> 00:18:30.940 But anyway, that was what I was building up whilst I was at university and then after university. 163 00:18:30.940 --> 00:18:40.940 And then in 1996, when life did settle down and I had proper management in place and so on and so forth, 164 00:18:40.940 --> 00:18:47.940 I thought I'd like to get back to my academic interests and really now actually try and find out 165 00:18:47.940 --> 00:18:53.300 After nearly 10 years, what are Hayek's economics? 166 00:18:53.380 --> 00:18:56.220 Because no one could tell me, no one knew, 167 00:18:56.300 --> 00:18:59.700 none of his books were published or anything. 168 00:18:59.780 --> 00:19:05.700 Hayek used to refer to this chap called Mises very respectfully, 169 00:19:05.780 --> 00:19:06.980 very, very respectfully indeed, 170 00:19:07.060 --> 00:19:10.780 and I thought, well, I'll try on the internet who this Mises is, 171 00:19:10.860 --> 00:19:14.020 plugged in Mises in 1996, and then bang, 172 00:19:14.100 --> 00:19:17.780 I came to the Ludwig von Mises Institute 173 00:19:17.780 --> 00:19:27.780 and that was just such a great, an eye-opener, it was a great, it gave me such clarity of mind and thinking. 174 00:19:27.780 --> 00:19:40.780 And then I learned actually about Austrian economics and it was, well I haven't looked back since, it's answered all my questions. 175 00:19:40.780 --> 00:19:48.780 But anyway, just in terms of some of the observations I'd like to share with you 176 00:19:48.780 --> 00:19:54.780 about my experiences in the business world and how they relate to Austrian economics. 177 00:19:54.780 --> 00:20:03.780 I think the first thing I'd like to tell you about is Smithfield Meat Market. 178 00:20:03.780 --> 00:20:08.780 Smithfield Meat Market is a fresh produce market and for any of you teachers here, 179 00:20:08.780 --> 00:20:18.780 I strongly recommend that there will be places in the United States where cattle is traded or where meat products or fish products or fruit and veg is traded. 180 00:20:18.780 --> 00:20:34.780 We are told in any economics class, you start with learning about demand and supply and you can see how the market works, clears all the time, efficient allocation of resources and so on and so forth. 181 00:20:34.780 --> 00:20:38.780 and then that's a kind of week of your course and then you spend the next year 182 00:20:38.780 --> 00:20:43.780 learning about how the markets are completely and utterly imperfect 183 00:20:43.780 --> 00:20:49.780 and they never clear, they never work and you know the story. 184 00:20:49.780 --> 00:20:52.780 But the first thing, when I first went down to Smithfield Meat Market 185 00:20:52.780 --> 00:20:57.780 it was an absolute eye-opener for me because I'd sort of accepted this line of thinking 186 00:20:57.780 --> 00:21:01.780 and I believed in the imperfect competition type of thing 187 00:21:01.780 --> 00:21:31.780 I've been pushed down the sort of public choice in Chicago school way of understanding things but then to see it with the beauty about a fresh produce market is that you've got the time clicking against you from day one so as a trader you have to clear your product on day one so all product clears the market to all different buyers the price adjusts it clears out they are the nearest thing you're going to get 188 00:21:31.780 --> 00:21:41.780 Why can it work in food production and not in any other aspect of business? I don't know. 189 00:21:41.780 --> 00:21:45.780 No one can really answer that question. There isn't an answer to that question. 190 00:21:45.780 --> 00:21:48.780 The free market works in all marketplaces. 191 00:21:48.780 --> 00:21:56.780 The only time you'll ever see surpluses in fresh produce markets is where government is involved, 192 00:21:56.780 --> 00:22:03.100 in 2012, such as where in the United Kingdom we have the Common Agricultural Policy, which 193 00:22:03.100 --> 00:22:09.620 is a European-wide driven policy that subsidizes production of certain fresh produce, and what 194 00:22:09.620 --> 00:22:17.420 a surprise, you know, there's massive oversupply, huge great big beef mountains, butter mountains, 195 00:22:17.420 --> 00:22:22.220 grain mountains, you know, you name it, so it's only when the government intervenes 196 00:22:22.220 --> 00:22:26.620 in the fresh produce marketplaces. Do you ever get any inefficiencies? So 197 00:22:26.620 --> 00:22:31.220 I would recommend to any teacher, you know, take your students down, you know, after they've 198 00:22:31.220 --> 00:22:33.620 been given, after they've been spoon-fed 199 00:22:33.620 --> 00:22:36.940 the first year course of all the rubbish, actually take them to 200 00:22:36.940 --> 00:22:41.020 take them to these marketplaces and see the free market in operation. 201 00:22:41.020 --> 00:22:44.020 Unhampered, it works, it clears. 202 00:22:44.020 --> 00:22:48.020 You have to clear your produce at all points in time. 203 00:22:48.020 --> 00:22:49.260 So that's the first 204 00:22:49.260 --> 00:22:51.320 little observation 205 00:22:51.320 --> 00:22:56.520 I made when I went into my business career proper. 206 00:22:56.520 --> 00:23:01.440 The second observation that I made is that I don't know whether 207 00:23:01.440 --> 00:23:05.200 the meat market, certainly in the United Kingdom, they're full of 208 00:23:05.200 --> 00:23:09.800 how shall we say, characters, affable rogues, you know, 209 00:23:09.800 --> 00:23:14.360 is the politest way I can describe 210 00:23:14.360 --> 00:23:17.360 these people. 211 00:23:17.360 --> 00:23:23.120 I remember one of them, his name is Jimmy, I won't say his surnames, I'll incriminate him. 212 00:23:23.120 --> 00:23:28.560 He used to always come up to me, and if you're a proprietor of a business, you were called Governor. 213 00:23:28.560 --> 00:23:30.200 He used to refer to you as Governor. 214 00:23:30.200 --> 00:23:34.680 So he'd say to me, come on Governor, look, I've got loads of stuff I want to show you. 215 00:23:34.680 --> 00:23:45.520 And he'd take me to his van, and in his van you'd see all this array of Gucci knocked off products and Versace and so on and so forth. 216 00:23:45.520 --> 00:23:51.480 Very foolishly, I was trying to resist purchasing anything off this character. 217 00:23:51.480 --> 00:23:56.280 Really, really, I spent about two years trying to resist him, but he kept on pursuing me because 218 00:23:56.280 --> 00:24:04.400 being a polite sort of guy, I never really told him to sod off, you know, in any meaningful way. 219 00:24:04.400 --> 00:24:12.440 So he kept pursuing me and in the end, struggling to buy Christmas presents for all the female members of my family, 220 00:24:12.440 --> 00:24:20.940 I bought some Chanel No. 5 off him, and to my great disappointment, on Christmas Day 221 00:24:20.940 --> 00:24:26.360 there were strange looks at me and my sister was the only one who'd, being on the same 222 00:24:26.360 --> 00:24:30.080 level as me, so she sort of came up to me and said, you disgust me, you do. 223 00:24:30.080 --> 00:24:38.200 I said, why, what have I done, what have I done now, you disgust me, you've sold them 224 00:24:38.200 --> 00:24:40.200 and stuff that all smells like gnats piss. 225 00:24:40.200 --> 00:24:51.200 So anyway, with Jimmy, you'd think I'd learn my lesson, but he then came up to me one day, 226 00:24:51.200 --> 00:24:57.200 and he produced a role of, it was money, counterfeit money, 227 00:24:57.200 --> 00:25:02.200 he was getting involved in some very seriously criminal activities, 228 00:25:02.200 --> 00:25:07.200 and he rolled out this whole ream of twenty pound notes 229 00:25:07.200 --> 00:25:20.200 and said to me, you know, you can buy this 2 pound, 2 pound or 20 pound note, Toby, you've got to be mad not to buy this off me and I said, no, thank you, Jimmy, not interested, not interested at all. 230 00:25:20.200 --> 00:25:35.200 Anyway, a few days later, a few days later, there's Jimmy laughing away, smiling, he was so happy, this was about 5 o'clock in the morning, he was really, really, really happy with himself, I said, oh Jimmy, why are you so happy? 231 00:25:35.200 --> 00:25:39.900 And he said, oh well, you're never, ever going to believe it, I've had real luck this morning, 232 00:25:39.900 --> 00:25:44.920 I was driving down the Seven Sisters Road, now for any of you who know the Seven Sisters 233 00:25:44.920 --> 00:25:51.420 Road, that is a very, very seriously dodgy part of town, where the professional ladies 234 00:25:51.420 --> 00:25:57.920 work the streets, shall we say, and he said, oh yeah, I've just had such a result, I've 235 00:25:57.920 --> 00:26:04.480 stopped, and I was asked by a girl if I wanted any services, so I said yes, went over, did 236 00:26:04.480 --> 00:26:15.000 the business gave her a £20 note and I got £10 back and I can't believe my luck so I've 237 00:26:15.000 --> 00:26:21.200 got the service and I've earned £10 with my money. I turned around to him and said Jimmy 238 00:26:21.200 --> 00:26:31.920 are you trying to be the next candidate for governor of the Bank of England? But Jimmy 239 00:26:31.920 --> 00:26:37.720 Jimmy, anyway, he didn't understand that last week. 240 00:26:37.720 --> 00:26:48.720 Now, needless to say, in probably 10 years, I haven't seen Jimmy again, so I suspect he's serving time at one of Her Majesty's institutions. 241 00:26:48.720 --> 00:26:55.120 Yeah, that's right, where he's probably best kept there. 242 00:26:55.120 --> 00:26:59.920 But anyway, I mention that because I think Austrians will understand that. 243 00:26:59.920 --> 00:27:04.920 I still am slightly confused into my mind, actually, of who's the bigger criminal? 244 00:27:04.920 --> 00:27:11.920 Is it the Jimmy's of the world who's the counterfeiter, who's ripping off the working lady? 245 00:27:11.920 --> 00:27:17.920 Or is it the governor of the Bank of England who's just ripping off the whole population period? 246 00:27:17.920 --> 00:27:20.920 You know, I don't know. 247 00:27:20.920 --> 00:27:25.920 You know, ever since reading Rothbard's What Has Government Done With My Money? 248 00:27:25.920 --> 00:27:37.920 I can't really answer that question, you know, before I take the conventional view that it's the petty criminal, but now I'm completely lost. 249 00:27:37.920 --> 00:27:47.920 This is a major problem. But I mentioned the counterfeiting story, because I think the Austrian audience will understand where I'm coming from there. 250 00:27:47.920 --> 00:27:53.920 There's an interesting point of history here. I was reading a biography of Isaac Newton, 251 00:27:53.920 --> 00:28:01.520 I don't know whether any of you know that Isaac Newton has actually played a very important role in sound money. 252 00:28:01.520 --> 00:28:10.720 He was master of the Royal Mint from the 1690s for about 20 years or so. 253 00:28:10.720 --> 00:28:21.920 And he was made master of the Royal Mint and he was so concerned with the clipping of the coinage that was going on 254 00:28:21.920 --> 00:28:28.920 that he agreed a deal with the Crown whereby he would be paid a little percentage of each coin 255 00:28:28.920 --> 00:28:39.920 to pull all the coinage in from the economy and re-mint it and get proper value established in the coinage. 256 00:28:39.920 --> 00:28:45.920 Now that could be an inflationist dream there, being paid to bring in coinage, 257 00:28:45.920 --> 00:28:53.920 But the counterbalance against that was that he underwent periodically every few months the trial of the PICS, 258 00:28:53.920 --> 00:29:01.920 which actually still happens today. It's where the goldsmith company, which is a livery company of goldsmiths, 259 00:29:01.920 --> 00:29:06.920 assess the weight and integrity of the coinage. 260 00:29:06.920 --> 00:29:14.920 And Newton had severe financial penalties put against him if the coinage didn't come up to standards. 261 00:29:14.920 --> 00:29:20.000 came up to standards, so there was a check and a balance, and to top that all, Newton 262 00:29:20.000 --> 00:29:26.280 also became a justice of the peace, so he could vigorously pursue all counterfeiters 263 00:29:26.280 --> 00:29:35.200 and have them executed, which poor old Jimmy, if he was around in 1690, he wouldn't be languishing 264 00:29:35.200 --> 00:29:40.240 at Her Majesty's pleasure now, he would be executed, but that's how sound money was 265 00:29:40.240 --> 00:29:50.880 was delivered into England from 1690 onwards and I picked out a little quote from a contemporary 266 00:29:50.880 --> 00:29:57.440 economist and scientist Sir William Petty in his book Political Arithmetic and he said 267 00:29:57.440 --> 00:30:02.760 that Newton had established a standard measure that the whole cash of England with some six 268 00:30:02.760 --> 00:30:08.320 million pounds and that was it, was money sufficient to drive the trade of the nation 269 00:30:08.320 --> 00:30:14.320 and quite right too, you know, there's never any need to have more money than that 270 00:30:14.320 --> 00:30:22.160 and there never is, it's only, we've only increased it due to all the inflationist policies, so 271 00:30:22.160 --> 00:30:28.480 there's one thing I just thought you might like to know about Isaac Newton 272 00:30:28.480 --> 00:30:35.080 and sound money and he has a role in the sound money movement, he's not only just a scientist 273 00:30:35.080 --> 00:30:37.920 But I digress anyway. 274 00:30:37.920 --> 00:30:40.640 Moving back into the modern period, 275 00:30:40.640 --> 00:30:46.480 some other observations I've made is that 276 00:30:46.480 --> 00:30:50.640 it became clear that during the 1990s 277 00:30:50.640 --> 00:30:52.880 a Labour government or a traditional Labour government 278 00:30:52.880 --> 00:30:54.560 would never ever be elected again 279 00:30:54.560 --> 00:30:57.280 under their banner of common ownership 280 00:30:57.280 --> 00:31:00.240 of the means of production, distribution and exchange, 281 00:31:00.240 --> 00:31:03.560 which is what you had to sign down to if you joined the Labour Party. 282 00:31:03.560 --> 00:31:08.160 Tony Blair changed all that when he came in power in 1994 283 00:31:08.160 --> 00:31:13.400 and he publicly stated that none of the Thatcher reforms 284 00:31:13.400 --> 00:31:17.280 would ever be repealed or replaced by his government. 285 00:31:17.280 --> 00:31:19.880 So, in a sense, he was turning the Labour Party 286 00:31:19.880 --> 00:31:23.880 into a Conservative party, a Thatcherite party, 287 00:31:23.880 --> 00:31:27.640 and he got elected on the back of it in 1997. 288 00:31:27.640 --> 00:31:33.200 And I think all the business community largely welcomed it. 289 00:31:33.200 --> 00:31:39.960 I don't think we saw any particular problem with Blair if he's stuck to what his election promises were. 290 00:31:39.960 --> 00:31:50.200 Now, Blair is the best actor in the world and he's a total and utter comedian. 291 00:31:50.200 --> 00:31:58.800 He has stuck to his promises largely, but what he's done and the thing that has affected us terribly and tragically 292 00:31:58.800 --> 00:32:03.200 is that he's incorporated all the social chapter legislation 293 00:32:03.200 --> 00:32:07.960 in from Europe into the United Kingdom law and that's a union charter really 294 00:32:07.960 --> 00:32:11.120 so we now have, and that's why the unions are silent 295 00:32:11.120 --> 00:32:14.160 in the United Kingdom, they don't need to 296 00:32:14.160 --> 00:32:17.440 resort to violence and intimidation 297 00:32:17.440 --> 00:32:21.320 and their closed shop practices to extract 298 00:32:21.320 --> 00:32:24.840 money out of businessmen, they don't need to do that anymore 299 00:32:24.840 --> 00:32:28.480 and what they have is they have a whole raft of legislation that's 300 00:32:28.480 --> 00:32:34.480 driven from Europe that now gives them all their wishes, you can't, it's virtually impossible 301 00:32:34.480 --> 00:32:40.600 now to sack someone in the United Kingdom, virtually impossible. We have on the back 302 00:32:40.600 --> 00:32:46.600 of the social chapter a 48-hour working week, which certainly if you're a night worker, 303 00:32:46.600 --> 00:32:51.000 even if you consent to working more, want to work more, want to work overtime more, 304 00:32:51.000 --> 00:32:55.160 you can't do, you're not allowed to, it's prohibited under the social chapter, you've 305 00:32:55.160 --> 00:33:02.280 You've got to give people minimum four weeks holiday pay, plus public holidays. 306 00:33:02.280 --> 00:33:06.920 You've got to give paternity leave paid for two weeks. 307 00:33:06.920 --> 00:33:12.820 You've got to give 13 weeks, up to 13 weeks off to anyone who asks for unpaid paternity 308 00:33:12.820 --> 00:33:13.820 leave. 309 00:33:13.820 --> 00:33:20.400 So you can conceivably, every male member of your staff can have up to, who has children, 310 00:33:20.400 --> 00:33:26.400 This applies to you if you have children, not just if your wife is giving birth to a child, 311 00:33:26.400 --> 00:33:30.400 but if you have children, period, you can have paternity leave, periodically, 312 00:33:30.400 --> 00:33:36.400 and you can literally work for 40% of the year, you can be being on paid leave, 313 00:33:36.400 --> 00:33:43.400 and the other 60% you can work, if you so choose, to turn up to work. 314 00:33:43.400 --> 00:33:49.400 But if you do turn up to work, you know, as a boss, you've got to be very careful now 315 00:33:49.400 --> 00:33:55.160 with your staff in terms of how you handle things and the cost that this has put on our 316 00:33:55.160 --> 00:34:02.200 business and the lack of flexibility that we now have because you can't, it's just 317 00:34:02.200 --> 00:34:04.480 so dangerous to sack people. 318 00:34:04.480 --> 00:34:14.360 In the last year I've been sued for over £100,000 which has been tragic for me, no-one wants 319 00:34:14.360 --> 00:34:16.680 to give away that kind of money in cold blood. 320 00:34:16.680 --> 00:34:46.680 These are very spurious claims and this is the way law is and then on the other side of the equation just so much as you can't sack people it's very difficult to recruit people as well for manual labour because your competition is in fact the social security system that's who you're competing against in our country and I have some sympathy with the individuals who do this 321 00:34:46.680 --> 00:34:59.680 If you live in London, and let's say the minimum rental you're going to pay for a one-bedroom apartment is probably 300 pounds a week, it's very expensive. 322 00:34:59.680 --> 00:35:07.680 If you go on the Social Security, your housing costs are paid. So, for a start, that's 15,000 pounds a year worth of benefit. 323 00:35:07.680 --> 00:35:15.680 Then when you get your income support and various other things and you can take a cash job in the black economy, what's the point of working? 324 00:35:15.680 --> 00:35:42.680 There's no real point in working, so it's tremendously difficult to recruit people occasionally, and thankfully, I'm very pro-immigration in one respect, because you get, for every ten immigrants in, you might get nine economic immigrants who are coming to benefit from the social security system, but you'll probably get one who's really genuinely hungry and wants to improve their lot. 325 00:35:42.680 --> 00:35:55.680 I would say that in our London operations we probably employ 40 or 50% foreign, certainly non-native, English speaking people. 326 00:35:55.680 --> 00:36:03.680 That's the tragedy of what all this legislation has done. 327 00:36:03.680 --> 00:36:07.680 And it's slowly, slowly grinding us all to a halt. 328 00:36:07.680 --> 00:36:15.440 We're all, you know, because you can't respond to market situations and you can see in America where things are a bit more flexible. 329 00:36:15.440 --> 00:36:22.360 You always have higher growth figures. I think four or five percent is quite a common growth over here. 330 00:36:22.360 --> 00:36:26.360 Europe is now slowing down to one percent, two percent. 331 00:36:26.360 --> 00:36:37.320 And I'm sure at some point in time it will go to negative growth because of the social costs that we all have on top of us, which are far too restrictive. 332 00:36:37.320 --> 00:36:44.760 And I think Britain is actually viewed still to be one of the better and more flexible economies. 333 00:36:44.760 --> 00:36:48.640 I think in France they really have it bad, where it's a 35-hour week. 334 00:36:48.640 --> 00:36:53.000 You are excluded from working anything over 35 hours. 335 00:36:53.000 --> 00:37:00.000 And the social insurance costs are on cost of 40% onto your salary. 336 00:37:00.000 --> 00:37:04.840 So it's really, really, really crippling stuff. 337 00:37:04.840 --> 00:37:13.840 But this is the state of the economy that we're in and what we're experiencing at the moment. 338 00:37:13.840 --> 00:37:18.840 But on a European point, now I'm in danger of getting on my high horse here. 339 00:37:18.840 --> 00:37:29.840 Europe to me is the biggest, biggest of all problems that is potentially facing our nation at the moment. 340 00:37:29.840 --> 00:37:41.840 and in fact all of the nations of Europe because what it is, it's a great big socialist project of income redistribution from the richer parts of Europe to the poorer parts of Europe 341 00:37:41.840 --> 00:37:52.840 and we're just about to sign a constitution, the first European constitution and I mention this point because reading the works of Thomas di Lorenzo 342 00:37:52.840 --> 00:38:05.240 and looking at the, lewrockwell.com, you're very key on promoting the secession point, 343 00:38:05.240 --> 00:38:10.320 which is something I would never, not really studying American history or anything, it's 344 00:38:10.320 --> 00:38:16.240 something I wouldn't really focus my mind on, but there's no, up until two months ago 345 00:38:16.240 --> 00:38:22.200 there were no secession provisions in the draft European constitution, and now through 346 00:38:22.200 --> 00:38:25.480 Lots of agitation by various people. 347 00:38:25.560 --> 00:38:31.800 There is a secession point and it's in Article 59 of the draft Constitution 348 00:38:31.880 --> 00:38:34.680 and it's called Voluntary Withdrawal from the Union. 349 00:38:34.760 --> 00:38:37.440 I'd like to read it to you. 350 00:38:37.520 --> 00:38:42.080 Point number one, any member state may decide to withdraw from the European Union 351 00:38:42.160 --> 00:38:45.640 in accordance with its own constitutional requirements. 352 00:38:45.720 --> 00:38:48.120 That sounds lovely, doesn't it? That's perfect. 353 00:38:48.120 --> 00:38:54.120 Now, if only a politician could kind of leave it there, but we go on. 354 00:38:54.120 --> 00:39:00.120 Any member state which decides to withdraw shall notify the European Council of its intention. 355 00:39:00.120 --> 00:39:03.120 The European Council should examine that notification. 356 00:39:03.120 --> 00:39:06.120 In the light of the guidelines provided by the European Council, 357 00:39:06.120 --> 00:39:10.120 the Union shall negotiate and conclude an agreement with that state, 358 00:39:10.120 --> 00:39:16.120 setting out the arrangements for its withdrawal, taking account of the framework of its future relationship with the Union. 359 00:39:16.120 --> 00:39:24.120 That sort of sounds all okay, they're talking about negotiation, well, you know, maybe you can give them the courtesy of negotiating with them. 360 00:39:24.120 --> 00:39:32.120 It then goes on, that agreement shall be concluded on behalf of the Union by the Council of Ministers, acting by a qualified majority, 361 00:39:32.120 --> 00:39:41.120 so they can vote, if they vote against you, you're, well, kind of game over, you can't succeed, after obtaining the consent of the European Parliament. 362 00:39:41.120 --> 00:39:44.520 And then they really, really clarify what their intention is here. 363 00:39:44.520 --> 00:39:49.120 The representative of the withdrawing member states shall not participate in the Council of Ministers 364 00:39:49.120 --> 00:39:52.520 or European Council discussions or decisions concerning it. 365 00:39:52.520 --> 00:40:02.920 So you're allowed to say you wish to leave, but then that's it, the negotiation is very one-sided thereafter. 366 00:40:02.920 --> 00:40:09.720 And I fear, I really do genuinely fear, certainly within my lifetime. 367 00:40:09.720 --> 00:40:16.720 In the American experience, I think it's probably about 70 years from constitution to civil war. 368 00:40:16.720 --> 00:40:20.720 If you don't have a right to succeed, then you don't have any freedom. 369 00:40:20.720 --> 00:40:30.720 And really, that's the end of any independence of the independent European states. 370 00:40:30.720 --> 00:40:33.720 That's it. It's finished. 371 00:40:33.720 --> 00:40:41.280 So that's a very, very real possibility that that will come into law within this calendar year. 372 00:40:41.280 --> 00:40:47.120 And Blair has said that there will be no referendum on this at all, 373 00:40:47.120 --> 00:40:56.360 as the politicians have already been empowered and mandated to act on our behalf on such a momentous issue of history. 374 00:40:56.360 --> 00:41:00.440 So we've already been told our masters will decide for us. 375 00:41:00.440 --> 00:41:06.800 and by the way we've already decided it's we're going to be signing it so you 376 00:41:06.800 --> 00:41:14.160 know there we have it the other points that I'd like to just dwell on the 377 00:41:14.160 --> 00:41:18.080 Austrian Austrian theory of the business cycle is something that's very very close 378 00:41:18.080 --> 00:41:24.400 to my heart as a businessman you know we sit in the economy and we feel the exact 379 00:41:24.400 --> 00:41:29.920 movements that Hayek initially described in his work in prices and 380 00:41:29.920 --> 00:41:36.080 production at the LSE in the 1930s and what Roger Garrison has so eloquently brought up 381 00:41:36.080 --> 00:41:47.920 to date and applied to the economy in his book, Time and Money, is because we live and 382 00:41:47.920 --> 00:41:55.880 experience the business cycle, business people have a natural affinity to the Austrian cause 383 00:41:55.880 --> 00:42:02.880 But I'd like to put one more, a little footnote to the Austrian theory, when, and it might 384 00:42:02.880 --> 00:42:08.600 actually be a good research project for some post-graduate students. The Austrian Theory 385 00:42:08.600 --> 00:42:14.120 of the Business Cycle describes how when the interest rate moves and monetary inflation 386 00:42:14.120 --> 00:42:21.120 is initiated, the various stages of production get skewed as people think there's more consumption 387 00:42:25.880 --> 00:42:32.880 Well, there's an investment overhang and a business cycle ensues. 388 00:42:32.880 --> 00:42:38.880 This is, I don't need to go into it and perhaps I won't be best explaining it, 389 00:42:38.880 --> 00:42:42.880 but in the Austrian theory, when the correction comes, 390 00:42:42.880 --> 00:42:47.880 it can predict what areas of industry the correction will come in, 391 00:42:47.880 --> 00:42:52.880 what stages of production, but it can actually go a stage further as well. 392 00:42:52.880 --> 00:42:58.240 Well, the only businesses that will ever be affected during the business cycle are those 393 00:42:58.240 --> 00:43:05.080 businesses, the large corporations where you don't lend on asset base against your asset 394 00:43:05.080 --> 00:43:11.000 base, where you're lending on your cash flow risk or when you're lending on mezzanine finance 395 00:43:11.000 --> 00:43:12.160 and so on and so forth. 396 00:43:12.160 --> 00:43:18.480 When the correction comes, the vast majority of small businesses that exist in the economy 397 00:43:18.480 --> 00:43:27.240 survive. We survive any recession because we don't have gearings that the big corporations 398 00:43:27.240 --> 00:43:32.400 do because the banks won't lend us any money. Anything is done, they'll only lend you against 399 00:43:32.400 --> 00:43:38.760 your assets. So the Austrian theory of the business cycle has a great advantage. If you 400 00:43:38.760 --> 00:43:45.520 look at the way companies are structured and what their borrowing positions are, you can 401 00:43:45.520 --> 00:43:49.480 And then predict actually what companies, not only what stages of production are going 402 00:43:49.480 --> 00:43:53.660 to be worse affected, but you can actually then predict what kind of companies are going 403 00:43:53.660 --> 00:43:59.760 to get blown out of the water in any correctional period. And they'll be all companies based 404 00:43:59.760 --> 00:44:10.760 on non-asset-based lending. So post-graduates could do some research into that. I think 405 00:44:10.760 --> 00:44:15.240 you'd be able to really fine-tune the Austrian theory of the business cycle and make it 406 00:44:15.240 --> 00:44:19.240 a very good predictive tool. 407 00:44:19.240 --> 00:44:27.920 But anyway, Geoffrey Herbin is very complimentary about me in terms of what we've set up at 408 00:44:27.920 --> 00:44:32.520 the LSE now, being inspired by the Austrian School. 409 00:44:32.520 --> 00:44:39.760 I've endowed a teaching programme at the LSE with the Ludwig von Mises Institute helping 410 00:44:39.760 --> 00:44:44.000 me here at all points in time and Roger Garrison was the first lecturer. 411 00:44:44.000 --> 00:44:51.680 We have Pete Beccy next year who's going to be working on the socialist calculation debate 412 00:44:51.680 --> 00:44:54.760 and then really I'd like to move on to the third year. 413 00:44:54.760 --> 00:45:03.480 I'd like to get into putting forward Austrian methodology and really establishing the foundations 414 00:45:03.480 --> 00:45:09.080 and the groundworks of the school and that's what we're doing at the NSE. 415 00:45:09.080 --> 00:45:16.080 I put my money where my mouth is, I believe in the school and we'll promote it actively. 416 00:45:16.080 --> 00:45:25.080 The other thing that we're doing is we've established the Cobden Centre as a charity in the United Kingdom 417 00:45:25.080 --> 00:45:33.080 and you'll soon start seeing our website, it's a scholarly website, the Cobden Centre, 418 00:45:33.080 --> 00:45:36.080 and we aim to produce all of Cobden's work. 419 00:45:36.080 --> 00:45:40.880 Richard Cobden's work. Now, for some of you who don't know that much about Richard Cobden, 420 00:45:40.880 --> 00:45:45.320 in my opinion of things, he's the most successful of all 421 00:45:45.320 --> 00:45:49.960 what you'd call a libertarian, political libertarians, or he was a liberal, 422 00:45:49.960 --> 00:45:54.120 a radical liberal in the 1830s, and he achieved 423 00:45:54.120 --> 00:45:58.120 three big things, and Professor Ebeling 424 00:45:58.120 --> 00:45:59.200 touched upon them 425 00:45:59.200 --> 00:46:01.000 last night. One of them was 426 00:46:01.000 --> 00:46:02.120 repeal of the 427 00:46:02.120 --> 00:46:03.480 the Corn Laws 428 00:46:03.480 --> 00:46:06.280 in 1846. 429 00:46:06.280 --> 00:46:11.400 And he managed to achieve this, it was a food tax 430 00:46:11.400 --> 00:46:13.800 by great political 431 00:46:13.800 --> 00:46:16.960 guile and cunning because 432 00:46:16.960 --> 00:46:18.100 only 433 00:46:18.100 --> 00:46:19.280 landowners 434 00:46:19.280 --> 00:46:20.560 had the vote 435 00:46:20.560 --> 00:46:23.240 in 1846. 436 00:46:23.240 --> 00:46:25.680 And the landowners were largely the 437 00:46:25.680 --> 00:46:27.120 aristocracy 438 00:46:27.120 --> 00:46:31.600 and they owned four-fifths of the land with 439 00:46:31.600 --> 00:46:35.600 Other freeholders, small people, are owning the rest. 440 00:46:35.600 --> 00:46:39.600 From 1490, and this applies to the Americans, 441 00:46:39.600 --> 00:46:43.600 the Americans took this law on as well, even after independence. 442 00:46:43.600 --> 00:46:47.600 The 40 shilling freehold principle was that anyone who 443 00:46:47.600 --> 00:46:51.600 could show that their land produced more than 40 shillings worth of income 444 00:46:51.600 --> 00:46:55.600 had a right to a vote. It was enshrined in the 1832 445 00:46:55.600 --> 00:46:59.600 Reform Act, and not many people knew about this provision. 446 00:46:59.600 --> 00:47:06.320 So Cobden immediately started knocking on the doors of all these little independent freeholders 447 00:47:06.320 --> 00:47:14.640 and got their sons and daughters and anyone vaguely related to them registered as freeholders 448 00:47:14.640 --> 00:47:19.920 because it never said, the 40 shilling freehold principle just said as long as you're a freeholder 449 00:47:19.920 --> 00:47:26.160 of that land now you could be a common, you could own that freehold in common with other people 450 00:47:26.160 --> 00:47:29.120 So he got lots of, some people will call this gerrymandering, 451 00:47:29.200 --> 00:47:33.400 but he got lots of people on the electoral roll 452 00:47:33.480 --> 00:47:39.440 and managed to turn the tide of opinion against the aristocracy 453 00:47:39.520 --> 00:47:40.840 and repealed the Corn Laws. 454 00:47:40.920 --> 00:47:45.520 So he's a great political manoeuvrer as well. 455 00:47:45.600 --> 00:47:51.680 The third major achievement was the Chevalier, 456 00:47:51.760 --> 00:47:54.120 Cobden-Chevalier Act. 457 00:47:54.120 --> 00:47:58.360 There's a treaty establishing free trade in 1860. 458 00:47:58.440 --> 00:48:04.160 And that, if you look at the statistics of how wealth was created, 459 00:48:04.240 --> 00:48:07.880 you saw from 1800 there were uplifts, 460 00:48:07.960 --> 00:48:12.920 modest uplifts in any measurement of wealth in Western Europe. 461 00:48:13.000 --> 00:48:16.840 And then from the 1860s onwards with this free trade treaty, 462 00:48:16.920 --> 00:48:20.320 I think it went up about 200% in 20 years. 463 00:48:20.320 --> 00:48:24.320 It's absolutely fabulous what his achievements were. 464 00:48:24.320 --> 00:48:29.320 His next achievement was... 465 00:48:29.320 --> 00:48:32.320 I don't know whether it's an achievement or two minds, 466 00:48:32.320 --> 00:48:34.320 whether it could be a failure as well. 467 00:48:34.320 --> 00:48:38.320 He was called the man of international peace, 468 00:48:38.320 --> 00:48:44.320 and what Cobden did was he'd established... 469 00:48:44.320 --> 00:48:47.320 Instead of going to war and killing each other, 470 00:48:47.320 --> 00:48:48.320 and so on. 471 00:48:48.320 --> 00:48:53.320 It would be probably nicer to have a conversation about things and he set up the principles 472 00:48:53.320 --> 00:49:01.520 of arbitration which was a great move forward because at the time the then liberal foreign 473 00:49:01.520 --> 00:49:07.360 secretary and then prime minister Lord Palmerston was instituting a policy rather like Donald 474 00:49:07.360 --> 00:49:10.080 Runsfield does now, gunboat diplomacy. 475 00:49:10.080 --> 00:49:16.360 It was called gunboat diplomacy in the British Empire and I think in the American Empire 476 00:49:16.360 --> 00:49:26.360 We should call it Stealth Bomber Diplomacy, which is whereby if anyone touched the hair or an asset of an Englishman, 477 00:49:26.360 --> 00:49:29.360 we'd send the Navy in and just blow up the country. 478 00:49:29.360 --> 00:49:37.360 And that happened in the Don Pacifico affair, where a Greek-British Jew had his house burnt down by some irate Turks, 479 00:49:37.360 --> 00:49:42.360 and Palmerston sent in the gunboats and invaded Turkey. 480 00:49:42.360 --> 00:49:49.360 And this is, but Cobden stood vociferously against this at all points in time. 481 00:49:49.360 --> 00:49:53.360 So we're setting up the Cobden Centre to really revitalise all this work. 482 00:49:53.360 --> 00:50:01.360 And I know that Hayek was a great fan of Cobden, Rothbard was, Mises was, 483 00:50:01.360 --> 00:50:04.360 Manchester Liberalism was something that was close to their heart. 484 00:50:04.360 --> 00:50:10.360 And I know Ralph Raco over there had the Cobden Society as well, I think, 485 00:50:10.360 --> 00:50:22.360 George Reisman and Rothbard and various others, and I think you then called it the Bastiat Society after that. 486 00:50:22.360 --> 00:50:29.360 There's probably a story as to why you went from British to French allegiance, I don't quite know what it is. 487 00:50:29.360 --> 00:50:33.360 But that's what we're doing. And then the other interesting thing, and the thing I'll finish on, 488 00:50:33.360 --> 00:51:02.360 I'm a great believer in you practice what you preach and the Austrian monetary theory is another important way of actually now making money which is we have an interest in a fund called the Alternative Investment Fund which is a hedge fund based in the Cayman Islands which is dedicated entirely to exploration of money. 489 00:51:03.360 --> 00:51:10.360 We are exploiting the works of principally Mises and his initial definition of the money supply 490 00:51:10.360 --> 00:51:17.360 and now developed by Frank Shostak and published in the quarterly journal of Austrian Economics. 491 00:51:17.360 --> 00:51:22.360 We have a very accurate working definition of the money supply 492 00:51:22.360 --> 00:51:29.360 and with that definition in place and various economic modelling we can track the various different changes 493 00:51:29.360 --> 00:51:57.360 and the purchasing powers of currencies and it's incredibly lucrative using applied Austrian theory to money making activities and I'm going to be donating 5% of my proceeds to the Mises Institute going forward on all our foreign exchange transactions benefiting from the work of Mises and Shostak and applied Austrian theory. 494 00:51:57.360 --> 00:52:03.360 We're then going to be looking at the Mises and Rothbard Natural Interest Rate Theory 495 00:52:03.360 --> 00:52:11.360 and how it applies to credit spreads and looking at exploiting any arbitrage opportunities there. 496 00:52:11.360 --> 00:52:21.360 So, on the back of my interests in Austrian economics, we've now got some very interesting businesses. 497 00:52:21.360 --> 00:52:27.360 and I've got to say, my introduction to Austrian Economics, although I was trying desperately to find Austrian Economics, 498 00:52:27.360 --> 00:52:35.360 I owe it really to Lew Rockwell over there and he's my inspiration in terms of setting up the Cobden Institute 499 00:52:35.360 --> 00:52:40.360 and we will shamelessly copy everything he's done over at the Mises Institute. 500 00:52:40.360 --> 00:52:46.360 As we will with his online publication, we're producing a publication called The Liberal 501 00:52:46.360 --> 00:52:58.360 and it will be, again, we'll copy Lew at lewrockwell.com, but anyway, that's my little story, I hope it's been of some interest to you, thank you very much. 502 00:53:16.360 --> 00:53:23.360 Every once in a while over here we hear some news clip about the Mayor of London and what he's been doing. 503 00:53:23.360 --> 00:53:29.360 Do you see anything about the pathology of then that could affect your business? 504 00:53:46.360 --> 00:53:58.360 I ask myself, either I should have a whip-round with other fellow businessmen or should we raise a fund to terminate him or shall I calm myself down a bit and try and oppose him in other ways? 505 00:53:58.360 --> 00:54:05.360 What Roderick is referring to, I believe, is the implementation of the congestion charge. 506 00:54:05.360 --> 00:54:14.360 This, Ken Livingston, who is the Mayor of London, has hailed this as a great Friedmanite policy of charging for road use. 507 00:54:14.360 --> 00:54:44.360 And, but of course it's, you know, to me, I'd be very supportive of paying for my own road use, if I got my taxes back, you know, then the problem is I don't want to pay for it, I pay for it once through the road tax, I pay through it twice, then second time round through our tax on diesel, which is 85% of the value of the diesel, and now we pay, yeah, 85%, now we pay again through congestion charge, 508 00:54:44.360 --> 00:54:48.360 There's a five pound charge to come into the central London area. 509 00:54:48.360 --> 00:54:54.360 Now, we, in our ignorance, and I should have thought this through even more, 510 00:54:54.360 --> 00:54:58.360 believe that the five pound charge would not actually, everyone would just pay it, 511 00:54:58.360 --> 00:55:00.360 because, you know, after all, it's only five pounds. 512 00:55:00.360 --> 00:55:04.360 There wouldn't be any, there'd only be a cost implication on the charging side. 513 00:55:04.360 --> 00:55:08.360 There wouldn't be an actual loss of revenue on the demand side for our products. 514 00:55:08.360 --> 00:55:19.360 So, the cost of the charge is, for our 45 vehicles going in and out of London, I think the cost of our charge is about £5,000 a month. 515 00:55:19.360 --> 00:55:30.360 Now that, okay, you know, you can live with on the level and volume of business that we do, and you know, you economise elsewhere, we can work with that. 516 00:55:30.360 --> 00:55:43.360 But what the terrible thing has been, and he will hail this as a great achievement, is that 25% less people come into London as a result of the charging. 517 00:55:43.360 --> 00:55:49.360 And why they do that is because it's a very difficult thing to actually pay. 518 00:55:49.360 --> 00:55:57.360 It's not like here where you have those easy passes and you can just stick one in your car and you go down a toll roll and then it bills you at the end of the month. 519 00:55:57.360 --> 00:56:15.360 You have to phone up a call centre and you can imagine it's typically an efficient call centre and you have to then give them your credit card number and remember your number plate and make sure you do it all between certain hours and if you do it outside those certain hours that's just tough luck. 520 00:56:15.360 --> 00:56:24.360 If you don't pay you automatically get a £40 fine that on day two goes to £80 and then on day three they're entitled to confiscate your car. 521 00:56:24.360 --> 00:56:54.360 with no right of appeal, so it's absolutely lethal, so people don't come in, they don't go into London and that's where, on the London side of my business, we were probably doing about £10 million worth of sales into London, they went down to £7.5 million, so at a 30 odd percent gross margin, that revenue's just gone, and that's the bigger problem, is the loss of revenue, and the politician can just do that, 522 00:56:54.360 --> 00:57:12.360 And, you know, if a politician decides to build an airline, you know, wants to knock down a few houses and, you know, position it somewhere in London, there's a whole sort of inquiry about things and people are given compensation when their land is compulsory purchased. 523 00:57:12.360 --> 00:57:19.360 I feel that 25% of my London business has been compulsory purchased and I've got no compensation for it. 524 00:57:19.360 --> 00:57:29.360 Fortunately for us, we're in a reasonably strong position whereby we can expand our supply outside our traditional areas. 525 00:57:29.360 --> 00:57:34.360 But the shopkeeper, if you're a barber shop or something, what can you do? 526 00:57:34.360 --> 00:57:36.360 You've lost 25% of your customer base. 527 00:57:36.360 --> 00:58:01.360 And it's not, if you think in a recession, people get blown out when 3% of the economy tanks, you know, but 25%, 25%, and this is done by a socialist who cares for people, and that's the irony of it all, so the only thing that we've done is we've sacked people. 528 00:58:01.360 --> 00:58:11.360 and then we've got sued for sacking people, I've got to sack them because you won't have the money to pay for them if we don't readjust our overhead. 529 00:58:11.360 --> 00:58:23.360 So whatever way you skin it, you're damned, but of course we're the nasty capitalist businessmen so as far as they're concerned we can just pick up the tab for everything. 530 00:58:23.360 --> 00:58:29.360 So sorry that's the answer to that question, dangerous question that one. 531 00:58:29.360 --> 00:58:39.360 Thank you, we've finished on time.