The image depicts a timely handbook of "practical pig breeding," while the below post discusses some aspects of its application in contemporary Europe.
In the absence of a constitutional framework ensuring the enforcement of generally applicable rules of just conduct, i.e. rules that apply to all agents of society, including those otherwise particularly prone to selfish and detrimental preponderance, notably the state and other agents with substantial resources, our political system degenerates of necessity into a rat race for the satisfaction of special interests, creating and reinforcing massive incentives and rewards for those building a regime based on "das Recht des Stärkeren", the rule of the strongest (bullies).
In this context, regulation is a biased business masquerading as law.
The natural consequence of the rule of law is a free enterprise economy, where everyone must play by the same rules.
By contrast, our political order inevitably favours power by privilege over fair competition. The politicization of everything in our society affects business, too. As a result, certain companies gain advantages that, if considered problematic at all, tend to be misleadingly blamed on capitalism, while capitalism - the economy of a free society - is incompatible with the usurpation of economic benefits by dint of the political process.
Unfortunately, the public believes that a regime of fair competition as ensuing from the rule of law is not desirable and that instead we should allow arbitrary political interference.
The underlying fallacy results from the mistaken idea that not (chosen) conduct but (impersonal) outcomes are to be categorised in terms of justice and injustice. By this logic, which is practised every day, the following is unobjectionable: if the politically influential lose in a game carried out in a regular manner, the outcome is still going to be declared "unjust" and will be overruled, by virtue of the powerful considering the result "unfair", i.e. not in line with their interests.
In a coherent system of justice, it is the observation or non-observation of generally applicable rules rather than the particular results effected by compliance with the rules that represent the subject matter of discerning justice from injustice.
(Of course, generally applicable rules of just conduct are open to revision or extension - but this is a slow and very subtle process expressly dedicated to preserving the coherence of justice, and must never be compromised to humour particular interests.)
Defining and constantly readjusting "rules" to achieve interested outcomes makes a travesty of the idea of justice.
We have replaced the concept of justice by the concept of interest. One cannot conceive of a more damaging attack on civilization.
This is a dramatic regression that throws us back to a level of societal interaction prevailing before the 18th century, aptly captured in the frightful formula of "a war of all against all".
Below, EU Referendum reports about aspects of how to succeed in our culture by being pompous snatchers.
"It has been nine years in gestation and today it takes effect. But implementation day for Mifid - the markets in financial instruments directive - will not be a Big Bang event in the creation of the European Union's single financial market so much as the start of a long roll-out."
So says The Financial Times, marking the kick-off of the EU’s Markets in Financial Instruments Directive – all in terms of glowing approval:
Mifid is a substantial and potentially sweeping piece of EU law-making. Its objectives of creating efficient conditions for trading securities and other financial instruments, promoting competition and providing EU-wide standards for investor protection serve the laudable goal of fostering economic growth in Europe through the creation of deep, liquid and well-regulated financial markets of a continental scale.
You would not expect the Europhiliac FT to write in any different way so it is to The Daily Telegraph that we must look for the downside. And downside there is:
John Tattersall, chairman of the financial services regulatory practices at PricewaterhouseCoopers, said sophisticated investment firms and brokerages in the City of London would be well placed to benefit from the rule changes, while smaller operations had most to lose.
"In the UK, where many firms have been gearing up for this for some time, it will be less of a step up than elsewhere," he said. However, he added, many firms would be hit with extra costs of compliance, which some have estimated at more than £1bn initially in the UK alone, plus an extra £100m a year.
"Brokerages will have to write to all their clients saying how they have classified them. They will have to disclose much more in terms of conflicts of interest and keep many more detailed records," said Mr Tattersall. "The costs are a concern to many people." But he said larger firms would likely attract more business as a result.
That is the story of EU regulation - and also the explanation of why big business is generally in favour of the EU. Broadly, whether it is hygiene standards for slaughterhouses, the manufacture of toys, electronics, drugs production or – as we see here – financial services, the regulatory system always favours the "big boys" at the expense of the small and medium enterprises.
Taken in the round, the biggest competitors of the giants are not their closest rivals but the hundreds and thousands of smaller business which are fleet of foot, more innovative and often able to operate with lower overheads – thus offering the consumer better value and more choice.
Competing for market share in such a diffuse market is expensive. Major advertising campaign may cost hundreds of thousands, rarely yielding more than a few percentage points. In fact, most advertising and promotion "spends" are directed simply at maintaining market share.
New regulation, however, is a much better prospect. Compliance costs, although onerous, are invariably less than the advertising budget and, in any case, can often be passed on to the consumer. But – as an almost universal rule – they have a disproportionate effect on the smaller business, many of which go out of business, giving gains in market share which may reach double figures.
In purely commercial terms, therefore, regulation is good for (big) business. The more cumbersome and expensive it is the better, as long as the market can be rigged. They are the most effective and economic mechanisms for increasing market share.
The flaws, though, are also manifest. Consumer choice goes out of the window – but since when did big business ever care about that? Furthermore, in a global market – and financial services is nothing if not global – business migrates to less regulated areas.
There then follows a beggar-thy-neighbour policy of trying to impose regulation on those areas but, with financial services, this will not always be possible and unexpected places like Dubai are already making considerable inroads into the London markets.
However, by the time the slide happens, everybody has forgotten what caused it – if they ever knew. The decline is put down to "market forces" or some such – never the real cause. And so the regulatory nightmare goes unchecked – and the FT will continue to write laudatory pieces as we nail the coffin lid down on our economy tighter and tighter.
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