Perhaps unsurprisingly given the extraordinary magnitude and implications of the ongoing financial crisis, in recent years there has been a significant number of fresh voices in the field of economics: names such as Max Keiser, Marc Faber and Alessio Rastani will be familiar to anyone who has taken a serious interest in the collective fiscal meltdown that seems to be engulfing much of the planet. Slightly more surprising is the fact that despite the incredibly bad economic predicament across most of Europe and North America, these same new voices seem to be heard relatively rarely; Alessio Rastani’s legendary ‘rogue trader’ BBC News Channel interview of 26th September 2011 represented a shock not so much because of the content of what he said, but the fact that the usually limp British Broadcasting Corporation would feature someone so lucid and frank.
So when we at Mediolana heard that none other than Detlev Schlichter would be featured on the 16th January 2012 edition of Start the Week – one of BBC Radio 4’s flagship current affairs programmes – it was almost enough to make us reconsider our breakfast options. For the uninitiated, Schlichter is the author of the instant classic Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown, an intriguing and highly readable tome which essentially posits that all fiat money systems – that is, systems where money is decreed by the state to have a certain value which is not contingent on its linkage to anything of actual worth, such as a commodity like gold or silver – are doomed to eventual collapse and replacement, either by a relatively painless switch back to commodity-based money or by a hyperinflationary tsunami that compels the cancellation of the fiat system(s) in question.
To our surprise, our very worst fears that the immensely charismatic former J.P. Morgan and Merrill Lynch investment ace would be marginalised in a panel that included Angela Knight – the Chief Executive of the British Bankers’ Association who these days all too often has the unfortunate remit of defending the indefensible – proved largely unfounded: Schlichter was given a reasonable-ish amount of airtime, his central thesis was not completely ridiculed, and a good discussion, seemingly, was had by all.
However, we were still left unsatisfied at the end of proceedings by the following two lacunae:
1. Economic Categorisation. Schlichter was introduced by the programme’s host, Andrew Marr, as a ‘radical’ economist, a description that made us fear the worst for the rest of the show. While the Ruhr-Universität Bochum graduate’s views are far from commonplace in the United Kingdom, Schlichter self-identifies as an member of the longstanding and not especially far-out Austrian School of economics. Marr’s evaluation is a stark reminder that the BBC is making a habit of labelling anything which does not accord with ‘orthodox’ thinking, particularly in economic matters, as ‘radical’ or, when proven to be demonstrably correct, simply ‘annoying’. Yet if Marr had been better informed, he would have known that at least some of the general dispositions of the Austrian School are actually the norm in much of the world: witness the constant preference for commodity money across countries such as Turkey, the United Arab Emirates and India.
2. Educational Values. Towards the end of the broadcast, there was a point in the discussion when Knight, together with Labour peer Maurice Glasman, noted the overwhelming tendency of the best and brightest in the British university system to gravitate towards jobs in the City of London. But there was no realisation that this was not an issue which could be solved by new policies or tinkering with incentives: it is a profoundly and profound moral problem which goes to the heart of so much that has characterised society in the United Kingdom over the last couple of generations, not least greed, short-termism and insane levels of materialism that have distorted the economy beyond recognition – and made Schlichter’s warning all the more worthy of consideration.
Mediolana 