Thursday, 31 May 2007

Why we suffer such terrible, inept government

My blogging life has two dominating themes:

1) bringing interesting Times articles to a largely Guardian/Independent reading audience,
2) commenting on yesterday’s news (often because by the time I’ve written it up it is too late to post it on the day and so I leave it to the following lunchtime to post).

On Wednesday, Chris Dillow wrote a provocative piece on why we put up with terrible, inept government (though actually he had a lot more to say about why government was terrible than why we put up with it). He comes to the shocking conclusion that ineptitude is the inevitable consequence of government (Well, you could have knocked me down with a feather!).

He cites four lines of research that suggest this:

  • F.A. Hayek’s (we’ve met him before!) view that information is inherently dispersed and no single person or small group can know as much or be as well informed as the millions of individuals working for their own (enlightened) self-interest;
  • Research into “Cognitive Bias” that has given us a list of common blunders that one might recognise from government (Groupthink is strangely missing, as is the “Fear-of-Brown effect”);
  • Transactions-cost economics, from which we learn that economies of scale are not the only possible outcome of horizontal and vertical integration, so that sometimes it is more efficient to contract out certain operations (human resources, manufacturing the constituent parts of a whole) than to do everything in-house and direct everything from on high;
  • Recent management literature suggesting that leadership and hierarchy are less effective than trust and delegation.

Dillow’s alternative to hierarchical government and the cult of leadership are certainly interesting: ‘flat-rate allowances [could be] paid to everyone rather than [operate] an administration-heavy welfare state; schools and hospitals could become worker coops; we could use demand-revealing referendums rather than look to “leadership”.’

I have argued before that the Government should limit itself to ensuring that everybody is able to access vital services, without feeling the need to provide them itself. I don’t see why schools and hospitals need to be “workers co-operatives” (it sounds like a sop to the Commies, to me!), but if some co-ops want to operate alongside, and compete with, profit making enterprises, social enterprises, charities, municipalities and whomsoever else wishes to provide services, I would welcome the diversity of provision.

However, while I remain unclear as to what he means by a “demand-revealing referendum”, if it is anything like Direct Democracy it fills me with trepidation. I would be happy if just three changes were made to society
1) A greater empowerment of individuals, from which would follow greater responsibility
2) A reduction in the size and scope of the state, which needs to learn to do less, better
3) Devolution of authority over those areas that require collective decision making to lower levels of government.

With a smaller state, stronger local government and greater individual freedom, we would be spared the gargantuan blunders of big government, would be better able to hold decision-makers to account, and would have a more real sense of responsibility over the tiny blunders that we make and suffer every day.

Mr. Dillow’s book, The End of Politics, will be added to my reading list as soon as I have read one of the two feet of books that I have outstanding on my bookshelf, and can thus lift the moratorium on new book purchases that I have unilaterally declared. Others may wish to read it sooner.

It would have made Big Brother IX far more interesting

I love Matthew Parris. Today the redoubtable Tory columnist has a sympathetic word to say about Ruth Kelly, who has been let down by her future boss, and has an excellent suggestion for making the Labour deputy leadership contest more interesting.

It makes Thursday’s bearable.

Wednesday, 30 May 2007

Labour deputy leadership promises of renewal founder in politics as usual

A day late, I have just watched the Newsnight special on the Labour Party’s deputy leadership contest. What a depressing experience!

Every single one of them stressed their desire to “Restore trust in politics” (Benn) and “renew the party” (Blears). Yet by-and-large they all committed the same sins that make politicians so contemptible.

Asked to give a “yes or no answer” to four policy questions, only Alan Johnson was prepared to say what he believed without either hedging or explaining. When pushed about replacing Trident, new nuclear power, ending the charitable status of independent schools and an amnesty for illegal immigrants, their answers were:

Cruddas: No Yes Yes (failed to answer)
Hain: Yes Yes No No
Johnson: Yes Yes No Yes
Harman: (failed to answer) Yes No Yes
Blears: Yes Yes No No
Benn: Yes Yes No No

When asked who they would vote for if they were not themselves standing, all five of the front bench candidates refused to answer, insisting that they were “in it to win it” (Blears). Only John Cruddas was honest enough to answer – perhaps because he was asked first and did not know that the others were so spineless; he said he would vote for Harriet Harman “because of her gender activism” (he might as well have said because she was a woman).

In fact, the straightest answer came when asked if they would have voted for the Iraq war (they all did) if they knew then what they know now. Both Cruddas and Harman said they would not and added that Labour ought to apologise for its mistake; Hain said he could not wriggle off the hook with the benefit of hindsight (which I thought was an honourable answer); while Johnson and Hilary Benn said they were glad Saddam was gone. Blears still fudged; she wanted to look forward, not back (having clearly not moved on since 2005*).

On one issue they all agreed, however. None supported caps on the size of donations to political parties (though most supported caps on spending) and the Trades Unions ought to be exempted from any ban on large donations. Some things, it seems, have not changed in the Labour Party.

--

*Interestingly, I tried to link to Britain: forward not back, Labour's 2005 election manifesto, but it has mysteriously disappeared!

Black Shirts in the West Midlands

Am I the only one that finds this disturbing?

Black-shirt police

A police force has changed the classic uniform of white shirts and black ties for officers who wear body armour. West Mercia Constabulary is introducing black shirts, which are designed to be more comfortable under protective vests, next month. Traditional uniform will be retained for officers not on frontline duty.

Peter Tatchell turns up in an unusual place

There was an excellent discussion of Peter Tatchell in The Times yesterday.

I was surprised that nobody mentioned it. Perhaps it’s true that Lib Dems don’t read The Times.

School vouchers convince me...

...but they have yet to convince James Graham.

An excellent debate is brewing at Quaequam blog, however. I urge all who have strong views on education, liberalism, capitalism and statism to hurry there and make your points.

I urge all who have weak or no opinions to go there and learn

I urge the rest of you to go there and read other posts about 18 Doughty Street or what nonsense fear of Wi-Fi radiation is.

Hurray for George Bush!

Tuesday’s announcement by President Bush that he is imposing stiffer sanctions on the Sudan for its genocide in Dafur is welcome news, and puts the rest of the world to shame.

“Too long the people of Dafur have suffered at the hands of a government that is
complicit in the bombing, murder and rape of innocent civilians,” President Bush
said at an 8am press conference. “My administration has called these actions by
their rightful name: genocide. The world has a responsibility to help put an end
to it.”

Too right. After the genocide in Rwanda in 1994, the world’s leaders descended into miserable self-reflection which resulted in a collective agreement never to allow such a tragedy to recur. And yet ten years later it did recur, and now estimates of the death toll range between two and four hundred thousand. If between a quarter and a half as many have died as in Rwanda, then the difference is merely quantitative; in essence, the genocide has happened again, and every government that has stood by and allowed it to happen is stained by it.

This latest ratcheting up of the pressure remains fairly token; while 31 companies and four individuals have been targeted, the Sudanese government has long expected this action and has moved to protect its assets. Nonetheless, this sends a strong signal, and I hope the first of many. It is now beholden on the European Union and any country whose citizens believe in, and whose government claims to uphold, human rights to at least equal these sanctions, and to come together to discuss further efforts to force Sudan’s government to end the state sponsored killing.

Britain’s own government has been timorous in its response – when I confronted Kim Howells on this last year, he fudged the issue. Little of worth has so far come from the European Union. Meanwhile, China continues to invest in Sudan and prop up its murderous regime, and Russia is becoming more obstreperous. However, whether or not we can persuade China to change its ways, or dissuade them and the Russians from vetoing a UN Security Council resolution, we have a duty to do what we can to protect the innocent victims of Dafur.

Our leaders seem to have forgotten. It seems that it takes George W. Bush to put this back on the agenda.

Tuesday, 29 May 2007

Let the police keep the peace. Teachers should be educators.

Another story about Teachers’ unions, this one triggering not anger and disgust but sympathy and concern (never let it be said I am not balanced).

The Professional Association of Teachers and the National Association of Head Teachers are having a disagreement over what to do about new powers to stop and search pupils to ensure that they are not carrying knives.

The PAT want staff to be trained and to wear stab vests. The NAHT would rather they called the police if there was any cause for concern.

Mick Brookes is right to argue that "Where there's a clear danger our advice to members is to call the police who are equipped and trained to do just this sort of thing”, but frankly I would go further.

Teachers should not be stopping and searching children. If there is any cause for concern, then the police should be called in. Teachers are not trained to deal with people who are both hostile and armed, and this new practice is inevitably going to lead to a casualty sooner or later.

Rising knife crime is a real problem in the UK, especially among the youth. But using teachers as untrained security guards is a very bad idea.

A much better plan would be to work with local safer neighbourhoods police teams (which would on average have an extra police officer apiece under Lib Dem plans) to check pupils whom teachers believe to be armed.

Let the police keep the peace. Teachers should be educators.

How the “Asset rich, income poor” can afford their Land Value Tax

Julian H. has asked a perennial question about Land Value Taxation, which I will seek to answer below, namely

…how it's possible to tax something so illiquid.

For example: suppose I have owned the land my house is on since 1990 - in which time its value has increased from £100k to £1m. Yet I am a school teacher and my income during that period has merely risen from £18k to £28k per annum; enough to live off but no more. I have no money investments beyond my pension. How do I pay a LVT on the £900k that my land's value has increased by? I have not seen that £900k cash and never will do because my lazy kids are still living at home and anyway I am sentimentally attached to the house so I'll live in it until I die.

In doing so, he has highlighted the one serious obstacle that land value taxation faces, which is how it affects those with big assets but small income: fashionably called the “Asset rich, income poor”. The most obvious example of these people are pensioners – those whom we cite so often when criticising the Council Tax (which is, when all is said and done, a property tax, albeit a badly flawed one).

There are two possible solutions to the knotty problem of paying tax on an illiquid asset. One would be to permit the taxpayer to defer payment indefinitely, with a proviso that the debt must be paid when the asset is sold, including giving the tax debt priority in the estate of deceased landowners still owing land tax debts. This would result in low yields from LVT in the first few years, but after a while it would begin to settle down and average out. It would also reduce house prices, as profits would be significantly curtailed as significant portions of any profit earned could be owed in back tax.

The other solution would be to create a far more sophisticated market for turning illiquid into liquid assets. Better than the above – which is effectively a government loan scheme – would be for markets to lend money secured on the property. This would require only a small change to existing rules. One can currently withdraw equity on a property; the only difference would be for asset-rich, income-poor households that would wish to defer payment on the new loan. That problem is hardly insurmountable.

Creditors (be they state or private) could either charge a set return, as they do now (5% per annum; 0.75% over the base rate; etc.) or take a stake in the premises (perhaps without charging a fee, as they would then be sharing in the impressive return on the land values themselves). After all, if LVT was set at 1%, and fell only on the land value rather than improvements (considered to average less than two thirds of property prices), then even if one bought a house and lived in it for 30 years, never paying one’s own LVT, when one came to sell/died after 30 years one would only have ceded less than a fifth of the (value of the) property to the person or institution that had paid 30 years of LVT on your behalf.

In answer Julian’s specific example, then:

Assuming a typical property, £60,000 of Julian’s original £100,000 was the stake for the land rather than the building on it. This has grown to £600,000 over 17 years, giving Julian half a million pounds in unearned growth. Consequently, either:
a) 17% of the land (but not the buildings thereon) is owned by somebody else – government or financial institution, or
b) Julian borrowed the money at a commercial rate of interest, and currently has a financial commitment (which I can’t be bothered to calculate because it is complex) which he has no need to pay until he sells the house or dies.

Either way, Julian need not worry. If, as he says, he is “sentimentally attached to the house so [will] live in it until [he] die[s]”, he need never pay off the debt. Instead, he can die still owing the tax/debt, and his “lazy kids” can pay it off out of the enormous sum of money they make selling the family home.

Even if Julian lives for 100 years after he buys the house, his children will still get the return on the buildings (a third of the overall value - £400,000 so far according to his original example), which will still provide a nice start in life now that they have to go out there and fend for themselves.
I hope that explains how LVT might be affordable for the asset-rich, income poor. It’s a better position than they currently find themselves in when the Council Tax bill arrives. And it would help damp down the housing market, too.

You must be NUTs

Before I discuss the latest example of union brass neck, I need to declare an interest.

Occasionally I dine at the expense of the National Union of Teachers (NUT). They kindly and generously like to lay on a fish and chip supper with complementary wine at the close of the Liberal Democrat Party Conferences (I think they do both), and I have been known to avail myself of their hospitality.

The cynical among you my wonder whether the NUT hopes to curry favour with the Lib Dems through this act of largesse (If only they were trying to curry favour!). Shame on you for thinking so. I’m sure it has never crossed the mind of the NUT to try to gain access to our hearts via our stomachs.

And to prove that there is no link between free food and drink and political favour, I am going to now point out how disgraceful and irresponsible the NUT’s latest pay claim is.

Now lets be honest. Few of us would not like to enjoy a 10 per cent pay rise, with a minimum raise of £3,000 a year. I know I could put it to use. But if we were all to enjoy a 10 per cent pay rise then the 2.8 per cent CPI and 4.5 per cent RPI inflation that Steve Sinnott is using as justification for his demand would soon rise sharply.

Not that the NUT has any interest in the rest of us. It is only interested in its members, which is understandable. However, the fact remains that a 10 per cent pay rise with a minimum rise of £3,000 per annum is greedy and selfish. 10 per cent is way beyond that enjoyed by the rest of the country, and as it would be funded from general taxation, it would further reduce the net gain of those whose pay rises were far more modest.

It would also punch a hole right through the government’s (long overdue) public sector pay restraint. Where teachers lead, doctors and nurses would follow, and soon hundreds of thousands if not millions of public sector workers would be agitating for higher wages. This would necessitate higher taxes – as previous public sector binges have done, pushing the tax burden and the size of the public sector up to record levels – and stoke higher inflation, which is already beginning to escape the iron grip of the Iron Chancellor and push interest rates up to uncomfortable levels.

Again, the NUT are not interested in the rest of the public sector (at least, not that they would admit, though I suspect that all the public sector unions agree that public sector employees as a whole should be paid a lot more). They simply want “pay levels for teachers that are competitive with comparable employment.” But what, exactly, is comparable employment?

As the son of two teachers (another interest I’d best declare) I have spent a lot of time around teachers, and have heard them compare themselves countless times to the other great “professions”: lawyers and doctors. This is largely based on the rather facile fact that educational professionals require a university degree, though these days the same could be said of work in a call centre. While there are undoubtedly many dedicated and well qualified teachers out there (my chemistry teacher had a PhD and my parents used to do marking throughout their evenings and weekends), the fact remains that teaching does not require the qualifications or the training that is required of a lawyer or a surgeon. Nor do they put themselves in harms way (at least, willingly!) as do police officers or fire fighters. Nor again do they need to demonstrate the research acumen of the only profession that really is comparable – that of university lecturers.

Mr. Sinnott is correct about one thing, however: “This is an illustration of the failure of successive governments to recognise the importance of the teaching profession to society. It must stop.” The solutions are straightforward.

Firstly, put an end to national pay bargaining. There is absolutely no logic in paying a teacher in Grimsby the same as a teacher in Gravesend. Salaries should reflect supply and demand, and the sum needed to tempt a teacher to work in any particular school is largely dependent on the local cost of living. National pay bargaining simply transfers money from teachers in areas with high costs of living – who struggle to afford houses and other necessitates – to those in poorer areas for whom the national salary goes a lot further. It is no wonder that it is hard for teachers in the South East. The Government lacks the spine for this, however, and would rather respond to the failure of their meddling with further meddling.

Secondly, if there really is a shortage of good teachers, as the NUT would have us believe, then pay should be based upon an honest assessment of the number and quality of teachers required. If this necessitates higher salaries, so be it. But higher salaries should be based upon an assessment of what is needed to get more and better teachers into the profession, not the self-serving demands of those who represent people who are already doing the job.

Thirdly, break up the public sector education monopoly. The only reason why the NUT has so much power is that its members almost exclusively work for a single employer. If tens of thousands of independent schools were negotiating with their discrete workforces, wages would reflect local need. There would be no government cap on pay rises; nor would the NUT be able to demand a set rise for all. What is more, as schools competed for the most talented educators (and other staff), really inspirational teachers – and we’ve all known some – would be properly rewarded. Meanwhile, the ineffective teachers – and I’m sure we can all think of some of them, too – will be encouraged to move to new careers where their talents would be put to better use. Good teachers would benefit, and so too would some of the bad, but most of all, the children would benefit.

It may very well be true that education is a commodity that we naturally under-consume (or under-fund) because the benefits are delayed or because those who pay are not those who benefit. Nonetheless, I believe that parents on the whole are more concerned with the welfare of their children than the policy officers in unions. Give them the money – through an education voucher scheme – with which to buy their education, from any private, public, voluntary, charity, social enterprise or any other kind of provider whom they choose, and further allow them to top up the voucher with whatever they can afford, and I’m sure that for the most part they will pour far more into their children’s education than the three to four thousand pounds currently spent by the state.

Parents are bound to be more liberal with their money when they can control how and where it is spent. And by exercising choice they will drive up standards in the profession. This may not be what the NUT want, but it is undoubtedly what children need.

All of which aside, I will thank the NUT next time I use their fish and chip supper to line my stomach before a night at the Glee Club.

Saturday, 26 May 2007

Frank Field comments on Margaret Hodge and housing

Another night, another period of disturbed sleep. Today, rather than keep me awake until 4am, my body decided to wake me up at 4am. Well, it’s novel, at least.

It also means I get to see Hard Talk, one of the more interesting and more rarely seen programmes on the BBC. For those not aware of it, it is one of the only programmes I know of where a prominent individual is interviewed one-on-one for half an hour (or probably longer, as it seems to be edited).

Last night it was the turn of Frank Field, a rare commodity in the country in that he is both a Labour MP and also quite bright. Actually, that’s too mealy mouthed: as a Tory friend once noted, he’s probably forgotten more about pensions and welfare than most of us will ever know. The BBC have not published tonight’s interview on their website yet, sadly, but his 2004 outing is available.

The reason for interviewing Field is undoubtedly his recent report for Reform, the first in a series of six. This promises to be an interesting series, as Field was Minister for Welfare Reform in the first Blair government. Charged with 'thinking the unthinkable' about social security reform, he made the mistake of thinking he could also ‘say the unsayable’ rather than nodding politely and saying “Yes, Gordon”. A year after his appointment he resigned in frustration.

In what was generally an interesting interview, I was most struck by his support for Margaret Hodge’s comments about social housing. Hodge has been widely criticised for “perpetuat[ing] the myth that social homes are given to new immigrants coming to the UK at the expense of the indigenous population” and even for using the word ‘indigenous’ to distinguish between recent immigrants and people born in the UK. The latter comment is harsh; she was undoubtedly fishing for words in a mine-infested sea – had she used ‘native’ she would have been both correct and crucified. Immigration is now inseparable from race, and the debate suffers from the same tortuous linguistic manoeuvring that spawned the mocking expression “politically correct.”

It seems to me that there is a simple question of fact that underpins this debate, and which to my knowledge has never been satisfactorily answered, which is whether there is any truth in the suggestion that immigrants receive preference in the allocation of Social Housing. It should be fairly easy to check the rules and procedures applied by councils on the one hand, and conduct a statistical survey on the other. If Margaret Hodge is correct, then immigrants do receive preference, but only because their need is greater. Social Housing is a socialist concept, and each receives according to his need. If so, one can fairly easily imagine that a newly-arrived family might have greater need than a family that is already in situ, and which must have some accommodation, no matter how unsatisfactory.

Hodge’s suggestion was that the allocation of Social Housing should be guided by “different rules based on, for instance, length of residence, citizenship or national insurance contributions...” Frank Field’s comment on this was interesting. He asked whether anybody had ever asked recent immigrants how they would construct housing policy. Noting that in some areas it was members of the Bangladeshi community, which had originally immigrated to the UK forty years ago, that were now complaining that they were being displaced, he wondered whether they would not in fact favour a system that rewarded residency, citizenship and the existing community. If they planed to settle, they might favour a system that would in the future reward their commitment to the community. If they have played by the rules, goes the thinking, they deserve their fair share, their turn.

It’s not entirely daft, but in Labour circles it certainly suggests that he did not stop ‘thinking the unthinkable’ after he lost his ministerial salary.

Not being a socialist myself, I see this as a simple resource allocation problem, and I think I know who is causing it. Immigration is creating a demand for housing, as is longevity and shrinking household sizes. Overly restrictive planning regulations make it impossible to meet that demand; we are building about half the number of houses we need each year, which makes existing and new housing expensive (as you may have noticed). Successive socialist and dirigiste governments have responded by trying to manage and manipulate the housing market. The system is typical of the era in which it was conceived: government builds houses and then rations them, distributing them based on political rather than economic criteria. The result has been disastrous, and not only aesthetically. It is ironic that battles are (sometimes literally) fought over access to social housing that is often seen as dilapidated and blighted by crime and communal degradation.

I would therefore disagree with those who argue that the solution to the question raised by Hodge is more social housing. Social housing is the problem. The solution is liberalisation.

Planning regulations must be radically overhauled to allow for more extensive and more innovative house-building. A land value tax must be introduced to encourage landlords to fill vacant properties and develop sites. Meanwhile, government must move to a system of subsidising tenants rather than landlords. Instead of supporting “Social Landlords” and turning local councils into property developers, the entire system should be focussed on housing benefit. This would free individuals to make their own choices about housing, and remove the social stigma that often accrues to council tenants.

As for the immigration issue, a demand-side policy would have two benefits. Firstly, it would reduce the pressure on scarce resources: while government money is not unlimited, it is more responsive to changing needs than the stock of publicly owned housing. Secondly, it would remove the most obvious mark of who is enjoying the State’s largesse. Between them, these two outcomes would reduce the tensions that have resulted from our system of state-allocated housing. It would instead give power and choice to the people, by putting the money in their hands.

But that really would be unthinkable.

Friday, 25 May 2007

I'm rich, rich, rich!! And I've binned my wife. And myself.

Spam's a funny business, isn't it.

In one day I have won the South African lottery (though I didn't buy a ticket), been offered a grant of a million Euros for my business development becasue of a random sample of shopping receipts, and been offered "high-excellence pain killers" by Alan Johnson (whom I thought was in education, not health!).

Meanwhile, Mrs. Polemic's attempt to add me to Facebook has been junked(she'll be very upset), as have... er... I. That's right: Yahoo Mail has actually interpreted an email from my yahoo account to that self same account as spam. Genius!

Oh, and it turns out another of my relatives has died, this one a former Central Bank governor of Liberia. It's funny how many of my relatives seem to have worked for crooked dictators (No jokes about a future Lib Dem government, please!).

A house-price crash will save the Government from finding a policy solution

I’m sure Henry George was spinning in his communally-owned grave last night (though having seen this, I wonder if he’s been spinning for some time!).

Newsnight devoted most of their programme last night to housing. (Not that you’d guess by reading the first comment on the Newsnight blog, which drips anti-Semitic bile). Gavin Estler chaired a debate between Housing Minister Yvette Cooper, a Tory shadow less aristocratic than Michael Gove, the owner of a chain of estate agents and somebody from pricedout.org. It was interspersed with a few reports.

In the first instance, just about everybody agreed that more housing was needed. The Government recognised that 220,000 new houses were needed each year, but blamed Tory councils for blocking planning permission. One commentator then noted that it had taken the Government ten years to raise house-building from 100,000 to 110,000, whereas in the 1950s the Tories managed to raise house-building from 200,000 to 300,000 in a couple of years. The lady from pricedout.org agreed that more housing was needed. Everybody agreed that there was a supply problem, but nobody explained how it was to be solved, or why we are tearing down houses in the North of England while building new ones in the South.

There followed a series of truly bizarre proposals, including the usual anti-capitalist assault on second-homers and those buying to let (in an example of economic illiteracy, Ms. pricedout argued that more supply would merely be mopped up by wealthy buy-to-let landlords and so would not benefit first time buyers, which showed a total ignorance of the most basic principle of economics). Poor hippies could no longer afford to buy houses in the bohemian paradise of Totnes, lamented one Newsnight reporter, who seemed to wilfully ignore the fact that those selling their houses to property magnates and .com millionaires were the very hippies and artists who had given the place its character, and were now happily cashing in on the very material windfall that they had enjoyed.

It’s all the fault of the money-lenders, went up a cry that would not have been out of place in twelfth century York. House prices are over inflated because people are now able to borrow vast sums of money (up to ten times their salaries!). The words “credit control” appeared on the screen. The panellists happily discussed whether there should be a cap on the amount one is allowed to lend. Apparently, it is the job of the lender to lend responsibly. I had always though that it was the job of the borrower to borrow responsibly – it is they, after all, who must meet the repayments or lose their house – but nobody spoke up for the freedom of the individual to borrow whatever sum they deem necessary (or desirable) to make whatever arrangements they see fit.

At one point the Newsnight team mentioned property taxes. Apparently, they solve the whole problem. But Middle England wouldn’t like it, so it was brushed aside with a politically expedient waive. There was only one thing for it, they concluded. A nice house price crash will sort it out; but lets hope its not too hard, added the politicians.

It is a shame that Dan Rogerson was not available, as a Lib Dem might have tried to keep the discussion about property taxes alive for just a little longer. Like the issue of road user pricing (which is a Lib Dem manifesto pledge, though we have cooled to it since two million people signed a petition objecting to it), it is the right policy and one that needs to be defended, explained and pursued.

Land is a finite resource that owes nothing to the ingenuity or effort of mankind. It has more in common with fossil fuels or spectrum band-width than labour or capital. Because it is both limited and essential (unless one is a pirate radio station), it’s value constantly rises as society grows richer: money chases more and better goods, so prices actually fall in real terms (imagine how much a brand new ZX Spectrum would be worth now – kitsch value aside); wealth outstrips population growth, so real incomes slowly rise; but land is static, so rising wealth and demand must push prices up. Land value inflation is inevitable.

The most efficient way to prevent land becoming the preserve of the wealthy few (which George argues must inevitably lead to the impoverishment of those who do not own land, as any extra wealth they produce will be taken in rent) is for the state to capture rent and distribute it among the populous. The Lib Dem proposals are rather more modest; they would tax property values at 1 per cent per annum, with a view in the long-run to taxing only land values and not the value of improvements.

The result would be to calm house price fluctuation. It would discourage hoarding; it would be costly to own land that was not in use. It also rewards improvement: a field would have the same land tax whether or not a block of flats were built on it, so the owner’s interest would be in developing his land. It would capture a proportion of the wealth (as opposed to income) that would otherwise entrench privilege in families, and would capture unearned income (that deriving just from owning a rising asset). From an economic perspective, it would have a far more benign effect than taxation of labour or capital, both of which we should encourage. And it is devilishly hard to evade.

Middle England’s objection comes primarily from the fear that it will lead to a net increase in taxation. This is – or at least, ought to be – misguided. If land value taxation were the preserve of local authorities, it could replace the hated Council Tax. If it yielded higher returns than the Council Tax, the Government should respond by reducing the grant it gives local authorities and tax labour and capital correspondingly less (that is to say, reduce income, capital gains and business taxes). This would additionally hand much more fiscal authority to councils and so promote the devolution agenda. Tax changes should be at worst neutral, but would be altogether fairer, simpler, greener, more local and more efficient. Sound familiar?

Tuesday, 22 May 2007

One down. A few more to go.

The European Union has decided to scrap regulations for timber quality and packaging sizes in a drive to reduce red tape. This is good news.

I struggle to see why Europe needs a uniform standard for packaging sizes - I'm a bright chap; I can figure out the difference between an 800g loaf and a 1000g loaf. And if my wood is too knotty, I'll not use that supplier again.

I hope that this drive to reduce red tape keeps going. I can think of a few more regulations that need not be taken at a level so elevated as to standardise across nearly half a trillion people.

For ye have the poor always with you

Geoffrey Payne and Agent Mancuso began a debate yesterday on whether the Liberal Democrats should make the reduction of inequality (referred to by some as the issue of “relative poverty”) a matter of party policy.

Coincidentally, I have been reading some old party papers today, and have come across clear statements of support for the concept of “relative poverty” and the idea that government should counter it.

“A fair Britain is one… [that] redistributes wealth from the richest to the poorest.
“Inequalities in wealth… are widening… We are determined to reverse this trend and to remove the inequalities created by the structures of society. We are determined to create a fairer Britain.” (Trust in People: make Britain free, fair and green, Lib Dem policy paper 76)
Yet as Mancuso notes, “even the poorest people in Britain are considerably better off than the poorest were a generation ago, and they in turn were better off than the generation previous. Compared to the millions who live in genuine poverty around the world, all but the very poorest in Britain live in luxury.” The sentiments are echoed in the article by Arnold Kling to which I referred a couple of weeks ago.

The Government defines income poverty as having an income below 60 per cent of the national median income; severe poverty is below 40 per cent. Yet in a dynamic, prosperous society, vast differences in wealth are inevitable (and perhaps even functional).

It is almost as though, at the very moment that we are about to rid our country of poverty forever, we have discovered a way of ensuring that the poor will always be with us. Hmm…

Last year I read an interesting account of how the relative definition of poverty came to be adopted in the UK. It starts with the Labour Party conference in 1959. Labour were in the doldrums: they had lost three general elections in a row, and Barbara Castle lamented “the poverty and unemployment which we came into existence to fight have been largely conquered.” But three years later at the annual conference of the British Sociological Association it was proposed that the “Poverty Line” be considered to be the equivalent to the amount that the government paid in ‘Supplementary Benefit’. Harriet Wilson, an academic who was there, described the tension that resulted from this redefinition of poverty as “a mood of conspiratorial excitement.” One historian, examining this change, has referred to it as “explicitly political”.

If there is truth in this suggestion, it is indeed disturbing, for it suggests that senior Labour figures deliberately adopted and promoted a relative definition of poverty, not because it better summed up the suffering of the economically less well off, but because it gave them an inexhaustible raison d'ĂȘtre, a justification for a Trotskyite permanent revolution, an excuse for an eternal battle against the wealthy and successful whom socialists so fail to understand and appreciate.

Irrespective of whether the conspiracy theory is true, however, relative poverty should not be our concern. Our focus should be on ensuring that nobody suffers from absolute poverty: that no matter how dire the circumstances, everyone may be assured of food, water, clothing, shelter and warmth. To those five essentials I might add the opportunity to lift themselves back out of their desperate state, but this is best achieved through a rapidly growing economy and loose labour laws, resulting in the rapid creation of new and better job opportunities.

By comparison, the levelling sentiments (which, is might be noted, bear little resemblance to the beliefs of the original Levellers) of those who would seek to take from the rich to give to the poor (what economists would call penalising success and rewarding failure) should have no place in our party’s policies.

Particularly, we must absolutely shun the populist attraction of a “policy of extra income tax for the very rich to secure more funding for public services [which] was a net vote winner at the last general election, by a substantial margin.” As liberals we should no more discriminate against people because of their wealth or their income than we should because of their gender or race. It is easy to find unpopular minorities against which some punitive legislation can be enacted, to the delight of an unsympathetic majority – and no minority garners less sympathy than the rich. But that is not what liberalism is about. Rather, it is an affront to the rule of law.

A fair Britain does not mean that everybody has the same or a broadly similar amount of wealth. It means that everybody, no matter their wealth, is treated equally by the state.

As Oliver Wendell Holmes, Jr., once said, “I have no respect for the passion for equality, which seems to me merely idealising envy.”

Sunday, 20 May 2007

Response from Simon Jenkins

I have had a response from Simon Jenkins to my letter about his comment piece in the Guardian last week suggesting that it is time that the Liberal Democrats disbanded.

He actually sent it on 14 May 2007, but as my spam filter is not as discerning as the readers of the Guardian; it junked him, and I have only just come across the replay in my bulk mail.

His response is frankly shocking:

Dear Tom Papworth

Thank you for your most interesting email. I have almost no quarrel with anything the Liberals have ever said. But if they disbanded and split into their more Labour and more Tory wings, think how clear-cut each general election might be.

With best wishes

Simon Jenkins

I have a suspicion that this is a standard reply, as it shows little evidence that he has read my letter. As I explained to him, the antithesis between left and right (Labour and Conservative wings , as he calls them) is archaic and does not represent the three competing philosophies that have shaped political discourse in Britain for two centuries: conservatism, liberalism and more lately socialism.

To say that he has almost no quarrel with anything that the Liberals have ever said, but nonetheless propose their disbandment, seems positively bizarre to me. It is usual in politics to support a party with which one almost always agrees.

As for how clear cut a general election could be, he has missed an obvious solution. Why not disband both the Liberal Democrats and the Labour Party, along with all the minor parties. Then general elections would be very clear cut indeed, with the Conservatives winning 646 seats and nobody else holding any. This is the sort of clear cut result one gets in places such as Cuba and North Korea, and leads to executive power that is in no way “diluted [and] unstable”, though one might wonder how it is to be held accountable.

Sir Simon clearly places the clarity of the outcome above the contestability of the result. I disagree. The fact that individuals may choose to demur from the cosy consensus of two-party politics (those rare “Sincere friends of freedom” to whom I referred in my letter, in homage to Lord Acton) is healthy and valuable and should be encouraged.

That a plethora of political parties should compete with one another is essential if politics is not to result in the inevitable failure of that always accompanies duopoly. Duopolies always result in the provision of identical products by identical firms: on the rare occasions when different firms ran trains between the same cities, they ran them at the same times and charged the same ticket price, leading to no discernable difference for the customer and so no real competition. As Gordon Tullock explained in The Vote Motive, political parties in duopoly act in a similar way, gravitating towards the “centre” as they seek to capture the votes of the median voter. This results in stultifying consensus of the type we saw between Conservatives and Labour in the third quarter of the last century, and (as Sir Simon himself showed) between the Thatcherites and New Labour.

Yet while Sir Simon is clearly unhappy with the Thatcherite consensus, he actively decries the one major party that would seek to undermine that consensus and return power to local authorities (a big theme of at least two of his recent books). I can only believe that this is a result of cognitive dissonance: though the evidence is before his eyes, he cannot (or does not wish to) overcome the established thought-patterns that fused in his mind in an earlier era.

That is a shame. The Liberal Democrats will continue to have a role in British politics as long as liberty is threatened by conservatives that fear progress and socialists that want to govern it; as long as the other two political parties in Britain subscribe to dirigisme and social engineering; and as long as majorities are allowed to dictate to individuals. With his strong support of localism and his having “almost no quarrel with anything the Liberals have ever said”, Sir Simon would be an ideal supporter. Instead, his talents are wasted supporting a party with which he clearly has greater disagreements. Our loss is also his.

Friday, 18 May 2007

Set parents free to improve the education of their children

Three days at home looking after a convalescing wife has dulled the senses, so my blogging has lapsed.

However, I know how much my regular reader needs their dose of Polemic. So here’s another spanner to throw into the works.

A couple of weeks ago the Economist published a useful round-up of recent studies into school choice. “Choice” is fast becoming a dirty word in the UK, tainted with the vile odour of Tony Blair. That is a shame, and also a misunderstanding. The so-called “Choice Agenda” pursued by the current government is a classic New Labour fudge: like the choices offered by Henry Ford, the citizen can send their child to any school they like, or have their maladies treated at any hospital, as long as it is state-run. They cannot take their hard-paid-for entitlement to free education or healthcare and utilise it in a non-state school or hospital, even if that establishment offers better, swifter, cheaper education or care.

The Liberal Democrats have made some progress, but they are still struggling: our (still extant) manifesto offers “diagnosis by the quickest practical route, public or private”, but fails to extend the same offer to treatment. This is not only a shame but also illogical: if there is value in allowing GPs to send patients to any provider of diagnostics, why is there not the same value in sending patients to any provider of treatment? The answer is, of course, that the benefits are the same, and the sooner we allow patients to seek treatment from the provider that best suits their needs – as determined by them – the better our national healthcare will be.

As I have noted previously, in that haven of Social Democracy that is Sweden, parents are already freer than almost anywhere else in the world to use their tax-funded education vouchers to educate their children anywhere they choose. Sweden has a functional literacy rate of 100 per cent, which puts our education establishment to shame, as a quarter of UK school leavers cannot read and write.
The reason that the Economist article is of such interest, however, is that it establishes what campaigners for school choice have been arguing since 1955: that choice benefits not only those who exercise their right to choose, but also those who do not, and who remain in the state sector. Those who oppose freedom argue that they would be left behind, stuck in state schools as the clever and the driven elbow their way into the best schools. Why those who are clever and driven should be condemned to uniform mediocrity I have never understood, but what matters is that the evidence suggests that these fears are unfounded.

Quoth the Economist: “Caroline Hoxby, an economist at Harvard University… has shown that when American public schools must compete for their students with schools that accept vouchers, their performance improves. Swedish researchers say the same.” So school choice, it seems, benefits all school pupils; even those whose parents do not, themselves, exercise it. As the Economist concludes, “It seems that those who work in state schools are just like everybody else: they do better when confronted by a bit of competition.”

Tuesday, 15 May 2007

An end to the packet of 10?

Children need to be protected from themselves. Adults do not.

That pretty succinctly sums up where I draw the line with regards the power of the state. Adults sometimes need protecting from one another, but never from themselves. A few caveats can be inserted for particular groups (e.g. the mentally ill) but the basic point stands.

But should we allow our efforts to protect children from themselves to impact on the freedom of adults?

Rumours have reached Liberal Polemic that the Department of Health is planning to consult on whether to ban packets of 10 cigarettes. The reasoning is that children are more likely to buy packets of 10 than of 20, and that packets of 10 therefore facilitate underage smoking.

The problem with this is that there are plenty of adults that buy packets of 10 cigarettes. If small packets were banned, it would reduce the freedom of adults to buy cigarettes in smaller quantities. It may even encourage them to buy more – unable to buy packets of 10, they will have to buy packets of 20 if they want any cigarettes at all. As people tend to use up the cigarettes they have, this will not only will this constrain the freedom of adults; it may even lead to worse health outcomes.

But what about the children? The legal age for smoking is anyway 16, which is fairly low (though there are moves afoot to raise it to 18). Under 16s should not be buying cigarettes at all, and I would expect purveyors of the evil weed to apply the law as diligently as off licences do (or rather, should!); if there is any doubt about a customers age, ID should be required (the ownership of the adult-rate photo-card that accompanied my train ticket was my tool of choice as a young smoker). There are of course cases where children look older than they are (as a 6’ teenager I didn’t get asked for ID very often), but the proposed response is a hammer that will crack a few adult nuts along with those of the children. The government should ensure that the law is applied rather than implementing other measures to compensate for its failure.

The final consideration might be that it is the 16 and 17 year old smokers who are being protected. They can legally buy cigarettes, but it is made more difficult in the hope of dissuading them from starting, or continuing. If so, I remain uncomfortable. If they can legally smoke, why make it harder for them? Raising surmountable (price) barriers is only quantitatively different from raising insurmountable (legal) ones; it represents moves by the State to protect adults (which, with regards to cigarette consumption, they are assumed to be) from themselves. There is an argument for taxing cigarettes, but it should be based upon the extra costs smokers incur, which are picked up by taxpayers under our welfare system; the tax on cigarettes (as on pollution), should pay for the externalities, rather than penalising those whose lifestyles we disapprove of.

I’m probably wasting my time, however. Smoking is becoming increasingly demonised by moralisers who believe they have every right to protect people from themselves. Defending smokers and their rights is never popular; they have the same status today as drinkers did a hundred years ago. They are frowned upon and thought to be showing a crass disregard for themselves, their family and society. All of this may be true, but if their behaviour is legal we should be willing to tolerate it. If it is illegal, we should stamp it out. But we should not make the lives of law-abiding citizens harder in our efforts to compensate for our inability to enforce the law.

"A packet of 5000 B&H, please."

Rejoice, rejoice!

Laurance Boyce, who for some time has been flitting on the verges of Lib Demhood, has joined the Party.

He may have baited Ming, and earned himself the righteous wrath of one of the high priests of Lib Dem blogging, but he is clearly keen and engaged.

Welcome to the party.

Saturday, 12 May 2007

If we really want to solve poverty, first we have to stop trying

It is the weekend, a time for reading books, watching a three day old episode of Question Time and not spending too long in front of the PC.

So instead, let me guide you to an excellent article by Arnold Kling on why the best means to solve poverty is "decentralised entrepreneurial activity under capitalism", rather than misguided centrally planned wonder-cures.

In the process, he (or rather, Robert Rector, whom he quotes) points out the fallacy of our oft-cited figures on poverty in the Western world, where (in America, where British commentators like to say that poverty is rife) "Forty-three percent of all poor households actually own their own homes... Eighty two percent of poor households have air conditioning... Nearly three-quarters of poor households own a car; 30 percent own two or more cars..." etc.
Kling's final point is especially pertinent. He advises that we need to shift our attention from a focus on intentions (how nice and worthy people are, and how much they want to help poor people), to a focus on outcomes (what effective policies or practices are, and how much they actually help poor people).

In the end, we need to spend less money dispatching 11,000 donor missions to 31 aid-receiving countries each year, and more money buying stuff we want to own, much of which (and, increasingly, more of which) is made in developing countries. If we try less hard, we might do more good.

Friday, 11 May 2007

The fairest drink on earth: a cup of free trade coffee

Jo Christie-Smith has questioned what non-"Fair Trade" coffee is if we don't have free trade. In doing so, she raises the whole question of “Fair” and free trade, and invites me to (finally!) write about one of my bugbears.

Ultimately, “Fair Trade” coffee is a misnomer, because it is no different in trade terms form any other coffee. The terms of trade are identical. The difference is that the wholesaler/distributor has chosen to pay above the market price for the product. This is not really “Fair Trade” but (depending upon one’s perspective) a form of charitable subsidy or a misguided means of convincing farmers to keep producing coffee when their labour would be more usefully turned to some other product. I think a more honest title would be “Generously paid for” coffee, or perhaps “We left a tip” coffee.

Note that this would not be the case if “Fair Trade” became a matter of policy, as the Trade Justice Movement would like. Then it would be either a subsidy or a tariff, depending how it was applied, and would be very different from freely traded coffee.

When provided by government, subsidies take money off taxpayers to pay producers to ignore the price signals in the market, which are telling them that they would be better off producing something else. If the price is artificially inflated (be it by a “Fair Trade” label or by a government tariff), it is consumers rather than taxpayers who are being… well… taxed.

Coffee is an excellent example of what causes this and the effect it has. The reason that the price farmers receive for coffee is so low is not (as anti-globalisation movements would have us believe) because nasty Western firms are bullying the farmers into accepting lower payments. It is because there is overproduction of coffee in the world – a coffee glut, basically. What is needed is less production, which would be achieved by letting marginal producers respond to the low prices by swapping to produce something else. Subsidies (voluntary or mandatory) disrupt the price signals farmers receive, so they keep producing, the glut continues, and the problem is perpetuated. Meanwhile, those not getting artificially inflated rates are left even poorer as the overproduction continues and even escalates.

The arguments being used by the Trade Justice Movement and others are basically the same as those used by domestic protectionists. They seek to get a better deal for the producer at the expense of the consumer. In the process, they actually harm the producer as well, because producers are discouraged from progressing to produce more lucrative products. Instead, they are encouraged to stay in a business that is reliant upon subsidy. If the subsidy is ever withdrawn, they are suddenly without a livelihood. They become subsidy addicts, supplicants at the doors of government or charities. On top of this, all of society suffers as well, because wealth is diverted from hard-working people to pay valuable workers to produce things that are not needed (in this case, too much coffee) when they could be producing more useful products and so enriching everyone.

My chosen solution is to stop the “Fair Trade” nonsense and encourage the Third World’s farmers to produce all the things that inefficient First World farmers are currently producing, but won’t be producing once we take away their subsidies and tariff protection.

It’s a great system.

It’s called “Free Trade”.

No Panacea, but free trade is still vital for poor nations’ prosperity

Yesterday, Mark Valladares published a post in which he argued that free trade would harm the economic development of the people of Vanuatu, and so undermine their already fairly basic standard of living.

I replied with a comment to the post in which I disagreed. Sadly, this comment has not made it onto Mark’s blog. I hope this is due to a technical error, or that Mark has been too busy to approve it. I would hate to think that a Liberal Democrat blogger was censoring the comments on his site because he disagreed with the content.

(UPDATE: Edis tells me that Mark is in the South Pacific as we speak, which might explain why he isn't poised in front of a PC, like I am. I bet he's jealous though. I wonder if he's wearing a plain shirt, as he tends to wear Hawaiian ones when in the cold, dank recesses of Blighty.)

The reason that this so concerns me is that Mark opened his post by saying “I know that our International Development spokeperson (sic.) reads this blog feed, so if you have a moment, Lynne…” My comment replied that I hoped Lynne had not read his comments yet, as I wanted to ensure that she read my response too. As my comments have been lost to the ether, I will attempt to reproduce them below, so as to explain why Mark is mistaken in arguing that Vanuatu should not enter into a free trade with the European Union.

Vanuatu is a small, pacific island nation of approximately a quarter of a million people, with a subsistence economy and 70% unemployment. Its government is currently negotiating a free trade deal with the European Union, and Mark questions whether the EU is acting in good faith, as he believes that the benefits will be rather one-sided. “Vanuatu’s economy is dominated by Australian companies” he tells us. “Whilst the tourism industry still has a significant element of indigenous providers, this is likely to change as international hotel chains move in. Tourism requires initial investment, which is hard to come by in a subsistence economy.”

Mark suggests that “free and fair trade” would best be achieved by “allowing such small nations free access to our markets, without reciprocity.” This, he suggests “would allow these comparative micro nations to support their inhabitants and reduce their dependence on overseas aid.”

In essence, this is the classic “Fair Trade” argument promoted by the Trade Justice Movement, and it is fundamentally flawed. There are two basic errors which undermine Mark’s argument, and which result in it being a recipe for stagnation and perpetual poverty rather than growth and enrichment.

The first error is the belief that the benefits of trade come from exports. Mark’s explains that Vanuatu produces little or nothing that we would want in Europe, so whereas the EU will have a new market for its companies, Vanuatu will be able to sell little or nothing back to us. This is a founding belief of Mercantilism, which argues that nations are enriched by a positive balance of trade (exporting more than they import). Basically, it boils down to “Exports good; imports bad.” Nothing could be further from the truth.

By far and away the greater benefit from trade comes from imports. Imports are only possible if a supplier can meet demand better than domestic producers, perhaps by selling goods more cheaply or of a higher quality. The result is that consumers (for which, read everybody) can increase their standard of living. This does of course put pressure on domestic producers to be more competitive, but that is healthy. Inefficient production is no more useful in Vanuatu than in Nottingham.

Milton Friedman made the point pretty well in Free to Choose, when he noted that "We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports."

The second fallacy that underpins Mark’s concerns is the belief that because we can produce everything imaginable cheaper and more efficiently than the people of Vanuatu, we will undercut them in all things and destroy their home industry. In fact, as Ricardo made clear two centuries ago, it does not matter if one nation can produce everything more efficiently than another. What matters is that each concentrates on what they are best at and then exchanges goods.

To illustrate this, let us imagine two Vanuatu citizens, named (in traditional Polynesian manner) Andy and Bob. Andy is an excellent fisherman and a good boat maker. Bob is a fair boat-maker and a pretty lousy fisherman. By the logic of the Trade Justice Movement, Andy can out-produce Bob in both fish and boats, so Bob has nothing to gain by trading. However, as Ricardo demonstrated, it is far better for both parties if Andy concentrates of fishing while Bob makes boats. Andy is most efficient as a fisherman and Bob as a boat-maker, so if they both concentrate on what they are best at their combined yield is maximised, and they can then swap maritime equipment for fish in a mutually beneficial manner. Similarly with Vanuatu and the EU: as long as Vanuatu’s people produce what they are best at, it is worth the EU exchanging that for what the EU is best at – or rather, both make money selling what they produce best and buy what they are less good at producing.

In practice, the world is resplendent with examples of where this has worked. Vanuatu’s poverty is irrelevant: South Korea was as poor as Ghana half a century ago, but as it opened up its markets it has risen to become the world’s twelfth richest nation. Neither is size a problem: Hong Kong was a tiny, poverty stricken island colony after the war, but an aggressive policy of free trade and low taxes made it one of the world’s best place to do business, and prosperity followed. In this global electronic age, even distance is no longer a problem: Vanuatu could attract financial services companies with low business taxes and a light touch regulatory regime.

In fact, it is worth asking what Vanuatu has to lose from freer trade. If, as Mark suggests, most of the population are subsistence farmers and fishermen, then the worst that can happen is that they continue to be subsistence farmers and fishermen. On the other hand, if he is right that “Tourism requires initial investment, which is hard to come by in a subsistence economy”, then the influx of foreign capital will fund hotels that will bring jobs to some of those 70% that are unemployed. Foreign firms dominated Hong Kong, they poured in to soak up China’s cheap labour, and they are buying up UK “national champions” at a rate that some find alarming. The result has been prosperity for the recipients of this movement in capital, not some new colonialism.

If the EU is currently negotiating a free trade agreement, the current scenario must be one in which trade is not free. This has clearly not produced prosperity for Vanuatu’s population. But Mark is correct to doubt that both parties will benefit equally from a free trade deal. The European Union has little to gain from a tiny island nation with a small population. Vanuatu’s citizens, on the other hand, will reap enormous benefits from trading freely with the largest economic bloc in the world.

Free trade is no panacea, it is true. With free trade one also needs a stable society, good governance, strong property rights, democratic institutions, a liberal economy and the rule of law. But free trade remains a vital ingredient in generating prosperity across the world, be it in the high towers of global financial capital or the low beaches of a pacific island nation. Anything else requires governments to tell their citizens that they may not associate freely with whomever they wish: that buying and selling from some people is wrong, just because they are far away. It is an illiberal and misguided policy, which is why the Liberal and Liberal Democratic parties have always supported free trade. Long may we continue.

Thursday, 10 May 2007

A letter to Simon Jenkins

A cornucopia of Liberal Democrat bloggers have responded on their sites to Simon Jenkins’ comment piece in yesterday’s Guardian, in which launches a bitter but slightly confused attack on the Liberal Democrats.

I see no point in adding to James Graham’s fisking. Nor can I ever hope to match the wrath of Cicero. I have not the time to rival Mind Robber’s essay. I cannot hope for a wide a readership as Stephen Tall. I will defer to Duncan Borrowman's acidity.

The only way to add value to this debate is to take it to its source. I have therefore written an email to Sir Simon in which I point out that he has, himself, demonstrated what the Liberal Democrats are for in his most recent book.

I have also sent a truncated copy to the editor, in the hope of it being printed. Were it to be, I would have a wider readership than Stephen (for just one day). However, as I imagine Party grandees are even now formulating an official response, I suspect it is a vain hope. The full version would anyway never see the light of day, so I am reproducing it below. I hope you enjoy it.

Dear Simon,

I was surprised that you should question the role and purpose of the Liberal Democrats in
your article in yesterday’s Guardian, as the answers were clearly contained within your most recent book.

Your article suggests that you continue to analyze politics through the lens of a right-left antithesis. Yet in
Paradoxes of Power, on which you leant quite heavily for the first part of Thatcher and Sons, Alfred Sherman wrote that “We should long since have been liberated from shibboleths inherited from the parade of the Estates on the Versailles tennis court in 1789”. This is undoubtedly true.

As Friedrich Hayek suggested in explaining why he was not a conservative, there are in fact three distinct political traditions, each competing for space in the political arena. In answering your question, therefore, I would point out that the Liberal Democrats continue a long political tradition of liberalism, as opposed to both socialism and conservatism.

Of course the divisions between the political parties are not always as clear as ideology would suggest. There is a Social Democratic tendency within the Liberal Democrats, just as Roy Jenkins et. al. represented a liberal tendency within the socialist Labour Party. David Cameron claims to be a liberal Conservative, though in practice he seems to lean more towards a paternalistic High Tory dirigisme that shares ground with the socialists.

Ironically, Thatcher and Sons also indicates how this ideology translates to distinct policy, and further suggests that this policy is one with which you have sympathy. You note that the Thatcher government’s attempt to denationalise and deregulate the economy, to break up corporate interests and to inject market discipline into public services (the “First Revolution”) was pursued by means of a massive centralisation of authority in Whitehall, in the Treasury and within the office of the Prime Minister (the “Second Revolution”). While recognising the need for the first, you lament the second as both a failure and an encroachment on the liberty and diversity within British society. Yet as you clearly demonstrate, this centralism and arrogation of power has been the policy of both Conservative and Labour regimes for three decades.

The Liberal Democrats have consistently supported an alternative, local agenda that is in keeping with the liberal tradition that decision making should take place as near as possible to the citizen. While agreeing wholeheartedly with the First Revolution, the Liberal Democrats would seek to reverse the second, injecting greater power and autonomy into decrepit and demoralised local government. The Lib Dems would hand power to national, regional and local authorities that are more responsive to individual citizens, empowering individuals and communities and so encouraging greater political engagement.

The bulk of your article is in fact an expression of genuine concern that the outcome of a truly representative voting system may have on the unity and authority of the executive branch. This is a serious matter and deserves greater attention (though to continue with the status quo is not a satisfactory answer). However, to suggest that the difficulties presented by a system of proportional representation warrant the dismantling of one of Britain’s oldest and greatest political parties, with a distinct ideological tradition and substantial electoral success, is illogical.

Sincere friends of freedom may be rare, but no matter how the British polity is constituted, they will find a home within the Liberal Democratic Party.

Yours sincerely,

Thomas Papworth

Wednesday, 9 May 2007

Norman Mailer on why prisons don't work

An interesting paragraph from The Executioner's Song by Norman Mailer, in which he seeks to explain why prison doesn't work.

"...the prison system was a complete socialist way of life... For twelve years, a prison [told prisoners] when to go to bed and when to eat, what to wear and when to get up. It was absolutely diametrically oppsed to the capitalist environment. Then one day they put the convinct out the front door, told him today is magic, at two o'clock you are a capitalist. Now, do it on your own. Go out, fiand a job, get up by yourself, report to work on time, manage your money, do all the things you were taught not to do in prison. Guaranteed to fail. Eighty percent went back to jail"
That sounds pretty plausible. Fortunately, the Liberal Democrats are proposing that training and work should be a compulsory part of prision life, so that at least when convicts leave prison they have the skills and experience necessary to find a job, and so begin a constructive life, rather than fall back in to the only life many of them have know - a life of crime.