Adam Smith Institute

By June 2007, after ten years, many people in the UK had got fed up with Tony Blair. There had been disappointing local election results. There was grumbling about the NHS and education. And there were many leftists in his party who wanted a redder kind of Labour and less enthusiasm for UK involvement in Iraq. And a growing band of MPs who had been passed over for office, of course.

Now Tony Blair must think that handing over to Gordon Brown was the smartest move he ever made. It all started well enough. Faced with many challenges – attempted terrorist attacks in London and Glasgow, Foot & Mouth Disease, and widespread summer flooding – Brown exuded an air of reassuring calm and confidence. Labour climbed to 40% in the polls. A Conservative MP defected. The Opposition seemed unable to land any punches, and reluctant to outline any policies of its own. Labour backroom workers started preparing for an early election.

It was an election that Gordon Brown could have won, giving himself a full five-year programme, albeit with a probably smaller majority. But he wouldn't say yes – and wouldn't say no. Not wanting to allow the Conservative conference to upstage him, he waited a fateful week. By then, George Osborne had announced plans for massive cuts in Inheritance Tax, the election fever smoked out other policy ideas that the public found attractive, and the Conservatives started shooting up in the polls. There would be no Autumn 2007 election.

It made Brown look like a ditherer. Then came Northern Rock. Then the Inland Revenue lost disks containing 25m addresses and bank details. There were funding scandals, with one Cabinet Minister being forced out. Then anger as tax changes came in, ending the 10p starting rate for lower earners. Party animosities turned to open warfare as people jostled for position to replace this dead man walking. [Click 'read more' to continue]

A leader in The Independent this week made the following point:

It is widely agreed that an unprecedented injection of public funds into the NHS over the past eight years has failed to deliver the expected improvements. This is because the funds were not matched by wholesale reform of the system. Health-care workers were left to carry on delivering services in the same old way, rather than being forced to become more efficient and responsive to patients' needs...

Well, I couldn't agree more. Their leader was in response to the Conservatives' latest green paper, launched this week and entitled Delivering Some of the Best Health in Europe: Outcomes Not Targets. The gist of the paper was that central-government targets distort clinical priorities and prevent innovation, and should be scrapped.

That's certainly a welcome idea. Targets make healthcare providers accountable to Whitehall, when they should actually be accountable to patients. Targets also generate bureaucracy and encourage 'creative accounting' – effort and resources are expended on jumping though hoops, when it should be devoted to medical care.

Many welcomed the Tory proposals on this basis – but plenty of others moaned that they were not radical enough. I don't necessarily disagree, but the Conservatives' plans do in fact go much further than most people realize.

Essentially, what they want to do is give doctors and hospitals much greater independence, establish a comprehensive payment-by-results tariff, allowing unrestrained competition between the private sector and NHS trusts, and then allow patients to choose freely between providers. Patient choice would be underpinned by the publication of healthcare outcomes, so that competition would really be directed towards higher standards. All good stuff.

Regrettably (albeit understandably) the one area the Conservatives won't touch is healthcare funding. Services will continue to be free at the point of use, and financed out of general taxation. That's a shame. Supply-side reforms like the ones outlined above will undoubtedly drive up standards, but they can only go so far. And without funding reform, excessive political interference will continue to be a very dangerous temptation.

It used to be the case that people enjoyed an area of privacy into which the law could not intrude. The saying “an Englishman’s home is his castle” reflected the view that the law had no business to enter or spy there unless it obtained appropriate warrants by showing good cause before a magistrate.

The state has recently equipped itself with vast powers to invade our privacy without showing good cause. It now monitors our movements and our conversations and intercepts our mailings on a large scale. Powers to which parliament assented on the assurance they would be used to combat terrorism are now used to monitor the way we dispose of garbage, the toilet habits of our dogs, and whether we are using the addresses of relatives to qualify for admission to a chosen school.

Britain has a CCTV camera for every 14 citizens. Some are equipped with microphones, and on others both face and number-plate recognition technology can track our movements through cities and cross country. That private space in which a person felt secure from the prying eyes of an intrusive authority is much diminished. The balance between a responsible citizenry and state power has been shifted sharply in favour of the latter.

This is a very amusing little video. Why would MEPs be in the Parliament building at 7 am to sign up for their daily allowance...if they weren't intending then to leave to go home?

Another interesting video. The similarities between trade and technological advance: odd that politicians don't rage against that latter really.

This is odd, according to Private Eye it's the older journalist who is supposed to be baffled by the new technology.

If you were wondering how laws are really passed in the UK here is your guide in detail.

Some are complaining about the rape of Iraqi oil. Here's something closer to the truth.

Obama's proposals about taxing the rich might be going a little too far you know.

And finally, this makes sense while this makes less.

Jeremy Hunt, the UK Conservatives' handsome, dynamic, young (42), wealthy Culture spokesman, was our guest at a power lunch in Westminster this week. His theme was policy for the Google generation. Technological advances – computers, mobile phones, the internet, interactive online stuff – have given people access and empowerment in ways they've never had before. But, think the Conservatives, politics and public policy has not moved on. Sure, you can file your tax form or buy a fishing permit online, but so what?

Contrast that with sluggishness with non-government action. Within minutes of the 9/11 attacks, websites were carrying eyewitness accounts that were as reliable as any that the BBC ran a day later. Within days of Hurricane Katrina, while the US government was still in paralysis, other websites had sprung up, linking the various relief agencies and helping people to track missing friends and relatives.

Technology, in other words, can enable us to decentralize public services and empower private or voluntary groups to deliver things better, quicker, and more locally. It enables millions of people to get involved in service delivery, where before it was run by an elite few. It allows the competition of millions of ideas where before things were decided in Whitehall. It means you don't have to have a top-down social and policy structure. It can be led by the people – what Hunt and his colleagues call 'collaborative individualism'.

They have a point. But how can this bottom-up revolution get started if big state institutions remain intact, crowding out everyone else? How will a thousand flowers bloom if state deadwood keeps out the sun? Time to get out the pruning shears.

Dr Terence Kealey, vice-chancellor of the University of Buckingham and a Senior Fellow of the Adam Smith Institute, had an article in yesterday's Daily Telegraph responding to criticisms of British universities made by Peter Williams, chief executive of the Quality Assurance Agency (QAA), the QUANGO responsible for maintaining university standards. Kealey disputes his claim that universities are "rotten" basing grades on "arbitrary and unreliable", and says Williams would do better to focus on the real problem: namely, that students don't get enough contact with their teachers. The end of his article is particularly strong:

Williams is being political. The QAA is power-hungry and resents the autonomy our universities have retained in this target-driven world. He wants more bureaucracy and he wants his QAA to supply it.

The QAA is already too intrusive. The best universities are in America, yet American higher education bureaucracy is trivial. There are no external examiners at American universities, for example, and the US equivalents of the QAA are pussy cats - which is why American universities flourish.

The QAA and other bureaucracies damage higher education because universities flourish only by self-regulation. Universities do best when they are independent, because scholars are innately self-critical, so only when external agencies displace self-criticism with arbitrary ticks in boxes do standards slip.

It's the QAA, not our degree classification, that is arbitrary and unreliable.

It’s an important safeguard that proceedings should only be brought against acts which are illegal in the place they are committed.  A person should obey the law of the jurisdiction in which they find themselves.  They can do things quite legally in the Netherlands which might be illegal in Britain.  This principle is among those which have been eroded.  Aiming to act against paedophiles, UK law has been amended so that people can be prosecuted in British courts for actions committed overseas.  The belief was that overseas jurisdictions might be lax in their laws or enforcement on acts the British government is determined to prevent, even if committed abroad.

It establishes the undesirable principle that the British government can regulate the behaviour of its citizens wherever they happen to be.  The principle should instead be that it reserves the right to regulate the behaviour of those within its jurisdiction.

We are joined this week by a new intern, Cate Schafer.

Cate is a third-year student at Hamilton College in central New York State. She hopes to complete a double-degree in Economics and Psychology and then continue on to graduate school for behavioural economics.
 
Cate works for Hamilton’s Burke Library reference department doing research of various types for students and faculty. She is also a member of the women’s volleyball and basketball teams at school.

She enjoys all sports and spends considerable time on ESPN.com (not during work hours, of course) and in front of the television cheering on her favourite teams.  Her other interests include baking dessert, travelling and meeting new people.
 
ASI is excited to have Cate on board for her research experience and will much appreciate her affinity for baking if goodies happen to make appearances.

For skullduggery and nefarious target hitting at Remploy, try these two posts. (More here) And for an overview of why the incapacity benefit system needs reform, try this one.

It would appear that all investors require the same macro-economic backgrounds.

Proving that there was indeed an eclipse at around the time the Odyssey was set, and eclipse which is mentioned in said Odyssey, does not of course prove that the other events in the poem are also factually true.

Just why is there this push to recycle everything? Other than the fact that we're being told we have to do it, of course.

Did you know that the NHS provides us with higher levels of avoidable mortality than the French system? Even, if you can believe it, higher than the US one? Might that be why no one has bothered to copy this Wonder of the World?

Raising the school leaving age might not in fact change very much at all.

And finally, a new type of public intellectual.

Gordon Brown said in a keynote speech on Monday:

More people need to adopt the work ethic and aim high in life… We must set a national priority to aggressively and relentlessly develop the potential of the British people.

As economists frequently point out, people respond to incentives. Gordon Brown and the Labour government’s policies over the last eleven years have decreased the incentives for a strong work ethic and given incentives for laziness. It is too easy nowadays to do very little and receive life’s necessities on a silver platter from the government. People who do earn well have to give so much of their income to taxes that there is a continuously smaller reward for work and education compared to that of the welfare state.

For too long, political demagogues in the United Kingdom (and elsewhere) have sought votes by telling the poor that they have no chance because the rich exploit them, that as the “people’s” representative, they’ll make the poor richer by making the rich poorer.

Empirical data shows that poor children who do well in their studies (even in state-schools) and obtain a university education will generally escape poverty. Now the government needs to give people responsibility for their own lives, allowing them to succeed if they do what is necessary, and not giving them a free ride if they do not. If work ethic and ambition “must [be] a national priority,” then Mr Brown needs to remove the incentive for laziness and let the incentives inherent in the free market return.

One of the basic principles upholding a free society is that the law should be known. This is subverted when retroactive legislation is passed. No person can know they are breaking the law if the law has not yet been passed. In recent years parliament has taken to making some of its laws retrospective. This was originally used against suspected war criminals, but has more recently been incorporated into finance bills to close loopholes the Treasury calls tax dodges.

The principle should be that whatever a person is accused of should be a crime at the time they committed it. How can people keep their behaviour within the law if the laws are only enacted afterwards?  Retroactive legislation is another case of the steady erosion of liberties by the subversion of the principles which sustain them.
 

So far, President Sarkozy has turned out to be something of a disappointment. In the model of previous incumbents of the Élysée Palace, he is impetuously protectionist, uploading agricultural protectionism to the European level, while trying to undermine the Doha Development Round.

I'm not a big fan of Peter Mandleson either, although he may be the best EU trade commissioner we're going to get. Regardless, in a choice between Sarkozy’s protectionism and Mandy’s attempt to reach agreements on World Trade negotiations, I take the side of Tony Blair's former right-hand man without hesitation.

On the one side of the fence we have Sarkozy, who believes that: "It would be highly unrealistic to keep wanting to negotiate a deal where we have not received anything on services, nothing on industry . . . and which would cut farm output by 20 per cent while 800 million people are dying of hunger."

While on the other side, we have Mandleson who believes that reducing trade barriers will "stimulate agricultural production and trade in other parts of the world, particularly amongst needy developing countries."

Free trade needs defending now as much as ever. As Rosemary Righter argues in The Times, "politicians need to confront popular anxieties about free trade by doing a far better job of explaining how much we gain from the global expansion of wealth and markets that it stimulates." Let’s see if Prime Minister Brown can show the courage that he has so far lacked. Needless to say, I am not hopeful.

There's a new kid on the block. It's a glossy magazine called Total Politics, aimed in part at political junkies. It's first issue is a really good read (declaration of interest: there's a piece by me debating with Polly Toynbee the merits of the smoking ban one year on). They start off with quite a coup: an exclusive interview with the Prime Minister. There's another with Lynton Crosby about the successful campaign which saw Boris Johnson elected as Mayor of London. There are lighter articles on the cars politicians drive, and on how Tory men should dress to impress!

Its launch party at Millbank Tower on Monday was a very impressive affair, with a level of interest by media bigwigs which bodes well for the new magazine's visibility and effectiveness. It's a welcome addition to the political scene, and we wish it well.

A Zimbabwean data point or two: if you prefer, the mess that inflation (not to say corruption and general thuggery) causes to an economy.

Of course, those aren't the only ways that government can mess up an economy, certainly not.

No, really, there are other ways in which that centralised authority can make things worse.

To blame the entire sub-prime mess on this might be too much: but government itself should certainly bear some of the blame.

Phew, economics works: we're seeing the signs of people changing their behaviour to deal with higher fuel prices.

Yes, technology does change: to the point that old decisions sometimes need revisiting.

And finally, the miracle of the intertubes: how books are written these days.