What kinds of inequality should we be worried about?
1. When inequalities come about as a result of different levels of effort. Some people are born with vast natural talents (e.g. Wilt Chamberlain) while others are not, or their talents are not in such high demand by the market. Some are born to dedicated, loving parents while others are raised in far less supportive environments. No one could claim they bear most of the responsibility for their genes or upbringing. But even if we could even out the differences in income or wealth due to different upbringings and talents, we'd want to leave in the differences from different levels of work. This is because leisure can be seen as a form of income, as it adds to utility. To give those who take more leisure the same money income as those who take less would be subverting equality, rather than enforcing it.
2. When inequalities derive from differences in job satisfaction or riskiness. People who do more dangerous jobs are paid more. This is exactly what economists would expect; extra money compensates the worker for the extra risk of injury or death. But it's also what we should want. A more satisfying, less risky job (like teaching or creating art) should pay lower by justice, and this is one of the really good and egalitarian elements of the market economy. This ties in with the previous point as one extremely undesirable element of certain high-paying jobs is the extreme hours they demand. If typically people's willingness to do extra hours begins to decline at an accelerating rate, we would expect high hours occupations—in a just, egalitarian system—to be paid disproportionately well.
3. When inequalities are necessary, due to the infirmities of current human nature, to produce a greater total pot to help the needy. A prominent element of John Rawls' A Theory of Justice, the book that kick-started the recent era of social justice theorising, was the difference principle, the idea that inequality in society should only be as much as is necessary to make the worst-off person as well off as possible. But driving inequality any narrower would harm the worst-off and would thus be unacceptable. Of course, as G.A. Cohen shows in "Incentives, Inequality and Community" and his book Rescuing Justice and Equality, this isn't a demand of justice—it's just a practical consideration when we have the welfare of the badly-off in mind. But in the real world pragmatic considerations are often appropriate, and it may well be that certain inequalities in a given society can be practically justified on these grounds.
The really interesting question is this: how much of the inequality in real-world capitalist societies is down to these three legitimate sources, and how much is down to undeserved luck? The key difference between 'bleeding heart' libertarians and traditional left-wingers may come down to this crucial (empirical?) question.
Preston Byrne says legal aid has to go
Over at the New Statesman, Adam Smith Institute Fellow Preston Byrne argues that the state needs to extricate itself from legal aid, in order to allow pricing to operate more rationally and create a competitive market:
Remuneration structures for legal aid mean that service providers have traditionally had no incentives to “compete on price,” competing instead on “the basis of reputation.” This arrangement, pointed out the final report of the Labour-commissioned Carter Review in 2006, penalises “the efficient practitioner who manages to dispose of a case efficiently in circumstances where this is the right course of action” as he or she would “receive less in case fees than the inefficient practitioner who does not succeed in addressing case issues efficiently.” (page 26)
The inefficient practitioner, in certain circumstances, is thus rewarded. This is not to say that reputation should not be a factor in selecting a lawyer – far from it. Even with classes of goods that are more homogenous in function, such as toasters, an individual product can command a higher price if it is of better quality. In the private sector, a client's selection balances a lawyer's reputation against his or her fee, with the client benefiting from price competition between equally talented providers. No such competition, however, exists, nor can it exist, within the current legal aid structure.
The Labour government attempted to address these issues in 2008 by introducing graduated fee arrangements – termed differently, price controls. Lawyers found these problematic when they were introduced, (paragraph 11) and continue to find them problematic today (paragraph 389); much of available state-funded work is “plainly inadequately remunerated,” says the Bar Council, despite the fact that the cost of the system to taxpayers continues to rise.
Time to privatise the courts
Britain's Ministry of Justice is considering "wholesale privatization" of the courts and tribunal service. Quite right too. Anyone who has seen the country's courts in action knows how inefficient they are, to the frustration of all who use them. That is because they are a monopoly, and monopolies do not have to please their customers – in this case, not just the public who use them but the taxpayers who fund them.
The Adam Smith Institute advocated privatization of the court system decades ago in its Omega Report and the replacement of civil courts with a system of arbitration. Some of this has been started, falteringly. It is time to bring a new, privatised vision to the sector.
The legal profession more generally needs reform too. Its trade union and its standards bodies are pretty much the same thing. Again, it is a closed shop. While the ability to represent people in court has been opened up somewhat, the monopoly remains, just as it does in medicine. Let us hope that the Ministry of Justice's proposals have a clear vision of how we can deliver justice in a more modern way, more competitively, more cheaply and at a higher standard. That is what privatisation usually does.
Censorship is not the answer to the Woolwich attack
Tyranny does not come as a thief in the night, but openly. The killing, by two radicalised islamic extremists, of a British soldier on a London street has brought the usual calls to suspend the rule of law. A BBC interview with one radical preacher prompted Home Secretary Theresa May to ask what the state broadcaster thought it was doing by broadcasting such a thing, and Baroness Warsi, formerly a prominent Muslim minister, joined the chorus. The newspapers reported that a ban on radical clerics being covered on the airwaves is being actively discussed.
If so, it won't work. Those with long memories will remember how the UK government tried to prevent the broadcast media carrying interviews with radical politicians from Northern Ireland. That came about after a particularly sickening interview with Sinn Fein leader Gerry Adams on the back of yet another Irish Republican Army murder. The law was duly passed, but the media simply used actors to dub the words of their interviewees, or put the text on screen and had the newsreader read it out.
Frankly, I don't want to hear extremists justifying murder on UK radio and television. It can be pretty revolting, not to mention deeply upsetting for bereaved relatives. But we have – or had – a rule that people should be free to express their opinions, no matter what the rest of us think about them. We have that rule because we believe that, although it may be abused on occasion, and although it may give air to views that might prove damaging, in the long run it is better to have ideas openly expressed and debated. If ideas are good, they will win that debate. If they are bad, they will not.
There is a limit, though, as the libertarian philosopher John Stuart Mill pointed out over a century ago. We do not allow people to say or do things that could cause real damage to others. We do not allow people to shout 'Fire!' in a crowded theatre, and we do not allow them to incite violence. The line between condoning a murder and inciting violence might be a thin one for the broadcasters to tread. But we owe it to the rule of law to try to maintain that line.
Is nationalism a force for good? Yes
The nation state is—in its fundamental nature—a free and tolerant political system. National loyalty requires only fondness for a geographical location (and its history) which can be acquired by anyone who moves to a nation, as well as those born and brought up there. In principle national loyalty requires no significant revision of values, nor does it exclude people on the basis of their family, colour or any other unsavoury criteria. It is, taken on its own, a remarkably benign form of attachment.
Loyalty is necessary for political institutions to uphold their laws. Laws protecting private property, free speech and so on do not hold sway because they have been written down by a legislator but because those subject to them believe they are authoritative. This requires general acceptance of their content and the body charged with enforcing them, which in turn requires a loyalty and trust for that body and for other citizens. In non-nationalistic countries such as Kazakhstan trade can't rely on its participants' having particular reason to trust one another. Nationalism avoids such pitfalls by enabling a trust of a pool of strangers – something which characterises flourishing societies.
The strongest ties among humans have proved to be religious, tribal-ethnic and national. They are typified by attachment to that which is familiar. The first two of these however, when elevated into political form, are intolerant of differing values and of differing bloodlines. The conflict between family love and religious obedience has characterised some of the worse strands of the Middle-East's history. In Africa tribal loyalties have underpinned devastating atrocities – in the 1994 Rwandan genocide for instance the Hutu people massacred the Tutsi (a group seen to have different physical characteristics). Twenty-two years earlier the Burundi Genocide had seen a reversed tragedy. Similarly fascism is not an extreme form of nationalism but an extreme form of tribalism—members of Hitler’s Aryan race were identified by their appearance and bloodline, not their attachment to a particular nation. We would do well to celebrate our often mocked pride for the rolling hills. Other attachments have proved much less tolerant of our differences and freedoms.
Another reason is philosophical. Where we happen to have been born and brought up is certainly arbitrary from a moral point of view – but this is no good reason to rule it out as mattering. Which mother we happen to have been born to is arbitrary, and yet no one claims we should shun her on that basis. Similarly we come across our friends arbitrarily, even if they have been chosen carefully from those we’ve met. My point is not that we should consider important all aspects of our lives that aren’t up to us, but rather that their being arbitrary shouldn’t be a reason not to think them important. In other words, arbitrariness should give us no reason to feel uneasy about the benefits that national attachment brings.
Is nationalism a force for good? No
My colleague Geoffrey Taunton-Collins argues that nationalism is a force for good, as the loyalty and fellow-feeling it generates are necessary to create high trust law-abiding societies. He says that examples of atrocities committed partially in the name of nationalism—the Rwandan genocide, the second world war and Holocaust, strife in the middle east—are all better explained by ethnic tribalism or religion. I disagree. Firstly I'm sceptical that successful modern societies are driven by nationalism, secondly I think it's impossible to disentangle the nationalist element in many of the terrible occurrences he lists, and thirdly I think that nationalism underlies some very bad policies adopted by many modern societies.
Why does an individual obey the law? One obvious reason is that the penalties for disobedience, weighted by the likeliness of their being incurred, often outweigh the benefits from breaking the law. A second reason, is that individuals believe there is some sort of justice in the laws. This is why people give "because it is against the law" as a reason independent of any further explanation for why a course of action ought not to be followed. Anecdotally, the arguments people give for the duty to obey the law—if these can be taken as also being the reasons they actually do obey the law—seem to go against Geoff's claim, centring on reciprocity, universality and fairness. And the cases where people disobey the law appear to go with my analysis. Consider illegal downloading: some estimates say PC games are illegally downloaded as many as 20 times as they are bought legally. People seem unswayed by the laws—brought about by the authority of the nation state they are supposedly loyal to—requiring them to buy games (or films, television programmes, music) legally. Because others are not following the law, and because the likelihood of punishment is low, they don't themselves.
Can nationalism and ethnic strife be disentangled? Certainly Hitler's regime looked no more favourably on the many proudly German Jews who had served the Kaiser honourably in the first world war than they did on any with Jewish ancestry. And certainly Nazism was centred on the idea of a Volk—a people—united despite the borders of Weimar Germany. But the purest form of an ideology is rarely what gets through and propagates throughout society, and the Dolchstosslegende—the idea that Germany didn't really lose the first world war, but was stabbed in the back by a Jewish-Bolshevik conspiracy—was a vital part of the Nazis' appeal. I think the general bleeding of racialist, ethnic and religious ideas into nationalism and national identity is inevitably tied into Middle Eastern conflicts and the two major central African genocides.
And finally, look at the policies nationalism produces. True, as Geoff points out, there is no necessary reason why nationalism should exclude anyone born outside the country, if they are willing to switch their loyalty to their destination nation, but in practice we know that's what happens. Taking the UK as an example, the tide of anti-immigration feeling has been rising and rising since Gordon Brown's 2007 pledge to provide "British jobs for British workers", culminating in the rise of UKIP and Tory policies like the 99,999 or less net inward migration pledge. Surely it can't be denied that a sense of nationalism, that the UK is collectively owned by only its current inhabitants, a sense of insider and outsider, is intimately connected to this ethically indefensible and economically incompetent trend?
As far as I can tell, actually-existing nationalism is not responsible for our generally law-abiding society, cannot be disentangled from many gross moral horrors, and is responsible for bad policy. Therefore I conclude that nationalism is a force for bad.
Ten reasons why the Left should like the ASI, 7: Killing nanny
The Left should back the ASI's objection to having the state make decisions for working class people under the claim that it knows best what is good for them.
The ASI opposes the paternalistic notion that working class people in Britain are incapable of making their own choices. People in authority, including many involved with the medical profession, often take the view that they know better than ordinary people and are therefore entitled to impose their choices. They seek both laws and punitive taxes to constrain people into living the lives that 'experts' think they should live. They ban indoor smoking and hide packets from view, and call for plain packaging and ever higher taxes, and justify all of this on health grounds. The ASI view is that people are entitled to do unhealthy things if they wish, and while it is acceptable to warn them, the choice must be left to individuals to make.
The same applies to high taxes on alcohol and calls for minimum pricing and restriction on its advertising. Again, health grounds are adduced, even though Britain is among the low consumers among EU members. If people feel they derive sufficient pleasure from alcohol to justify any adverse consequences, that is a decision they can freely make. It is no function of the state to treat them as children incapable of making choices for themselves. Such an attitude is patronizing.
This is also true of foods deemed by experts to be unhealthy, including fats, salt, sugar and fizzy drinks. There are proposals for fat taxes, for taxes on fizzy drinks and limits on the salt and sugar content of foodstuffs. Labelling is acceptable so that people know what they are doing, but measures to force them into diets favoured by 'experts' demean and diminish the values of ordinary people. These 'experts' never seem to consider that ordinary people, especially low-income people, might find that tobacco, alcohol and appetizing foods add interest and satisfaction to their lives. These might be what some regard as unwise choices, but they are for people to make as adults, not as the protected wards of an over-mighty state.
Ten reasons why the Left should like the ASI, 5: Anti-surveillance
5. The ASI opposes official surveillance and secret powers. The Left should welcome the ASI's opposition to snooping and surveillance by authority and its support for an open rule of law.
It is not a legitimate exercise of authority for a state to spy on its subjects. If they go about their peaceful business, their activities are no concern of government, and government has no right to intrude into them. Government is our servant, not our master, put in place by the people to protect them and to safeguard their liberties. Using the excuse of monitoring possible terrorist acts, government has resorted to quite illegitimate surveillance measures into the lives of its law-abiding citizens. The ASI has opposed the extension of these powers, and the use of CCTV cameras by local authorities in quite trivial cases such as improper parking, putting out rubbish for collection at the wrong times, or to monitor whether parents live at the addresses claimed in their school applications.
The cry that "only the guilty have anything to fear" has been used to justify the oppressive intrusion of tyrants throughout history. In fact the innocent have a great deal to fear from governments which demand the right to read their mails, to eavesdrop on their conversations, to record them on camera, and to monitor their movements. These things are no legitimate concern of governments.
The ASI supports the rule of law, done openly and subject to public scrutiny. It opposes secret courts and secret powers, and supports the right of accused persons to trial by jury and full public scrutiny of the judicial process. Where there is legitimate cause for concern about public safety, and surveillance is indicated, there should be separate application each time, judged on its merits by a magistrate, rather than an automatic and general right to conduct it.
Talk o' gin an' beer
London's pubs may soon be protected from demolition or conversion after Boris Johnson agreed to list them as 'community assets'. What this means is that any pub which is so listed becomes considerably more difficult to sell. A selling pub landlord will be required to:
- notify their local authority;
- wait for the local authority to notify any “interested parties;” and
- “if local groups are interested in buying the asset they (will) have 6 months to prepare a bid to buy it before the asset can be sold,”
…helped along by government-funded “pre-feasibility grants of up to £10,000 and feasibility grants of up to £100,000” drawn from a £30 million social slush fund.
The Daily Mail reports that “every week 25 pubs close,” with the attendant loss of thousands of jobs, “never to reopen, victims of... cheap supermarket booze, heavy duty on beer and the smoking ban.”
Supposedly, listing “helps to see off the property developers who are the main reason pubs go down.” But are they?
Industry publications further point out that taxation on alcohol is “eight times greater” than in France, which combined with increased input costs “of barley, malt, glass, aluminium and energy” squeezes margins such that “the major UK brewers have seen profits plummet by almost 80 per cent.” Changing tastes and squeezed budgets have contributed to beer sales falling to their lowest levels since the Great Depression.
Many pubs are now more valuable for the land on which they sit than the pints they pull, resulting in their being “demolished or converted to other uses such as residential and retail services which radically alter community spaces and change the tone of the high street.”
This is no bad thing. The father of Austrian economics, Carl Menger, wrote that “if, as a result of a change of tastes, the need for tobacco should disappear completely,” there would be no doubt that tobacco would lose its utility entirely and the services of tobacconists, importers, traders, pipe-makers, tobacco-farmers, and “the specialised labour services of so many people who are employed” in the trade would “cease to be goods.”
This should not mean permanent destitution for those involved. A free market can redeploy its resources towards more profitable purposes. “Many tools and machines used in the manufacture of tobacco products,” Menger wrote, can be “placed in causal connection with other human needs even after the disappearance of tobacco.”
As in many other occasions in life, where goes tobacco, so goes beer. Times, and tastes, have changed. [ ] Yesteryear's East End labourers are now hipsters and carb-conscious yuppies, and City types are more likely to hit the gym at lunchtime than ‘roll down the pub’.
The problem is exacerbated by the smoking ban, the high burden of business rates, VAT and excise taxes, and falling household incomes. Additionally, in the midst of a housing crisis, the human need for housing is considerably more pressing than the human need for drinking in connection with the land on which “our” pubs have been built. One should not therefore be surprised that pubs have become increasingly valuable as property, rather than business, assets.
This is not to say that the Austrian approach is entirely fatalistic on the issue. We can, and should, announce “last call” on government intervention in this sector of the economy – freeing pub business from regulation so it becomes more competitive and liberalising the housing market will reduce the cost to society of both entertainment and places to live, while not interfering one whit with the property rights of pub owners. Listing pubs as “community assets,” however, achieves virtually nothing.
