The story of Yeru Anka

Paul Anka is remembered for hit singles including Diana, and for writing the words of My Way.  His brother David, though less well known, had a distinguished career as a development economist.  He advised African countries on import substitution and tariff barriers, and was known as 'Yeru' (wise leader) by the African recipients of his help. 

Although long retired, his legacy still survives.  Even today when development economists advise on import substitution and tariff barriers, the Africans will crowd round, chanting the name of their former 'wise leader.'  "Yeru Anka!" they shout, "Yeru Anka!

RIP Barry Bracewell-Milnes

We are saddened to learn of the death of Adam Smith Institute author Dr Barry Bracewell-Milnes.

Bracewell-Milnes was one of the earliest supporters of the Adam Smith Institute in the late 1970s, and became a regular speaker at our conferences and events. A meticulous tax economist – who was for many years economic adviser to the Institute of Directors – he spent much of his life arguing passionately that taxes on capital were counterproductive and damaging.

For the Adam Smith Institute, his publications included False Economy and Captive Capital, each arguing strongly against plans to align capital gains tax rates with the income tax rate. The presumption was that a divergence between the two rates enabled some people to take income in the form of capital gains rather than income, and so avoid tax. Bracewell-Milnes demonstrated that only a tiny handful of people actually had this option, and that the problem was easily policed. Indeed, some countries (such as Hong Kong at the time) had no capital gains tax at all, and were completely relaxed about it. But what high rates of capital gains taxes did was to drive investment offshore, and lock people into out-of-date investments that they should really cash in but did not, simply because they feared or resented the amount of tax they would have to pay. This lock-in made capital less productive and damaged the whole economy.

Bracewell-Milnes also railed against inheritance taxes, which he saw as another tax on capital. For the Adam Smith Institute, he wrote Free Wills and Inheritance Without Taxation on this subject. Extending his capital gains arguments, he showed how inheritance taxes similarly trapped people into inefficient investments, because people tried to protect their capital against the tax, rather than investing it in the most productive way. Again, the result was a net loss to the economy. Indeed, Bracewell-Milnes calculated that death duties and inheritance taxes had actually produced a net loss for the economy in every year of their century-long history. A deeply religious man, he also objected to how inheritance taxes hit families at the worst times of their lives and ran counter to the natural human instinct to provide for and help one's relations and friends. It was better, he thought, to abolish the tax entirely: and he even convinced John Major's government to do that, but too late in their period of office, unfortunately, for that conversion to have any effect.

Other taxes too came under the Bracewell-Milnes searchlight, including changes to Britain's little-understood advance corporation tax, which (he said in An ACT Against Trade were deeply damaging to business). In A Disorderly House, he also dismantled the arguments for raising alcohol duties, and exposed the illogicality of EU alcohol taxes, which he felt were largely the random result of horse-trading by countries anxious to protect their own production, and which were especially damaging to Britain's beer and Scotch whisky producers.

Bracewell-Milnes's arguments remain very relevant today – witness recent debates in the UK on capital tax rates and minimum alcohol pricing. Today's politicians and lobbyists would do well to review the clear and comprehensive arguments in his Adam Smith Institute publications. We shall miss him, not just as a powerful advocate of lower taxes, but as a good friend.

Think Tank Reviewed

Madsen's "Think Tank - the story of the Adam Smith Institute" continues to attract comment.  The Guardian has just featured a review by Steven Poole, sandwiching Madsen (as he points out with delight) half way between intellectuals and gin!

Madsen is pleased his book merits a notice in the Guardian, though he's not sure about "his Panglossian triumphal march through policy concepts taken up by successive governments, inspired by the institute's "philosophy" of tax-cutting libertarianism."

Most people will probably read the book and then decide for themselves, especially since there's now a Kindle edition of it…

An honourary D.Litt for Eamonn Butler

In a signal honour for the Adam Smith Institute and especially for Eamonn personally, he is today awarded an honorary D Litt from Heriot-Watt University in Edinburgh.

In presenting Dr Butler for the degree, the Head of the Business School described Eamonn as "following in Adam Smith's footsteps."  Just as Scotland's most famous economist had opposed vested interests which used government power to distort markets and promote anti-competitive regulations, so Eamonn has campaigned to have whole areas of government activity carried out more efficiently by free market activity:

"In his many publications in newspapers and magazines, in his many broadcasts on radio and television, and in his many meetings with leading politicians, Dr Butler argued for contracting out of many local government services, he argued for the privatisation of companies and utilities, he advocated internal markets in health and education.  Internationally, he advised governments on economic reform, anti-corruption policies and administrative reorganisation.  To support his policy recommendations, he wrote many books on the contributions made by leading free market economists including Friedrich Hayek, Milton Friedman, and Adam Smith."

The address went on to point out that Eamonn persuaded Edinburgh City Council to allocate the prime site outside St Giles' Cathedral for a statue to honour Adam Smith, hitherto bereft of adequate recognition in his own country.  Eamonn went on to organize the creation and the funding of the magnificent statue of Smith which today adorns that site, dominating the High Street. 

And when, three years ago Adam Smith’s residence for the last twelve years of his life, Panmure House, came on the market, the Edinburgh Business School purchased it.  Eamonn has been a leading supporter of the campaign to restore that property as a further memorial to Smith and his work.

In recognition of Dr Butler’s outstanding contribution to the advancement of public policy and economics, the Head of the Business School asked the Vice-Chancellor by the authority of the University Senate to confer the Honorary Degree of Doctor of Letters on Eamonn Butler.  It is an honour well-earned over decades of contribution to public policy, and is richly deserved.

The ASI and Eamonn's many admirers join together today in offering Eamonn heartfelt congratulations.

Update: Read the commencement address given at the ceremony here.

Cheerio, not goodbye

As some readers will already know, I am moving on from the Adam Smith Institute. Friday was my final day as Executive Director here, and in June I will be moving to the United States. I'm heading for Washington, DC, where I am going to be Managing Editor at the Reason Foundation, a libertarian think tank which also publishes Reason Magazine and produces Reason TV.

I'm very excited about this new opportunity, but, needless to say, I am also very sad to be leaving the Adam Smith Institute. It has been a great five years, and I have so many wonderful memories to look back on. I will miss all the people I have worked with enormously.

We have done so much since I started in 2007, that it is hard to pick favourites. But here are few personal highlights: unveiling the Adam Smith statue back in 2008; running Freedom Week in 2011; filling the LSE with libertarians for last year's Hayek v Keynes debate. I have also hugely enjoyed establishing a top-notch ASI lecture series over the last few years. Tour de force talks by Tara Smith and Kevin Dowd stand out as particularly memorable moments.

More broadly, there are a handful of overarching themes that have characterized my time here: the resurgence of Austrian school economics in response to the financial crisis; the emergence of unabashed libertarianism as a distinct voice in the political debate; and the creation of a fast-growing libertarian youth movement in the form of the UK Liberty League and European Students for Liberty. I will always be very proud of the role we have played in these developments.

My final words, though, must go to Madsen and Eamonn – who gave me an opportunity few people fresh out of university could dream of – and to the Adam Smith Institute's friends, supporters, and donors, who make everything we do here possible. Thank you, and farewell.

Why we need to kill solar power subsidies right now

I've never been very taken with the arguments in favour of subsidising various forms of renewable energy. I've qlways far preferred the idea that if we really do have an externality in the form of CO2 emissions then the answer is a Pigou Tax on that externality and that will sort everything out over time. However, given the joy with which governments like to pick losers that wasn't an argument that was really going to work.

So, we've had subsidies for solar power. The argument being that they need a boost to get the prices down and then, eventually, solar will be cost competitive with other forms of power generation and we can abolish the subsidies. Which allows me to bring you tidings of great joy. The day to abolish those subsidies is today. Right now, immediately:

Two German solar energy developers are planning to build photovoltaic plants in southern Spain that will earn a return without government subsidies.

There we go, solar is now cost comparable with other forms of energy generation. Thus we could and should stop the subsidies immediately. For even if you do buy the arguments of the greenies, that a boost was needed to get the bandwagon rolling, well, it is rolling now and thus we can stop wasting money on those subsidies.

However, as Milton Friedman said there's nothing so permanent as a temporary government programme, so I seriopusly doubt whether anyone is going to take the success of the technology as a reason to stop subsidising the technology. Despite the point that we've already managed what the subsidy set out to achieve.

The ballad of Theresa May

By all accounts, this was a crappy week
for Mr Cameron and his Tories.
After taxing granny, pasties and the meek,
and seeing George Galloway crowned in glory,
the Home Office creates a scheme so fearful,
antithetical to liberal thought,
I'd pay a lot to give a great big earful
to a minister (shame they can't be bought-
that is, unless it's Dave that you'd like to see.
I wonder if George charges VAT).

The plan, we're told, is the implementation
(necessary for survival of the State)
of a GCHQ listening station
to stop these pesky terrorists of late.
We need this new system here and now!
But passage of the bill can wait till post-
the Games, as "Parliamentary time allows",
just exactly when we will need it most
"to obtain effective, real-time, viewing stats"
of web use (this includes photos of cats).

Never mind all the current legislation,
extensive in consequence and scope,
now laws that govern the British nation.
(They should not instil you with too much hope.)
I shall provide an example here for you:
see "section 58"! Ten years, for taking
a picture of a building in full view.
And if they can't prove you're below the board, Her
Maj can slap you with a Control Order.

They say stop-and-search mitigates the risks,
which as of the year two thousand and nine
meant none were arrested, six figures frisked
(the perps got away in the nick of time).
And remember that Libyan revolution
and how you took to Twitter fervently?
That's speech unsafe under our constitution
(you'll be needed at Belmarsh, urgently).
Want to tear down a foreign state? Well, this here's
unlawful, and will get you seven years.

When a book can be illegal and jail needs no charge,
the state has the tools it needs to play rough.
It's time to push back on Big Brother writ large:
we must say, and loudly, "enough is enough."
But I've now said plenty. Enough out of me:
time to get on the horn and call your MP.

Proprietorial Schools Conference, April 28

The Centre for Market Reform of Education (CMRE) is a new education research and policy unit founded by ASI research fellow James Croft, the author of our outstanding 2011 report, Profit-Making Free Schools.

The purpose of the Centre is to explore and promote wider understanding of the benefits of a more diverse, competitive and entrepreneurial education sector and market-led solutions to public policy issues.

CMRE is staging a private schools conference for proprietors/headteachers, school entrepreneurs and consultants, on 28th April at Fulham Prep School. At the conference James will be presenting the next instalment of his on-going research into for-profit schooling in the UK independent sector.

The conference offers a unique opportunity for proprietors to meet and share their experiences, and to take in the perspectives of leading consultants and researchers. The full agenda, together with speaker profiles and details of how to register, may be viewed here.

ASI budget coverage highlights

The Adam Smith Institute appeared on a variety of TV, radio, print and online news sites commenting on Osborne's announcements both pre and post speech. Below are some of the highlights:

• Dr Eamonn Butler on the Jeff Randall Show, Sky News discussing the expected changes in taxes.

• Dr Madsen Pirie on the Today Programme arguing against government intervention in business and for less regulation and taxes.

• ASI Fellow Alex Singleton on the Jeremy Vine Show defending the need to scrap the 50p tax rate.

• Sam Bowman on Al Arabiya TV giving his reaction to Osborne's announcements.

• Dr Madsen Pirie writes in City AM an entrepreneur's wish list for the budget.

• Sam Bowman writes in the New Statesman on his dream budget proposal: legalising and taxing drugs.

• Sally Thompson writing on Politics.co.uk on the need to reduce the tax burden and simplify the tax system to generate growth.

• Dr Eamonn Butler writes in the Spectator Coffee House on how Osborne can learn from Adam Smith on taxation.

• Tom Clougherty's criticises the tax hike on cigarettes in The Sun.

• Sam Bowman liveblogged the Budget at the Reuters website.

• The ASI's reaction to the 50p tax rate and lowering of the 40p tax threshold feature in the Daily Mail and Daily Telegraph and ConservativeHome.

Running for liberty

This weekend, our friend Hunter DuBose (pictured left) ran the Bath Half Marathon in support of the Adam Smith Institute. Love the t-shirt, Hunter!

That's right, dear readers, we inspire such devotion and enthusiasm that people are prepared to run for 13 miles just to help fund our efforts to advance free markets and individual liberty.

It is worth reminding readers that even though we give almost all of our work away for free – whether it's this blog, our reports, our student programmes, or admission to our events – it does cost money. In some cases, quite a lot of it.

We don't take government funding. And contrary to popular myth, we don't get very much from big corporates either. So, ultimately, we depend on the generosity of individuals who share our ideals to make everything we do possible.

If you like the work we do, and you want to see us become a bigger, better force for liberty, please consider lending us your support. It's easy – all you need is a credit card!

If you'd like to know more, get in touch with me (tom@old.adamsmith.org) or Sally (sally@old.adamsmith.org). And don't worry – we won't make you run a half marathon unless you really want to!