British Fusionism

4517

british-fusionism

'Fusionism' is the name generally given to the ideological alliance between conservatives and libertarians, particularly within the US Republican Party. It is widely seen as a major feature of the Reagan Administration, though as a political movement it goes back much further than that. Meanwhile, many commentators argue that the decline of ‘fusionism’ during the Bush years (when social conservatives came to dominate the party) is a significant part of the Republicans’ current woes.

It is probably fair to say that ‘fusionism’ is less easily applied to the British Conservative Party, which has generally been far more statist than its US counterpart. The Thatcher years are, of course, an obvious exception to that rule. But I’m not sure we’ll be saying the same thing about the ‘Cameron administration’ in a few years time. Often you hear David Cameron and George Osborne making disparaging asides about libertarianism during their speeches, probably in a childish and unnecessary attempt to ‘triangulate’.

So it is interesting to see the results of a new poll on ConservativeHome, which is very popular with grassroots Tory activists. Readers were asked to “identify the extent to which they identified with various strands of conservatism" by giving nine different descriptions of conservatism a mark out of ten. The most popular was fiscal conservatism – a belief in lower spending and balanced budgets – followed by ‘supply side’ conservatism – a commitment to lower taxes and less regulation. In third place was libertarian conservatism, the conviction that we needed less of the state in every walk of life.

In descending order of popularity, the next six tags were compassionate conservatism (defined as support for school reform, welfare reform and the family), euroscepticism, social conservatism, law and order conservatism, unionism (i.e. keeping Britain together) and, lastly, ‘hawkish conservatism’ (those who favour an interventionist foreign policy).

Of course, I know that the readership of ConservativeHome is not necessarily representative of the Conservative Party as a whole. But this poll does suggest to me that David Cameron, if elected, will not be allowed to get away with being Ted Heath Mk. II. And thank goodness for that!

MPs: always on the take

4495

mps-always-on-the-take

Chris Mullin is right when he states that £64,000 isn't peanuts. It's not. It's 253% more than the national median wage, or roughly double if you include a London weighting figure of 20%. (The Family Spending 2008 figures conclude that London living is 20% more expensive). So it's fair to conclude that politicians have an easier life than the majority of us on their 'basic' salary. Let's also not forget that they can expense much of their everyday spending whilst also eating subsidized food and drink, and should they garner a ministerial position then they're really raking it in.

Yes, their expenses should be published, down to the last nut and bolt. Yes, their other jobs should also be listed along with how much they earn for those positions. But neither of these solves the question of their pay. The Senior Salaries Review Board will continue to 'advise' the prime minister, meaning that the MPs will still set their own pay. A solution to this problem needs to be found as many in this country don't trust politicians (historically trust in politicians was declining before the expenses scandal) and therefore feel they are paid too much as of now.

MPs have achieved little for the reward they receive. Their remuneration isn't a reflection of the overbearing, unproductive and stultifying effects that their actions have on the rest of us. The UK's political class is in fact acting as a successful glass ceiling to the growth that we all could profit from without their interference. Their pay is purely a reflection of their self-centred and self-aggrandizing nature. A suitable pay cut would be sufficient to drag them back to earth and reveal the hardships that they have brought upon us. Connecting their pay to the median wage, as a base, would firmly ground them. Further linking that with growth and removing their ability to vote on their own pay rises would act as fair punishment for the years of theft they engaged in.

From the Annals of Entirely Counter-productive Government Interventions

4484

from-the-annals-of-entirely-counter-productive-government-interventions

Yes, we know, we're ruled by blithering idiots whose every attempt to make anything better makes everything worse: this is not cynicism about politics it is simply the wisdom which we all painfully aquire as we mature. There are also those few who drink deeply at the fountain of economic knowledge and are able to point to exactly where and when the idiots go wrong. Today's entry from the Annals, the Analects of Stupidity, brings together two wildly different economists: our own Richard Layard, New Labour Peer exemplary, and Alan Reynolds of the Cato Institute. Not people you would normally find agreeing on the colour of the sky but then that economic knowledge when imbibed does lead one to outburts of truth telling.

First, Layard on the distinguishing feature between European and US unemployment rates:

For example, Europe has a notorious unemployment problem. But if you break down unemployment into shortterm (under a year) and long-term, you find that short-term unemployment is almost the same in Europe as in the U.S. – around 4% of the workforce. But in Europe there are another 4% who have been out of work for over a year, compared with almost none in the United States. The most obvious explanation for this is that in the U.S. unemployment benefits run out after 6 months, while in most of Europe they continue for many years or indefinitely.

Elsewhere this is laid out as the pithy truth that if you subsidise something you get more of it. Reynolds makes the same point by quoting Larry Summers:

Summers knows why the US rate is so high. He explained it well in a 1995 paper co-authored with James Poterba of MIT: "Unemployment insurance lengthens unemployment spells." That is: When the government pays people 50 to 60 percent of their previous wage to stay home for a year or more, many of them do just that.

But what has been happening in the US over the past year? Yes, unemployment has been rising to European levels and above. And what has also been happening is that unemployment benefits, or the time you can claim them, have risen to one and a half years in some states and near doubled to just under a year in all of them at minimum.

In reality, the evidence is overwhelming that the February stimulus bill has added at least two percentage points to the unemployment rate. If Congress and the White House hadn't tried so hard to stimulate long-term unemployment, the US unemployment rate would now be about 8 percent and falling rather than more than 10 percent and — rising.

Yes, OK, we know we're ruled by idiots: but do they have to be so damn expensive with their stupidity? We know that raising unemployment benefits, and extending their term, raises unemployment. So why do they extend them when we're already worried about the amount of unemployment we have?

And to have the effrontery to call it "stimulus"....sorry, but that is so stupid, it hurts.

Immigration makes us richer

4481

immigration-makes-us-richer

Much nonsense is talked about the effects of immigration: and few of the truths are well known. The greatest truth of which is that it makes us, the natives, the indigenes, richer. And no, not just because it means there is a plumber about who doesn't require a second mortgage to fix the toilet.

We've all seen the various figures bandied about: immigrants bring in new skills in short supply: ah, say Migrationwatch, but immigration only raises native incomes by £4 a year (or was it week?) each. And then the response that yes, but the incomes of the immigrants have risen tremendously, making immigration as a whole hugely an increase in general human happiness. Then someone mentions that the immigrants steal "our jobs" and then but immigrants have needs and thus create jobs....and around the whole circle we go once again.

However, there's a very Adam Smithian attempt to look at this all here. The argument is obvious (as are all good ones once they've been explained to you): average incomes depend upon average productivity in an economy. The division and specialisation of labour increases productivity thus the more people there are around the more division and specialisation there will be and the higher productivity will be.....and so average incomes. Immigrants are more people and thus.....

Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.

What is further worth noting is that this was true of low skilled immigrants: for having more low skilled labour around means that we can indeed have that greater division and specialisation of labour, between the high skilled and the low.

So it isn't just that we're doing people a favour by allowing them in to share what our forebears built: immigration really does make us richer.

Can government be limited?

4451

can-government-be-limited

Last week I bemoaned the fact that the EU’s Lisbon Treaty fails to set any real limits on the size and scope of EU government. This is a significant failing: surely defining and limiting the proper role of an institution is one of the primary roles of any constitutional document? That said, it is also worth asking whether constitutional limits on government actually work, or whether they are ultimately powerless when faced with a state intent on expansion.

Political theorist Anthony de Jasay would argue that the latter statement is the more accurate one. To use his example, a government accepts constitutional limits to gain the confidence of its subjects in much the same way a lady agrees to “wear a chastity belt to reassure her lord". However, with the key to the belt always within reach, “it can occasion delay, but cannot stop Nature". When government itself has the ability to amend a constitution, that constitution cannot absolutely limit its power. Indeed, outright amendment is rarely even necessary – an expansive ‘interpretation’ of the constitution can often achieve much the same end.

The American example is instructive here: as the Cato Institute’s William Niskanen has pointed out, the US Constitution only authorizes the Federal Government to exercise “18 rather narrowly defined powers". And yet since the 1930s, the powers of that Federal Government have “expanded enormously without a single amendment to the Constitution". Much of this is due to the ‘interstate commerce clause’, which is today interpreted in a way that would horrify the Founding Fathers. The result is a Federal Government that “acts as if it has the authority to define its own powers" and seems to grow faster with every passing year.

On the other hand, it might be that there are some constitutional devices that could succeed where others have failed. The best would probably be those that limited the ability of government’s to tax, spend, or print money. Government spending could be strictly limited to projected revenues, while any tax rises or new taxes could be made subject to affirmation in a referendum. Likewise, the long-term growth in the money supply could be strictly limited by a constitutional rule like the one Milton Friedman suggested.

Another idea is the ‘non-discrimination clause’ advocated by James Buchanan. As John Meadowcroft has put it, this would make “legislation that discriminated on the basis of sex, race, age or religion, or on the basis of occupation, income or wealth" unconstitutional. Such a clause would outlaw the allocation of government privileges, and would only allow a flat tax. It would also require any benefits to be universal. The result, in theory, would be to prevent the exploitation of particular groups via the political process, while also balancing the incentives in the democratic system – people would in future only be able to ‘vote themselves more money’ by also voting themselves a higher rate of tax.

Whether or not these measures would work in practice is difficult to predict in advance. The democratic state tends naturally to grow, and de Jasay may be right that attempts to constitutionally limit its size are doomed to eventual failure. But despite that, I’d say it was still worth trying.

Draft Lords Reform Bill

4455

draft-lords-reform-bill-

The Lords Reform Bill envisages an 80% elected House of Lords – the Church of England bishops will remain, but the remaining 92 hereditary peers will go. There is the option of moving to a 100% elected chamber at some future time.

Piecemeal reform is the sad lot of the Lords, since nobody has ever been able to agree how it might be reformed. For all the many faults of the hereditaries, they did bring to the chamber more women, more people with disabilities, more young people, more communists, more non-lawyers and non-careerists than ever inhabited the Commons. And although the present life-peer system sends far too many superannuated political hacks to the Lords, it also puts in experts with real experience in science, medicine, academe, charities and much else. An elected Lords is very unlikely to attract independent-minded and expert people such as Lord Winston and the Chief Rabbi, though they bring something important to our legislative process.

We don't need a bill to introduce elections for the House of Lords. We need a national debate on how the House of Lords should be elected. It definitely should not be elected on anything like the same grounds as the House of Commons – or it will be packed full of the same party-political, media-driven careerists. For a start, the term of office should be just one stint – of maybe seven years – so that people cannot make a political career out of it. Second, it needs to have a chance of attracting serious experts rather than fame-seeking celebrities or campaigners. Maybe a limit of zero on election expenses could achieve that, perhaps coupled with a ban on using party labels. The Lords should also reflect diverse national interests more than the Commons: perhaps we should have half the seats reserved for women, or a proportion of the seats reserved for people in each different generation. I don't know what will work: I just know that something cooked up by a discredited political establishment between now and a general election won't.

Dr Eamonn Butler is Director of the Adam Smith Institute.

Why Philip Hammond MP should resign

4447

why-philip-hammond-mp-should-resign-

Conservatives need a reform minister, not a Scrooge.

That ol' pre-budget announcement time is here again, where the UK government tells us all the things it would like to spend money on, before telling us in the spring how it is going to raise the money from us to pay for them. It's no way to run the public finances, and it is one of the reasons why we are in such a financial mire. Even on the government's own figures, the public debt will reach a figure equal to three-quarters of our income. But many economists reckon it may even end up bigger. The government is, after all, borrowing a further £175 billion this year – equivalent to £3,000 for every man, woman, child and infant – and still more next.

So I have a new job for Philip Hammond MP. Currently he if the Conservatives' spending spokesman, and what he doesn't know about public spending isn't worth knowing. But he needs to become instead the spokesman on public service renewal – and minister for that if the Conservatives win the election.

You will never streamline the public sector by Treasury ministers bullying departments over money. Instead, you need a complete review of what government does, what it has to do, what it can do better, and what can be done better by other people and by the public. All departments need to buy into that, and it needs a reform, not a finance minister in charge if everyone is going to trust the process and be a part of it. After all, the process may find that spending in some areas should be increased, even if other departments are found to be doing a lot of pointless stuff.

The good news is that this reforming approach worked for Canada, which reduced annual borrowing from 9.1% of GDP in 1993 to zero just five years later – and has been running surpluses for most years since. Our black hole this year, at 12.4% of GDP, is deeper, but I reckon Philip Hammond is up to that job. He should resign his Treasury brief and instead demand to become Shadow Secretary for Public Service Renewal.

Dr Butler's book The Rotten State of Britain is now in paperback.

National socialism in action

4448

national-socialism-in-action

The UK government wants internet service providers to keep records of our email and web visits. Really, I am sure that it would love to collect that information on some new custom-designed, multi-billion-pound central database of its own – but it's been getting a lot of flack recently that it is a 'database state'. How very much more convenient to tell private companies they have to keep this information – and hand it over, on a daily basis, as and when the state demands.

In political science terms, this is national socialism: the state doesn't actually run businesses (or in this case, databases), it just forces private companies to behave as it chooses. Private companies become agents of the state. When you hand over personal information to your credit card provider, your phone company, your bank or any number of retailers, you are effectively giving that information to the state.

Given the number of terrorists and paedophiles we are led to believe are out there, perhaps we do want to give our law enforcement agencies the power to see what people are saying and doing on the net. Well, we might, if they used it only for that purpose, and if our state authorities were competent and focused only on public safety. Sadly, they regularly lose our data on the train. The civil service and the police see politicians, not the public, as their bosses. And huge numbers of officials have access to our data. When HMRC lost 2 million child benefit records in the mail, they revealed that it had been copied by a 'junior official'. Junior doctors were caught illicitly sharing juicy patient records of celebrities coming into their hospital. And so it goes on.

How many 'junior' officials are going to be able to demand our email information off my ISP? And if they come across something nicely embarrassing about someone, how many might just be tempted to sell it to the News of the World? Frankly, I would prefer my data to be held nice and secure by the private companies I choose to deal with, against whom I can take action against breach of trust. When governments breach our trust, there is no recourse to any justice.

Dr Butler's book The Rotten State of Britain is now in paperback.

Just what it is that this capitalism thing is good at?

4440

just-what-it-is-that-this-capitalism-thing-is-good-at

Putting aside my usual insistence that capitalism and markets are very different things, a quick question on what is it that the system we commonly call capitalism is so good at? What, really, is the benefit that it brings to us all?

For $70,000 (£42,000), it may not seem like a very good deal: all you get is a polished silver box containing a USB drive on a black velvet tray.

What you get is your personal genome. So, is capitalism simply good to provide exclusive trinkets for billionaires? There are those who say that it is of course, but that would be to grievously misread what is happening here.

The cost of the procedure is dropping fast, and while $70,000 is a significant expense by even a Wall Street banker’s standards, it seems inconsequential when compared with the $3 billion cost of decoding the very first genome — a project that was completed in 2003, after 13 years. Today the same process takes six to eight weeks. By 2015, says Mr Conde, personalised sequencing is likely to cost under $1,000, and take only days.

From $3 billion to $1,000 in only 12 years: yes, the thing which capitalism is so good at is making things cheap.

This is why it works as a socio-economic system. Leave aside all the morality plays of exploitation and the like for a moment and think purely as an entirely hard hearted pragmatist. We've got cheap food now, we can all fill our bellies at the expenditure of trivial, by historical standards, amounts of labour. Cheap clothing: it's within the memory of those alive that Sunday Best really did mean one's second and only other set of clothing. Even housing which seems so expensive has increased in quality so much that it is cheap by any long term comparison. Add medicine, transport, heating, alomst any sector of the eonomy or consumption that you wish to mention. All are incredibly cheap by the only standard that really matters: how long and how hard must we labour to get them.

As that hard headed pragmatist you would note that the capitalism/markets thing is the only system which has managed to achieve this. No other system that we've ever tried has done that truly remarkable thing, offer a sustained, long lasting and general rise in the standard of living: the reason being that no other system comes remotely close to capitalism's ability to make things cheap.

Not bad for a system derided (wrongly) for being based upon nothing but greed, is it?

Immigration policy is a mess

4434

immigration-policy-is-a-mess

Funny how politicians leap on bandwagons before an election - first bank bonuses, now immigration. After a few soothing words about how important migrants were for the UK economy, Gordon Brown went on to outline lots more controls to stop them. Should play well among all those Labour voters who defected to the BNP.

The reality is that immigration has shrunk. All those Poles are going home, now that the streets of Britain are no longer paved with gold. Not that Gordon Brown's new 'tough' policy could prevent EU citizens from working here anyway. Migration has contributed billions to the UK economy. Migrants are 60% less likely to draw state benefits.

Home Secretary Alan Johnson admitted that Labour's immigration policy is a mess, and he's right. It has chased one headline after another, ending up with a dog's breakfast of a 'system' that is neither efficient nor just. Immigrants and their families can be detained indefinitely, are not allowed to work or draw benefits – so they end up being exploited in dangerous and underpaid illicit jobs.

The new points system is supposed to rationalize all this; but it has already proved damaging. We do actually need unskilled migrant workers in our businesses and public services. Overseas students are stymied with all sorts of paperwork and no longer feel welcome, choking Britain's reputation in international education. Companies complain of visa bottlenecks and having to advertise for chief executives in job centres so as to prove that no native person can do the job. The Tories want the same, but with caps on. It will be a relief when the election is over and we can (briefly) discuss this subject rationally again.

Dr Butler's book The Rotten State of Britain is now in paperback.