In praise of Will Hutton

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No, I agree, not what you expect  to see here, a piece praising Will Hutton, he of the government should regulate and intervene everywhere shtick. But sometimes it is neceessary to praise those you disagree with, as I am now doing with Will Hutton.

We are looking disaster in the face. A British version of Fannie Mae and Freddie Mac must be created now. Legislation to create a Gordon Mac should be introduced before the summer recess.

An interesting idea floated on 22 June 2008. Then we had Paul Krugman on July 14 2008 saying that the two FM's were in fact part of the cause of the problems. Specifically that their public/private role was a problem. On July 15 that year, James Hamilton thinks they're a problem. On the 16th, Larry Summers says that "one hopes that we are now witnessing the end of this particular experiment in creative capitalism".

And on Christmas Eve the news was floated out that:

The U.S. Treasury Department will remove the caps on aid to Fannie Mae and Freddie Mac for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.

Yes, that's right, they not only went bust they now have (something which the commercial banks do not have) unlimited taxpayer support. Oh, and their senior management is still getting bonuses: $6 million this year.

Without Will Hutton where would we be? How would we know what not to do if he were not there to guide us?

Thus praise is due to Will Hutton. As with the recent comment about Polly Toynbee from Fraser Nelson: every compass needs its butt end.

Learning from Copenhagen

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Despite the hot air and elaborate promises being thrown about the before its start, Copenhagen has been classified by pretty much everybody as ‘a failure’.

Regardless of your belief in man-made climate change and the need for global government regulation, the shortcomings of the Copenhagen Summit reflect the problem of demanding people to unite behind one universal goal and solution.
Wealthy European nations tend to have governments keen to get involved in every area of public policy, and are therefore happy to sign up to large, attention-grabbing emission cuts and vocally drive their own moral agenda through conference.

However, most Americans are skeptical about man made global warming and are therefore unenthusiastic about emission cuts, while developing countries are strongly against any moves to constrain their development and economic growth with puritanical regulation. For its part, China wishes to show its political and economic muscle, and remind the rest of the world of the importance of its cooperation. The result of trying to mediate these conflicting interests is a vague, last minute Accord that absolutely nobody is satisfied with. It is obvious that you simply cannot reach a dramatic conclusion when different incentives don’t align.

The difficulties at Copenhagen could also be applied to national government. A political elite frequently has the incentive to delve further into public life, creating more legislation with the belief that society will be better off in the future because of it. However, these beliefs and solutions do not sit well with everybody, and attempts to impose them can lead to public outcry, dissent- or worse- a fall in the polls. In order to take onboard a range of opinions, a half-formed, middle of the road option is passed, which is unlikely to satisfy or improve the lives of anybody. Just look at some of New Labour and Cameron’s policies.

Governments and super-groups need to accept that there is a limit to the extent that groups with different interests and needs will co-operate with their own set of values and priorities. If their continual exercise of power does not lead to tyranny, it can lead to stagnation in a middle ground. By stepping back and letting smaller groups pursue their own ends, better progress and innovation is likely to come.

Strands of British conservatism

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The latest Total Politics contains the results of an interesting poll, which surveys the ‘ideology’ of MPs. One part of the poll asks Tory candidates and MPs “what strand of Conservatism best characterizes your political philosophy?" – Cameronism, Thatcherism, One Nation Toryism, Libertarian or Cornerstone. For MPs, One Nation Toryism scored 38%, Thatcherism 26%, Cameronism 12%, Cornerstone 6%, and Libertarian 3%. For candidates, Cameronism scored 43%, One Nation Toryism 22%, Thatcherism 19%, and Libertarian 7%. But what do these labels actually mean?

I’ll assume that readers of this blog are fairly well acquainted with libertarianism, meaning (broadly) free markets, individual freedom and limited government. Cornerstone, on the other hand, represents the socially conservative, traditionalist part of the Conservative party. Some of its members are free market, others are not.

The term One Nation Toryism comes from one of Disraeli’s novels, but is basically another term for ‘Butskellism’, the name given to Conservative acceptance of the post-war, Keynesian consensus through the fifties, sixties and seventies. This is the big government, paternalist part of the Tory party.

Thatcherism, meanwhile, represents the rejection of / opposition to the post-war consensus. It isn’t something with a clearly defined ideology of its own, but some of its main characteristics are identifiable: monetarism and supply-side economics, coupled with a belief in a strong nation state and a tendency towards centralization. Thatcherites were the ‘dries’ to the One Nation ‘wets’.

But what of Cameronism, the ‘philosophy’ that 12% of MPs and 43% of candidates believe in? I’m tempted to say that it isn’t a distinct strand of Conservatism at all, and that it is actually more of a style or marketing strategy than anything else. When it comes down to the specifics, it is little more than a fudge (call it a ‘third way’, if you like) between One Nation Toryism and Thatcherism – an attempt to keep everyone happy.

But perhaps that is a little harsh on David Cameron, because he does at least claim to have a ‘big idea’. That idea is that before the frontiers of the state can be rolled back, ushering us into a ‘post-bureaucratic age’, the state must first re-make ‘society’ – that is, use its policies to rebuild those non-governmental institutions that statism has undermined. This is really what the Conservatives are getting at when they talk about the family, about communities and charities and co-operatives and so on.

It is important to draw a distinction here between this ‘Cameronism’ (Jesse Norman’s Compassionate Conservatism provides a good introduction) and Philip Blond’s ‘Red Toryism’. Certainly there are outward similarities – both aim to strengthen ‘society’– but in fact they are fundamentally different. Red Toryism is entirely collectivist: its proponents believe that the state and the market both exist to serve ‘society’ and should be so directed by politicians. The individual does not enter in to the equation. By contrast, Cameronism’s proponents would see the role of both the state and society (understood as ‘institutions’ rather than just a collective) as empowering the individual.

And this, to me, is the ultimate ideological divide: individualism vs. collectivism. Compared with that, all the other labels pale into insignificance.

To aid you in understanding why politics isn't the solution

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There's two groups of people wandering around the country today who both call themselves liberals. There's people like me, who actually are liberal, who point out that while government is certainly necessary it's a necessary evil. Some things have to be done collectively and with the powers of compulsion of the State and we should assign those things to government and then get on the rest ourselves, whether individually or in voluntary collectivism as we wish.

Then there's the other kind of liberals who see government as not just necessary but something which is necessarily good and that it should, with its attendant politics, take over and run more and more of our lives. One little example of why the former view is correct, the latter a failure:

When he earmarked $100,000 in taxpayer spending to go to Jamestown's library, Rep. James E. Clyburn meant for it to go to the library in Jamestown, S.C., which is in his district. But in the bustle to write and pass the $1.1 trillion catchall spending bill, Congress ended up designating the money for Jamestown, Calif. - 2,700 miles away and a town that doesn't even have a library.

The man who actually runs the library that our geographically challenged politician intended to help originally asked for $50,000, not $100,000.

So there we have it, government and politics, twice the cost and incompetent to boot.

Yes, we need to have government and politics is a necessary handmaiden. But let's keep it where it needs to be shall we, that irreducible minimum where only government works, not sprawling across our lives like some "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money".

The power of localism

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Tom’s excellent blog on the nightmare of ‘world government’ hits upon a very strong argument for localism. As Tom put it:

When all is said and done, there is one, final check upon a government’s ability to oppress its people. It is the mechanism used by Cubans when they tie empty oil drums to the chassis of old cars and try to paddle to Florida, or by North Koreans who manage to sneak all the way from the Yalu River to Bejing to try to slip into foreign embassies and beg for freedom. It is the ability to escape.

But this ‘exit option’ could be extended far beyond nation states. After all, even though it may be possible to move to a different, freer country, doing so is generally inconvenient. If we were to radically devolve power within nation states, however, that exit option would be very much enhanced. You could, in a sense, create a competitive ‘market’ in governments. And if you could change your government by moving from, say, Norfolk to Suffolk, you would have a far more genuine ‘choice’ about the policies you are subjected to than you could ever get at the ballot box.

The instinctive reaction of most English people to this suggestion would be incredulity. But look at Switzerland. Its 26 cantons exercise by far the greater part of that country’s political power, taking prime responsibility for healthcare, welfare, law enforcement and public education, as well as taxation. The most populous canton is Zurich, with some 1.2 million inhabitants, while the least populous (excluding the half-cantons, which band together) is Jura, with 70,000. And yet despite their small size, they seem to do rather well: the Swiss enjoy low taxes and excellent services.

There is no question that England’s traditional counties could operate effectively with a similar degree of autonomy. There would be numerous advantages to this: local governments would be more responsive and accountable than distant ones, they would be able to tailor policies more appropriately to local needs and conditions, and they would be able to innovate and learn from other jurisdictions. Moreover, competition between jurisdictions for businesses and residents would likely drive down average tax rates, while encouraging better use of taxpayers’ money.

Of course, in some areas the governments that resulted from localism would be even worse than the Westminster government. This is unfortunate. But if we believe in choice and competition, and further believe that those areas that adopt free market policies will prosper and inspire others, then we really should be prepared to let go of centralized power and see what happens.

No escape from World Government

Indeed, it is only the potential for people – and capital – to fly to freer countries that prevents governments from being more tyrannical. Governments’ ability to force their citizens to surrender their property is constrained by competition from lower-taxing rivals, while societies that allow successful people to enjoy the rewards of their efforts can attract skilled workers away from less free societies. And this competition also enables societies to learn from one another: the oft-cited examples of superior practice abroad (be it high-welfare Scandinavia, high-growth East Asia or English-speaking North America and Australasia) rely on other jurisdictions trying different things, from which we can learn.

Neither, despite the passionate belief of those behind World Vote Now, does democracy always lead to prosperity. The Social Democratic failure of the mid-20th Century proves that. Bad policies can dominate even in democracies. Indeed, democracies have in-built features that undermine freedom and general welfare. The current economic crisis, caused by broadly similar policies across the developed world, should act as a signal warning that one world government would have the potential to get it wrong on a colossal scale.

It is questionable how democracy could work across 6 billion people, anyway. A legislature the size of the UK House of Commons would be made up of members who each represented 10 million people. I doubt many MPs will hold surgeries or canvass voters across constituencies the size of Beijing. Yet a larger legislature would not function. Consequently, politicians will simply be more remote; more isolated from voters. We should be devolving power, not pushing it ever further away.

Lastly, there is the risk of utter calamity. Recent history has contained far more civil than international wars, and they have proven far more costly in lives. They fall into two categories: wars to control the government; and wars to break away and form a new state. Both have resulted in (sometimes immeasurable) human suffering. Even democracies have not been spared. The potential suffering from a global civil war is too horrifying to contemplate.

There is an alternative. Polities could be small; close to the people: probably the only way that power can be held in check and made to serve, rather than to master, the people. Politicians could be limited to doing only that which individuals cannot achieve either on their own or by cooperating freely with their fellows. Polities could have open borders so that they would benefit from the work and resources of all mankind. They would be free to experiment and so to learn from one another.

Most of all, they would provide havens to which the victims of oppression could escape. Under a world government, minorities, non-conformists and dissidents would have nowhere to hide and nowhere – absolutely nowhere – to run.

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In 1620 a group of religious non-conformists, oppressed by the English Church and government, fled Southampton and sailed to a new world, where they founded a colony where they could practice their religion freely. For 30 years, East Germans would risk (and sometimes suffer) death or torture to cross from Communist East to Democratic West Berlin. In 2008, over 25,000 people sought asylum in the UK, many with their dependents in tow.

Yesterday, my brother sent me a link to a website advertising the documentary-film World Vote Now. This latest campaign for a world government – based upon democratic lines – asks the question “[If] democracy creates stability and raises living standards... why not introduce it on a worldwide scale?"

The Pilgrim Fathers and the East Germans entangled in barbed wire might be able to answer that question. When all is said and done, there is one, final check upon a government’s ability to oppress its people. It is the mechanism used by Cubans when they tie empty oil drums to the chassis of old cars and try to paddle to Florida, or by North Koreans who manage to sneak all the way from the Yalu River to Bejing to try to slip into foreign embassies and beg for freedom. It is the ability to escape.

The advocates of a world government would of course claim that, constituted democratically, a world government would not oppress its people. This is charmingly naive. India, the world’s largest democracy, faces more independence movements than one can easily count. The United States government spies on its own citizens in breach its own constitution. The UK has more CCTV cameras than any totalitarian state and our government would seek to vet one in seven of us and make us all carry identification papers at all times.

[Continued... CLICK HERE TO READ MORE]

I vote for a tea party

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A few of pieces of US polling data caught my eye over the weekend. The first is that a Fox News/Opinion Dynamics poll conducted last week has found that 46 percent of Americans do not think that President Obama will be re-elected in 2012. This comes on top of the news that Obama has lower approval ratings than any previous president at this stage in their presidency, according to a survey by Gallup. The other intriguing poll result comes from a survey by Rasmussen Reports, in which 36 percent of people said they would vote Democrat, 23 percent ‘Tea Party’, and 18 percent Republican.

The really interesting thing there, of course, is that there is no political party called the ‘Tea Party’ – rather, the ‘tea parties’ are a series of anti-big government grassroots organizations that have sprung up all over the US in the wake of the Wall Street and Motor City bailouts, President Obama’s stimulus package, and the Federal government’s attempted healthcare reforms. While their policy objectives are, unsurprisingly, not clearly defined or codified, the tea party movement is very clearly a manifestation of what Grover Norquist calls the ‘Leave Us Alone Coalition’ – people of various political backgrounds who want lower taxes, limited and fiscally responsible government, and less state intervention in their lives.

As I’ve said before, this is precisely the ground that the Republicans should be re-colonizing after the disgraceful profligacy and statism of the Bush years. If they were to manage it successfully, I’ve no doubt they could win back Congress in next year’s mid-terms, and then be in a position to curb Obama’s excesses. To put it simply, the future of the ‘Grand Old Party’ lies in rediscovering common ground with libertarians, and developing a coherent, small government message. But will they realize that in time?

Why Cameron is a conservative, liberal and socialist

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Which ideology does the leader of the Conservative Party subscribe to? I would argue none and all. Depending on the issue Cameron is a conservative, liberal or socialist.

Under Cameron the Conservative Party has of course continued to take a conservative line on welfare, the family and various social and civil liberty issues. They are warm to the policies coming out of the Centre for Social Justice. Through the ‘One Nation’ and 'progressive conservative' nonsense, his support for the NHS and his adherence to 'sharing the proceeds of growth' there can be few who doubt his socialistic tendencies. Yet he is also mildly liberal – by this I of course refer to classical liberalism* – on a number of issues, most notably in his faith for institutions outside of the state, contained in the original idea of the 'post-bureaucratic state'. Although yet to form into any solid policies, this offers the prospect of some liberal policies breaking through.

Cameron of course is what success looks like in modern politics. The public voted for Tony Blair, so they will vote for Cameron. It is possible that a new brand of conservative Conservatives, such as the remarkable Dan Hannan, could stem the tide; or even better, the Orange bookers could eject the socialists from the Liberal Democrats – who could go on to found the Sandal Party – rekindling the flames of liberalism. In the battle of ideas all things are possible – until then, we need to convince a pragmatist to be a little more liberal and a lot less socialitic.

* This true meaning of liberalism is perhaps dead in the water. Hayek was using the term in his time to define his intellectual position, but as his fame and opinions preceded him, it was rather easy for him to retain that affectation. If a mere mortal such as myself claims to be a liberal, most people would take me to hold the diametric opposite views to ones I actually hold. Nevertheless, corrupted as it is, there seems little point having two words for socialism, so the definition of liberalism might be a battle worth fighting.

Public sector profligacy

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If the finance director of any private company issued a set of half-year figures like Alastair Darling’s pre-budget report, angry shareholders would be calling special general meetings to have the entire board sacked.

Since 1997 the government has spent, and borrowed, wildly. Its debts are about as large as they were after Waterloo and the Second World War. At least then we could see where the money went – saving ourselves and Europe from tyranny and fascism. Today we have no victories to show for it. All that it has bought us is bloated government and a collection of decrepit banks. Yet the borrowing continues to rise – by an amount equal to £3,000 for every man, woman and child in the UK this year, and about the same the next.

If that were a company, it would not be just the board getting fired. There would be massive cost-cutting all round. Over the last five years, public spending has grown nearly 7% a year. The Centre for Economic and Business Research figure that if our debt is ever to stop growing, we have to shrink that spending by at least 1% a year. With inflation at 2%, that means real cuts of at least 3%.

Of course, politicians hate cuts, particularly before an election. But private companies have to take a hit when times are bad. They already have. Ask all those people who are out of work – which I reckon could peak at 3.8 million – and the millions more who have had to take real pay cuts. The CBI says that half the UK’s companies plan to freeze pay this year. Two-thirds of them have already imposed recruitment freezes.

Yet the finance director of UK plc, in worse debt than any private company and any comparable country, is not proposing cuts or freezes at all. Indeed, he aims to pay his workers another 1% this year! If their productivity had grown by a quarter in the last decade, as private-sector productivity did, that might seem sensible. But in fact, public-sector productivity declined 3.4% in the same period.

Would you invest in a company like that? Many foreign investors are having doubts too, and three rating agencies are hinting that UK plc is a bad risk. Of course they know that there is an election coming up. The first budget after that will be crucial. But really, we should be taking action now. We do not need to lose front line services. But we need to cut back office costs, and reduce those gold-plated public-sector pensions, and bloated staff numbers and pay. The public are ready for it. After all, they have been tightening their own belts for a while. Is it not about time, for once, that our government sector did the same?

Dr Eamonn Butler is Director of the Adam Smith Institute and author of The Rotten State of Britain.

Reforming the voting system

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It is reported that the Labour Government will pledge to put a referendum early in the next parliament to consider an alternative vote replacement of our first-past-the post-system. Firstly it should be noted that Labour are highly unlikely to be called on to honour such a pledge, since they will probably be in opposition by then. Secondly it should be seen as a bid to attract Liberal Democrat support for Labour in a parliament with no overall majority. The Lib-Dems are unlikely to fall for it, being more or less committed to helping the largest party to rule rather than strike deals of this nature. The timing of this proposal perhaps shows a Labour party resigned to not winning another term.

There is a more general point. The proposed change is designed to make future Conservative governments unlikely, since the other parties have a track record of ganging up on them in tactical voting. Indeed, it would make outright winners less likely than coalitions, European style. It is often said that the present UK system is unfair because it under-represents minor parties in parliament. This may be true, but fairness is only one of its aims. Another is stable government, which an alternative vote system might undermine. There is an even more important attribute of the present system: it enables us to change governments quickly and decisively. On the Continent a swing of 10 percent might result in a few minor changes to junior ministry posts. In the UK it usually heralds a removal van pulling into Downing Street next day. Our system enables us to get rid of governments when we think them past their sell-by date, and that is not an advantage to be tossed aside lightly.

Dr Madsen Pirie's "101 Great Philosophers" makes a great and affordable Christmas gift.