More on the new paternalism

4977

more-on-the-new-paternalism

Glen Whitman has been, as I've mentioned here before, fighting the good fight against the new paternalism. You know, these things like "Nudge" that are all the rage in Notting Hill circles. We know better than you and we'll push you into doing what's good for you....something that has always reminded me of school but perhaps without the beatings that accompanied the pushing.

The basic idea is of course exactly like school. Then it was yes, Double Maths isn't fun now but we're adults and you're children and yes, we know that it will do you good in the future. The new paternalism is making the same logical argument, just applying it to smoking, drinking, pensions savings and whatever else the self-proclaimed adults insist we children should be doing.

As Glen points out though, there's a horrible logical problem at the heart of such thinking. Those paternalists know what we should be doing by their standards: that's not the new part of it all. The new is that they claim to know what we should be doing by our standards. That is, that their prescriptions help us to achieve our goals by imposing methods which we're simply too dim to think up for ourselves.

Yet here we get to Hayek's point about why socialist economies don't work. Whether you're a planner or a paternalist there is no possible way in which you can know what my, your and the bloke who lives around the corner's desires and aims are. It simply cannot be true that a few people at the centre know what motivates 65 million people or what their dreams are.

So they cannot, it is impossible, for the new paternalists to design structures to nudge us into behaviour which achieves our goals for they are entirely blind as to what our goals are. Thus they can only impose the nudges upon us to get us to what they think are our goals...and that, inevitably, will be to impose upon us what are their goals for us.

It won't work therefore simply because of the old problem of socialist calculation. Since it will not work perhaps we can forget all about it then and go on to do something useful. Like design the system to maximise freedom and liberty so that we all have the option to not only pursue our own goals but to work out what those goals are for ourselves?

Lobbying politicians

4953

lobbying-politicians

“I’m like a cab for hire – for up to £5,000 a day”. Stephen Byers’ claims to have accepted financial payment in return for influence on government policy should not be too surprising. Politics is prone to manipulation by interest groups.

This problem is universal, but it is worrying that the issue is rarely treated in terms of the fundamental incentives at play. Politicians are human, and as such they respond to financial enticement - the platitude ‘everyone has their price’ must not be forgotten in this discussion. The point is that there is always an asymmetry of resources between large firms who can organize effective lobbying campaigns, and members of the public whose voice is heard only once every four or five years. The problem is inherent to public office, a ‘Government Failure’.

It is misleading that many of the media reports on this issue seem to gravitate towards a discussion of the lacking integrity of those involved. This distracts from the point that the problem is a structural one, stemming from the misalignment of the incentives of politicians and the ‘public good’.

I am skeptical about the prospects of successful reform on this issue. Any new rules and regulations will be written by politicians and civil servants, who have absolutely no incentive to effectively cut off what is a potential cash cow for them. Complete transparency would theoretically act as a disincentive to engage in such activities, but it is not difficult to imagine ways around such measures. It is hardly possible to monitor every conversation a minister has.

The responses of politicians have been equally misguided. David Cameron has said:

These are shocking allegations. The House of Commons needs to conduct a thorough investigation into these ex-Labour ministers

Cameron seems to imply that the problem is unique to the Labour Party. The Conservatives may score some points off the back of this, but the fundamental conflict of interest remains regardless of who is in power.

All this would be worrying at the best of times. But with the increasingly hyperactive FSA and increased regulatory proposals emerging from government, Byers’ claims contradict the idea that public officials always make decisions based on sound reasoning of what is in the ‘public interest’. It is difficult to imagine the much-needed injection of competition into the banking sector taking place given the powerful international lobby on behalf of the monopolistic behemoths such as RBS and Lloyds TSB – HBOS.

But back to parliament; the current guidelines relating to lobbying rely far too much on the personal integrity of the individual in power:

Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.

Is this really a sustainable position? This latest revelation, coupled with the recent expenses scandal, should raise suspicion amongst the public as to the potential malleability of those setting the policy agenda. To reinterpret a phrase of Nietzsche’s, they are “human, all too human”.

Government bigger than private sector

4951

government-bigger-than-private-sector

Britain's government sector is now bigger than its private sector. It accounts for 52.1% of Gross Domestic Product according to the OECD – the highest since the organisation's records began. Sure, government was even bigger in the early 1940s, but then at least we were fighting a war to save Europe from Nazi dictatorship. There is no such excuse this time.

In 1900, the government was a mere 15% of the economy. It was given a boost by World War I, but for most of the interwar years it remained in the 20%-30% range. After World War II it stayed below 40% until Harold Wilson's 1964-70 Labour government broke that barrier, and now Gordon Brown has taken it through the next.

Keynesians might rejoice: spend your way out of recession, they say. The trouble is that governments spend other people's money. And those people, in the private sector, can spend – and invest – it a lot more efficiently than civil servants can. The Keynesian solution takes money out of the wealth-creating side of the economy and throws it into the wealth-spending side. That is no way to generate the new economic growth that we need to earn our way out of the debt dungeon. We need to reduce government spending drastically. And that requires nothing less than a complete re-think about what government departments, agencies, and programmes exist for.

My ruined weekend

4949

my-ruined-weekend

A perfect picture of British politicians still not "getting it" came with Saturday's news that photographer Simon Roberts has been commissioned by the Speaker's Advisory Committee on Works of Art to document campaign activity in the run-up to polling day. Yes, taxpayers will be paying for Mr Roberts to travel around the country in a motor home during the campaign to shoot a few pictures.

The Advisory Committee's announcement gave no indication of how much this will cost and, in the greater scheme of things, it probably isn't a lot. But against the background of the MP's expenses scandal and the ever-ballooning government debt load, surely this august committee whose mission is to look after Parliament's art collection could have sent out a stronger signal that correcting both problems (their expenses and the national debt) can only be met by a relentless battening down of the spending hatches.

Given the wall-to-wall media exposure the campaign will receive, a few more photos for Parliament's art collection really are a luxury the country can do without. Egregiously, Mr Roberts himself is asking the public to send in yet more photographs of local campaigns for an online gallery, with some images selected for display at the official Commons exhibition after the election. Just what taxpayers want to see their money spent on - pictures of politicians.

Mr Roberts says "I'm particularly interested in the relationship between politicians and the public." Let's hope he snaps arrogant politicians on the receiving end of some airborne tomatoes and rotten eggs.

If you're new to the Committee's activities, check this link for recent, uncosted, acquisitions.

On the unnecessary nature of much regulation

4946

on-the-unnecessary-nature-of-much-regulation

I will admit that much of my personal opposition to the swamp of regulations in which we find ourselves is that I personally cannot stand being told what to do: I'll find my own way to my grave thank you very much. This isn't, I'll also admit, all that strong an argument as a public or political policy against regulation. My personal wants or desires only become such when they are widely shared.

However, there is a much stronger argument against said regulation: it doesn't actually do what it sets out to do. Take, for example, what is possibly the world's strictest single set of regulations, China's "one child policy". Strict in the sense that no one else has even dreamed of imposing such a restriction on that most private and personal of decisions, whether to have a child or not (umm, that should probably read "children", shouldn't it?).

Even the most cursory reading around on the subject will show that all agree that, however vile the actual imposition has been (forced abortions and all that) it has been effective. It has reduced China's birth rate below what it would otherwise have been.

Except, well, even that doesn't seem to be true:

According to the paper, the population of the county has grown over the 25-year period of the scheme by 20.7 per cent, which is nearly five percentage points lower than the national average, despite families being allowed two children.

Over that same 25 year period China has had the greatest growth in the population's wealth ever in that nation's long history. As with what has happened everywhere else people have got rich(er) birth rates would have fallen anyway. And when people were freer they had fewer children, in aggregate, than those who were tightly regulated as to their fertility.

So even this, the poster child (sorry) for necessary and effective regulation, turns out not to be quite what it seems. A little more liberty, a few more markets and the increased wealth that both bring are more effective at reducing population growth than strict regulations. Or, if you prefer, economic liberty, the world's greatest contraceptive.

A regressive state of affairs

4933

a-regressive-state-of-affairs

I have been reading a lot about how successive governments undermined the then dynamic private education sector that was galloping apace in nineteenth century England. The state’s usurpations were incremental, but devastating in their consequence.

Making education free destroyed private education for all but the very richest. In order to make it free, money had to come from somewhere, and on this occasion it was largely through regressive taxes on alcohol and cigarettes. In effect, the poor lost all their previous power as consumers. This story is repeated across many current functions of government throughout the world.

It was therefore highly disappointing to read Policy Exchange’s report calling for “tobacco duty to be progressively increased”. Incredibly, they claim: “every single cigarette smoked costs the country 6.5 pence”. By incredible, I of course mean it is literally not credible, as Matthew Sinclair’s broadside on ConservativeHome makes abundantly clear (NB. It is also worth watching the excellent Simon Clark of FOREST take a representative of ASH to pieces here on a related subject).

Which leads to the question that every freedom-loving individual in the UK is asking themselves – and others – in these uncertain times: can this awful state of affairs be turned around? Only time will tell, but clearly the principal ingredient missing at present are the politicians and political party with the pedigree to stand athwart history, yelling stop!

Land of the bureaucrats

4924

land-of-the-bureaucrats

In the Spectator magazine's 'How to Save Britain in Ten Easy Steps: A Manifesto', Ross Clark asks a very pertinent question. How is that the UK's public sector is larger now (as a percentage of GDP) than it was in 1979, when it was still controlled vast swathes of industry? The answer is bureaucracy:

What are public sector workers doing if they are no longer mining coal, driving buses or making steel? A huge and growing number of them are engaged in regulatory activities. We have gone from a blue-collar public sector to a white-collar one. The state does not work on the shop floor; it is employed upstairs in the compliance department, in health and safety and in human resources. Nowhere demonstrates the change more than Castle Morpeth in Northumberland; once a coal-mining district, it has developed an economy which revolves around state bureaucracy. Government employers, most significantly the local authority and the Inland Revenue, account for 57 per cent of all jobs in the district.

That statistic is an eye-catching one, but even the nationwide picture is depressing. According to the ONS, there are now more than 6 million public sector workers, which is equivalent to more than 20% of the workforce. How many of them provide a service you would willingly pay for, I wonder? And how many represent nothing more than a vast paper-shuffling payroll vote for the advocates of ever bigger government?

As I've written before, you could cut public spending by £118bn overnight, just by making a reasonably extensive list of government's necessary functions (and I mean necessary in an immediate, political sense rather than a philosophical one) and getting rid of any area of spending that doesn't appear on it. A further 15-20 percent efficiency savings on what remained is not out of the question either. The trouble is, with so many people dependent on big government for their livelihood, and such strong lobby groups to protect those special interests, it's going to take a very brave politician to do the right thing.

If anybody finds one, let me know...

Brown study

4916

brown-study

It pays to study Gordon Brown's record, since his current campaign largely glosses over it. I am not just talking about Britain "best placed to face this recession" and then being last to emerge from it. Nor am I talking about "A Labour government pledges not to increase tax rates," before it raised income tax, firstly be removing the cap on National Insurance and then by increasing the top rate of income tax from 40 to 50 percent.

I am not talking about the government that "abolished boom and bust" before presiding over the biggest bust in history. Nor do I refer to the self-imposed rules about "only borrowing to invest" before borrowing more money to spend than previous governments have ever borrowed or spent. We can gloss over the pledge to "balance the budget over the course of a cycle" First he redefined the cycle to fudge the discrepancy, and then abandoned it altogether, blaming foreigners.

Promising financial prudence, he sold Britain's gold reserves at the trough of the market, about a quarter of its current level). He promised to keep his predecessor's budget targets, but raided the pension funds for over £5bn a year, took a windfall £23bn in 3G licence fees, using the proceeds to fund his spending.

Mr Brown likes spending. It creates dependent public sector workers and makes everyone more dependent on his largesse. But spending takes money, and that means taxation and borrowing. Jeff Randall has a very good piece in which he relates an early conversation with (then) Chancellor Brown.

He told me: "Interest payments on the national debt are £25 billion a year. We're spending more on national debt repayment than on schools or law and order, and that is a situation I don't want as a hallmark of a Labour government... The public borrowing requirement was £23 billion last year. We plan to get it down very substantially."

Randall points out that the current deficit is £180bn, with interest payments coming up to £40bn, more than is spent on defence.

Brown now tells us that it's all about character, and that he has it, being a plain, straightforward guy. Unfortunately for him, that is on the record, too. He has been exposed as a bully with no regard for the truth. What on earth did we do to deserve him?

Questions on democracy

4883

questions-on-democracy

To some extent, the exact position of political parties in the polls doesn’t matter. The Conservatives know that an overall majority could still be theirs provided the attention they have lavished on key marginal seats pays off. However, it is not only the local parliamentary candidate’s sweat that is channeled into these constituencies, but also the national party’s time, money, and to a degree, policies.

When a parties’ seat tally relies upon the decision of a few thousand voters, there is always a temptation to trumpet the most ‘centrically appealing’ policy options even the circumstances call for something more radical. This way, they believe, they will not alienate any of the mystical makers and breakers of government: the floating voters. In the case of the Conservatives, this can come across as hesitancy and weakness, result in lower overall public ratings, and even lead to hits in the confidence of international investors.

When courting marginal voters, there is also a disposition to show that in government you will really make a difference to voters’ lives. Unfortunately, the easiest way to do this is to look proactive, by promising that the state will intervene and provide more. In this way, pledges for bigger government are inevitably made.

This is a problem under first-past-the-post, but any constituency based election system would have similar problems. At least with FPTP the ability to firmly throw a party out of power exists.

An interesting alternative, however, was aired by the philosopher Jamie Whyte at The Next Generation meeting earlier this week. His idea was to do away with universal suffrage altogether, and instead see elections decided by a randomly chosen panel of jurors in each constituency; with the decision-making process publically broadcast Big Brother style. This, he argues, would combat voter ignorance and apathy, while also ensuring political parties put forth sensible ideas that would hold under scrutiny.

Evidently, there is much to argue about with this proposal, yet there is no doubting the irony that as things stand policy is decided on, and political power held by, a small elite in the name of democracy.

And now for something completely different

4886

and-now-for-something-completely-different

I was reading, as is my wont, the Daily Mash and came across this example of incisive satire (rough language warning). Yes of course the current government is obsessed with nannying the population, the bureaucracy even worse, but also of course no one, not even them, is going to send grown adults around chip shops advising upon the size of chips. No, not even in the name of obesity and the children. So to have the Food Standards Agency purportedly doing that is a joke, an example of something so mindbogglingly ludicrous that not even our tax money would be spent upon it.

Sadly, Kissinger did get the Nobel Peace Prize and Tom Lehrer is correct, satire is dead. For the story is true.

.....officials from the Food Standards Agency watchdog are encouraging chip shop owners to produce even thicker versions, much like potato wedges.........The FSA scheme will cover Cambridgeshire, Greater Manchester and Northern Ireland by the end of this month. Officials will visit 80 chip shops to examine how much fat is in their chips and offer advice.If the pilot scheme is successful it will be rolled out across the country and last two years. Other small caterers including Indian and Chinese takeaways will be included.

There are two things I take away from this story, one of them minor, one major. The minor point is that those who say there is no room to cut the State are wrong. Clearly and obviously so: the settings on the potato chipper that can be offered to the good citizens of a county, a metropolitian authority and a province can clearly be left to the vagaries of the market, personal taste and how fiddly those settings are. A bureaucracy is not required thus there are certainly some bureaucrats who can be fired. Plus, hopefully, the management that thought this up.

The major point is that this might not be enough. It might be that the fears of my darker days are justified, that there really is only one solution: a violent and bloody revolution. Not just as catharsis but to stop people being so dashed stupid.