A winter of malcontents?

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Looking back, it seems very strange that in the early 1980s the genteel town of
Eastbourne witnessed marches of hundreds of people chanting ‘Maggie, Maggie, Maggie....Out, Out, Out’.

Of course, by the standards of the time, these political activities were relatively innocuous. But the subsequent year-long miners’ strike, which began in 1984, brought a new viciousness to industrial disputes. The violence in many Nottinghamshire pit villages, along with the quasi mediaeval riots at Orgreave, will be long remembered.

With large public sector job losses now almost certain, union militancy is likely to reappear this winter - with a vengeance.

Public sector unions are already anticipating industrial action, with local government, education and the NHS being obvious target areas. Aside from large job losses, wage cuts and less favourable pension scheme terms will be at the heart of many disputes. Union discontent is not limited to the public sector. The futile dispute at British Airways continues – to the undoubted benefit of other carriers, such as Ryanair and EasyJet.

The Communication Workers Union (CWU) will shortly be holding a ballot amongst its 50,000 staff at British Telecom. The Royal Mail, too, may well face action from the CWU. Given the unions’ fractious relationship with Network Rail, strikes are also expected on the railways during the coming holiday months. At least, a widespread miners’ strike will be avoided. There are now only a handful of underground pits operational in the UK compared with more than a 1,000 in the early 1920s, when close to one million miners were employed.

As the sun sets on the summer of 2010, the likelihood is that the following few months will be very challenging. The Coalition Government will come face to face with a wide range of malcontents.

How tough will it need to be to ensure that its policies prevail?

The importance of referenda

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There are two arguments that are frequently quoted opposing the use of referenda in UK politics. The first is the cost associated with educating the electorate on the issues involved and administering the vote, the second, the fact that holding them would undermine Parliamentary sovereignty. In fact it is clear these arguments are not simply flawed, but are in fact arguments in favour of an increase in the use of referenda.

At present the vast majority of decisions made in Whitehall are done so in back rooms, by quangos or other such bodies. The manner in which they operate is far from transparent, with deals being reached out of the rightful glare of public scrutiny. These vast bloated groups are inefficient as well as costly, taking excessively long periods of time to reach ant substantial conclusion. It seems logical therefore, that were the same amount of taxpayers' money spent on educating the electorate on the issues at hand, the benefit would be twofold. The electorate will ultimately have a better grasp on political issues, meaning personality and media play less of a role in electing future politicians, and the mood of the public can be properly gauged. The cost in education will be partly borne by pressure groups interested in whichever area is being voted on. As long as suitable controls on lobbying are introduced this free market approach can be transferred to mainstream politics. 

The largest ever protest in the UK was in opposition to the Iraq War. The march through London saw approximately one million people objecting to the invasion. Did the invasion go ahead, despite the evident public opposition? Yes. Would that have been the case had it gone to a referendum that had been binding on the government? No. The Blair government knew this would be the case, that there would be widespread national objection to the conflict, and so acted against public opinion, thus committing billions of pounds and the lives of hundreds of troops to an unwanted illegal war. New Labour was also in favour of joining the single European currency, but as part of their manifesto pledge promised a vote that they knew they would lose. Had Britain committed, it is suggested that it would be in a similar position as Greece is now, dependent on the IMF. This demonstrates how a government is prepared to alter its behaviour to be more in keeping with the public mood even with the simple potential for a referendum. 

Jamie Brooke is the winner of the 2010 Young Writer on Liberty. 

A warning of things to come?

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I woke up this morning to find Hayek’s Road to Serfdom topping the bestseller list on Amazon. And while it’s quite disturbing that it took Glenn Beck’s promotions (the guy who called President O a racist and regularly preaches doomsday on Fox) to get it there, I’m quite happy for the result.

The Road to Serfdom outlines the dangers of falling prey to socialist principles, however honorable they may seem from afar. Due to the complexities of the economic system, a centralized, planned economy is only feasible in practice under a tyrannical regime. This, in turn, breeds economic inequality, the very opposite of what the structure strives to achieve.

Road to Serfdom was first published in the 1940s to a world that had just emerged from the cruelty of the Nazi regime and was facing the looming threat of Communism. It’s bewildering that almost seventy years later we are still debating the merits of such a system.

With the onset of the recession, more and more people are turning to socialism, interpreting the recent events as a failure of capitalism. Cries can be heard from left and right for increased regulation and government control. Yet we are conveniently forgetting the unavoidable dangers that all such admirable ideals entail (The Communist Manifesto was veiled as a call to arms for the cause of equality). The choices we make in the pretense of the greater good may result in unintended consequences. In the words of Hayek:

To the great apostles of political freedom the word “freedom” meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the order of a superior to whom he was attached. The new freedom promised, however, was to freedom from necessity, release from the compulsion of the circumstances, which inevitably limit the range of choice of all of us. Freedom in this sense is, of course merely another name for power or wealth.

Re-booting Government

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Dr Eamonn Butler released a report today Re-Booting Government: How to deal with the deficit without cutting vital services,  which argues that reducing deficits and debt is essential. Debt imposes a large interest-payments tax on citizens, limits the options open to governments, and it weakens political leaders both at home and abroad. But in the long run, a cheese-slicer approach to cutting spending is not going to be enough. We need to completely rethink the role of the state, what it does, and how it does it. In short, we need to reboot government.

You can download the full report here.

The future of the Salisbury Convention

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Is the Salisbury Convention dead? The idea of it is that the House of Lords should not stand in the way of the government, with its House of Commons majority, delivering the manifesto promises on which it was chosen by the voters. The idea is attributed to Lord Salisbury, who was Conservative leader in the Lords in the 1940s and 1950s, and was developed in particularly after 1945, when Clement Atlee's Labour government, with a huge Commons majority, faced an equally huge, but unelected, Conservative majority in the Lords. So the custom is that, while the Lords can propose amendments in the public interest, it cannot introduce wrecking amendments, and it will not oppose manifesto promises on second reading.

But on what manifesto was the present coalition government elected? There were two manifestos, with plenty of conflicts between them. The government might say that it quickly drew up an agreement, with each party dropping some promises but accepting others from the other side: but the electors never had the chance to vote on this compromise. So what authority should it have?

Already, Labour peers are threatening to tear up the Convention and set themselves free to oppose coalition bills. In so doing, they only hasten their own demise. An opposing majority in an unelected House of Lords might be tolerable if it makes useful amendments and does not block legislation out of partisan spite. If they turn every issue into a party issue, though, people will start asking by what right do these appointed, mostly superannuated ex-politicians dare to interfere? It all increases the pressure for an elected House of Lords.

McDonnellator

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Philip Blond’s red Toryism

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I had tried my best to avoid Philip Blond and his brand of red Toryism. Having overheard him interviewed on the radio once or twice, I was far from convinced that he offered anything much worth pondering upon. However, as an avid reader of CATO Unbound, I was finally forced to deal with his ideas. More's the pity.

The problems he highlights are convincing enough: civil society is in tatters, crony capitalism and the bully state. Even the ‘enabling state’ as he broadly defines it would be markedly less pernicious than what we have now. Yet this is all rather unoriginal stuff and really not worthy of a think tank.

Yet, it is not all bland, some or it is wrong too. His mischaracterisation of libertarianism would make anyone moderately versed in the literature deeply frustrated. In Shattered Society, an article for The American Conservative, he suggests the following: “Those who construe the libertarian individual as the center of current rightist thought actually draw upon an extreme Left conception that finds its original expression in Rousseau, who held that society was primordial imprisonment.” This is patent nonsense. Libertarians don’t have a problem with society, it's the government that's the problem.

Worse, when we get down to cold hard policies we can see what red Toryism is offering. According to the Res Publica blog, the government should force alcohol prices up, increase banking regulations and much else besides.

Ultimately, it looks as though red Toryism doesn't trust people to be free. Yet the dead and dying institutions that Mr Blond pines for were destroyed and are being destroyed by the growth of the state and the only way to get them back is to allow the freedom that allowed them to flourish in the first place.

Why some places suck and others don't

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It's hardly an original observation that some parts of the world suck mightily as places to be unfortunate enough to inhabit while others are, by historical or global standards, really rather decent. Various explanations for this have been offered over the years and the current fashionable one is that institutions matter. not just who is in power and what they want, but what restrictions does the society put upon exercise of power: is the law stable for example, are property rights respected, does getting ahead depend upon ingenuity, effort and improving the general lot or by sucking up to hten nearest politician? Or, Lord forbid, mounting a coup to become the nearest politician?

A fascinating look at one small part of this:

It seemed as if these chiefs — who would otherwise prefer secure property rights — were suffering from distributive conflicts over land and a lack of information about their boundaries and the extent of allocations. Common sense seemed to dictate that if lands were dutifully surveyed, demarcated, and adjudicated, and chiefs were given registers in which they could record allocations, they would surely avoid infringing on each other’s parcels and end these problems. So I asked Muntari [the local Ghanaian planning official] what the state was doing to help chiefs solve these distributive conflicts and information problems. Muntari’s response was unsettling. He claimed that, after working with chiefs for seventeen years, he had come to the conclusion that chiefs did not want clear boundaries, functional property registers, and an environment devoid of disputes. He argued that the chiefs would sabotage any effort to provide these features. According to Muntari, in the absence of such mechanisms, cash-strapped, land-hungry chiefs could conveniently “mistakenly” allocate the lands of neighboring chiefs or sell land that their ancestors had sold earlier. Further, where tenants engaged in subversive political behavior, chiefs could conveniently award their rights to more loyal subjects… Simply put, chiefs did not want property rights security.

Another way of putting this would be that in order to preserve and maximise their power politicians would prefer that many things and decisions are in the gift of politicians. with, as noted, the inevitable result that such things as property rights become the gift of politicians.

Whereas a limitation of political power through such things as the institution of laws on the protection and delineation of property rights reduces said power of politicians and boosts the property rights. Along with the incentives to invest in and develop said properties, to the benefit of all.

Something we might remember when people here argue that there should be more political oversight of this or that or the other. The incentives facing politicians are such that they will move to increase their power, not something which necessarily (or even possibly) is in the interest of the rest of us.

In short, more law and less politics makes for a richer, happier and more secure place.

Democracy's challenge

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Mature democracies are in a crisis. From Greece to California, they have proven incapable from sinking massively into debt. Households are crushed by overextended mortgages and maxed out credit cards. Governments’ already record deficits don’t even take into account off-balance sheet items like pensions, private finance initiatives and implicit loan guarantees.

All this despite the biggest number of educated people the world has ever seen, linked by digital networks disseminating knowledge at the blink of an eye and monitored by thousands of analysts, journalists and pundits 24-by-7.

This disaster applies to highly diverse political structures, from America’s robust federalism with its constitutional checks and balances to Britain’s loose House of Commons dominated by a powerful executive. Majority governments, minority governments or coalitions, there’s no pattern. Yes, some democracies seem fiscally prudent but this may reflect special circumstances. Australia and Canada benefit from the booming commodities cycle while some, like the Nordics and Switzerland, are small and socially cohesive.

More than anything, democracies need to address a social zeitgeist where individuals and the governments they elect have become hooked on the never-never, turning upside down the wisdom of the ages: pennies saved are never earned, the saving man never becomes the free man, money does buy happiness, who pays his debts never gets rich. Rather, it now takes a lot of borrowing to live within your means.

To its credit, the UK’s new Con-Lib coalition has staked its all on two big issues – deficit-cutting and political reform. The real triumph would be structuring the latter to cure the former.
At first glance, the UK would probably benefit from a dramatic decentralization of tax and spending power to as close to the individual as possible. However, the current regimes in Scotland, Wales and Northern Ireland don’t inspire much confidence here and the ultimate in grassroots democracy - California – is a fiscal basket case.

What about political reform that includes a rules-based fiscal regime? Well, the eurozone has a Napoleonic code of fiscal rules that were ignored by the powerful when it suited them or exploited by the weak when nobody was looking. Even Gordon Brown had a “golden rule” that proved a fraud and the Bank of England’s inflation target of 2% hasn’t prevented retail prices from rising by 5% during a recession.

It’s probably not the political structures that need reform but the individuals who run them. Blair, Brown, Cameron, Clegg, Obama, Merkel, Sarkozy, Zapatero, Papandreou and all their elected minions now come from a professional ruling class whose survival depends on delivering the fantasy that we can live beyond our means.

So here’s one fundamental reform: make elected office a part time, unpaid job to which re-election is limited to just two terms. These citizen-politicians will then feel the consequences of their decisions in their real lives.
 

Regulating oil

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Following the BP oil spill, the Obama administration announced on Thursday that it will suspend Shell’s Arctic program that was to commence this coming month. In fact, all exploratory offshore drilling will be stopped, and a moratorium placed on new deepwater wells until 2011.

It has been a recurrent theme these past few years to increase control over any industry that experiences problems: the financial sector, healthcare, and now, the latest gem of the collection, oil. At the rate the events are unfolding, we’ll soon have a Randian nightmarish dystopia on our hands. For there’s nothing that could possibly go wrong with a few politicians in Washington with no expertise in the oil industry deciding what the appropriate safety standards are…right? Ironically, the ones who will suffer most from such tighter regulations are going to be the consumers who will see a hike in oil and gas costs.

On the other hand, it is in BP’s interest to (literally) clean up the mess as fast as possible. The reason the problem still hasn’t been solved, a month after the incident, is because it presents a tough technological challenge. It’s doubtful that the government would have been more efficient had it taken over earlier. And while critics claim that BP has weak incentives to ensure safety, since the losses to the company are minuscule compared to its profits, the dangers to its reputation are much more hazardous.

The bottom line is that we will never be 100% ensured against spills, no matter how much we regulate the market, unless we stop consuming oil altogether. If anyone is to blame, first and foremost are the consumers of oil that regularly expect their demands to be met by the market. Regulation will not protect us from environmental disaster, but shifting to newer and cleaner forms of energy will.

Meanwhile, we’re left to wonder which industry will suffer the next regulation-craze. Toyota anyone?