For the unions, apathy rules OK

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Behind all the headlines of the forthcoming Royal Wedding and of Ireland’s ignominious financial collapse, there was an election for the new General Secretary of Unite, the UK’s leading trade union with 1.4 million members. The official winner was Len McCluskey, but the real winner was apathy. Just 16% of Unite’s membership actually voted, with the winner securing a measly 7% of the total membership’s vote.

It is well known that trade unions have had difficulty in organising valid ballots – think of the shambles relating to recent strike votes at British Airways. But a 16% turn-out for such a key trade union post is woeful.

How has trade unionism come to his? After all - allowing for amalgamations - McCluskey’s predecessors include such household names as Jack Jones and Hugh Scanlon. Compared with the 1970s when the trade union movement exuded power, it is now marginalised. Like rusty seaside piers, it seems part of history.

Unquestionably, the major contraction of UK manufacturing industry has greatly reduced trade union membership. Furthermore, as the UK faced seemingly endless strikes – remember British Leyland at Longbridge and Ford at Halewood - in the 1970s, the election of Margaret Thatcher as Prime Minister in 1979 had a massive impact on trade unions.

Various Acts in the 1980s severely curbed their activities and materially changed their legal liabilities. Clearly, with heavy job losses now certain in the public sector, there will be widespread trade union action.

But it is in the pensions field where trade union officials, with the right expertise, could add so much. Millions of employees have precious little idea of their pension options and entitlements – explaining them in clear language would be so very beneficial and, rather than agitating for strike action and mass protest, union reps could play a valuable role in helping their members navigate the complex tax and pensions systems. John Foster Dulles famously asked if Britain had a role once it had lost its empire - do the trade unions now have one?

Spring-cleaning: The missing trick

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Incoming management typically regards the inherited HQ as idle, over-staffed and unproductive. They seek to reduce overheads, which seems so much easier than increasing sales, and re-focus the frontline teams. In the event, especially if they are inexperienced in these matters, the new management, and their shareholders, are disappointed.

Some readers will be familiar with the three brown envelopes story: the message in the first is “blame the previous management”, then “say that things are about to turn around” and finally “write three brown envelopes”. This same old sequence applies to government just as much as commerce. The leaders of the Coalition are exceptionally bright and talented but, Ken Clark aside, have little relevant experience from commerce or government.

The wrong but typical approach is to decide to cut costs by X, which translates to reducing the headcount by Y. Since, initially, headcount reduction costs more than it saves due to redundancy payments and notice periods, management announces it as medium term savings, i.e. the benefits without the costs. Non-replacement of leavers mitigates the pain and the cost.

The surviving old guard of senior managers bide their time but eventually stoke up the fury when expected work is not completed on time or adequately. Consultants are then hired to get it done and, eventually, are replaced by payroll workers to save money cost. We are back to square one, or at least another brown envelope. The missing trick is that the spring-cleaning of government departments needs to be driven by removing work first, and people second. Each HQ unit should be considered in the light of “if this work was not done at all, what would be the consequences?” Where the work disappears, so can the headcount. It needs to be that way round. 

Closing quangos or primary care trusts and transferring their work to departments and doctors’ practices respectively will achieve nothing unless the work itself is also eliminated. A dead giveaway is the phrase “working with”. The people being worked with may well be grateful not to be worked with. The Eastern Strategic Health Authority claims to “work with” 46 other NHS bodies.

Rolling back government should be about reducing what government does first and worrying about headcount and savings second.

How to avoid career politicians

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PJ O’Rourke (whose new book will be launched in the UK later this month) has a good piece this week which talks about what we could do to improve the quality of the politicians we get. As O’Rourke says, we know one thing: that career politicians are precisely the opposite of whom we want to rule over us. Wanting to be involved in politics might be attributable to different factors – for instance, principled idealism, or enjoying wielding power. But any politician whose livelihood depends on being elected will have to sacrifice his beliefs to improve his electability. After all, a sitting politician is nothing but someone with a comparative advantage in telling voters what they want to hear. All that doesn’t mean that all politicians are necessarily bad, but undoubtedly quite a few are the ones who are there for the wrong reasons. These are the ones we should try to avoid.

How can we do it? PJ O’Rourke suggests legislative juries to minimize the influence of anybody who has any kind of urge to rule others. As usual, it’s a great idea. Candidates would be selected by lottery from the general population, with the really wacky ones being weedled out by primary voters, and would legislate like a jury does in a trial – listening to the arguments put forward by different groups and choosing on that basis. This might yield considerably better results than if the legislation was based on popularity – the government that can rob Peter to pay Paul will always be able to count on the support of Paul. (It’s a pity it so often has Peter’s support too, but that’s a different story.)

This might be fanciful, but there might be more minor changes we can make. For instance, we could stop paying MPs a salary: if a politician isn’t dependent on winning an election to feed his family, he might be slightly less interested in voting to please public opinion and the party whips. This would also be a good way of ensuring that politicians have achieved something professionally rather than simply living off the taxpayer. Term limits could also be a good idea, but should include all elected jobs to prevent careerists from shifting around jobs, as happens in the US. But maybe even these minor reforms are as hopeless as trying to implement a jury system – we'd have to get these reforms passed through parliament and, in the end, turkeys rarely vote for Christmas. 

Big society reward points would undermine a small government agenda

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It’s disappointing that the coalition’s vision of the Big Society has largely failed to capture the public’s imagination. Whether this failure is down to genuine ideological resistance on the part of the public or to poor explanation by the implementers is a moot point. What’s for certain is that one recent development threatens to confuse matters even further.

Windsor and Maidenhead council is planning to issue “big society reward points” which would allow good citizens to cash in on their virtuous deeds: plant some trees or volunteer at a retirement home and you’ll be rewarded with discounts at high street shops, supermarkets and restaurants. Free marketeers are all in favour of people reaping rewards from their actions, but considerable problems arise when government interferes in stipulating what those actions should be. David Burbage, the council’s leader, said that the planned scheme might be extended to reward improved behaviour in areas such as healthy living and school attendance. Such a move would lead to further confusion amongst those who don’t understand what is meant by the Big Society, and disappoint those seeking an end to big government.

What’s appealing about the Big Society is its reminder to individuals that they should help themselves and those around them before looking to government: if councils were to start manipulating this idea for the purpose of social engineering, it would quickly lose its appeal.

When will the centre-left learn and stop being idiots?

No, this isn't just me being mean, this is a question Neal Lawson asks:

The definition of an idiot is someone who does the same thing again and again but expects a different outcome. When will the centre-left learn and stop being idiots?

The short answer is when they learn to love and embrace markets.

A slightly longer version would be when they learn to open their eyes to the world around them and observe what actually works. I do have to make one assumption here, perhaps a leap of logic. I assume that what the centre left want is a social democracy of the Nordic sort: given that they continually say that they'd like a Nordic social democracy I don't think this is a particularly huge assumption or leap.

For what said centre left continually seems to miss is that those Nordics are, underneath those high tax rates and high levels of redistribution, largely classically liberal economies. Indeed, one paper claims that Denmark is, underneath those taxes, the most neo-liberal of all the world's economies.

The UK's centre left just doesn't seem capable of understanding what it is that makes what they claim to want work: imagine the horror there would be if I suggested that Group 4S took over the majority of fire and ambulance services in the UK? Yet that is what Denmark does (really: it's actually Group 4S that runs them). We can hear the screams already as Gove tries to bring the Swedish school system with its funding following the pupil, essentially a market, to the UK. Can you imagine the piteous wails if someone suggested importing the Finnish schools system (often ranked as the world number 1)? With its division at 15 into academic sheep and vocational goats?

Compare and contrast the the Swedish health care system with the NHS: taxes are raised in county and spent in county (on average, 400,000 people, it's as if a PCT raised and spent its own money), there are copayments to see the doctor...no, we couldn't imagine the British centre left allowing such a system to exist, could we? Nor the localism of Denmark: the national income tax rate is 3.76%: the top national one 15%. The vast bulk of the money is raised by the communes which can be as small as 10,000 people. You and I would think that money so raised will be better spent when any and every taxpayer knows exactly who is spending it and where they have a snifter on a Friday night.

Or compare the Austin/British Leyland/ Rover story with Sweden and Saab. When GM couldn't find a buyer for it the Swedish govt shrugged their shoulders and said "well, if no one else wants it, why should we?"....a lesson that the American centre left might have noted when they came to deal with GM itself.

Until the centre left stops trying to do the same thing again and again, this insane insistence on the ickyness of markets and the joys of centralisation, then they'll continue to be idiots.

You need to have a classically liberal economy underneath: with all the vim and vigour that implies, meaning that you can get useful levels of economic growth. You might then want to have substantial redistribution on top (I don't, a safety net is just fine) but if you do want the redistribution then you really have got to have the classical liberalism: for there's no other way your going to generate anything to redistribute given the high tax levels you will impose.

Four lessons from America's elections

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The results of the US midterms and the stunning success of the Tea Party offer a few lessons to free marketeers and libertarians in the UK. Here are some immediate thoughts:

1) Political earthquakes can happen, and happen quickly. Few in the UK imagine that a Tea Party could emerge here because of differences in temperament and history. I agree. But the Tea Party has shown that a simple, strong message of fiscal responsibility can resonate with individuals outside the political establishment and stir them into action. Frustration with overspending and overtaxation can lead to rapid change in political parties, as the number of Tea Party-backed candidates this cycle demonstrates. We should not rule out the emergence of a bottom-up change to the political landscape in Britain, and the free market message appeals to those dissatisfied with ineffectual and overreaching government.

2) The free market message is the best way for the right to win over new demographic groups. As Republican pundit Patrick Ruffini pointed out, the supposedly-racist Tea Party supported black, hispanic and other minority candidates to victory – Marco Rubio, Tim Scott and Nikki Haley are three notable examples. Rubio and Haley are both the children of immigrants and strongly pro-market. If the right in Britain hopes to adapt to a changing population, it should learn from America that the small state, pro-market approach can appeal to people from all backgrounds and walks of life.

3) Libertarianism is becoming increasingly electable. The election of Rand Paul, son of Ron, is heartening. Paul, though backed by Sarah Palin and the Tea Party, is openly libertarian on most issues – sometimes embarrassingly so – and has the potential to be an independent-minded voice for individual liberty in the Senate. Paul’s landslide election shows that, if libertarians can co-opt party apparatus to win a nomination, their views are often surprisingly appealing to the electorate. Kentucky is a far cry from the Home Counties, but his anti-bailout, anti-corporatist platform could be just as effective in some parts of Britain. On the other hand, the Californian ballot initiative to legalize marijuana failed – the libertarian message still has a long way to go.

4) Social conservatism is becoming decreasingly electable. The Tea Party-backed candidates who struggled and often failed were the ones like Christine O’Donnell, Sharron Angle and Ken Buck who emphasized a socially conservative message that strayed from the free market principles that are at the core of the Tea Party. Angle said that she wanted to ban alcohol, while O’Donnell’s campaign was a trainwreck from its conception thanks in part to her outspoken opposition to masturbation. Voters simply don’t want to hear a politician trying to control their bedrooms while claiming to free their wallets. 

Britain isn’t America, and it would be a mistake to read too much into these results. Still, they offer an impressive example of how free marketeers can return from the wilderness and decisively shape an election.

The Big Society in action?

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When David Cameron first mooted the idea of a Big Society, many were left perplexed about what it was and more importantly how it could be achieved. Today a charity from the southwest, The Somerset Community Foundation, may have shown us how this broad concept can be practically applied.

They have launched the “Surviving Winter Appeal” that aims to tackle the issue of fuel poverty among the elderly in Somerset. It is estimated that in the UK 33,000 pensioners are unable to afford to heat their homes over the winter months despite receiving winter fuel allowance. The coalition has pledged to continue to pay universal benefits to the elderly, with all those over 60’s receiving between £250 and £400. This does not make sense – there are many pensioners in this country who could fund their own winter fuel without this subsidy.

This Big Society-style scheme aims to solve this problem of unnecessary provision, by encouraging those who do not need the government’s money to donate it. Then it can be reallocated to those who do need the extra funds. Lords Ashdown and Cotter have already pledged to the appeal, as well as the prominent businessmen Michael Eavis and the Bishop of Bath and Wells.

Examples of Cameron’s Big Society are something that has so far has been hard to find. The concept is loose and its application unclear, but this scheme may start to indicate the route that charities and voluntary organisations need to explore if they are going to fit the Prime Minster’s vision of how this country should operate.

It seems that what David Cameron meant by the Big Society was that charities and voluntary organisations would take responsibility for ensuring the correct allocation of scarce resources, which in this case is government money. This scheme is hugely worthwhile and tackles the very real problem of fuel poverty. But ultimately it raises the question of why winter fuel payments are universal to begin with. The actions of a few good people cannot excuse the irresponsible spending of a profligate state.

Rolling back the state

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From a rather unlikely source, here's another reason why we should all cheer on efforts to roll back the state:

Yet, these are only examples of the latest round in this long running Statist assault on self-help and personal responsibility. The State has all but destroyed community in our cities and put it under siege even in our most distant rural places. Its key weapon is the professionalisation of everything, so that the volunteer and the amateur are usually excluded, and always thought second best. It is this that explains all those advertisements in The Guardian for local-government co-ordinators and facilitators. It's why the public sector has employed an extra 900,000 staff in the past decade. It's the reason for the growing belief that, if a job's worth doing, it's the state's job to do it.

Agromenes, Country Life, October 13, 2010

Young people want spending cuts, not tax hikes

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It is reassuring to see that the “new” generation has got a good grasp on the economic path that needs to be taken if the UK is to reverse its national debt. I'm not talking about Ed Miliband's new shadow cabinet, but the 18-24 year olds polled by Radio 1 about how they, the “new” generation, felt about the imminent cuts.

The poll showed that 62% of 18-24 year olds believe that cuts are necessary, and when asked whether they would prefer cuts or tax hike, 76% went with cuts. This shows that the proposals outlined by Lord Browne yesterday, in regards to University funding, should be welcomed by students above the previously muted graduate tax – what's good for the goose is good for the gander. It also gives the lie to the idea that young people are generally left-wing. Just because "student leaders" are loudly Marxist doesn't mean that the people they claim to represent are – most are elected with very low participation by an active minority, with the majority of students staying far away from the process. As in many groups of people, there is a silent majority of the young who simply want to be left alone to live their lives as they wish.

It is not just this younger generation, who arguably may not feel the full impact of the proposed cuts, who believe the coalitions cuts are necessary. A recent ICM poll showed that a majority of voters support axing child benefit for high earners. The same survey indicates that people would rather see cuts in welfare than in defence or education.

It appears that these recent polls show a swing towards rationality, particularly where cuts are involved. We cannot continue to live either, individually or as a nation on credit. Both individuals and the government have to take responsibility for their past actions; only when we acknowledge the problem can it start to be fixed. I'm glad that so many others agree.

Bravery on child benefit

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The Chancellor’s announcement this morning that child benefit will be cut for high earners is excellent news, for more reasons than one. It is obviously high time that government welfare payments be cut and in times like this it is quite reasonable that the first cuts be made to those payments that do the least good in terms of providing a safety net. Cutting child benefit for the rich may create a little discomfort for them, but far less than cutting benefit for the poor and unemployed. Though I question the need for child benefit at all, it is right that the first welfare cuts be made to the lowest-hanging fruit.

Moreover, cutting a universal benefit like child benefit means that the Chancellor has decided to be brave and think about the long-term political consequences of his actions. Many Conservative canvassers during the last election were bewildered by the refusal of high-income earners to vote for their party because they would lose some of these universal benefits, despite the fact that their net tax-benefit burden would be lower. This is a consequence of a universal benefit system where the costs – taxation – are dispersed and relatively unseen and the gains – child benefit in this case – are concentrated and visible. All people on benefits will be reluctant to vote them away even if it will mean a net gain for them, and it takes political courage to break this vicious cycle.

I'm also heartened that these cuts are being made despite the fact that they will directly affect the journalists reporting on them, many of whom earn enough to be left out of the new income threshold. The fact that the government is prepared to face these vested interests head-on is encouraging.

Of course the cuts in benefit need to be deepened and widened. Policy Exchange’s Neil O’Brien says that of the people on the winter fuel allowance, 82% are not in ‘fuel poverty’. There are countless other benefits which were designed to make more people feel dependent on the government to win their votes. We can no longer afford these benefits, and I’m glad to see courage from the government in cutting them.