Why should the public purse pay for political parties?
The so-reasonable sounding Sir Christopher Kelly has today pronounced on the funding of political parties and their election campaign. The big donors are to be cut back to a maximum of £10,000 each. Since he only proposes a cut it election costs of 15% that leaves a big gap (about £50M or so for each election) to be filled by, guess whom, the taxpayer. Needless to say, MPs will decide the matter with no say in the matter for the electorate. No referendum on this.
Of course, if the politicians could persuade more of us taxpayers to contribute [more] to their parties, as the Americans do, that would be another matter. If we liked our politicians we would be happy to pay for their election but the truth is that we don’t. So why should taxes be imposed upon us without our agreement?
Direct contributions are to be encouraged by [gift aid] tax relief as for charities. That’s a good idea but it is limited to the first £1,000 of the £10,000. How daft is that? The whole point of the change is to encourage personal giving.
Parties will get £3 per vote in Westminster elections and £1.50 for European ones based on the previous results. In other words, if a party comes in with a landslide, and then proves, disastrous it will receive far more funding than the parties the electorate now wishes to vote for.
There’s a simple solution to all this. Make donations subject to tax relief by all means but otherwise if MPs cannot persuade us to pay for their campaigns, then they do not deserve office. We’d be better off without them.
Don't get your hopes up about the Occupy movement
I’ve put off writing about the Occupy movement until now. It wasn't clear to me what Occupy Wall Street and Occupy London Stock Exchange wanted to achieve. Indeed, it still isn’t. But I’ve seen more and more articles like this, which claim that their problem is with governmental corporatism, which are worth considering. (I'm not particularly convinced by that article's take on economics, but it's just an example.) If this is correct, then the Occupy movement is more sympathetic that many have given it credit for being. Sadly, I don't think this is the case.
What do people mean when they say corporatism? The term is widely used but doesn’t seem to have a common definition. I and many other free marketeers use it to describe government collusion with big business; whether through direct cash transfers like bank bailouts, trade protection for industry like agricultural tariffs, indirect subsidies like taxpayer-funded roads or limited liability laws (as distinct from limited liability contracts, which are OK because they only apply to contract parties), or artificial barriers to entry like licensure. In this view, for example, Tesco is seen ambivalently, benefiting in some ways (unpriced roads, say, or agricultural subsidies) and suffering in others (such as import tariffs).
But this is not what many other people mean by the word. By corporatism, many mean a system in which large corporations exist, in their view wielding too much “market power”, such as the ability to sell below cost price to undercut rivals or to put pressure on suppliers to reduce their asking price. In this view, Tesco is a bad thing because of its size alone, irrespective of whether that size comes from the state. And, typically, they are comfortable with using the state to cut a large firm down to size.
This distinction is important: libertarians who are encouraged by the Occupy movement’s rhetorical opposition to corporatism should be wary of people using the same word to mean two different things. If you are opposed to corporations being sponsored by the state, I’m probably your ally. If you want the state to stop big corporations from existing at all, I’m probably not.
The Occupy protest’s focus on Wall Street and, especially, the London Stock Exchange make me think that they are in the latter camp of anti-corporatists. Yes, Wall Street is home to bailed-out banks, but Occupy Wall Street hasn’t focused on the banks – they have targeted the financial sector in general, which is certainly not all (or even mostly) a creature of the state. Occupy London Stock Exchange’s focus has been even broader; the target has been publicly-listed companies, most of which are hardly recipients of government privilege at all.
The Occupiers are not anti-government, they are anti-wealth. Their slogan, “we are the 99%”, highlights this. The only way this distinction between the bottom 99% and the top 1% makes sense is if it is about money, not state-granted privilege.
Many Occupiers would probably say that they are OK with people who have really earned their money by making people’s lives better. But what meaningful definition have they settled on for this? Did Wilt Chamberlain deserve his millions, earned by taking a small amount of money from thousands of willing spectators? Does Wayne Rooney? Many Occupiers could answer yes to both questions. But what significant difference is there between Rooney and, say, the CEO of Royal Dutch Shell, or some other highly-paid CEO? If they’ve been paid the money willingly by shareholders, they deserve the money just as much as a sportsman who has been given money by thousands of spectators.
Most of the top 1% of income earners (or wealth owners) have made their money through market mechanisms, by selling something that people want. In fact, the biggest recipients of state largesse are usually the voting middle classes, who take from both the rich and the poor. I suppose “we are the bottom 60% and the top 2%” doesn’t have the same ring to it, but if the Occupiers were really against state largesse rather than the wealthy themselves, it would be a truer slogan.
Alas, despite the optimism of many libertarians, I don’t think there is much that is liberal about the Occupy movement’s aims. Whatever superficial resemblance to aspects of the free market cause there is in the Occupiers’ rhetoric is just that: superficial.
If the Occupy movement focuses on what it could achieve, it might realize that government is the only institution that will listen to it. If that happens, there might be some common cause with free marketeers – a broad-based anti-bank bailout campaign is long overdue in this country, for instance. But as long as Occupiers insist on bleating about “the 1%” and targeting legitimate private firms as if they are criminal bodies, I’m not optimistic.
In praise of Gordon Brown
Gordon Brown's premiership will not be remembered as a success. He did so many things wrong that the list is too long to tell. Among the highlights are his sale of 395 tons of Britain's gold reserves between 1999 and 2002 for £2.3bn, an amount that would now be worth $14.3bn.
He devalued trust in open government by sneaking in 'stealth' taxes without declaring them. He turned Britain from one of the most competitive, low-tax regimes in Europe to one of the least competitive, high-tax regimes.
He squandered mind-boggling sums on public services, claiming that their poor performance was because they were under-resourced. The mountain of extra cash brought no improvement remotely commensurate with it.
He schemed against Blair's premiership, undermining it whenever he could, and thwarting its ability to restructure and improve the public services.
He borrowed without limit, leaving his country with a crippling burden of debt. It had taken 300 years and innumerable wars to take Britain's public sector net debt to £352bn by 1997. It took Brown 12 years to double that, and it is well on the way to doubling again by 2014.
The list goes on, but he did two things right. He gave the Bank of England its independence (though its Monetary Policy Committee is still government appointed). And his 5 conditions kept us from joining the euro. Given a chance, Tony Blair would have taken Britain into the single currency faster than he took us into Iraq, but those 5 conditions were never met, so Britain stayed out.
Looking at the mess the eurozone is in today, we can be grateful that staying out was one of the things Gordon Brown did right. The euro represented an attempt to impose political wishful thinking upon economic reality. Even in its current crisis, eurozone leaders are putting EU politics ahead of what economic sense requires. We are well out of it, and Brown merits a nod of praise to punctuate the torrents of well-deserved abuse.
US political donations are falling
A couple of weeks back I intimated that political donations might not be so much about bribing a politician to do something for you: they might in fact be about paying off a politician not to do something to you.
We've not got that decisive information that we would require to confirm either way, but a new report doesn't invalidate my position either:
They might not be among the jobless protesting against Wall Street, but the rich are angry, too. Furious over U.S. government gridlock, the wealthy have their own form of protest: Refusing to make political contributions.
Gridlock means that no new laws are getting passed. Sure, if people are refusing to donate because no new laws are being passed then it could be because without new laws being passed there's no point in bribing a politician to get the law you want.
But note also, if no new laws are getting passed then there's no need to pay off a politician to prevent a new law from screwing you over either. The old protection rackets used to send the thugs around to break the windows to show what would happen without the protection: if no new laws can be got through Congress then there's no thugs to send and thus no need to pay.
What does slightly worry me about this formulation, that political donations are demanded not offered, is trying to think up a scenario in which to test it. Anyone got any bright ideas about how we might disprove the hypothesis?
Is politics meritocratic or not?
Is politics a meritocracy? Or do connections, family ties, have much more to do with whether someone manages to get ahead?
It's possible to argue this either way: neither John Major nor Margaret Thatcher came from the sorts of backgrounds that we would normally associate with being a natural part of the ruling classes.
Ross gives us a different way of measuring this. An interestingly different method of measuring this. Assume, first, that there are two sets of possible careers. There are those where talent is obvious: he picks songwriting as an example. The difference between an OK songwriter (Julian Lennon) and a great one (John Lennon) is obvious to all. Sean Lennon might have the genes and the contacts, but not the ability. Then there are those where talent, beyond a vague suitability, doesn't seem to make much difference. There's not all that much difference in talent between a jobbing actor (say) and an A list star and from what I can see in fashion design there's absolutely no difference at all between what is turned out by a global star anointed a Dame and a random run through the fabric samples while covered in glue.
In these careers where talent is hard to discern it becomes networks, contacts, family perhaps, that determines the success or not of the individual.
It would be much too harsh to state that this distinction is always true: only that on average we would expect to see more dynasties in those careers where talent is either not necessary or indistinguishable, as against those where possession of talent is obvious.
So is politics meritocratic in this sense or not? Does family background, that network of contacts, matter perhaps too much?
We're on our fourth generation of Benns as MPs and our third generation of Benns as Cabinet Ministers. Perhaps politics isn't as meritocratic as we might wish: or perhaps talent is just too difficult to perceive in this field?
Libertarian independence
I visited Manchester this week, to help with the ASI's events at the Conservative Party Conference. Sadly, apart from our own events, the TFA's Freedom Zone and Forest's excellent Stand Up for Liberty event, I left feeling a little despondent. What struck me about the conference was just how marginalized libertarians are within the Conservative Party today – not just the Rothbard-reading, abolish-the-state libertarians, but also classical liberals who just want to reduce the size and scope of government, if not to (say) privatize the roads. The same applies to UKIP and the Liberal Democrats – both have libertarian members who struggle against parties that are fundamentally unlibertarian. (I have not met a libertarian Labour member but a few may exist for all I know.)
Yes, the Conservatives generally agree that income redistribution is a bad thing, but on a range of other important issues the party is at best divided and at worst totally opposed to the libertarian agenda. On issues like sound money, the NHS (“the most precious institution in our country”, according to the PM), bank bailouts, farm subsidies, personal freedoms, localism, economic regulation, migration, foreign interventionism, drugs, defence, corporate welfare, and others, the leadership and/or membership of all of the UK's mainstream parties are set against even moderate libertarian stances.
It's not just that they're insufficiently radical on the areas where there is agreement; in many cases above it is profoundly opposed to libertarian ideals, and this will never change from the inside.
It seems to me that many politically-active libertarians have overinvested in the party politics – rather than convincing politicians, who ultimately have to appeal to voters for their jobs, libertarians should be focusing both on changing public opinion and asserting themselves as a voting bloc. Libertarians, moderate and radical, should be fiercely independence from any particular party.
Matt Welch and Nick Gillespie, both editors at Reason Magazine, have a new book, The Declaration of Independents, in which they argue that libertarians in America should throw away party tribalism and embrace being floating, independent voters and activists. It's not a directly analogous system, of course, but the principle that libertarians should avoid wasting time on party politics and instead work on specific issues is a good one. Why waste time working for a political party that mostly despises what you believe in?
This is true of Conservative libertarians most of all. It's perfectly possible that the Liberal Democrats, UKIP or even Labour could put forward a manifesto that coincides with more libertarian beliefs than the Conservative party – the latter's corporatist "pragmatism" (bailouts, protection for big business) is widespread but may be less ingrained among other parties' voting bases. And the Tories might become more libertarian if they had an incentive to. There is no incentive unless more libertarians assert themselves independently from parties. They have nothing to lose but their membership cards.
Occupy Wall Street – the real culprits
For just over a week now Zuccotti Park in New York has become yet another place to be 'occupied' by those claiming to represent the majority in society: in the case of Occupy Wall Street, they claim to represent the '99%', which I suppose includes me (and most likely you).
And their demands? Unclear. The movement is a hodgepodge of the frustrated and annoyed, not a particular coherent political or economic ideology. However, overarching aims demand an end to corporate influence on the political process combined with a generic anger at the bankers and other 'fat-cats' who have, figuratively speaking, gorged themselves on our milk. All this, of course, is topped off with the expected banners exclaiming 'Stop Capitalism'.
Some of the aims I have sympathy for. Undoubtedly the corridors of power have been captured by interest groups and lobbyists (although here big business is not solely to blame). People have a right to be furious about the economic decisions that have been made, thereby saddling them and their future generations to indebtedness. But who are they to be angry with? Is it really Gordon Gekko who should be vilified?
To a certain extent, yes. However the real culprits of this calamity are our disastrous politicians, who dish out taxpayers' money without second thought, disregarding their electorates' wishes. A billion here, a trillion there: when you're seeking re-election spending other peoples' money must be easy. It is government who repeatedly bails out bankrupt firms (with our money) and thereby takes away risk, a vital function of the market. When government encourages Wall Street to act recklessly by shielding them from losses, little is likely to change. To top it off we have no choice in the matter – the government is the only force able to legally steal your money.
True Capitalism is not the problem. The reason successful firms are successful is because they offer things we want. We can choose whether to give them our money – Ronald McDonald has never coerced you into buying a Big Mac. If the government were a firm on the open market, it would go broke within milliseconds.
But we haven't got true capitalism. It is a bastardised form. We have currencies controlled by central banks who artificially manipulate interest rates and money supply. We have governments who are in bed with a harem of interest groups, all vying for special favour and concessions. Our government steps into markets, naively trying to 'correct' them but only emboldening crises. Firms which should have gone under long ago have made too many friends in office: the system is cancerous.
To those at Occupy Wall Street: you have every right to be furious. But who enabled Wall St. to act with such careless abandon? March down to D.C. or the Fed: it is the politicians who have squandered your money on vain political projects and hide behind the redoubt of 'broken capitalism'. Helicopter Ben is not throwing his own money out the side of his helicopter, after all.
It is not capitalism that needs fixing, it is our meddling, incompetent political class and our bankrupt political system. Our economic and political freedom is stifled and it is time to take it back.
Shock! Horror!
Well, I think this is shocking, even if you don't:
Hedge funds, financiers and private equity firms contributed more than a quarter of all the Tories' private donations – which this year poured in at a rate equal to £1m a month – the study by the Bureau of Investigative Journalism has found. The figures show an increase in the proportion of party funds coming from the financial sector, raising fears that the City's financial influence over the Tories is on the rise as key pieces of legislation are discussed by the coalition government.
Blackmail I call it, akin to Mafia Dons muttering "nice business here, be shame if someone ruined it, wouldn't it?"
Of course contributions to politicians from a sector increase when reforms to that sector, to the laws that apply to that sector, are mooted. That's why changes in the law are mooted: to make sure that the sector coughs up the donations to keep the political parties on the road. It's a shakedown pure and simple.
PJ O'Rourke once asked "When will we be done?", when will we have made all the laws we need to and can stop? The answer is of course that for politicians the answer is never. For without being able to change the law, to the advantage of some and disadvantage of others, how would they be able to shake loose the cash that pays for them?
The thing you have to remember about the political process is that it's not always entirely evident who is paying who to screw whom. It's not, as the naive think, our politicians protecting us from their ones, us fighting the good fight against those nasties. It's politicians extracting a juicy lifestyle from the rest of us.
Deborah Orr asks a fascinating question
I do think this is a fascinating question. One that rather perks me up and has me asking "Yes? So why don't people think this way?"
Can you be on the left and also believe that the state really does have to be much more lean and much more efficient?
Why is it that it's people like us, people defined as being upon the right, who are always going on about the efficiency of the State in doing things? That it actually ought to be efficient at the things that it does?
Surely, if you were (in this left right political sense) of the left, if you wanted to argue for greater State involvement, you would be arguing even more strongly than we do that the State must be lean and efficient in what it does? You might well think that it should be doing more things, but your insistence upon lean and meanness should be even greater than ours, no? You do, after all, want it to do more things from those limited resources available and you're also trying to argue that it's a great way to get things done.
But of course this isn't the way it generally works out. Those arguing in favour of State action rarely are those arguing that we should examine the efficiency with which the State does things.
I suspect a large part of this is that what is generally referred to as "the left" isn't actually anything either left or right. It's just the producer interest speaking, one of the more conservative forces known to man.
But there's also a chink in there, room for the argument that it is we classical liberals who are truly of the left, as we have been for centuries. Yes, absolutely, there are some things which must be done and things which can only be done by government: therefore government must do those things which must be and can only be done by government. But then end aim of all of this is to provide the average person, the working man, that Clapham Omnibus rider, with the best deal possible. Which means that the State must be efficient so as to extract as little as possible from the pockets of the populace to fund what it must do: leaving as much as possible to fructify and benefit us all.
Our concern for efficiency is exactly and precisely because we're on the side of the people, not the producers like the conservatives of the so-called left.
ASI at the Conservative Party Conference
We've got a host of great fringe events organized for the Conservative Party Conference this year. I feel a little selfish – I didn't organize them, but the line-up of topics and speakers is pretty much a dream team. Come along to as many as you can: you can watch dull speeches by politicians at home, but you can't find a panel on booze, drugs and tobacco that features Chris Snowdon, Alex Massie and Dan Hamilton anywhere else. The other events – which include speakers like Allister Heath, John Redwood and Steve Baker – will be superb as well. You don't need a Conference pass for any of the events, but do RSVP if you can so we can put out enough refreshments.
If you're around on Sunday night, come along to our Liberty Drinks at 7:30pm at Bar 38 (Peter St, Manchester). That's just outside the cordon, so even if you're not going to the Conference you should come along for a pint. I know better than to give out my phone number on the internet, but if you need directions or have any questions you can tweet me throughout the Conference at @S8mB or you can email Sally at sally@old.adamsmith.org.
Here are the details for all the events:
The Individual v The State - The battle for lifestyle freedom
Panelists:
Philip Davies MP
Daniel Hamilton, Director – Big Brother Watch
Alex Massie, freelance journalist – Spectator blogger
Chris Snowdon, author – Velvet Glove, Iron Fist
Date: 2nd October 2011
Time: 5.00pm to 7.00pm
Location: Radisson Edwardian, Stanley / Livingstone Suite, 38-40 Peter Street, Manchester, M2 5GP (outside the security zone)
RSVP: sally@old.adamsmith.org
Food and drinks will be provided
After the event we have also reserved an area at Bar 38 on Peter Street for 'Liberty Drinks' in association with the Taxpayers' Alliance and Big Brother Watch from 7.30pm.
Wealth Creation & The Coalition: An agenda for growth
Panelists:
David Gauke MP
John Redwood MP
Allister Heath - Editor, City AM
Freddie Cohen - Assistant Chief Minister, Jersey
Date: 3rd October 2011
Time: 12.30pm to 2pm
Location: Manchester Central Exchange 2 & 3
RSVP: sally@old.adamsmith.org
Lunch will be provided
Economic Growth & The Planning System
Panelists:
Bob Neill MP
Steve Baker MP
Tim Smith, Partner, Planning & Environment, Berwin Leighton Paisner
Tom Clougherty, Executive Director, Adam Smith Institute
Date: 4th October 2011
Time: 8am to 9.30am
Location: Manchester Central 5
RSVP: sally@old.adamsmith.org
Breakfast will be provided