Is nationalism a force for good? No

My colleague Geoffrey Taunton-Collins argues that nationalism is a force for good, as the loyalty and fellow-feeling it generates are necessary to create high trust law-abiding societies. He says that examples of atrocities committed partially in the name of nationalism—the Rwandan genocide, the second world war and Holocaust, strife in the middle east—are all better explained by ethnic tribalism or religion. I disagree. Firstly I'm sceptical that successful modern societies are driven by nationalism, secondly I think it's impossible to disentangle the nationalist element in many of the terrible occurrences he lists, and thirdly I think that nationalism underlies some very bad policies adopted by many modern societies.

Why does an individual obey the law? One obvious reason is that the penalties for disobedience, weighted by the likeliness of their being incurred, often outweigh the benefits from breaking the law. A second reason, is that individuals believe there is some sort of justice in the laws. This is why people give "because it is against the law" as a reason independent of any further explanation for why a course of action ought not to be followed. Anecdotally, the arguments people give for the duty to obey the law—if these can be taken as also being the reasons they actually do obey the law—seem to go against Geoff's claim, centring on reciprocity, universality and fairness. And the cases where people disobey the law appear to go with my analysis. Consider illegal downloading: some estimates say PC games are illegally downloaded as many as 20 times as they are bought legally. People seem unswayed by the laws—brought about by the authority of the nation state they are supposedly loyal to—requiring them to buy games (or films, television programmes, music) legally. Because others are not following the law, and because the likelihood of punishment is low, they don't themselves.

Can nationalism and ethnic strife be disentangled? Certainly Hitler's regime looked no more favourably on the many proudly German Jews who had served the Kaiser honourably in the first world war than they did on any with Jewish ancestry. And certainly Nazism was centred on the idea of a Volk—a people—united despite the borders of Weimar Germany. But the purest form of an ideology is rarely what gets through and propagates throughout society, and the Dolchstosslegende—the idea that Germany didn't really lose the first world war, but was stabbed in the back by a Jewish-Bolshevik conspiracy—was a vital part of the Nazis' appeal. I think the general bleeding of racialist, ethnic and religious ideas into nationalism and national identity is inevitably tied into Middle Eastern conflicts and the two major central African genocides.

And finally, look at the policies nationalism produces. True, as Geoff points out, there is no necessary reason why nationalism should exclude anyone born outside the country, if they are willing to switch their loyalty to their destination nation, but in practice we know that's what happens. Taking the UK as an example, the tide of anti-immigration feeling has been rising and rising since Gordon Brown's 2007 pledge to provide "British jobs for British workers", culminating in the rise of UKIP and Tory policies like the 99,999 or less net inward migration pledge. Surely it can't be denied that a sense of nationalism, that the UK is collectively owned by only its current inhabitants, a sense of insider and outsider, is intimately connected to this ethically indefensible and economically incompetent trend?

As far as I can tell, actually-existing nationalism is not responsible for our generally law-abiding society, cannot be disentangled from many gross moral horrors, and is responsible for bad policy. Therefore I conclude that nationalism is a force for bad.

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Politics & Government Miles Saltiel Politics & Government Miles Saltiel

An end to zombie politics 5: Europe

How readily the Zombie metaphor applies to the politics of Europe: eighteen years of unapproved accounts, eternal squabbles between federalists and anti-federalists; the Euro project itself - intended to unify but achieving the opposite. But none of this matters for this piece, confined to the Zombie character of British responses to the European dream and the nightmare it has become. Instead, I will explain why the government must not ruin its negotiating stance by essentially promising to put its weight behind staying in the EU regardless of the success of negotiations, as I laid out in greater detail in a recent report.

UKIP’s success last Thursday (2 May) and Lord Lawson’s piece in Tuesday's Times (7 May) blow the cobwebs off an issue kicked into touch for three months by January’s  referendum promise. Lawson's article points out that referenda can sometimes be red herrings. Sometimes, as in 1975, they are a device to shut down discussion. On this occasion they could be more of the same. Alternatively they can act as a way for the political class to reconcile themselves to giving up on a favourite project. I’m getting that the current government warms more to the former approach: thus the bonkers ideas floated over the past week.

On the one hand they've considered doing absolutely nothing. This would look magisterial, if an administration bumping along the bottom of the electoral cycle could pull the stunt off; however in the event it will look weak.

On the other hand policymakers have mulled publishing a bill setting out the referendum terms. This scheme would also be as weak as water, vulnerable to disabling amendment when eventually put to Parliament. Similarly, the wheeze of a 'mandate' or 'backing' referendum coinciding with the EU elections next year adds nothing to January’s promise. Both of these are transparent tactics, most likely to irritate voters who deserve to be taken more seriously.

Worst of all is their inherently zombie nature in flinching from the contradictions inherent in the so-called in-out referendum. These stem from the convention that Her Majesty's Government commits itself ex ante to campaign for the renegotiated outcome. It may be that anything less would court accusations of unsportsmanlike behaviour from the other side - our negotiating counterparties in Europe. Such a commitment, however, greatly weakens the UK’s bargaining hand, particularly if following the current plan of linking to a timetable. The other side can simply wait out our negotiators, offer meaningless concessions, or prevail upon the UK to offer further referenda till the electorate sees sense and votes in the EU's preferred direction, as seen previously in France, Ireland and elsewhere – if it is a given that the government will put its weight behind an in vote regardless of the result.

If the government wishes to offer a referendum in good faith, let it put forward a proposal which actually makes sense. It may not get through Parliament, but it will show willing and serve as a clear line in the sand. This would be a bill to bind UK to one and only one referendum regardless of the state of negotiations at the time of a stated deadline. Setting aside party politics, if such a bill were passed it would be more likely than not to strengthen UK negotiators’ hands; it could pave the way for early negotiations if wanted; and it would relieve the post-2015 election government of the nutty ex ante obligation to campaign in favour of the outcome.

The arguments against are trifling: of course it might not get through parliament (and if it did would not bind a future Parliament), but the very attempt sets the agenda both domestically and overseas, going some way to throwing holy water on the zombie hordes of EU politics.

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Politics & Government Dr. Madsen Pirie Politics & Government Dr. Madsen Pirie

Three ideas that will not be in the Queen's Speech

I was on the Today programme on BBC Radio4 alongside Tom Papworth of Centre Forum.  John Humphrys asked each of us to nominate three pieces of legislation we'd like to have seen in the Queen's Speech setting out the government's priorities for the year.

My first was a bill to allow all employees of small businesses to be registered as self-employed.  This would create huge numbers of new jobs by lowering the non-wage costs borne by employers.  It would also reduce the paperwork they have to cope with, freeing up time to drum up more business, and keeping prices down by lowering their costs.

Secondly I proposed a bill to set the income tax threshold at the minimum wage level for an average working week, making it so that no-one earning less than that would have to pay income tax.  This would give the low-paid the so-called 'living wage' without it costing jobs by raising the costs to employers.  It would indeed involve lost revenue, but there would also be supply side effects as work became more attractive and significant numbers moved off welfare and into work.

For my third point I called for hard drugs to be medicalized, meaning available to addicts at clinics run by doctors and nurses, and for recreational drugs to be legalized.  I pointed out that the so-called 'war on drugs' was being lost, as it has been for half a century.  The new proposal would take the crime out of drug use.  I said I thought politicians would carry on doing more of what they knew did not work, but that more and more were admitting that a new approach was needed.

None of my proposals is in the actual Queen's Speech, but I am confident that at some stage in the future all of them will.

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Politics & Government Tim Worstall Politics & Government Tim Worstall

Loan subsidies are the same old government picking losers stuff

This little story is instructive as to what is really happening in our bright new world:

The Treasury is to underpin a £75m loan for the Drax power station in North Yorkshire, marking the first project to be financed using the Government’s £40bn infrastructure guarantee scheme.

Even the Labour Party understands these days that government coughing up the money for one specific firm or another, even one industry over another, doesn't really work. For the money ends up going to those politically favoured rather than those best able to use such aid. So the code words have changed: now we're supposed to applaud "investment" in "infrastructure". Or greenery. Or perhaps just the subsidy to interest rates to those engaged in such activities. This apparently is much better as it means that the market will decide who gets the subsidy.

Except of course nothing has actually changed. Here we've got money going to Drax. In order to change over some of the boilers from burning coal to burning wood pellets. Wood pellets that will have to be sourced from thouswands of miles away so great is the volume required. Far more than Britain's forests could possibly provide. Wood pellets that are actually much more polluting than coal too.

And why is Drax converting from cheaper and cleaner burning coal to wood pellets? Because the EU says that it should. So we've not in fact got markets allocating anything at all here. We've one level of government picking a loser and another coughing up the subsidy for that losing choice.

As I say, nothing much has changed, we've still got the same groups of bozos wasting our money. The only real change that has happened is that it's now rather more difficult to kick them out of office for being bozos. This is not an advance in the necessary management of politicians.

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Politics & Government Miles Saltiel Politics & Government Miles Saltiel

An end to zombie politics 3: The regions

The urgency of relief from Zombie regional policy was brought home by the street-parties celebrating the death of Baroness Thatcher, the palpable bitterness of regions eviscerated by a century of rotten policy. Originally I planned this post for financial regulation, but as recent banking failures hinge upon regional policy, let’s turn to this instead.

First, some international context: from the outset of the financial crisis, thoughtful Americans noted that subprime borrowing was stimulated by policies promoting home-ownership among uncreditworthy minorities, unreached by general prosperity. Good intentions went wrong.

And now we begin to grasp where our own good intentions went wrong. On 5 April, the Parliamentary Commission on Banking Standards called HBOS’ failure what it was: plain bad banking, nothing to do with alphabet soup, bonuses or the other usual suspects. This paves the way to face the fact that HBOS’s collapse tallies with Bradford & Bingley, Dunfermline, RBS and Northern Rock - all failed “country banks”.

Let’s pass over financial regulation till another blog, reverting to today’s theme: that the decline of Britain’s primary industry prompted 100 years of awful policy extending from white-elephant investments, through piecemeal subventions, to the Blair-Brown wheeze of public-sector and financial employment, the latter not just back-offices but regionally based banks with national ambitions, political patronage, and - as it turned out - disastrous business models.

Regional regeneration is uphill sledding: Dorling and Thomas point to the UK’s profound regional disparities and the inverse relationship between public expenditure and prosperity, while Polèse captures the agony for once proud regions of accepting lower cost-bases. So let the Tories reconnect with voters outside the Southeast by repudiating Zombie policies and proclaiming two clarion objectives: immediate relief and eventual reskilling.

Policies for immediate relief: 

1. Let HMG kick off with tough love, doing its bit to make regions more competitive with regional wage differentials for its own staff. The pill’s bitterness is best sweetened by letting national inflation operate upon salary-sheets redrawn to equalise employees’ purchasing power from region to region.

2. My last blog touched on the opportunities for the North opened up by fracking. All over the world, hydrocarbon development promotes “roustabout” outfits offering drilling, wellhead and other services, all fostering local proprietary skills. So let the Department of Communities and Local Government issue guidance encouraging the construction or conversion of property for such entrepreneurs. At the same time, let the Treasury offer holidays on their national insurance and corporation tax. Finally, let the Department of Employment relieve them of the restrictions of wage and employment regulation.

3. The population is ageing and the retired no longer necessarily hard up. So let regional developers and operators of retirement communities enjoy relief similar to that set out above.

Policies for eventual reskilling: This goes to rebuilding technical, entrepreneurial and political skills. Let’s pass over general education, hoping that Michael Gove’s reforms catch hold; and local funk, often stemming from underfunding and addressed in my last blog. The last government pushed large-scale public sector and financial employment with grisly results, teaching us to field other industries and more resilient structures.

4. The Treasury plus the Education and other ministries should goose up university development offices seeking to engineer regional knowledge-based clusters, with regulatory concessions, tax holidays and other Enterprise Zones elements. Heaven knows how hard it is to pick winners, so let HMG also be promiscuous with funds for start-ups to match arms-length private money.

5. The promise of creative and healthcare industries is all too often stymied by BBC and NHS jobsworths. So preparatory to more fundamental reform, let’s decentralise programming for license-funded broadcasters outside London, pushing the consequent local content to rise to the challenge of a high bandwidth world; and let the Department of Health operate a presumption of approval when commissioning bodies in the regions propose innovations in secondary provision. And note, creative goes well beyond TV, embracing business communications, design, fashion, performance art plus social and other media/software, most of these inherently small-scale. 

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Politics & Government Dr. Madsen Pirie Politics & Government Dr. Madsen Pirie

Ten myths about Margaret Thatcher

The left-wing commentariat seems to be using the argumentum ad nauseam against the Thatcher record.  This consists of repeating an allegation, no matter how much evidence is produced against it, or how many times it has been shown to be false.  In City AM Allister Heath dealt with some of these assertions, but that has not stopped the anti-Thatcher brigade from repeating them.  Here are ten claims they make which are not supported by the facts.

1.  She destroyed UK's manufacturing base. No. Manufacturing output was 7.5% higher when she left office than when she began.  It did decline as a proportion of the total economy, but only because other sectors, especially services and finance, expanded more rapidly as the economy changed.  This happened in other advanced economies at about the same time as part of a general trend.  It is true that three major industries, shipbuilding, steel and coal, did decline as they proved unable to compete with other countries in these areas, but other industries, such as advanced manufacturing, expanded.

2. She destroyed the Unions' power to protect workers. Her reforms empowered union members rather than union leaders.  Previous Conservative and Labour governments had tried and failed to bring unions under the law.  The UK's strike record, the worst in Europe, did not help workers.  The Thatcher reforms gave union members the right to vote for their leaders in secret postal ballots, and gave them the right to be balloted ahead of possible strike action.  These resulted in more moderate union leadership and greatly reduced industrial unrest.

3. She lowered income tax so that the rich paid less. She did change income tax, but the rich not only paid more, but paid a higher share of the total.  Her governments steadily lowered the top rate from 83% (or 98% on investment income) down to 40%, and cut the basic rate to 25%.  The low rates raised more revenue than the high ones had done as business boomed and the tax base expanded.  The top 10% who had been paying 35% of total income tax saw this rise to 48% (from just over a third to just under a half of the total).

4. She turned vital state industries into private monopolies. Wrong.  The privatization programme turned ailing state monopolies into competitive and successful private ones.  Her government took care when it privatized to build in competition by whatever means it could.  BT faced a competitor called Mercury, with periodic reviews that allowed more competitors.  Most of the utilities were exposed to world competition as well as national competitors.  An important key was to separate the infrastructure from the supply, so that different producers competed to send their products down the pipes or cables to consumers.  Where this was impractical, suppliers had to bid competitively to win the franchise for a limited time frame.  Loss-making state monopolies were replaced by competitive and profitable private companies.

5. She destroyed Britain's coal industry. Britain's coal industry had been in decline for decades.  Many more pits were closed under Harold Wilson's Labour governments than under Margaret Thatcher's Conservative ones.  One reason was the rise of oil and then gas and nuclear as cleaner alternative sources of power.  Another was the decline of heavy industries that depended on coal.  Domestic heating moved away from coal, and North Sea gas replaced coal gas.  Added to this was lower cost foreign coal.  All of these ultimately doomed loss-making subsidized coal mines, and the year-long miners' strike helped reinforce the case for alternatives.

6. She did not really cut taxes. Critics point to a slight increase in the government tax take over her 11 years as proof that her tax cuts were illusory.  There were initial increases, especially of VAT, but under her there were major cuts in income tax and corporation tax that generated substantial economic growth.  After the initial years of dealing with the financial mess and the inflation that had been left, the government took less of GDP.  Tax Freedom Day, calculated by the ASI as the day of the year when people have paid off the government share, for 10 years after that either came earlier or stayed the same.

7. She unleashed the regulation that led to today's crisis. As Philip Booth at the IEA points out:

"the 1980s was not a period of financial deregulation. Insider trading was made illegal in 1980. The life insurance industry, which had been almost free of regulation for over 100 years from 1870, was re-regulated from 1980 to 1982. Bank deposit insurance was introduced in 1979. The sale of investment and insurance products came under statutory regulation from 1986. Further, the first ever regulation of UK bank capital took place under Basel I, agreed while Thatcher was Prime Minister."

The 'Big Bang' did allow more types of firm to trade in financial instruments, but it essentially replaced private regulation with public accountability.

8. She committed a war crime by the sinking of the Belgrano. The UK was in a war situation over Argentina's illegal seizure of the Falklands.  The South Atlantic area was a war zone in which hostilities were under way.  The 200 mile exclusion zone did not restrict fighting to within its limits.  It was a warning to neutral ships to avoid it.  The Argentine cruiser Belgrano was not a neutral ship and was on a zig-zag course, posing a menace to the British task force, and was sunk as an act of war, one that Argentine commanders accepted as legitimate.

9. Hers was a deeply unpopular and divisive government. She led the Conservatives to victory in three elections in a row, all with substantial majorities.  She did not win over 50% of the vote, which no party has done since World War II, but she did win a higher share in 1979 than Tony Blair did in 1997, and more in her subsequent two victories than he gained in his.  Her governments shunned the post-war consensus that had presided over Britain's decline to an economic basket case, and thus divided opinion.  More to the point, socialists had hoped that their ideology might one day rule, but the Thatcher governments ended that hope within the UK and helped to end it on a world scale.  The Left cannot forgive her governments for taking that future from them.

10. Her cuts slashed the public services. In fact public spending increased by 17.6% over the course of her governments.  There were cuts to proposed increases, but core service spending expanded.  Because the economy boomed under Thatcher governments, the total state share of GDP diminished as a proportion of the total.  It declined from 45.1% when she came in to 39.4% when she left. She increased expenditure on health, education and social spending, but by less than the growth in the private economy.

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Politics & Government Dr. Madsen Pirie Politics & Government Dr. Madsen Pirie

She was a giant among men

If anyone had inspected the economic statistics for the UK in 1979 with the name of the country concealed, looking at growth rate, annual rate of inflation, output per head, days lost through strikes, and so on, they would have supposed they were looking at a third world country.  Britain was "the sick man of Europe," left behind since World War II and destined, it seemed, to fall further behind.

Within a few short years Margaret Thatcher had transformed the nation and its prospects.  Britain went from having the highest record for days lost through strike action to the lowest, and from the lowest growth rate to one of the highest.  No less importantly people reacquired self-confidence in the future, together with the optimism that their children would inherit a better world than they had lived in.  They acquired in addition a stake in the nation, with huge numbers of ordinary people who had never before had the opportunity becoming home-owners and investors in Britain's future.

The change was psychological as well as economic, and it was achieved in the teeth of a prevailing pessimism in the political establishment.  The talk then was of "managed decline," and no one thought that Britain's descent could be reversed.  Margaret Thatcher showed that a combination of character and resourcefulness could succeed in turning around the nation where few had thought it possible.  She proved them wrong, and in doing so earned her place as one of the greatest prime ministers who has ever presided over the fortunes of this nation.  More than that, she was one of the few whose resolution and determination stood up to the international threat of Communist tyranny and saw it defeated ignominiously and erased from history.

When her funeral is held in St Paul's with full military honours, there will be many who look back in gratitude at the transformation she achieved against the odds and in the face of opposition from those whose political lives had been lived in the belief that free markets and free choices were simply irrelevant in the modern world.  They never forgave her for proving them wrong, but most others will honour her memory and her achievements with affection and gratitude.  She did well and we thank her.

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Politics & Government, Tax & Spending George Kirby Politics & Government, Tax & Spending George Kirby

Let's have a United States of Britain

The UK should become a federation of states, hugely increasing the power of local compared to central government, thus allowing the individual more control over his life. Also, it would allow more differentiation across the country, meaning a variety of policies could be tested in all areas of the public sector. The most successful could then be imitated, meaning progress for the nation as a whole.

I envisage a division of the country by region, such as the South-West, the East Midlands, and so on. Wales, Northern Ireland and Scotland would each be a state, as could the Channel Islands and the Isle of Man. Territories further overseas might also become states, or they could retain their current status. States should have independence similar to Swiss cantons, with their own government and parliament.

Such a rearrangement of the country would, of course, be a huge change. But that is not an argument against it. Indeed, we could use the opportunity to at least debate some fundamental questions concerning the structure of the state: for example, the power of the monarchy, and the lack of a codified constitution. A more plausible objection is that local governments already have sufficient powers. But they have limited power over taxes - “England’s local government finance system is one of the most centralised in the world” – and laws.

Most of local governments' funding comes from central government grants, This means that councils have less incentive to spend responsibly, as they don't have to answer to the people they get most of their funding from – the nation's taxpayers. Thus, councils often spend money unnecessarily as the tax year nears its end, to ensure they don't have their budget cut for the next year. If local councillors had to face, on a daily basis, the source of most of their income, they would be more inclined to spend it wisely.

Local control over laws would be another important aspect of such a change. If the population of one region wants to legalise drugs, why should it be held back by the rest of the country? As a state, London, say, could go ahead with some drug legalisation. Then, if and when its policies proved successful, other states which had doubted drug legalisation's benefits could follow.

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Politics & Government James Lawson Politics & Government James Lawson

The mediocrity of chasing the middle ground

The economy is stagnant, government spending continues to rise, and we’ve lost our AAA rating. With the recent rejection of boundary reforms, and the UKIP-led humiliation at Eastleigh, it’s no surprise that some Conservative backbenchers are grumbling.

Cameron is adamant that he will not “lurch to the right” in response. His focus remains on the centre. After all, the median voter theorem tells us that majority rule voting will select the outcome most preferred by the median voter. But is success as simple as chasing the middle ground?

Firstly, the median voter theorem only works along one-dimension, 'Left' v 'Right'. This is hopelessly simplistic as the public’s views vary across issues. When we vote, we are limited to choosing a party package and we each have different priorities within those packages.

Secondly, it relies on there only being two parties, and assumes that those at the extremes will vote on side. Yet there are at least three significant parties.By some estimates UKIP cost the Conservatives a number of key marginal seats at the last election too. The winner of the 2010 election was actually ‘none of the above’ – more people avoided the ballot box altogether than voted Conservative.

Thirdly, the theorem assumes that preferences are ‘single-peaked’. Instead it’s possible to have different views on the same issue depending on the scenario. For example, one might in theory oppose paying for state schools. Yet, after being taxed for education, one might then prefer to pay a bit more voluntarily to get better state schools and thus avoid the additional cost of going private.

Finally, chasing the median voter has limited grounding in the public good. Public Choice theory teaches us that politicians and voters are liable to government failure. Some will act selfishly, voting to promote their wellbeing at the expense of the masses. Excessive focus on the centre also guarantees that principles are left behind in the wake of the latest opinion polls. U-turns can turn off past loyalists. Many who did support the Conservatives now lack enthusiasm, and the Government is generally criticised for its chameleonic approach.

Yes, the Conservatives had lost three elections in a row, and were ‘toxic’. Yes, there are votes to be won in the centre, and policies should be presented in terms that resonate with the public. However, votes may also be won by pursuing radical policies, by building enthusiasm amongst core voters, by reengaging non-voters and even by turning 'right'. One shouldn't just focus on the middle ground, there are many votes to be won elsewhere.

Having never won a General Election, Cameron might consider his predecessors. Margaret Thatcher was radical, faced an entrenched socialist status quo and was more ‘right-wing’. She delivered three electoral majorities, enthused her core vote, won over many ‘working class Tories’ and left a legacy that shaped the political world.

James was a founder of the Liberty League, who are hosting the upcoming Freedom Forum.

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Horsemeat, moral panic and the failure of regulation

Is there anything more terrifying and dangerous to liberty than a 'moral panic'? I use the term in its sociological sense as the horsemeat saga fairly seems to fit the bill. One can almost write the script: a small finding, further investigations hit the front pages, the press become fixated and call for the heads of those responsible, government steps in, calls go out for a public enquiry and regulation or a toughening up of the rules and more spending on enforcement... In a few weeks the issue itself is largely forgotten except that the resultant regulations last forever. Worryingly, the scandal has also prompted attacks on international trade in food products and displayed the economic nationalism we see in this country with calls to eat only British meat.

The most puzzling feature of this particular saga and many others is the belief that additional regulation can solve the problem. In many ways, food was one of the first areas of the economy to be regulated under the Food Adulteration Protection Act of 1860, prompted by noticeably similar Victorian fears. In a curious and amusing echo of the banking crisis, we already have a regulator called the FSA, the Food Standards Agency (is the repetition of acronyms just coincidence, or a sign that we have so many quangos there aren't enough names?), which runs a Food Authenticity Programme. Although the FSA has been at the centre of the scandal, DEFRA also has powers in this area.

It is clear that there has been widespread adulteration of food products despite the presence of these institutions. Indeed, as with the banking crisis, it may be that regulation has encouraged it in various ways. Interestingly, a former bureaucrat at the FSA has suggested that the EU may be partially responsible owing to its ban on 'de-sinewed meat'. What is evident is that regulators will not prevent such events happening. Instead, as the ban on de-sinewed meat suggests, regulation will cause unintended consequences. Additional requirements for 'traceability' and more enforcement will increase costs for supplier which will be passed on and further drive up food prices for already hard-pressed low-income consumers, or it will promote cost-cutting and thus adulteration. Regulation will tend to drive smaller firms out of the marketplace, allowing room for monopolists to dominate the market. One should note that food industry lobby groups are usually happy to call for more regulation as well.

Surely, it would be better to allow a more competitive and de-regulated marketplace, where consumers could choose whether they paid additional costs to guarantee the quality of their products and where market innovations could find more effective ways of policing?  Why is it that, whenever a crisis such as this occurs, calls for more regulation emerge despite (i) the failure of existing regulation (ii) the evidence that regulation may actually have contributed to the crisis and (iii) the effect of regulation will allow monopolistic behaviours and ultimately harm the consumer?

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