Venezuela Campaign: Chavez' Cuban healthcare fiasco
Hugo Chavez’s apologists have always used his healthcare spending in the early years of his presidency to counter criticism of his appalling human rights and economic records. A cursory google search brings up many fawning articles to this effect.
However, a closer examination of Chavez’s healthcare policy reveals a decidedly ugly picture. Chavez subcontracted a large chunk of Venezuelan healthcare provision to Cuba in a programme called Barrio Adentro, paying huge sums to Cuba for the provision of doctors. Very little of the money goes to the Cuban doctors, the vast majority (96%) is pocketed by the Cuban state. This funding helped Chavez finance Cuban security and intelligence support for his regime. Cuban intelligence has been vital to the Chavista regime’s ability to control both its population and political opposition.
Meanwhile, the Cuban doctors working in Venezuela are close to being slaves. The doctors are not allowed to bring their families with them and are forced to live in terrible conditions. They are only given small stipends with most of their extremely modest salary being held by the Cuban state until they return. They lose that too if they are sent home early by the Venezuelan regime. In 2010, seven Cuban doctors and a nurse who had escaped to Miami sued Cuba and Venezuela for conspiracy to force them to work as “modern slaves”.
Barrio Adentro failed to create a lasting healthcare system in Venezuela and consumed a large part of the Venezuelan budget. Between 2005 and 2014, $29.7 billion (over 50% of all social expenditure) was spent on Barrio Adentro. Most of this money went directly to the Cuban state and much of the rest was lost to pervasive Chavista corruption. By 2014, according to the President of the Venezuelan Medical Federation, 80% of Barrio Adentro’s facilities had been abandoned. Many of these facilities were being used to dump trash or were occupied by the homeless. Of the 20% of clinics still operational most were operated only part-time, often just until 10am. By 2014, after a nine-year programme and tens of billions of dollars, most of the Cuban doctors had gone home or fled to other countries.
Barrio Adentro has also comprehensively failed as a preventative healthcare programme. Since 2010 Venezuela has had the highest teenage pregnancy rate in South America, something that is easily prevented with basic contraception and education. The Health Ministry stopped publishing statistics in 2016, but by then maternal deaths had reached 756 per annum from 346 in 2010, and child mortality had increased by 92% since 2010. Vaccination rates for all the major preventable diseases have collapsed. Vaccination against polio fell from 86% in 2000 to 58% in 2008, and vaccination coverage against tetanus, whooping cough and diphtheria fell from 77% in 2000 to just 22% in 2008. After having been eradicated, diphtheria broke out again in 2017 and is spreading, along with many other previously eradicated diseases.
Essentially, Chavez built Barrio Adentro as a secondary healthcare system based around foreign indentured labour and starved the primary public healthcare system of resources. Following the almost total collapse of Barrio Adentro, Venezuelans are left with a system that is falling apart and unable to provide even the most basic forms of healthcare. Hugo Chavez’s healthcare legacy is a broken system that disproportionately harms the poorest Venezuelans.
More information on the Venezuela Campaign can be found on their website.
Brexit shows the perils of a planned economy
One of the remain arguments about Brexit is that it’s going to be a terrible disruption to how the world works - or that part of it that concerns the UK that is. It’s also true, unlike some other arguments being bandied about. The thing is though, this is also the argument against a planned economy in the first place.
Think through what that argument is. We’ve got so much work to do, so much administrative gumph to work through, that we’d better not make the change in the first place. It’s all just too complicated, see? Butwhat would a planned economy be? An even greater amount of administrative gumph meaning that we’d never be able to change anything.
Not changing anything in the face of changing technology is also known as progressively becoming poorer than we ought to be. Thus a planned economy is contraindicated on the grounds that it would indeed make us poorer.
Take this about medicines:
Few of the recipients of the millions of prescriptions dispensed every day across Britain are likely to give much thought to the system that ensures that everything from painkillers to niche medicines are available. Beyond the pharmacist’s counter, however, lies a network spanning national borders andcontinents and involving multiple supply chains.
“It all works so smoothly because of the incentives and obligations that are in place,” said one industry insider. “What will be really interesting to see is what happens when it comes under pressure.”
Certainly the doling out of the pills is a largely non-market system in the UK but their manufacture is globalist marketry writ large. Which system is easier to change as technology does? Well, the drug companies do seem to be able to continue to produce new things, it’s the NHS which lags other health care systems in deploying them, isn’t it?
It's true, new technology creates mineral reserves
We’ve been known to be quite vocal around here on the subject of mineral reserves and resources. It is entirely true that the Earth’s endowment of, say, copper atoms is fixed to any useful estimate. That’s not what either mineral reserves nor resources are though, they are an entirely economic concept. Reserves are what we’ve identified and proven - yes, proven - we can extract using today’s technology, at today’s prices, and make a profit doing so. Resources are where we’re pretty sure but haven’t proven to a certain legal standard.
That being so it is quite obviously advancing technology - that being Julian Simon’s Ultimate Resource - which creates mineral reserves and resources.
Even among those who accept the above truth there’s still one point underappreciated. Each step forward in that identification and extraction technology does not apply just to the one reservoir, it gives us an entire new Earth to explore once again:
After billion-barrel bonanza, BP goes global with seismic tech
Buoyed by the success of seismic imaging that found an extra billion barrels of oil in the Gulf of Mexico, BP is looking to take its latest technology to Angola and Brazil.
The software used in the Gulf, based on an algorithm created by Xukai Shen, a geophysicist straight out of Stanford University, led to BP discovering the crude in an area where it had long thought there was none to be found.
Industry experts said the scale of the discovery 8 km below BP's Thunder Horse field, announced last week, marked a major leap forward for deepwater exploration - a costly business known for its low success rate and high risk.
This new technology has not created that one billion barrels. It has done that plus given us the entirety of the planet at 8 km deep to go explore again. And that’s why technology produces so many new reserves, simply because each advance creates new planets to explore.
As an example concerning Simon. His bet with Ehrlich about the prices of commodities, one of which was copper. Over the period of the bet the SX-EW technology came into widespread use. Before this copper was produced from sulfide ores. With it they could be produced from copper oxide ores. The new technology meant we could explore the world again for copper oxide - no wonder the price fell.
Montesquieu was born 330 years ago
Charles, Baron de Montesquieu, born on January 18th 1689, was one of history’s most influential political thinkers. He never needed to earn his living, having inherited the fortune and the title of his uncle, but instead devoted his life to thinking and writing. Born a year after England’s “Glorious Revolution” had deposed the autocratic King James II and replaced him with a constitutional monarch, William III, he was influenced by, and admired, the way the English had introduced institutions that tempered absolutism. He compared this unfavourably with the unchecked power of the French monarchy.
His 1748 book, “The Spirit of the Laws,” set out the notion of the separation of powers, a principle that underlies the US constitution, and which has been incorporated into the constitutions of many other countries. He proposed that the three branches of government, the executive that directs the country, the legislature that makes its laws, and the judiciary that adjudicates its justice, should be separate and independent of each other.
This went beyond the English constitution, which had the executive embedded within the legislature by virtue of its ability to command a majority, and until recent times had the judiciary within the legislature’s upper chamber. Montesquieu’s idea was that the separation of the three branches, in tension with each other, would limit the power of the state, and therefore enlarge the liberties of its subjects.
His book was banned by the Catholic Church, but was widely acclaimed in Britain, and especially among the American colonists. His innovation was the recognition that rulers had to be restrained by checks and balances. Since Plato, people had supposed that power could be checked if leaders were virtuous and acted with restraint. Montesquieu disagreed. Morality does not check power. Only power checks power. And if each source of power is checked by others, it will be restrained. That insight was Montesquieu’s lasting contribution.
The cost to society of a £5 dress is nothing
A puzzling question asked over in the Telegraph:
What’s the real cost to society of a £5 dress?
Nothing, quite obviously. Society doesn’t have a wallet, society’s not paying for the dress, the cost must be nothing.
Boohoo’s festive sales rise might have allayed investor fears that it was going to repeat Asos’s shock profit warning, but the millennial-focused fashion brand is stoking a wider debate about the bigger cost of fast fashion. Few fashion retailers can afford to sell dresses for £5 a pop. The question is should they even be trying?
That’s a slightly different question and one to which the answer equally obviously is - Yes.
Consider what happens when the £5 dress is available. We become richer as we are able to dress ourselves for £5 not £50. It costs us less of our own labour time to enter the Dolly Parton lookalike contest. We’re richer by what else we can gain from our labour over and above that dress.
The person who made it is almost certainly going to be someone much poorer than us who is also made richer by the transaction. We are buying her labour time at a rate in excess of what other local to her opportunities will provide and she is thus able to earn more. She’s richer.
And there isn’t anything else. For all those other costs - say, landfill of barely worn clothes and so on - are already included in our price system. We have got that landfill tax, recall?
The world has simply become more efficient at clothing our nakedness and what’s wrong with that?
More spin, Less in the way of truth from Public Health England
The latest nanny statist smackdown comes from where you would least expect: the BBC.
In an extraordinary episode of BBC 4 show More or Less, the unscientific claims from Public Health England are finally challenged head on in a train wreck interview with PHE head of nutrition science, Dr Louis Levy.
In an extraordinary exchange, show presenter and economist Tim Harford put to Levy the findings of PHE’s own expert report which found that there is a lack of evidence that sugar consumption is problematic for adults. Levy initially responds by repeating the claims that sugar is problematic for weight gain because a higher sugar intake increases calorie consumption.
Harford, however, does not let him get off lightly:
Harford: I'm just looking at the [Public Health England’s 2015] committee report and it does say there's insufficient evidence of appropriate quality to draw conclusions on the impact of sugar intake on the majority of cardiometabolic outcomes in adults including bodyweight. That's from the committee's own report.
Levy: Yeah. So I was talking when I gave you my statement, I was talking about the link particularly for children. I mean, there was good evidence for children and there’s no reason to believe that the evidence would be any different for adults, although obviously as it said, there wasn't as much evidence for that.
Harford: So I did read the evidence correctly then they didn't manage to find the link between sugar…
Levy: Yeah
Harford: ...and body weight in an adults.
Levy: They didn't find good studies that allowed them to make the same conclusion as they were able to draw in children.
Harford: Yeah, but I mean they did have some randomized controlled trials...
Levy: Yeah
Harford: ...that seemed not to find an association.
Levy: So there are some studies that find that association. However, overall when you take the body of the evidence together, they concluded that there was an association between sugar intake and weight.
Harford: Although just to underline, they found that for children, not adults.
Levy’s willingness to repeatedly mischaracterize the evidence is extraordinary. Levy says, for example, that “there’s no reason to believe that the evidence would be any different for adults,” while in fact there is evidence, from the gold standard of research, randomised controlled trials.
This is shameful behaviour from a public body that has a revenue of £4.5 billion. Importantly, this exchange finally puts to shame the mirage that Public Health England are neutral arbiters of scientific fact and not political activists.
As is outlined earlier in the show, in an interview with Institute of Economic Affairs' Head of Lifestyle Economics and ASI Fellow Christoper Snowdon, the government’s own data shows sugar consumption is actually declining
Since 1992 added sugar consumption has fallen by about 28%, according to the Family Food Survey. Since 2000, adult consumption of sugar has fallen by about 10%, teenage sugar consumption has fallen by 18%, and since 1997 sugar consumption amongst younger children has fallen by 29%, according to the National Diet and Nutrition Survey.
It turns out that the only reason the headlines and messaging is so apocalyptic about sugar is because Public Health England halved the guidelines for acceptable level of sugar in one’s diet from 10 per cent of daily calorie intake down to 5 per cent in 2015 on the basis of weak evidence of the impact of sugar. This was on the basis of the aforementioned committee report that did not, in fact, find sugar is problematic for adults.
The pin’n’mix attitude to sugar stats by Public Health England does leave a rather sour taste in the mouth.
Al Capone and Prohibition
On January 17th 120 years ago, the American gangster, Al Capone, was born. He rose to prominence as a bootlegger in Chicago during prohibition, and became notorious for his brutality against rival gangsters. He was wealthy enough to have the city's mayor and police chiefs on his payroll, but was finally convicted on Federal charges of tax evasion on his illicit earnings and jailed in 1932, a year before prohibition ended.
The prohibition era, 1920-33, was racked by crime and violence, as ordinary Americans had to resort to criminality in order to drink alcohol, and ruthless gangs such as Capone's were happy to supply it. Many commentators have pointed to the similarity between the ban on alcohol in that era and the ban on narcotics today. The criminality of drugs means that prices are high and there are fortunes to be made in selling and smuggling them. In the countries that source them there is money to buy politicians, police and judges. Turf wars in city streets resemble those of the bootleggers, with dealers shooting each other to protect their patches. And otherwise law-abiding citizens are forced into conflict with the law to satisfy their preference.
If one had asked in 1930, "Will legalizing booze mean more alcohol-related health problems?" the answer would have been yes. "More addiction?" Again, yes. Will it mean some lives ruined?" Yes. "More accidents?" Yes. "More suicides?" Probably yes. Yet prohibition was repealed, partly because what they currently had was Al Capone, and that was worse.
Many similar questions could be asked about legalizing drugs, and the answers might be similar, too. True, quality control would be better, and prices lower, but there might well be more addiction and the related problems it brings. But what we have at present is the equivalent of Al Capone, and that's worse.
Policy Priorities in 2019: Into The Future—Why Everything Will Be Awesome
This is the third of a three part series on the Adam Smith Institute’s Policy Priorities in 2019. In part one, we make the case for creating a more prosperous society post-Brexit. In part two, we discuss how practical liberalism will tackle Britain's burning injustices.
The future is going to be awesome.
Driverless cars reducing traffic congestion and fuel usage while saving millions of lives. Lab grown meat ending animal cruelty and starvation. Nuclear, fusion, micro power plants, renewable and storage technologies providing cheap, reliable and low emission energy. Air taxis flying us to our destination in minutes. A free, open internet built on the superfast 5G mobile network providing limitless entertainment and choice. Drones delivering us orders in minutes. OLED TVs that roll up and down as required. AI improving services like healthcare and meaning we can spend more time with our kids. Robots saving us from monotonous, dangerous, and strenuous work. Desalination and water recycling providing limitless safe water for drinking, agriculture and industry. Blockchain securing, decentralising and reinvigorating finance, trade and the rule of law. Safe, quiet and affordable supersonic flight ending the tyranny of distance across our planet. The sharing economy setting workers and consumers free to voluntarily cooperate, increasing trust and meaning more efficient use of resources. Pills and treatments curing evermore diseases including cancer and extending our lives. Diets customised to the individual. Start-ups using open data to innovate in healthcare, fintech and energy. Hyperloop between cities cutting journey times from hours to minutes.
The Adam Smith Institute is excited, optimistic and ready for the future. In 2019, we will continue to crusade for progress against the neo-philistines who seek to hold back progress with pessimism and needless red tape. If the last two hundred years, since we unleashed human potential in the Enlightenment and Industrial Revolution, have shown us anything it is that the limits of human potential are our imagination. But this future will only be possible if we are willing to grasp the opportunity. Our public policy must be open to new technology, even when it is disruptive in the short-run, because the costs of stagnation are too high. We know that too much regulation stifles innovation, which not only damages economic growth and wages but also lowers our quality of life and prevents social progress.
Let’s take the future of transport: a topic that the ASI will be talking about more this year. Driverless cars will substantially reduce if not entirely obliterate congestion, emissions, and crashes. Surveys have found that people are broadly excited about the potential for driverless cars – 52% of Britons have a positive view and just 14% have a negative view of self-driving vehicles. Nevertheless, many are fearful about safety. Governments must resist the temptation to respond to the extremely rare cases of crashes – there has been just a single fatally in a fully self-driving car, compared to 1.24 million annual fatalities in conventional cars – by overregulating. There are some complex safety, ethical and insurance issues to address. Nevertheless, it is essential that misguided regulation does not slow down lifesaving technology. The same principle, encouraging innovation, also applies to other new transport technologies, including scooters (share schemes are booming in the United States, however they are banned on British roads and pavement), air taxis, drones, Hyperloop and supersonic travel.
The ASI are techno-optimists. We will continue to make the case for embracing developing technologies from artificial intelligence and big data to lab grown meat and blockchain. There are many, however, who do not share our optimism. There are now endless streams of books and articles predicting a forthcoming jobs apocalypse because of a mixture of robots, artificial intelligence, the sharing economy, and big data. While it is true that new technology has been displacing jobs for centuries, there is a lack of evidence that automation has reduced the number of available jobs. We are now doing safer, less strenuous, more complex, interesting and higher paid jobs than in the past.
Humanity would be much worse off today if the Luddites had succeeded in preventing the mechanisation of factories, or the pessimists who said that computers would lead to joblessness had been allowed to prevent technological development. Meanwhile, the gig economy means that individuals have more flexibility, a trade-off many are willing to make for less job security than a traditional job. Efforts to regulate the sharing economy, such as Transport for London’s ill-fated attempt to ban Uber, at the behest of rent-seeking old industries, will inevitably hurt consumers.
If we want a bright digital future, we must not over regulate the internet. The internet is central to the future of technology: it is not only how we communicate, work, and find information, it is also the necessary backbone for practically all future technology. But there are several threats to the future of the internet. There are increasing calls from the political left and right reign in alleged ‘monopolies’ such as Google, Facebook and Amazon, limit usage of big data, and introduce digital taxes, despite the lack of consumer harm. Pulling the hand break up on the world’s most innovative companies will only make us all poorer in the end.
There are also substantial efforts by governments to undermine encryption, such as those proposed by Prime Minister Theresa May and passed last month in Australia, that will make the internet less safe. We must fight crime and terrorism without threatening cybersecurity and privacy by building backdoors into existing technology. Encryption is not a threat; it is absolutely key to the digital economy and liberty. As American founder Benjamin Franklin is often quoted, ‘Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.’
In the Rational Optimist: How Prosperity Evolves, Matthew Ridley argues that ‘ideas have sex,’ that is, over time new technologies, concepts, and governance evolves by the merging and moulding together of ideas, they ‘meet and mate’. Over the last few hundred years, this process has accelerated because of, as Deirdre McCloskey argues, Britain first and subsequently the Anglosphere, the West and the rest of the world, embracing the bourgeoisie love of entrepreneurship, innovation and creation. We must continue to embrace this love of those who create. There’s truly never been a more exciting time to be alive – let’s unleash the opportunities of the future.
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Adam Smith Institute’s Policy Priorities 2019
Part 1: Rebooting Britain—Creating a More Prosperous Society post-Brexit
Part 2: Practical Liberalism—Tackling Britain’s Burning Injustices
Part 3: Into The Future—Why Everything Will Be Awesome
Policy Priorities in 2019: Practical Liberalism—Tackling Britain’s Burning Injustices
This is the second of a three part series on the Adam Smith Institute’s Policy Priorities in 2019. In part one, we make the case for creating more prosperous society post-Brexit. In part three, we outline a future worth fighting for.
Liberalism has always meant helping the most marginalised.
Restrictions on individual liberty disproportionately harm the least well-off in society. From our decades-long support for drug law reform to more recent endorsement of safe standing at Premier League football matches, the Adam Smith Institute remains at the forefront of advocating practical, evidence-based, liberal solutions to pressing social issues in the UK. This year will bring new challenges to individual liberty from the left and right, but it also has the potential to be a great year for consumer choice, harm reduction, and the repeal of counterproductive regulations in different parts of our lives.
In 2018 we welcomed the legalisation of medical cannabis, but we’re falling behind the rest of the world in our approach to the recreational market. Last year saw Canada legalise recreational cannabis, as well as Michigan and California. New York and New Jersey are both likely candidates for further reform in the US and it’s only a matter of time before the UK follows. We want to make that happen sooner rather than later. The evidence shows that recreational legalisation disrupts an unaccountable and dangerous black market, leads to more informed users, reduces consumption for underage people, and frees up police resources to focus on violent crime. The naysayers have been proven wrong and recent polling shows that the almost two-thirds of Brits support the legalisation of cannabis. We will be continuing the fight for a commonsense approach to cannabis in 2019 and providing a blueprint for how best to legalise the drug.
A liberal, harm-reduction approach to drug policy should also be applied in other areas. Last year saw the expansion of festival drug testing service The Loop, with new academic evidence confirming that this initiative significantly reduces drug-related hospital admissions. In 2019, this service should expand into more festivals and city centres in order to save lives and we’ll be supporting such moves. We will also argue that the Government should allow trials of supervised drug consumption rooms: even the Home Office acknowledges the clear evidence that such sites reduce overdose fatalities and bring high-risk users into contact with medical support. Switzerland, Germany, the Netherlands, Norway, France, Luxembourg, Spain, Denmark, Australia and Canada all have these facilities operating in their cities and it’s time for us to join them. Another aspect of UK drug policy sorely in need of change is the failed Psychoactive Substances Act, which we have repeatedly called to scrap. As Professor David Nutt recently highlighted in his keynote speech at our Forum conference, the PSA makes our draconian regulations on psychoactive substances research even more restrictive while pushing users towards more dangerous drugs and consumption patterns.
Prohibition doesn’t work when it comes sex work regulation either. Last year saw mounting pressure on Leeds City Council to scrap its managed street sex work zone in Holbeck, despite strong evidence that such schemes reduce exploitation and violence against the most vulnerable sex workers. In 2019, we’ll defend this approach and encourage other local authorities to trial it elsewhere. On a national level, we’ll continue to support full decriminalisation of sex work as the only reasonable way of reforming our botched current approach. The wide array of evidence supporting the case for full decriminalisation continues to mount, while the alternative of ‘End Demand’ (the Nordic Model) clearly fails to protect the most marginalised sex workers.
While practical liberalism primarily focuses on helping disadvantaged groups, we’re also committed to protecting individual liberty in everyday contexts. 2018 was the year that the Nanny State went into overdrive, with a fabricated childhood obesity crisis used to justify all manner of paternalistic measures. The sugar tax came into effect in April while Transport for London announced a ban on fast-food adverts. Proposals for mandatory calorie counts on menus, a pudding tax, minimum alcohol pricing, bans on energy drink sales to under-16s, and various advertising crackdowns will be a key challenge in 2019. We’ll be at the forefront of making the evidence-based case for lifestyle policy that benefits those who are best placed to make their own decisions about what to eat and drink: ordinary people.
One notable exception to the public health lobby’s incessant calls for state intervention is vaping, which we will continue to champion alongside other reduced-risk nicotine products. In 2018 we released 1 Million Years of Life, which argued that the UK could take its comparatively liberal approach to e-cigarettes even further through policy reforms that make it easier for smokers to switch to reduced-risk products: from sensible advertising reform (which is now underway) to using Brexit as an opportunity to increase consumer choice in the field of safer smoking alternatives. This year, we’ll be keeping up the pressure on Government to back this harm reduction revolution and embrace the burgeoning market for reduced-risk products.
But that’s not all. In 2019 we’ll be tackling a huge range of other policy areas that would benefit from liberal reforms. Our overly strict childcare regulations prevent women from getting into work and hurt poorer families. Our ban on paying blood plasma and organ donors leads to shortages and entirely avoidable deaths. Our approach to criminal records creates significant barriers to rehabilitation and ruins the lives of many young people. Our approach to refugee policy—whether it’s our costly, unpopular ban on letting asylum seekers work or unreasonably low limits on overall numbers—is in dire need of change. Our homelessness epidemic has many complex causes but the housing crisis and reluctance to fully embrace evidence-based Housing First approaches both play a key role.
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Adam Smith Institute’s Policy Priorities 2019
Part 1: Rebooting Britain—Creating a More Prosperous Society post-Brexit
Part 2: Practical Liberalism—Tackling Britain’s Burning Injustices
Part 3: Into The Future—Why Everything Will Be Awesome
Policy Priorities in 2019: Rebooting Britain—Creating a More Prosperous Society post-Brexit
This is the first of a three part series on the Adam Smith Institute’s Policy Priorities in 2019. In part two, we discuss how practical liberalism will tackle Britain's burning injustices. In part three, we outline a future worth fighting for.
It’s time to reboot Britain.
From housing and tax reform to cutting red tape and backing free trade, the Adam Smith Institute will continue to put productivity and economic growth at the heart of our policy agenda in 2019.
The ASI will continue to make the moral case for economic growth. Over the last two hundred years economic growth has reduced absolute poverty from over 90 per cent to less than 10 per cent today, despite substantial growth in population. This means more people than ever with not only a shelter over their head and food on the table, but also access to education for their children and smartphones for entertainment. And if anything, measures of economic growth actually underestimate the massive improvement in living standards over the past few hundred years. Nevertheless, it has become fashionable in recent years to reject growth. Equality, reallocating a limited pie, is often cited as their most pressing concern, others push the idea that growth is secondary to the nation or society, while others still say we must hold back growth to protect the environment. The thinking on all three completely misses the point. Economic growth helps the worst off by creating jobs which help the poorest individuals pull themselves and their families out of poverty (rather than aiming to pull down those at the top), and even improves the environment.
The biggest political challenge facing Britain in 2019 is leaving the European Union. The Adam Smith Institute had no institutional position on Brexit itself. Nevertheless, we do believe that with Britain having voted to leave we should take advantage of the opportunities presented. For many leaving the European Union is the end point. For the ASI, Brexit is a means to an end. The important issue is not the parliamentary antics in the coming days and weeks, it is the course that Britain charts in the coming years and decades. It is not politics that matters, but policy. The challenge for Britain is to take advantage of Brexit to create a freer, more prosperous, and more innovative nation.
This means rejecting EU protectionism and promoting free trade multilaterally in the World Trade Organisation, establishing CANZUK, and joining the TPP-11. It means bilateral deals with countries like the United States on the basis of mutual recognition, and unilaterally by reducing tariff and non-tariff barriers with countries around the world. Leaving the EU need not make Britain a closed society. In fact, it is an opportunity to make the popular case for migration. Migration is a good, for those countries that receive migrants, and for those migrants themselves. We will continue to highlight the folly of the illiberal arbitrary numbers cap while promoting migration from around the world: the people who will staff our public services, build the first trillion pound company, and lead our country. Britain could raise funds and ensure visas are taken up by those who can contribute most to our economy by introducing a visa auction system.
Brexit is also an opportunity to unshackle from costly EU red tape, such as the GDPR, nonsense protectionist restrictions on GMO crops, and the Working Time Directive which limits the ability for individuals to freely contract. Regulation does not just hurt innovation, as discussed in the A Future Worth Fighting For post, but also reduces competition by hurting business creation and is regressive because the poorest households spend a larger proportion of their income on goods in heavily regulated high cost sectors. The first step will be taking stock of regulation, understanding its causes and effects, and what is most important to reduce. We must also start talking about reforming occupational licencing, which restricts entry to many professions leading to higher consumer prices and unemployment.
It is essential that upon leaving the European Union chains are not reimposed. Britain must not simply replace a distant, unaccountable and harmful bureaucracy in Brussels with a slightly closer, unaccountable and harmful bureaucracy in Westminster. To fight a bias towards the status quo, EU regulation incorporated into British law should automatically sunset within 5 years unless Parliament specifically reauthorizes the rules.
We will continue to fight for the building of affordable, high quality housing to alleviate the housing crisis. High housing prices hurt productivity by reducing mobility. High prices make it too expensive to move for better jobs. Soaring housing costs also have intergenerational equity and political implications. The rising value of homes owned by older generations is increasing wealth inequality and makes it harder for those relying solely on income to succeed in any given generation. The cost of housing is also making young people susceptible to extreme anti-capitalist messaging. While not everyone needs to own their home – there’s nothing wrong with wanting the flexibility of renting – everyone should be able to afford their home.
It is essential to reject boring old proposals, like taxpayer funded social housing that crowds out private sector projects, patently ineffective rent control, or subsidies that push up costs further. House prices are high because there are restrictions on building more homes. Less strenuous and less politically ambiguous rules would means more affordable housing where we need and want it most. The first step is to allow building on the Green Belt, much of which is not actually green. It is also important to relax regulatory limits on the height, design, density, aesthetic, and size of houses which only serve to make building more expensive.
There are other steps that could be taken to fight the housing crisis. Councils could introduce planning auctions for property rezoned for residential purpose, with the proceeds directed to infrastructure and compensation for any loss of value of existing homes. Social tenants eligible for the Right to Buy should have access to Flexible Right to Buy: the ability to buy a different new home using the value of their Right to Buy discount. Reforming the taxing of property will also improve affordability. Stamp duty, council tax and business rates should be replaced with a Land Value Tax with regularly updated valuations. This will stop stamp duty discouraging downsizing.
Tax reform is key to boosting productivity. From first principles, the tax system should raise the necessary revenue for government services with the minimal burden on taxpayers with as little disruption to productive activities as possible. Following last year’s American corporate tax reductions, wages have been boosted by hundreds of companies, and, more importantly, the immediate deduction of capital expenditure has encouraged investment.
Taxes on interest, capital gains and inheritance discourage saving which is necessary to create the capital base for productivity boosting investment. These taxes should be replaced with a broader based VAT, since ultimately consumption is the endpoint of economic activity. If we want to reduce poverty, particularly among low income households, an important step would be to increase the personal allowance so more of the lowest income earners do not have to pay tax. There is also no reason for National Insurance to be separate from income tax, since the contributory link between NI and actual pension payments is long since broken.
Brexit is a watershed moment. Britain’s economic future is open. We should follow the low tax, light touch regulation model of the world’s richest countries such as Singapore and Hong Kong. The alternative path of higher taxes, more regulation, nationalisation and central control of the economy is the downwards spiralling trajectory of failed socialist nations, from communist China and the Soviet Union in the past, to Venezuela today. That choice is ours.
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Part 1: Rebooting Britain—Creating a More Prosperous Society post-Brexit
Part 2: Practical Liberalism—Tackling Britain’s Burning Injustices
Part 3: Into The Future—Why Everything Will Be Awesome