Oxfam's wealth statistics are persistently misleading - Ben Southwood comment

In reaction to Oxfam's annual wealth statistics report out this morning, Ben Southwood, Head of Research at the Adam Smith Institute, said:

"Each year we are misled by Oxfam's wealth statistics. The data is fine—it comes from Credit Suisse—but the interpretation is not. It is not the wealth of the world's rich that matters, but the welfare of the world's poor, and this is improving every year.

"The fraction of the world's people surviving on less than $2/day has fallen from 69.6% in 1981 to 43% in 2008, and even lower now. The consumption of the world's poor continues to rise, as does their education, healthcare, and height. And remember, the global 1% includes around 5m Brits—most of those with a London house—not just oligarchs and plutocrats.

"Oxfam use Vietnam as a case study, bizarrely failing to mention that economy's incredible growth: income has gone up from around $100 per capita before the 1986 neoliberal reforms to around $2,000 today.

"Inequality is a side-effect of stability, peace, and growth; clamping down on it through foolish wealth taxes risks everybody's living standards."

For further comment or to arrange an interview please contact flora@adamsmith.org

Change Britain's claims about post-Brexit trade deals are "basically junk" says Sam Bowman

Sam Bowman's comments about post-Brexit trade deals featured in The Guardian:

Sam Bowman, the executive director of the neoliberal Adam Smith Institute, wrote in a blogpost that the numbers were “basically junk” and said the heavyweight backers of Vote Leave “can do better than this”.

“The extra exports figures come from using EU projections about the benefits of trade deals with countries and blocs like India, China and Mercosur, and dividing by Britain’s share of extra-EU trade (15%),” he wrote.

“This is fairly misleading, because it assumes that the UK could get the same terms as the EU, which is unlikely, since the UK is a much smaller economic bloc than the EU, so other countries will be less willing to give us what we want to get access to our market. It’s very much back-of-the-fag-packet stuff.”

Tide Effect paper continues to make waves in The Sun

The ASI's Tide Effect paper advocating the legalisation of cannabis in the UK received more coverage in the new year in The Sun online:

A report by the right wing think tank the Adam Smith Institute reveals there are major savings for state coffers if the soft drug was regulated.

Between £750m and £1bn could be earned by the Revenue if it was taxed.

And there would also be significant savings in the criminal justice costs, with 1,363 offenders now in prison for cannabis-related crimes, costing taxpayers £50m a year.

The call is backed by a full spectrum of MPs, including ex-Tory Cabinet minister Peter Lilley, and veteran Labour MP Paul Flynn.

In addition to financial arguments, there has long been a call to legalise the drug to help people with chronic pain and anxiety.

The All Party Parliamentary Group on Drug Policy Reform says tens of thousands of people in UK already break the law to use cannabis for symptom relief.

Adam Smith Institute slams Corbyn's "bananas" pay cap proposals in Bloomberg

Labour Party leader Jeremy Corbyn backed away from his pay cap proposals as the Adam Smith Institute marked the plans as "bananas" in Bloomberg news.

Sam Bowman's "totally bananas" quote also appeared in The Sun and Sky News Online (twice) and his other comment in The Guardian: 

The Adam Smith Institute, which also promotes unfettered markets, was also dismissive [of the maximum salary cap]. Sam Bowman, executive director, said: “A maximum salary cap would hurt British firms and ultimately ordinary British workers. If you’re a worker for a FTSE 100 firm, this is bad news: your job security and wages will suffer if your company isn’t led by the best people in the world.

“If you’re saving for a pension, this is bad news: the value of your savings will suffer as British firms become less productive, starved of global top talent. If you rely on the NHS or other public services, this is bad news: tax revenues will fall as these highly-paid executives move abroad."

Sam Bowman's comment also appeared in The Irish Times:

"The Adam Smith Institute dismissed it as “bananas” although, with remarkable restraint, it avoided the use of the words “peanuts” and “monkeys” in its response. “If we want Britain to boom, we need to let business hire who it wants and pay them what it wants,” said director Sam Bowman."

And in The Independent, City A.M, i News Online, Economia, and The Evening Standard:

"A maximum salary cap would be completely bananas and hurt British business and ultimately ordinary British workers.

"The strategic decisions that top bosses make affect every part of their firm, and multinational corporations are right to spend what it takes to attract the best business leaders to Britain."

Corbyn's maximum salary cap totally bananas - Sam Bowman's response

Following Corbyn's proposed maximum salary cap, our Executive Director Sam Bowman made the below comments:

"A maximum salary cap would be completely bananas, hurting British firms and ultimately ordinary British workers. The strategic decisions that top bosses make affect every part of their firm, and multinational corporations are right to spend what it takes to attract the best business leaders to Britain. There's good empirical evidence that CEOs matter more now than ever to the wellbeing of their companies, possibly because global competition is fiercer than ever. (http://onlinelibrary.wiley.com/doi/10.1002/smj.2504/abstract)

"If you're a worker for a FTSE 100 firm, this is bad news: your job security and wages will suffer if your company isn't led by the best people in the world. If you're saving for a pension, this is bad news: the value of your savings will suffer as British firms become less productive, starved of global top talent. If you rely on the NHS or other public services, this is bad news: tax revenues will fall as these highly-paid executives move abroad. If we want Britain to boom, we need to let business hire who it wants and pay them what it wants."

For further comment or to arrange an interview please contact flora@adamsith.org, 020 7222 4995.

Jeremy Corbyn's maximum salary cap is bad news for British workers

Sam Bowman's opinion piece on why a maximum salary cap would harm workers featured in i news:

It wasn’t a huge surprise to hear Jeremy Corbyn call for a maximum salary cap on the basis that it would reduce inequality. Maybe so: it would probably lop off the top of the job market, driving top chief executives, footballers and other high earners overseas. If all you care about is cutting inequality by getting rid of the rich, then fair enough.  But if you care about your own quality of life and that of people poorer than you, then it’s a bad policy.

Read the full i article here.

Sam Bowman answers The Big Questions

Following the Fat Cat Wednesday pay debate, Executive Director Sam Bowman appeared on the BBC's The Big Questions, in defence of high executive pay and more. 

Sam Bowman champions evidence-based policy in Conservative Home

Sam Bowman's comment on the role of experts and politicians appeared in Conservative Home:

Ideology is often dressed up in terminology that sounds neutral but makes significant assumptions about the role of the state and its ability to effectively solve society’s problems. Anyone for some ‘evidence-based policy’?

Government Brexit strategy isn't in crisis, says Tim Worstall in CityAM

Senior ASI fellow Tim Worstall appeared in CityAM online and in print, quashing fears that the Brexit strategy was "in crisis":

To claim that anyone’s Brexit strategy is in crisis is to misunderstand what a strategy is. It is the goal that you have decided to reach.

Britain’s strategy in World War II was the unconditional surrender of Germany – everything else was tactics. Hulk’s strategy is “Smash!”. Britain’s strategy with respect to Brexit is: “Thank you, it’s been great, we’re leaving. Maybe we can do lunch some day?” Everything else is simply tactics.

Do we stay in the Single Market? The Customs Union? Allow free movement? These are all tactical decisions – ones we cannot possibly make until we know what cost the EU will impose for each. My own prediction is that the cost of staying in the Single Market and the Customs Union will be free movement – the one price we’ve said we’re not willing to pay. As every general knows, tactics are to be dealt with by junior officers.

Having voted to leave the EU, the strategy has been set. We must now let the junior officers get on with it.

High Pay Centre's Fat Cat Wednesday figures don't make sense, says Sam Bowman in the IB Times

Executive Director Sam Bowman's comments appeared in the International Business Times, criticising the High Pay Centre's figures on executive pay:

"None of these complaints are valid unless the High Pay Centre thinks it has a better way of estimating the value of executives to firms than those firms themselves. Can the High Pay Centre tell us how much CEOs are worth? If not, how can they say that they are overpaid?

"Chief executives can be worth quite a lot to firms, as is shown by huge moves in company share prices when good CEOs are hired, or bad CEOs are fired. Steve Jobs can make a firm; Steve Ballmer can break a firm. The High Pay Commission's complaints only make sense if you assume firms don't actually care about making money – which is to say, they don't make sense at all."

Sam also appeared on Sky News to discuss the topic.