ja_mageia

If you have a job in Britain, you pay National Insurance. You may not realise this, because it is taken out of your wages, like taxes. But politicians are keen to tell you that it isn't tax...it's insurance. Baloney.

The scheme was introduced in 1911 by Lloyd George, and the idea was to provide a safety net for workers who hit difficulties. The idea was to build up a fund, from which things like medical care could be paid for. Today it's supposed to pay for the NHS, unemployment benefit, sickness and disability benefits, and the state pension. But in reality, there is no fund, and these things are paid for out of taxation – even pensions, which make it Britain's biggest Ponzi scheme If you or I tried to run anything like it, we would be in the slammer alongside Bernie Madoff.

The other reason you might not notice National Insurance is because the 'employer' pays more than the 'employee'. It's a lot more for employers, 12.8% of salary, so it's a major cost. But of course, it is really the employees who pay the whole cost...wages would simply be higher if it didn't exist.

National Insurance doesn't really pay for the NHS, pensions, and the rest. It's collected alongside other taxes and tipped into the general Treasury pot. And these things are paid for out of the general Treasury pot, alongside much else. If it did provide what it said it was for, it would be a pretty good deal for older workers, but a disastrous one for younger workers. After all, older people use more NHS services by far, and older people are more interested in pensions.

It also helps rich people more than poor people. Rich people are more likely to stay on at school and do degrees at university before they start working and paying in. They can also afford to retire earlier, and take their state pension at 65. People from poorer families are more likely to go to work straight from school, so are paying in for longer. They may not be able to retire at 65; if they put off collecting the state pension, they do get a higher rate, but it is unlikely to be enough to compensate. Richer people live longer so get more pension (and healthcare) benefits than poorer people. You can be stinking rich and still get your state pension and your free NHS benefits. Scam, or what?

National Insurance is a tax. We should bite the bullet and call it a tax, even though this would put the headline rate of tax up to about 35% and the top rate up to about 65%. But at least then we would see the size of the burden that exists on Britain's workers. Then give people a tax rebate if they insure their own health and provide their own pension. Job done. And done a lot more fairly than the state system.

As the American phrase goes, a conservative is a liberal who has been mugged by reality. The playwright, David Mamet, is of course far too bright to become merely a conservative after such a conversion and seems to be joining with us on the sides of the angels over in the classically liberal corner. Here's what he has to say in his latest book about subsidies to the stage arts:

The theatre is a magnificent example of the workings of that particular bulwark of democracy, the free-market economy. It is the most democratic of arts, for if the play does not appeal in its immediate presentation to the imagination or understanding of a sufficient constituency, it is replaced. ... It is the province not of ideologues (whether in the pay of the state and called commissars, or tax subsidized through the university system and called intellectuals) but of show folk trying to make a living.

Or rather, of course, it should be such and not be in the pay of the state and the commissars.

Conversely, Mamet dismisses state subsidy for the theatrical arts as no more than a means of propping up incompetent “champions of right thinking” whose work would otherwise be incapable of attracting an audience. Such playwrights, he says, are purveyors of politically correct “pseudodramas” that “begin with a conclusion (capitalism, America, men, and so on, are bad) and award the audience for applauding its agreement.”

It's not exactly difficult to divine his meaning there, is it?

All of which leads to an interesting conclusion. There might, just, be an arguable justification for subsidy to education in the arts: youth orchestras perhaps, drama lessons. But it would appear that there really is no justification for taxing the dustman so that the Duke can have his opera or the demagogue his drama. The conclusion being that we now have a policy prescription. The teaching of the arts, certainly, life enriching and part of any decent education. So put that in the education system and then we can close down the entirety of the Arts Council and all the luvvies that hang from it. A good half a billion in savings and as the man said, 500 million here and 500 million there and pretty soon you're talking real money.

Minister for Employment Chris Grayling said earlier this week that employers in the adult entertainment industry will no longer be permitted to use job centres to search for workers to fill posts involving “direct sexual stimulation.” According to The Telegraph, the restriction will apply to a broad variety of professions that will include strippers and topless female bar attendants. Mr Grayling stated that he issued the ban in order to protect the unemployed from “exploitation.” Mr Grayling’s decision is an unfortunate instance of legislated morality that will harm, not help, the unemployed.

Placing a job advertisement does not force anyone to do anything; a job advertisement merely relays to job seekers information about the different types of work for which people are willing to pay. If a person finds such work to be exploitative, as Mr Grayling does, they will simply not take the job. But if the person finds it to their advantage to be a stripper or topless bar attendant, the advertisement simply makes them, and their potential employer, better off by facilitating the transaction. The new regulation will merely make it less likely that such people find gainful employment in a timely fashion.

Though denying such employers from using job centres is admittedly quite different from an outright prohibition of such work, Mr Grayling’s decision is nevertheless a worrisome intervention. Government job centres essentially subsidise the distribution of job-related information in a community. All members of society, including owners of strip clubs and topless bars, pay for this subsidy. The prohibition on advertising certain types of jobs ensures that the subsidy is directed to certain types of work that Mr Grayling finds to be acceptable, and denied to other types of work that he personally finds to be “exploitative.” Not everyone agrees with Mr Grayling’s assertion that strippers and topless bar maids are exploited, and the ban consequently represents the arbitrary imposition of Mr Grayling’s personal preferences upon job seekers.

As long as an employer is looking for an employee to fill a legal job, he or she should be permitted to use government-funded job centres. Instead of helping workers, the ban will prolong the duration of unemployment for some merely to score points with voters who happen to agree with Mr Grayling’s concept of morality.

If we are throwing quangos into the bonfire, I'd like to fuel the flames with a couple of 'consumer protection' bodies. I figure that government agencies that aim to protect us from faulty goods and inadequate services do no such thing – and indeed, leave us more exposed to them because they tend to reduce competition in consumer markets.

One of the great myths about the free market is that something dire has to happen before producers change their ways. For a start, I just don't accept the fact that producers and sellers are deeply unethical and will gladly sell us dangerous products if it makes them a quick buck. Most people I know in business are as ethical as the rest of us and don't want to do any such thing, any more than they want to profit from selling drugs or guns. They want to make money by serving their customers.

And, being good businesspeople, they know that you do not make money by serving a customer only once. It costs money to search out customers and pitch your product at them. You don't want to have to do that over and over. No, what you want is customers who are so delighted with what you sell them that they come back to you over and over. Remember also that businesspeople work at the margin. If just a few customers don't like what you are selling and go to another supplier, that it your profit gone. If they tell their friends, that's even worse. Long before you've killed any customers or had to fight any lawsuits, you will have changed your ways. Choice is by far the most effective consumer protection imaginable.

For some reason, people assume that taking these same market principles into services like healthcare or schools, which are run by governments today, would mean an endless round of painful closures and particular schools or hospitals going out of business. It's true that most new businesses fail. Their owners simply misjudge the market, or do not have the right skills and resources to capture it. But once they are established, firms close much less frequently. They learn where the market is and how to serve it, and they adapt to serve the changing tastes of their customers.

If they sometimes get it wrong, or can't keep up with the changing nature of demand, then yes, they might have to close. But far more often, you find they merge with or are taken over by other firms. There is usually something of value in the business that is useful to another. If we commercialised or privatised schools and hospitals, I would not expect to see them closing down all over the place. Long before closure threatened, they would have changed, and for the better I would expect to see them improve and change and try to take on the competition, and if they could not stand the pace, others would step in and take them over and upgrade them. The service standards that were tolerated in the monopoly state system would simply no longer be tolerated, and service users would be far better protected, as consumers, than they are in the state monopolies today.

Some much-needed changes may soon arrive to council estates around the country, according to recent announcements by members of the government. The Prime Minister, speaking in Birmingham on Tuesday, explained his desire to transition to fixed-term council house tenancy in order to better accommodate the changing needs of tenants, as well as encouraging social mobility. Housing Minister Grant Schapps announced the introduction of a National Affordable Housing Swap Scheme, in which tenants in public housing who want to move for whatever reason may exchange houses with anyone in a similar situation in another part of the country.

The status quo is unfair to both taxpayers and residents, and causes considerable economic damage by reducing the flexibility of the labor market. Under the current system, council residents enjoy lifelong tenancy, and can even transfer council houses to their children. 1.8 million people are on waiting lists for social housing, and tenants’ ability to remain in social housing indefinitely seriously undermines any incentive for individuals to move out of subsidised housing, which in turn damages the government’s ability to provide for those who truly are in need and squanders taxpayers’ money. Moreover, despite the existence of some “mutual exchange” programs, many public housing tenants are still unable to move without giving up their house. The result has been an unreasonable system in which 234,000 units of social housing are overcrowded, while 456,000 others have excess capacity. Both the policy of lifelong tenancy and the difficulty of moving make it difficult for people to move to areas of the country where they may find better paying or otherwise more rewarding jobs. This not only harms the individual by preventing them from advancing themselves, but also prevents Britain from adjusting to new economic conditions in a swift manner. An end to lifelong tenancy would ensure that those who occupy public housing are those who need it the most, and the housing swap scheme would dissolve much of the rigidity present in the current system.

The discussion about social housing, however, must go further. A considerable proportion of Britons, approximately 13%, live in some sort of social housing, and demand for subsidised housing clearly exceeds the supply. Waiting lists and rationing are not an efficient way of allocating any scarce resource, housing included. More privatisation of the public housing stock and a more relaxed and realistic approach to housing and planning regulations would allow more people to make their own decisions about where they live, and would permit developers to step in and fill the demand for low-cost housing.

The Food Standards Agency created a considerable row when it announced this week that meat from a cow born in the United Kingdom from the imported embryos of a cloned American cow was sold and consumed last year. British and European regulations prohibit the sale of products intended for human consumption from cloned animals without prior authorisation, which has never been granted. The discovery incensed animal rights activists, and public outrage has erupted due to deep mistrust of cloned and genetically modified food, as well as the failure of the Food Standards Agency to detect the products in a timely manner. Two lessons can be learned from the issue.

First, the issue highlights the inability of the government to regulate effectively, even in matters as trivial and simple as the one at hand. That the farmer involved in the controversy, Steven Innes, appears not to have tried to circumvent the law, further highlights the elusiveness of effective regulation. If the government is unable to draw up intelligible and enforceable regulations on mundane issues, it is unlikely that it will be able to fare much better with more complex regulatory schemes.

Second, it is high time that Britain and the European Union become more accepting of scientific advancements that have improved, and will continue to improve, agricultural productivity. Cloning of animals is one such improvement. Farmers and scientists in the United States have experimented with the cloning of animals in order to increase milk and meat production. Meat and other products from cloned animals have proven to be just as safe as products from naturally conceived animals, and the cloning of animals does not affect any other individuals other than those who choose to produce and consume such products. If the ban were lifted, those who do not wish to buy products derived from cloned animals would remain free to do so, the costs of related regulation would be eliminated, and agricultural productivity could improve.

The shock over the cloned cow should be over the observation that there was shock at all. That Britain outlaws a non-offensive and potentially productive enterprise that is successfully practiced elsewhere in the world without incident is unfortunate, and harms the country and its farmers.

Yesterday saw our inaugural Liberty Lectures event at Cass Business School. The speakers were as follows:

• Dr Tim Evans – The Importance of Liberty
• Dr Eamonn Butler – How Markets Work
• Dr John Meadowcroft – Sex , Drugs & Liberty
• Dr Mark Pennington – The Lessons of Public Choice Theory
• Professor Anthony J. Evans – Banking , Inflation & Recessions
• Dr Richard Wellings – The Proper Role of Government

Videos of all the speeches will be uploaded onto our YouTube channel soon.

Recently I recorded an interview for a programme called Marx Reloaded on Germany's ZDF television. The producers assured me that there had been a revival in Marxist thinking since the 2007/08 financial crisis. I can't say I had noticed, and would be dismayed if they are right. There certainly was a good deal of criticism of the banking sector in particular, and some fears that the capitalist system was looking less robust than most non-economists thought it was. And there have been calls for more government regulation and intervention, right enough. But actually we defenders of free markets have come out of it all pretty well. Ordinary people have quite correctly concluded that while the bankers have much to answer for, the politicians have a lot to answer for too. And in intellectual circles at least, there is a growing view that fresh regulatory programmes are not the answer. International agreement on bank regulation, and proper enforcement might be the answer, but some of the regulations did more harm than good and many of the regulators were pretty useless.

Still, the interview made me focus on some of the traditional criticisms that Marxist philosophers have made of the capitalist system, and one of them that has picked up strength recently is of course the idea that big business in general, and now big banks in particular, have enormous power over our lives, and shouldn't that power be controlled and exercised collectively?

Thinking about the question made be realise quite starkly that even the biggest, most bloated capitalism actually has precious little control over my life. I don't know about yours, but I'm pretty sure the same is true of you. In the free market system, the power of any person over any other is pretty small. Because they have the threat of fines and imprisonment to back them up, minor officials can bully and threaten us outrageously – like the one from Revenue and Customs who phoned me the other day to complain about some minor mistake with a form. Even my local council officials can serve me with a spot fine for dropping litter and put me in jail if I refuse to pay it. However much we complain about bankers on big bonuses, they can't do that.

If these officials were all benign and enlightened servants of the public, such power might be tolerable. But they're not. Marx was right, groups have their own self-interest, and we need to think about the self-interest that motivates national and local government officials. Yes, they maybe want to make the world a bit better, as we all do. But just as we in the private sector are motivated by the prospect that, if we make people's lives a bit better, they might just pay us money for it, theirs are motivated by the incentive to make people's lives a bit worse. The HMRC officials get better promotion and pay if they meet their targets for getting our forms and our cheques in on time and all properly filled out in the regulation ink. The local government officer too attracts the admiration of superiors for an outstanding 'compliance' record of fines and prosecutions. And because the last government made just about everything an offence, from smoking on windswept station platforms to selling a squirrel, there is probably not one person among us who is completely immune from the possibility of being fined, prosecuted or imprisoned.

If such petty officials have so much power over us, just think how much power our national politicians and officials wield. They can make or break careers, and businesses, and industries. In socialist countries with an even more extensive state apparatus, officials and politicians have all this and more. No, give me the free market system any time. Despite all the worst efforts of our bankers, we have a lot less to fear from them than we do from the political classes who really do have power over us.

Vince: "Don't make me do it Bob".

Manuel F. Ayau , rector emeritus of the University Francisco Marroquin in Guatemala and former President of the Mont Pelerin Society, died today. An entrepreneur, thinker and tireless advocate of the principles of the free society and free economy, the Universidad Francisco Marroquín is the most visible fruit of his efforts.

He applied his great entrepreneurial spirit and creativity to create a superlative institution, building it and teaching at it over four decades, and in the process putting together a powerful team of advocates for the principles of freedom. The extraordinary success of the Fabian Society convinced Ayau that education of the intellectual elite was a decisive factor in the destiny of a country. He and colleagues founded Francisco Marroquín University with this important function. Perhaps nobody in Latin America has made so profound an impact in promoting the ideas of classical liberalism in the region.

But he had an immediate practical effect too. He was instrumental in the decision of Guatemala's central bank to abandon fixed exchange rates, in measures that allowed people to hold gold legally, and in the country's telecommunications deregulation, giving Guatemala one of the most free communications regimes in the world.