Adam Smith Institute

Peter Luff MP, head of the House of Commission Business and Enterprise Committee, was our guest at a Power Lunch in Westminster yesterday. Round the table we had a number of regulators, lobbyists and businesspeople, mainly from the telecoms, mail, and energy sectors, so it made for a wide-ranging discussion.

Luff's topic was how far we might streamline the workings of the Department for Business, Enterprise and Regulatory Reform. Quite a bit, I would say. Rather a lot of its work involves simply replicating what private agencies do already. It seems to delight in devising all kinds of taxpayer-supported special schemes for this sector or that, this activity or that, as the political wind blows. It would be much better off standing out of the sun and letting businesses grow under the light of lower taxes and lighter regulation.

One topic that did come up at the discussion was the independent review of postal services that is currently underway. This could be quite radical in its findings. There is certainly a strong case for privatizing the Royal Mail, as we explained in our report Privatization - Reviving the Momentum. Indeed, with many other national mail carriers now in private hands, and with the growth of private carriers in the UK, the case is getting stronger. The political problem, of course, has always been what to do with rural post offices. Privatization brings transparency, and transparency is the enemy of the sort of cross-subsidies that keep rural post offices open today.

On the other hand, many of the rural post offices have gone already. More banking, benefits, licensing and other traditional post office functions are now done online. So maybe the problem is getting smaller. And maybe the question of whether some rural village really needs a post office or not should be up to the local authorities – not a decision made by some distant bureaucrat in London.
 

It's time to light up in the pub again...Yes, I realise that sounds absurd in the extreme, especially as you’ve not heard about the ban on cigarettes being lifted. But now technology has come to the rescue. A clever device has hit the market, which will enable you to get round the ban altogether.

Advertising for the Gamucci Micro Electronic Cigarette claims, "It looks like a cigarette, it tastes like a cigarette, it smokes like a cigarette, but it isn't a cigarette... [it] produces a real smoking experience without any of the deeply unpleasant side-effects of tobacco.”

The device uses state of the art vapourising liquid to produce smoke and it comes with cartridges that release vary strengths of nicotine if you just can’t give up the weed. So what are you waiting for, spark up... or at least plug it in, charge it up, and stand at the bar puffing away! Oh what fun, to watch the nannies' faces turn puce with rage as they realize they can’t do anything.
 

Yes, you should vote today. You can't run around complaining about them if you haven't at least tried to throw the ***tards out.

On which subject, yet another grossly illiberal measure being proposed. Further, as pornography and sexual violence seem to be substitutes rather than complements it is also entirely counter-productive, not that that's ever stopped politicians before.

The results of another grossly illiberal measure: also counter-productive. Quelle Surprise.

A bracing dose of economic sense in the medical field. If you can't get insurance to do it it's because it's too risky.

Two on science: evidence would be a nice thing to have in one newspaper article and losing the superscript is really rather important here.

Yes, there really is a skill called "management".

And finally, some of these journalist types really do enjoy their job.

Yesterday The Times led with the revelation that the government is introducing a secret tax that will add £200 to cost of many family cars:

Tens of thousands of families will have to pay up to £245 extra a year under new road tax rules after a covert government decision to include cars up to seven years old.

This move is entirely deceitful. If car buyers had known at the time of purchase that buying a car that emits over 225g of carbon dioxide per kilometre would mean such an added cost, they might have thought twice before acquiring it.

As Chancellor, Gordon Brown steered clear of such dishonesty. However, as Prime Minister he has allowed this retroactive policy to be initiated under his watch. Originally cars bought previous to March 23 2006 were exempt from the tax, but Alistair Darling in the last budget announced a new series of car tax bands that rescind the previous exemption, leaving the already over-taxed motorist with even less money in their pocket. The Automobile Association (AA) claims that this will push many people into negative equity because the value of these cars on the second-hand market will now be worth thousands of pounds less than the car owner’s outstanding loans.

Given the rising fuel, utilities and food costs such a stealth tax is plain wrong. The people it will hit are families; these are not super cars but family cars, chosen not for their power but their safety record. Take a look at the EURO NCAP safety standards for the Renault Espace, the Vauxhall Zafira and the Ford Galaxy; three cars that will now be heavily taxed.

What, you may ask is Alistair Darling’s response to hardworking families hit by another stealth tax? Upon being asked in a radio interview what those facing higher car taxes, his answer was that to suggest that they should by new cars. Maybe if you stop taxing us, Darling, we might be able to.

One of the worst aspects of the Clinton–Obama battle for the Democratic presidential nomination has been the increasingly protectionist rhetoric coming from the candidates. Each seems desperate to appear more isolationist on trade than the other. This is a shame, because as this excellent new trade briefing paper from the Cato Institute points out:

[F]ree trade is a vital component for maximising economic growth. America's ongoing commitment to expanding trade – a commitment shared by previous Republican and Democratic administrations – has resulted in lower prices and greater product variety for consumers, job growth for exporters, and higher levels of productivity and innovation that increase prosperity in America and abroad. Accounting for the phases of the business cycle, indicators of American worker and household well-being and prosperity continue to improve. The decades-long decline in manufacturing employment (although not matched by a decline in manufacturing output) has corresponded with an increase in service-sector jobs, with a net 26 million new jobs added since NAFTA took effect in 1994, and an increase in real compensation of nearly 23 percent.

What makes it worse is that I'm sure Hillary Clinton and Barack Obama both know this. After all, Bill Clinton was an enthusiastic free-trader who passed the now much-maligned NAFTA (don't forget, Hillary was a 'key part' of that administration...), while Barack Obama's advisers told Canadian diplomats that his protectionism "should be viewed as more about political positioning than a clear articulation of policy plans." Perhaps whoever wins will swing back to the centre once the primaries are over, but I wouldn't want to bet on it.

Presumably with an eye to a swift recovery after a possible drubbing in today's local and mayoral elections, Labour is sensibly losing no time on the Crewe and Nantwich by-election. They have already taken the unusual decision to table the writ before the funeral of Gwyneth Dunwoody has taken place and it now looks as if they are lining up Gwyneth's politically active daughter – Tamsin Dunwoody – as their candidate.

The late Gwyneth Dunwoody had a 7,000 majority and the seat is only 165th on the Conservative list of target seats, requiring an 8.4 percent swing. This said, if the News of the World’s target seat data is to be believed then this could be a Conservative gain. Their ICM poll suggests that the Conservatives would make a net gain of 131 seats, resulting in a 64-seat majority – or, to put it another way, Tory donor Lord Ashcroft's field-ops team has done rather well.

Either way, we have an intriguing contest on our hands. If the Conservatives fail to make a significant inroad into the Labour majority Brown will use it to shore up his position, whilst if the Tory's cut the majority to anything below 3,000, Cameron will really be able to claim that his message is reverberating throughout the country.

The election is only three weeks away, on Thursday 22 May. It will be very interesting to see what happens.

I'm quite impressed by Right On, the Daily Telegraph's 15-minute weekly television show. It's all very professionally produced. It features a two-minute segment called Heffer Confronted in which the rotund and politically incorrect pundit is confronted by (the slightly less rotund and almost as equally politicially incorrect) Iain Dale. There's also a discussion with leading politicians on a current affairs issue (on this one it's Alan Duncan MP) and a short section of snippets from the Westminster gossip factory.

I think this will work and will grow. Iain Dale's 18 Doughty Street internet enterprise was a really good try at pioneering the unknown terrain of online television. But I guess that few people want to watch five hours of political stuff on their computer screen each night. And if you just dipped in, you never knew exactly what you'd get. I'm sure the way forward is something like the Telegraph have done - a few short snippets that you can select from, and play the bits that really interest you. I imagine the choice will expand as the Telegraph gets to grip with the format. Worth a look.

The Prime Minister's appearance on the Today programme this morning has not been greeted with the rousing applause he might have hoped for. Here, here, here, why, you might even get the impression that a number thought he misspoke, even was economical with the truth.

Which is worse, too much government or not enough?

This World Wide Web thing is 15 years old today: the anniversay of CERN releasing the code into the public domain.

A subject dear to our hearts here. Are violent video games a complement or a substitute for real world violence? If, as seems to be true, a substitute, then what does that say about violent pornography?

A detailed look at what actually went wrong with sub-prime.

What happens when you compliment an economist.

And finally, the London Mayoral race 2012 and Humph and Samantha.

Jason Turner is an interesting person. He was in charge of welfare reform in New York under mayor Rudi Guiliani, and before that he designed Wisconsin's history changing welfare reforms. He has a chapter in the new report Paying for Success from Policy Exchange,  and was speaking to a few of us at the Institute of Economic Affairs. The fact that I was there as well indicates the degree of cross-think-tank interest there is in the Wisconsin experience.

Wisconsin, Turner told us, cut its welfare rolls dramatically – and reduced poverty and increased employment at the same time. That's because they started from a set of clear principles about what welfare should be for, rather than trying to fiddle with the existing system. The key principle, which struck a chord with taxpayers, legislators, and the working poor, was that everyone who is able to work should be expected to work, and get paid for it, either in the private or the public sector. It's what Turner called the 'time commitment' – sitting idle while drawing benefits is not an option. That appeals, he said, to everyone's sense of fairness – particularly that of the working poor, who do not enjoy the luxury of being able to sit at home while getting paid for it.

The other innovation in Wisconsin was to get private agencies, charities and companies, to handle the task of supporting and training welfare recipients and helping them get back into work. These independent intermediaries did very well out of the plan – but then they were saving taxpayers huge amounts of money. That, of course, led to some criticism, and Turner believes there are important lessons from how that criticism was handled. Well-motivated private agencies can work wonders – the important thing is to keep them working wonders, and not rush to prune back your contracts at the first hint of disquiet.

Another key point learnt from Wisconsin is to keep your targets and your benefits simple. The target in Wisconsin was to reduce the number of people dependent on welfare – a simple target. And complicated benefits were scrapped in favour of simple, flat-rate ones – like a wage. Otherwise, as Frank Field MP sorely noted, you tend to get people worsening their circumstances in order to qualify for the particular benefits. Not what you want at all.

Back when he first became prime minister (how he must miss those days!), Gordon Brown was keen to show off his social authoritarianism. Perhaps he wanted to create a contrast with David Cameron's 'liberal conservatism' and win over the right-wing press. Brown's 'son of the manse' streak manifested itself in his decision to veto the Manchester super casino and slam the emergency brake on liberalizing gambling, and to announce a review of the reclassification of cannabis from class B to class C.

Well, the review is over and it appears that the Advisory Council on the Misuse of Drugs has recommended – quite sensibly – that cannabis remain a class C drug. But it also appears that – rather less sensibly – the prime minister is going to ignore their advice and have it reclassified anyway. As he eloquently told GMTV, "I have always been worried about cannabis, with this new skunk, this more lethal part of cannabis."

Let's be clear about what this means.  Possession of a class B drug carries a penalty of up to five years in prison and/or an unlimited fine. Supplying a class B drug (which could just mean giving some to a friend) carries a maximum 14-year sentence and/or an unlimited fine. Such punishments are plainly completely disproportionate to cannabis – a widely used recreational drug that is by no definition of the word 'lethal', as the prime minister claims to believe.

That's not to deny that cannabis can be detrimental to a person's mental health. But reclassifying it to class B and turning thousands of otherwise law-abiding individuals into serious criminals is hardly a sensible response. It exposes the absurdity of the government's whole approach to drugs. It also makes educating the young about drugs even more difficult: they know that cannabis is not a 'lethal' drug and when the government claims it is, they are less likely to believe anything else they say.
 

In our Omega Project report back in 1984, we argued that GPs - Britain's family doctors - shpuld expand their practices to include diagnostics (like x-rays), outpatient services, even small operations. Well, at last the politicians have got the idea. Suddenly, up are springing 'polyclinics'.

The belief is that groupings of maybe 20-30 GPs mean patients can enjoy longer opening hours, a wider range of expertise, and a more comprehensive service. Buildings and equipment can be worked more efficiently, and back-office costs spread more thinly across the larger number of doctors.

Many advanced countries have had similar arrangements for decades. It hasn't happened in the UK because our health system is so politicized and ruled by vested interests. Nobody can ever agree on change, so it doesn't happen.

It's happening now - though some of the new polyclinics are simply replicating the facilities of nearby hospitals, rather than replacing or rationalizing things. With any luck, though, the extension of private-sector money and management, creeping up the system from primary care into activities that have traditionally been done in state hospitals, will revolutionize things. At a Cambridge Health Network meeting on this the other day, it was amazing how many NHS stalwats used the word 'market' - and as something they should be following, not resisting. I'm not sure thay quite understand what the 'market' is yet, or how quickly the chill wind of competition can sweep away an existing order. But, just maybe, the wind is getting up.

Sometimes truth is stranger than fiction:

Police rushed out to an emergency call after a man mistook a black binbag in his sitting room for a wolf.

Drunken Lawrence Eaton, 50, armed himself with a knife and fled his house after seeing what appeared to him to be a wild animal crouched in the corner of his room.

The ex-lorry driver ran to a phone box and begged for police to come to help during a babbled emergency call.

Police raced to the scene with their own trained dogs ready to investigate the wolf report and came across Eaton still in the street carrying a kitchen knife.

But on searching his house they found only a black binbag and quickly realised that Eaton had got confused in his drunken state.

Instead, they charged him with possession of a knife...

From The Scotsman.

Something that all too many forget. Drugs were once legal in the UK and no, it really didn't seem to cause many problems.

Other numbers to be kept in perspective: this coming crash. We don't even know if GDP growth will go negative yet in the US, let alone decline significantly.

This might not have been the very bestest documentary ever, at least judging by this review.

Clever people the French, you know, Cartesian logic and all that. Not all display that admirable quality though.

That Tragedy of the Commons stuff: keeps popping up everywhere.

A fascinating experiment: what did Robert Johnson really sound like?

And finally, yes, this could have been better designed.

London's Mayoral election is getting plenty of coverage but the local elections taking place in 155 council areas across England and Wales the same day have generated far less interest. As yesterday's Daily Telegraph noted:

Council elections never attract much interest. Average turnout in local polls since 1996 has been 35.4 per cent. And those who do vote tend to treat the election as a miniature referendum on the national parties, a megaphone through which to shout at Westminster.

The reason is straightforward. People don't think that the composition of their local council is going to make very much difference. Indeed, it's hard to think of any developed country in which local government is weaker than here in Britain. As the Telegraph continued:

Schools and hospitals are largely run from Whitehall. The decree on fortnightly recycling came, in effect, from the EU's Landfill Directive. Three-quarters of council budgets come from central government, the highest proportion in Europe.

This is a shame. Local government could be a useful bulwark against excessive central government. When power is diffused it is limited. Localism creates an 'exit-option' similar to the one that exists in the market – if people don't like the policies of their local authority, they can move to another one and take their taxes with them. That creates competitive pressures to keep charges down and improve standards.

Localism also allows for greater experimentation. Councils can learn from each other and move towards better delivering better services. When power is centralized none of this can happen. There is no 'exit-option' short of leaving the country and only one reform can be tried at a time.

Counties should exercise the same powers as the Scottish Parliament.* People often say that local councils are not competent to exercise such powers, and that if they did it would result in a 'postcode lottery'. But I'd say that these powers are precisely the ones that should be left to local government. They couldn't do worse than Whitehall. And besides, centralization has itself given us a 'postcode lottery'. If local authorities were free to tailor polices to local needs, there would probably be less divergence in outcomes than under the one-size-fits-all approach.

* Healthcare and social services, education, housing and planning, transport and local environmental issues, among several others.