Time for liberty

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And now that the legislators and do gooders have futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems. And try liberty…

Frederic Bastiat, The Law (1850)

Why we should fear American health care reform

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Tucked away in a piece about possible end runs around NICE, the health care rationing body, is something of a scary paragraph:

Pharmaceutical companies are reluctant to launch new drugs in the UK at low cost because 25% of the global market is influenced by the UK price.

No, not that one sentence, although it helps explain why this next one is scary:

It comes at a time when other countries are actively considering setting up equivalents to Nice. First among them, and most important for the pharmaceutical industry, is the US. President Obama is known to be interested in some sort of cost-effectiveness scrutiny of medicines, which is bitterly opposed by the industry.

What all too few seem to understand is that medical innovation is hugely driven by what happens in the US market. The only market that is largely free from price controls. We can see from the first sentence that price controls do indeed retard innovation but of course there is no outcry about this for we don't normally see it. Who does take note of cures that aren't invented, aren't launched, because price controls mean there is no profit in their being so?

The great release from this problem for European health care systems has been that the US market, by far the largest in the world, is not subject to such price controls. Thus 300 million of the richest people on the planet underwrite, through the prices they pay for new treatments, the developments that we get years later as prices drop.

If the US does indeed bring in some form of NICE equivalent, some form of price rationing, then medical innovation will fall....no, not cease completely, simply there will be less of it than there would otherwise have been. Thus people who could or might have been cured will not be and they will die.

Reform of the US system might still be worthwhile, something like NICE might even still make sense: but don't anyone believe that such changes will be costless, they will indeed cost lives.

The internet

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Paradoxically, some of the greatest forces for liberty often provide the opportunity for substantial infringements of our rights. Nowhere is this more apparent than in the case of the ubiquitous internet. The ‘web’ is recognised as the most powerful and comprehensive source of information, the most varied source of entertainment and the most versatile means of communication. This year, Wikipedia has over 2.8 million articles; all submitted and edited by the general public. Google has around 30 billion webpages indexed. What is unique about the internet then is the amount of information it makes available, instantaneously and for free. Whilst critics have pointed out that much of the material on the internet is misleading, surely the internet is the ultimate example of John Stuart Mill’s marketplace of ideas: the multiplicity of information ensures that a consensus emerges around what is correct and objective.

However, it is the volume and nature of this data, particularly that generated from communication, that provides the opportunity for our right to privacy to be infringed. Whilst we can exercise our consumer sovereignty to force private companies to take reasonable steps to protect our privacy, we have no choice but to accept the intrusion into our privacy of the ‘dead hand’ of the Government. This crucial difference is exemplified by the fact that Facebook was recently forced to back-down over its new Terms of Service, as many users felt that they did not provide sufficient safeguards for their content, with particular concerns about it being stored indefinitely even after the user had left the service. Meanwhile, the Government is sticking to its draconian plans to store all emails and text messages under the remit of GCHQ, despite widespread public opposition. Ostensibly, the purpose is to help identify and convict terrorists and other criminals, but this dystopian scheme is too great a price to pay. Furthermore, it seems impractical to trawl through the vast amount of data we would collectively generate.

In conclusion, the more governments portray the Internet as a modern-day “Wild West", the more they will seek to regulate and scrutinise our use of it. Whilst I fully accept that some monitoring of specific users to prevent and solve criminal activity is inevitable, any blanket method that gathers user data indiscriminately is a huge infringement of our civil liberties, and one that seems to contravene the principle of “innocent till proven guilty".

The Internet is written by James Freeland, winner of The Young Writer on Liberty 2009.

Capitalism: A hybrid system

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It [is] urgent to understand at long last that what goes by the name of capitalism in ordinary language is a hybrid system crossbred from liberalism and social democracy, where the freedom of contract is allowed to work in some respects but is stymied in others and where perverse incentives springing from taxation and regulation are mixed with the profit motive that drives competitive markets.

Anthony de Jasay, Greed, Need, Risk and Regulation

Can you hear me, BSkyB?

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David Cameron’s recent speech, in which he emphasized his determination – if elected as Prime Minster next year - to slash the number of quangos, is to be welcomed. Interestingly, with one stark exception, the details were sketchy. Clearly in Cameron’s sights, is the sprawling empire of Ofcom, which has become far more than a regulatory back-stop and is now effectively a Department of Telecoms and Media.

In recent weeks, Ofcom has earned the wrath of BSkyB, part of the News Corporation stable, which controls leading newspapers such as the Times, the Sun and its week-end equivalents. Ofcom has proposed that BSkyB should be obliged to offer access, on wholesale terms, to its football and film Pay-TV rights – acquired at massive cost – to its competitors, most notably BT and Virgin Media.

If this proposal were ever implemented, BSkyB would be forced to lower its prices quite markedly, which would inevitably have an impact on future Pay-TV rights valuations: the next Premier League Pay-TV rights auction is due in 2012. Why, it could be asked should BSkyB be required to share its Pay-TV rights? After all, competitors, like BT and Virgin Media, have every opportunity to bid for TV rights packages themselves.

In reality, the chequered past of both companies still haunts their finances. Although BT’s net debt is now close to £10 billion, it remains desperately constrained by its global business setbacks and its burgeoning pension fund liabilities. Virgin Media includes the one-time cable duopoly, NTL and Telewest, both of which racked up vast debts and delivered dreadful share price performances.

Nonetheless, Cameron’s quango initiative, and especially its focus on the ever-expanding Ofcom, represents sound political thinking, which will be carefully noted by those who control News Corporation as they discuss their political options over the next year.

Can you hear me, BSkyB?

The population bomb four decades on – Are we still doomed?

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There is nothing new about fears of overpopulation – every century has had its fair share of apocalyptic claims about the future of mankind and the Earth. The late 1960s saw the release of The Population Bomb by Paul R. Ehrlich, which stands as one of the founding texts of the modern environment movement. It popularised neo-Malthusian concerns that current rates of population growth were unsustainable, a fear revived every year on the UN’s World Population Day (today, July 11).

This year, the Electronic Journal of Sustainable Development took the opportunity to assess whether these fears are justified. It features a new paper by Paul R. Ehrlich and Anne H. Ehrlich (unnamed co-author of the original book) who have few regrets about the claims they made. If anything, they argue that “perhaps the most serious flaw in The [Population] Bomb was that it was much too optimistic about the future". They point to the collapse of numerous fisheries, the irreversible loss of biodiversity, ozone depletion, and most importantly in their view, global warming.

But such claims – no matter how popular they remain – are at odds with empirical evidence, according to Indur M. Goklany, co-editor of the EJSD (free online journal) and author of The Improving State of the World. In his article, he argues that “despite unprecedented growth in population, affluence, consumption and technological change, human well-being has never been higher."

Even if Goklany concedes that the record is mixed for the environment, he explains why this is: “Initially, in the rich countries, affluence and technology worsened environmental quality, but eventually they provided the methods and means for cleaning up the environment… After decades of deterioration, their environment has improved substantially." His and many of the other articles in the EJSD show that if anything, we need more economic growth and technology, underlined by stable market institutions like property rights – not less.

But as Goklany warns, the great advances mankind has made in the past centuries do not mean that economic growth and technology innovation should be taken for granted. Rather, he warns that the “policy preferences of some environmentalists and Neo-Malthusians, founded on their skepticism of affluence and technology, would only make progress toward a better quality of life and a more sustainable environment harder. Their fears could become self-fulfilling prophecies."

Issue 3 of the EJSD – “The Population Bomb Four Decades On" – is available here.

The EJSD is a peer-reviewed, open access, online journal- the result of a partnership between International Policy Network and the University of Buckingham.

Diminishing democracy

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Democracy, one of our most coveted liberties, is under threat from increasing centralisation and unaccountability of government.

Whilst the recent European Parliament elections make the EU appear democratic, a closer look at the legislative process reveals a clear absence of democracy. The UK has 72 MEPs out of the 736 in the European Parliament, meaning that MEPs we elect have hardly any voice in Europe. Even when MEPs across the EU form political blocs in the Parliament, differences still persist, which prevent each country’s MEPs from wholly pursuing their national interest. The greatest deficiency of democracy, however, lies with the unelected lawmakers of the European Commission. Three quarters of the UK’s laws come from the Commission in Brussels, which is not directly accountable to the electorate of member states.

With UK citizens already forced to cede so much power to the European Union, surely we deserve a choice about losing any more of our sovereignty? Unfortunately our government doesn’t think so and in July 2008 ratified the EU’s Lisbon Treaty, without giving us the referendum they promised. And that’s not the only instance of the government stifling democracy.

Numerous government functions are carried out by quangos, and despite Gordon Brown saying that they are “often government in secret, free from full public scrutiny", there are still hundreds of them. By passing on decision-making to these non-governmental bodies, the government is effectively unaccountable for many of the decisions that have huge effects on local communities. After the general election in 2005, health authorities and primary care trusts – the main quangos in healthcare – threatened to close local hospitals, but the government could not be made responsible for these decisions. How is it democratic that such important decisions are made by unaccountable bureaucrats who we haven’t elected?

Diminishing democracy is written by Akhil Shah, who finished second in The Young Writer on Liberty 2009.

In mysterious ways...

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 Junksmith is stumped for words.

Taxes

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Taxes, on the face of it, may not seem a threat to liberty, but the scale of tax rises that we are facing for a large part of this century mean that they will have a substantial impact on our lives and liberty.

The Institute for Fiscal Studies forecast that balancing the budget will cost every UK family “£2,840 per year by 2017-18 in higher taxes or public spending cuts" and that it would be 2032 before national debt fell to 40% of GDP. The National Institute of Economic and Social Research forecast that the basic rate of income tax could have to rise by “between 8p and 10p in the pound" to plug the hole in our public finances.

Indeed we have already seen tax increases on the entire population in the Pre-Budget Report 2008, in which national insurance contributions are set to rise by 0.5% from April 2011. Furthermore, there were rises in stealth taxes in the Budget 2009, most notably on cigarettes, alcohol and fuel.

Why does all this matter to liberty? As taxes rise, the liberty of taxpayers to spend their hard-earned money as they please is eroded away. To put the projected tax rises into context, with median weekly pay at £479, a rise in the average person’s annual tax bill by around £1,50014 represents over 6% of their income being paid in extra taxation.

Public spending can be cut relatively painlessly by cutting expenditure on quangos and bureaucrats; for example, there is huge scope for getting rid of countless managers in the NHS. However, the government’s determination to limit cuts in public spending to indefinite ‘efficiency savings’ that hardly ever materialise indicates that a large part of the deficit in public finances will have to be narrowed by raising taxes. And if excise duties, especially taxes on alcohol and cigarettes, are raised substantially, the poor, who spend the largest share of their income on such indirect taxes, will be hardest hit. Assuming that the marginal benefit of each extra pound spent diminishes as income rises, reducing the income of the poor will have the largest impact in reducing liberty, if we measure it in terms of the utility forgone by spending the money on taxes.

Imminent higher taxes therefore threaten our liberty because they will result in significant and larger-than-necessary cuts in disposable income and living standards for all.

Taxes is written by Akhil Shah, who finished second in The Young Writer on Liberty 2009.

Labour isn't working

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The latest figures released by the Department of Work and Pensions show a telling but frightening story as to the societal damage New Labour have inflicted upon Britain. According to the data, over a million people have been on constant state benefits since 1997 whilst another 1.9 million have been on benefits for over seven years.

These results are not as surprising once New Labour’s welfare policies have been inspected. Although they claim to support the most vulnerable in society they seem to have penalised them at every opportunity. State benefits are set at a level where it is more beneficial for an individual to remain on them rather than seek employment. And, if they do find work, they are hit almost straight away by an income tax that penalises them for earning. This is not just damaging to the economy, but it is hugely damaging to society and individuals as long term unemployment often leads to unrest within communities and families. There are teenagers in Britain who have never had a working parent with similar prospects for themselves.

This is further evidence that a free-market system with greater incentives and scope for efficiency creates a fairer society. Once again, socialists have undermined the very people they are supposed to protect. Labour claims to be the party of the working classes, yet every post- war Labour government has finished with unemployment higher than when they started. This is undeniable evidence that Labour has had a negative impact upon society. But will voters learn from their mistakes? I very much doubt it.