Welcome Holly and Hunter!

Holly Mackay and Hunter Georgeson have joined the ASI as gap-year employees. We asked them to write this post to introduce themselves to our readers.

Holly:

Having said in my interview that my favourite book was Harry Potter, I was both extremely surprised and delighted to find out that I’d landed one of the coveted gap year internship positions at the Adam Smith Institute. After finishing my A-Levels in Politics, Economics and Maths, I desperately wanted to fill my year with something that would hopefully allow me to build on my interest in those subjects, and working at the ASI is the perfect opportunity to do so.  Three weeks in, I’ve already had a fantastic time; I can’t wait for the rest of the coming year here.


I am an enthusiastic advocate of the ASI’s forward-thinking libertarian stance, and as Margaret Thatcher’s no. 1 fan, it’s a dream for me to have the opportunity to work with the masterminds behind some of her policies. As well as championing greater economic freedom, I also subscribe to the belief that individual liberties on social issues should be maximised too. I have already written my first blog post from this perspective, arguing in support of the Assisted Dying Bill, and I look forward to exploring so many more topics that are currently pressing British politics. Some of my personal interests include education, particularly in the wake of high levels of immigration and how we should cope with expanding demand, and how a freer market can actually be fairer for everyone- the Bleeding Heart Libertarian within me fully supports ASI campaigns to lower taxes for the poorest, get rid of the National ‘Living’ Wage, and reduce regulations on businesses to allow entrepreneurs to flourish and create higher earnings for everyday workers.


I’m so excited to learn more from my colleagues here at the ASI; their energy and hard work is hugely inspiring, encouraging me to look at economic problems from angles I’ve never considered before. I greatly admire the work the ASI does, especially its outreach to students and young people, and I look forward to being able to contribute myself.

Hunter:

Very aware that an entire year without a definite plan would become a sort of spiritual black hole, I leapt at the opportunity to apply for the ASI’s internship programme. After my first week here, I find it difficult to imagine that my time could be any better spent.


I did A-levels in subjects (English Literature, History, and Maths) that limited my ability to ask big questions – there’s only a certain extent to which you can explore the deeper political philosophy behind Thatcher’s privatisation reforms when you’re studying the history of modern Britain. Although the ASI’s work is on policy reform, there is behind the scenes a rich discourse on the ground-up basis for the free-market, libertarian perspective. It’s very exciting to be around people who feel just as strongly about explaining their own ideas and hearing new ones as I do.


My own introduction to the liberal-right perspective came with reading, firstly, Hayek’s The Road to Serfdom, and later, Mill’s On Liberty. I found the simplicity of the principles underlined by the authors refreshing, whilst the few nuances and inconsistencies only drove me onto further reading. My particular interests include the problem of whether we can, or should, regulate against monopoly in a market economy, and the idea of more localised government systems, specifically with regard to the fostering of competitive forces between regional health-systems – like in Sweden.


Outside of academia, I’m the drummer in a band called Topknot (it’s ironic, I promise!), and spend a lot of time working towards my ultimate goal of becoming an ascetic.

New ASI Paper: “Utility Gains: Assessing the Record of Britain’s Privatized Utilities”

A new Adam Smith Institute paper, “Utility Gains: Assessing the Record of Britain’s Privatized Utilities” assesses the various utility sales of telecoms, gas, water and electricity companies during the 1980’s and 1990’s and looks at how government, shareholders and customers fared since the privatisation process. The paper argues that the following benefits occurred for each stakeholder:

For the government – various general benefits accrued, such as a pronounced surge in investment. It benefited financially, both from one-off sales proceeds and from ongoing sizeable Corporation Tax receipts.

For shareholders, like pension funds, have generally done very well, with many privatizations – particularly the 12 RECs – heavily outperforming the FTSE 100. Privatized water stocks, too, have powered ahead. There are a few notable exceptions to this, such as Railtrack, British Energy and British Telecom.

For utility customers the financial benefits have been less tangible – in a period of massively rising wholesale prices there has been little to pass on. But investment has been much higher and much-needed improvements in customer service have been developed. Telecoms prices have actually fallen materially, while domestic gas, water and electricity prices have all risen sharply in real terms. However, domestic energy prices have risen mainly due to much higher wholesale gas costs – not because of private sector ownership.

The paper finds investment in utilities is now much higher than before privatization, especially in the electricity distribution and water sectors. In the latter case, substantial real price increases have helped finance this investment which had been woefully inadequate prior to privatization in 1989. Over the 25-year period, roughly £110 billion has been invested in the water sector, with the overwhelming majority of this sum being spent by the ten privatized water companies. Currently, over £4 billion per year is being invested.

The paper argues that the privatisation of utilities also created an innovation spike, specifically in the telecoms sector. Privatising British Telecom in 1984, it argues, created a new industry as the staid former Post Office subsidiary started to participate in an international marketplace, in which mobile telephony was developing at a rapid pace. Within a few years, Vodafone had become the pioneer of mobile telephony to such an extent that, by 1999, it had become the fourth most valuable company in history within just two decades of its founding. Had British Telecom remained state-owned, it is probable that the broadband rollout would have been delayed even further.

Click here to read the full press release.

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207.

Ruth Davidson speech to Adam Smith Institute

This week the ASI hosted the feisty Ruth Davidson to deliver a lecture on lessons from Scotland’s founding father of economics – Adam Smith – as she outlined her vision of an alternative to the SNP’s statist agenda.

Good Evening Ladies and Gentlemen.

Thank you for the opportunity to speak to you this evening.

It seems to me that there is a rather long and – if I might say – inglorious tradition of Scottish politicians hanging speeches round the neck of Adam Smith and his legacy.

I’m sure you’re familiar with them, but – for me – there seems to be two main types.

The first type is what I would refer to as the Gordon Brown method.

The Brown method is where you examine Smith’s philosophy from three hundred years ago and demonstrate that, astonishingly, it coincides almost exactly with your own policy agenda here in early 21st century.

Yes, it turns out that Adam Smith was a kind of New Labour prophet, just waiting to be discovered all this time.

Which shows your current policy platform isn’t a tricksy wheeze to triangulate left and right, all the better to scoop up the votes of middle England. Oh no!

It turns out that it has a “golden thread” linking it right back to the heart of the Scottish enlightenment where, before the words “Tony Blair” were ever heard, it was first discovered that liberal economics and social justice could go hand in hand.

The fact that Smith actually came from Kirkcaldy is just the cherry on top of the cake.

I can only say that if I was Gordon Brown looking for some kind of ballast to hold my political beliefs together, I probably wouldn’t have been able to resist either!

But that isn’t the only type of speech of course. There’s a slightly shabbier version of the Brown method which adds a great dollop of parochialism mixed with hubris.

This is the one where Politician B seeks to assert that pretty much everyone has got Adam Smith wrong from Day One. Apart, of course, from the speaker himself.

And why have they got him wrong?

Broadly speaking, continues Politician B, this is because they are not Scottish.

And, in not being Scottish, they therefore fail to understand the true meaning of Adam Smith.

Target number one is, of course, the Adam Smith Institute.

(Read the full speech here.)

Time for Time Limits

A new ASI report, Time for Time Limits: Why we should end permanent welfare, finds that a 5-year limit on Jobseekers’ Allowance (JSA) across workers’ lifetimes could save the Treasury £300-350m per year, as well as boosting labour markets and putting a break on self-fulfilling cycles of dependency.

The paper, authored by Peter Hill, a lecturer at the University of Roehampton, reviews President Bill Clinton’s ‘Personal Responsibility and Work Opportunity Reconciliation Act’ (PRWORA) which coincided with a massive decline in welfare rolls from 5 million to less than 2 million families by 2006. The act is credited for saving the US government over $50bn between 1996 and 2002.

In some states, there was a decrease in benefits caseloads of 96%, as well as an unprecedented drop in female unemployment and improvement in their financial status even in low paying jobs, and a drop in child poverty. Furthermore, comprehensive econometric analyses suggest that 6-7% of decreases in unemployment counts (and 12–13% of those in female-headed families) are as a result of the introduction of time limits. Although difficult to estimate the exact impact on the UK labour market ex ante, a similar effect on Claimant Count Unemployment could be expected; this translates to an estimated reduction in the benefit bill of £300–350 million based on current spending.

Though Universal Credit is innovative in tackling benefit withdrawal cliffs that make working very unattractive to some households, it does not put any limits on its unemployment insurance provisions. More radical reform like time limits has potential beyond the government’s current schemes.

Just as the US ended welfare as an entitlement programme, the paper argues that the UK should also take the radical step of ending JSA being funded from general taxation and instead return to a form of ‘Unemployment Insurance’ funding from NICs. This would mean operating the welfare system as a genuine self-funding insurance scheme managed through the UK Government Actuary’s Department.

Click here for the full press release.

Hunting Foxes… Because You Like It

Last week, a new vote on whether the Hunting Act, the scorn of politics in the early 2000s, should be amended, was thrown out of the window. There was none of the anger that had filled the 400,000 protestors outside of Parliament Square in 2004, nor the 700 hours of debate that had occupied the Commons. Only a smug look from Nicola Sturgeon, as she realised she had outsmarted David Cameron.

Amending and repealing the Hunting Act has long been on the agenda for the Conservatives. Before the 2010 election, there were murmurings that, were a Conservative majority to take power, repeal of the ban on fox hunting with dogs would be looked at.

So let’s look at fox hunting with dogs. The Countryside Alliance declares the Hunting Act bad for the rural economy, bad for rural communities, bad for animal welfare and a waste of police resources’. It is true that reports of malpractice on foxhunts and police prevention take up time and resources. Very few convictions for those hunting with dogs have ever been brought about, despite the amount of evidence which animal rights groups present. ‘Bad for animal welfare’ is somewhat difficult to comprehend, but if they mean that it is bad for animal welfare that poultry might be killed by a fox, before they are killed by the slaughterhouse, perhaps this is an understandable argument. Bad for the rural economy and rural communities is a dubious case to make. Many hunts have seen their numbers grow since the ban. The Burns Report, which examined hunting before the Hunting Act was introduced, registered 178 hunts in 2000; there are now 176. However, although there are fewer hunts, the number of participants has dramatically risen. 20,591 people were subscribed for foxhunts in 2000; around 45,000 now take part regularly in hunts. The demand for foxhunting has certainly not diminished.

Most interesting of all is to examine how hunting affects fox numbers. Perhaps the most reiterated reason which hunting enthusiasts enjoy promoting is that hunting is a form of culling – that without hunting, foxes would be ravaging farming communities. Realistically, fox hunting causes very little impact to fox numbers and likely increases them if anything. Fox numbers are determined by competition. Foxes will move into territories where they find it easier to find food and face less competition from other foxes. This means that there is a constant movement of foxes which cannot be stopped by hunting. Moreover, studies have shown that the more foxes killed in a winter cull, the more that are born in litters come springtime. The greatest regulator of the fox population are the foxes’  social factors themselves: social groups of foxes will defend their territory from other fox groups on a nationwide level. Other factors involve food availability and disease, but these tend to be local issues with little impact.

Fox hunting has very little to do with the actual real numbers of foxes killed. Those who participate should not try to convince both others and themselves that they are a necessity to the protection of farming. It remains their liberty to hunt, but it is for the purpose of their enjoyment, not conservation.

This article was written by Benjamin Jackson, a Research Associate at the Adam Smith Institute. Benjamin is half-way through his Classics degree at the University of Edinburgh.