Corbyn’s win and the future of politics

The election of Jeremy Corbyn as the new Labour Party leader tells us three things. First, that we have (deservedly) lost faith in the prevailing political class. Second, that the old class-and-age-based party alliances are dead. And third, that things are going to be a lot more interesting (if also a little worrying).

First, Corbyn (like Donald Trump in the Republican Party election in the US) did well because he does not follow the accepted norms for politicians. For one thing, he didn’t wear a suit in regulation camera-friendly plain colours or, like rival Andy Burnham, blue-grey and the regular white shirt and camera-friendly plain tie too. Indeed, there was speculation that Corbyn’s minders had briefly got him to dispose of his undershirt, but this hope was soon dashed. He was neither clean-shaven nor coiffured. Unlike the others he looked like a regular person, in fact – acting his age as a mature person who does not need to dress like a mannequin to be taken seriously, but can be taken seriously on his experience alone.

Maybe that is why he used just two words when the others used ten. He had no need to exert his presence by filling the available airtime, because his presence alone was quite sufficient, and the views he was expressing were so gripping. No need to fill the airways with platitudes when you can simply drop one or two bombshells and enjoy the silence.

The reason why he gripped the debate and garnered the votes was precisely that. Whatever you might think of his positioning, he seems like the sort of person you can have an honest conversation with in the pub, rather than someone who believes nothing and spouts focus-group-tested soundbites at you. Britain, it seems – or at least the Labour side of it – is ready for such straight talking after the porage of the Blair-Cameron era. The fact is that we are fed up with identikit politicians and want leaders who will take firm views on things they believe in – even if we sometimes disagree with them.

Second, with this stance, Corbyn can attract new people to his side of politics, breaking them away from their traditional tribes (as the LibDems tried, but failed to do). Mrs Thatcher, similarly, had strong support in the working-class and Northern areas that were hardly traditional Tory heartland communities. They voted for her, even though they disagreed with much of what she did, because at least she looked like a leader, who knew where she was going, and not as a cipher that could let us drift off down the path to hell if it seemed to be less controversial. And there are a lot of potential things coming up that might split old alliances too – such as Scottish devolution and the EU referendum. The Labour Party in Scotland is dead, but might a more-left UK Labour Party be more willing to do a deal, or be more able to pick up the votes of disgruntled Scots? It all suggests that a Corbyn-led Labour Party (if it can hold together) could well pick up all kinds of new support from new places, and from non-voters who have given up on Westminster government entirely.

Third, all that is going to be interesting. The Labour (or indeed Tory) moderates who try to paint Corbyn as a dangerous nutter will seem as significant as the temperance campaigners who complained that Churchill drank too much.

With any luck the old consensus in which we drift gracefully into more and more public spending and more and more regulation and more and more intrusive legislation over our lives might suffer a shock, as it did in the Thatcher era. It probably won’t last long until we are drowned in cross-party porage again, but enjoy it while it lasts, if you enjoy a white-knuckle ride that is.

Milk markets are not hard to udderstand

You can lead a cow to a supermarket, but you can’t make it raise its prices. The supermarket, that is. Because if one supermarket did, its customers would all desert to the ones that didn’t. So what’s the point of the farmers’ protest? What will change?

Dairy farming is yet another industry going through a technological revolution; and when that happens, some lose out. But the ultimate result is cheaper (and better) products for consumers. And as Adam Smith reminded us, the sole end of production is consumption. Why undertake the bother and expense of production, otherwise?

True, there are other factors. The world is pretty flush with milk right now. And Europe is particularly flush, thanks to EU subsidies. Yes, there is less subsidy than there was, and it is less related to production – remember the Milk Lake and the Butter Mountain? An obscene waste of animal products. But we still have the Basic Payment Scheme, all those Agri-Environmental Schemes, Private Storage Aid (i.e. bribing processors to hold milk products back when prices are low), the School Milk Scheme, not to mention Import Tariffs against other world producers.

The result is that today, about a third of the income of England’s dairy farmers comes through subsidies. If they sold their herds and retired to Bournemouth they wouldn’t get them any more, so they carry on, producing more milk than the nation actually wants.

The dairy farmers’ argument is that milk is difficult to transport – it is bulky and you have to keep it cool – so we need to produce milk locally. There is some truth in that, but it is a two-edged sword: because since supply sources are so restricted, you need to be prepared for some pretty spectacular price rises and falls from time to time. Like now. And if consumers cannot get dairy products from other producers because of import tariffs, consumers lose out too.

But back to technology. Britain is a terrible place to produce milk. The winters are cold and wet, so you have to bring your herd into shelters and give them heat, silage and hay (and muck them out), all of which adds to the cost. It’s Adam Smith, again: why try to produce wine in Scotland, at thirty times the expense of vineyards in sunny France?

To cut the cost, some enterprising dairy famers are creating farms that are a hundred times larger than the norm, usually sited in sunnier parts of the country, with huge winter sheds and new technology such as dry bedding, feed derived from other farm by-products, heat recycling, and capturing methane for fuel. It is no wonder that small-scale dairy farmers are complaining that they can’t compete.

If we scrapped the web of subsidy that featherbeds inefficient production systems, we would produce what we needed, in the quantities we needed, at a sustainable price, and with very much greater efficiency. And taxpayers would be better off, too. Yes, some people would have to find new jobs. It happens. Ask the people who used to sell encyclopaedias.

Antony Fisher, herald of freedom

One hundred years ago was born someone you have probably never heard of, but who helped bring freedom to large parts of the world. 

The story of Sir Antony Fisher shows how one person with a vision can change history. He was a Battle of Britain pilot in World War II – a conflict that claimed the lives of his brother and two cousins. After the War, he grew despondent that the freedoms his family members had died for were being casually thrown away. The radical 1945 Attlee government nationalized all the main industries – coal, steel, electricity, railroads – and created a ‘Welfare State’ with state healthcare, public housing, and ‘cradle to grave’ social benefits.

Fisher thought about going into politics. But by chance he read the Reader’s Digest abridgement of F A Hayek’s The Road to Serfdom, a book that showed how European socialism morphed, too easily, into Nazi totalitarianism. So he visited Hayek, who told him bluntly to forget politics. Politicians just follow prevailing opinions. If you want to change events, change ideas.

Fisher went on to pioneer battery farming, turning chicken from a luxury to a staple food in war-impoverished Britain, and used his early profits to follow Hayek’s advice. In 1955 he created the Institute of Economic Affairs, which pumped out books and articles, explaining the advantages of personal and economic freedom over state control. When Margaret Thatcher became Tory leader in 1975, she devoured its ideas, famously forcing aides to read Hayek’s Constitution of Liberty and telling them “This is what we believe!”

The IEA gave Thatcher’s gut belief in freedom a deep intellectual foundation, making her not just a politician but a formidable champion of freedom. That made her a hugely important ally to Ronald Regan. Thatcher saw the Soviet Union as not just morally but intellectually bankrupt, and as such it could be faced down. She and Reagan succeeded.

But Fisher did not stop there. He helped create one new ideas factory after another – the Fraser Institute in Vancouver, the Manhattan Institute in New York, the Pacific Research Institute in California. He set up the Atlas Foundation as a catalyst to help start even more. By 1988 there were already 35 think tanks in the Atlas family. Today there are 450.

They are changing events all over the world – from land reform in Peru, through privatization in Britain, public debt control in Pakistan, to low-cost private education in India. And spreading the ideas of liberty in even the most unlikely places, in the Muslim world from Morocco through Turkey to Yemen and  Kazakhstan; in Africa from Mali and Ivory Coast to Ethiopia; in Europe and the Far East. 

Antony Fisher was an unassuming man who helped change history and who is now helping change the future. As Oliver Letwin MP put it in the Times in May 1994, that is “quite a chain of consequences for a chicken farmer.” Quite so.

Magna Carta – and EU law today?

Lord Sumption has been telling the papers that we owe our freedoms more to the French Revolution and its Declaration of Rights than to Magna Carta, the 800th anniversary of which we celebrate this month. He is wrong. But each passing day makes him more right, and that is the whole problem. A real problem for freedom, not some merely smug debating point.

Sumption may be a distinguished mediaeval historian, but he is a poor political economist, or legal scholar for that matter. He calls the Charter a ‘turgid’ document of its time, and says it has ‘nothing to do’ with our libertarian tradition.

He is right that it reads like something rather turgid and technical. It was indeed mainly a list of demands, and was never meant as a constitution. But what it demands is critical to the development of limited government and representative democracy in the centuries that followed.

Magna Carta is the re-assertion of property rights that Anglo-Saxon England enjoyed before the Norman Conquest. The limits it imposes on authority – preventing the King’s arbitrary confiscation of people’s property and freedom – occupy only three or four of its 63 clauses and are therefore easily dismissed by those who think the Charter was just a hotchpotch of ‘trade union’ demands by the aristocracy.

But those who drew up the Charter knew that these few clauses are absolutely crucial. They are there precisely to guarantee those property rights that are spelled out in the rest of the document. What good is it to have rights if they are unenforceable because the authorities can act without restraint.

From that assertion of property rights, grows parliamentary democracy. Sure, as Sumption sneers, the Charter is by no means a democratic constitution, and concerns itself only with the rights of a rich few. But it reasserted the pre-Norman tradition that the rules of taxation and justice should be based on agreement, not on the whim of monarchs. To reach agreement, you need debate. And to debate, you need some kind of representative parliament.

It also explains England’s later history as a great trading nation, and the entrepreneurial flair that abides in the Anglophone nations. The Charter guaranteed property rights, and that principle was quickly expanded from just the nobility to everyone. So people could build up capital without fear of being expropriated by kings, ministers and officials.

And the common law that was reasserted by the Charter allows people to do what they want, provided only that others are not harmed by it. Top-down Continental law, by contrast, requires you to seek official permission first. It is obvious which one is likely to encourage more innovation.

Sumption also tries to show the Charter’s irrelevance by dismissing its insistence that justice should be based on the ‘law of the land’. The assertion as worthless, he says, because the King decided what the law actually was. But the whole point was that the Charter reasserted the commonly agreed fact that the ‘law of the land’ was much older and more fundamental than King-made law. It was the common law of the Anglo-Saxons, built up, by the common people over centuries. This law had evolved and endured, despite the efforts of feudal authorities to supplant it, because it worked and because it was made by the people as they went about their everyday business. This common law was a matter for everybody, not just for the king to decide and hand down to everyone else.

We have the same issues today, with Britain’s common law tradition being swamped by top-down law in the shape of EU regulation. Here again, the Continental tradition that you need detailed regulation that says what you can do is at odds with Britain’s common law approach that you are free to act as you choose unless there is some proven and agreed reason not to.

The difference is crucial, and that is why Sumption is so horribly wrong to suggest that our libertarian tradition owes more to France than to Runnymede. Perhaps our rights and freedoms are indeed being subjected more and more to this Continental legal tradition. But this legal harmonisation is something to be mourned and feared, not celebrated.

UK loss on RBS sale: so what

Bygones are bygones. Or as economists call them, ‘sunk costs’. If you invest in something that doesn’t pay off, you can kiss your sunk costs goodbye. Just sell for what you can get.

Today we are being told that UK taxpayers are going to take a £7bn loss when the government sells its stake in the the mega-bank RBS. Add fees and costs, and it might be £14bn. So what?

When the UK’s Labour Chancellor Alastair Darling spent £45bn of our money bailing out RBS – and another £63bn on Lloyd’s, Bradford & Bingley, Northern Rock and the rest – he wasn’t going through the Financial Times with a highlighter to pick good investments to enrich taxpayers. He was trying to rescue Britain’s financial services sector during the financial crash.

For a sector that brings in £66bn a year in taxation, that was a pretty good deal. Yes, you can argue that if he had done nothing, the market would have sorted it out. Or that the government should have simply lent the banks more money. But at the time it was all pretty hair-raising. Banks exist on trust, because if all their customers pull out at the same time the banks don’t (usually) have enough cash on hand to repay their deposits. They have lent out that cash to help grow businesses, jobs and prosperity. So when 20,000 queued up to take their savings out of Northern Rock, and the RBS said its cash machines were going to run out of cash in 48 hours, it wasn’t unreasonable to do something.

Actually, when you look at that £108bn went, taxpayers are already in pocket. Slices of Lloyd’s have already been sold off, and Northern Rock is looking like a really good business again. It depends on your predictions of what the remaining bits are worth, but taxpayers could already be £14bn up on the deal. That’s no surprise: the same happened in Sweden when its banking sector was bailed out years ago.

So what of RBS? Bygones are bygones. The bank grew bloated in the boom years, and has had to spend hundreds of millions restructuring. And being involved in just about sort of financial business known to humanity, it has picked up more regulatory penalties than most. So it is trading well below the 502p share price that Alastair Darling bought it at.

But that money was spent, not on buying a bank as an investment, but on buying a bank to save it from utter collapse. Money spent, job done. Bygones are bygones, let’s move on.

Should we wait until things improve, so that taxpayers get all their money back? No. After all, as they keep telling us, shares can go down as well as up.