President Cameron and the TV debates

David Cameron’s decision on the TV debates was one of the worst of his life. No, not yesterday’s ‘final offer’ to the broadcasters of only one 90-minute debate with seven (or eight) parties represented, and held well before the start of the ‘short campaign’ prior to the General Election of 7 May. Rather, it was his decision to push for TV debates five years ago, when he was Leader of the Opposition, that caused the damage.

In purely ‘political’ terms, that decision quickly back to bite him. It gave an opportunity to the Liberal Democrat leader, Nick Clegg, to come forward as the ‘Anti-Westminster’ candidate, boosting that party’s standing and forcing the Conservatives into coalition.

TV debates of course always help the underdog and damage the government. So now that Cameron is Prime Minister, he is facing the same calls for debates from Labour and the smaller parties, and is having to take the same criticism he launched at PM Gordon Brown last time, that he is ‘frit’ of defending his record.

But there are two, more fundamental problems. The first is that there is no logical way to decide which parties should be represented in TV debates. The debates are, after all, seen as a ‘national event’, rather than some throw-away entertainment, so it is important that they should be fairly structured. But it is impossible to include all of the dozens of parties, including pop-up parties, who contest seats in the General Election. So where does one draw the line? The Liberal Democrats may be sharing power, but they are polling little better than the Greens. UKIP has come from almost nowhere, but now out-poll the Liberal Democrats, so should they be included at the expense of the LibDems? And the Democratic Unionist Party (and Sinn Fein for that matter) may well stand only in Northern Ireland, but they are key forces there, so should they be on the platform too?

There simply is no objective way to decide. And no answer is going to suit every party. (And it is for this same reason that taxpayer funding of political parties can never work either – unless the two biggest parties simply divide the funding up between them and resist any claims from ‘upstarts’).

The most serious problem, though, is a constitutional issue. Britain’s governmental system is not supposed to be a Presidential one. True, the Prime Minister has many of the powers that a US President has, powers that once belonged to the monarch (like initiating wars and signing treaties, without troubling Parliament overmuch). But the Prime Minister is not just an executive, but still a member of the legislature – a Member of Parliament. When British voters go to the polls, they are supposed to be electing their local MP – someone who will actually hold the government to account. They might take into account what that might mean in terms of who moves in to 10 Downing Street, but in all but one constituency, that is not who they are electing.

There is an argument that the executive in Britain has too much power, precisely because it also controls the legislature. Of 650 MPs, a hundred are on the payroll, a hundred would like to be, and two hundred on the other side are lining themselves up with the same in mind. So party leaders and offers have enormous power, and Parliament has very little restraint on them. Maybe we should be separating the executive and legislative branches. Certainly, the last thing we should be doing is deepening the power of the executive further. But this is precisely the effect of TV debates. They focus attention on just one person, boosting centralism and central power. That is not healthy for any nation. Frankly, there should be no TV debates at all.

The end of local authority libraries

Local-authority-run public libraries are going the way of launderettes and video stores. Technology has swamped them, and they haven’t responded to the changing pattern of demand. We still have 4,145 public libraries in the UK, about fifteen times as many as we had in the 1920s, despite the fact that more and more of us access our reading material (and even our phone books, newspapers, dictionaries and encyclopaedias) in digital form, that over 84% of households have internet access (76% of us access the web every day) and pretty much all schools have and use the internet.

Bookshops have responded to these changes, bringing in cafe-style environments and organising events and book clubs that bring people into the shop, where they might just browse around and buy something. Libraries like to say they are doing this sort of thing, but it is half-hearted. Birmingham says its new library will only do events that are self-funding, for example: no concept of using events to bring more people in. That dearth of thinking is why Birmingham has discovered that the £10m-a-year cost of running its £188m spanking-new library (which of course won lots of architecture prizes) is unaffordable, given all the other urgent demands on the city’s budget.

It will always be like this. Local authorities have to provide life-saving services, social care, transport, roads, schools, you name it – libraries are always going to be something of a luxury, particularly when 70% of the borrowings are fiction, and much of the rest are about cookery, DIY and cars. Local authorities know this is not  a debate about ‘public education’ but about free entertainment for largely elderly and middle-class users.

LSSI, a company founded by librarians, which works with 78 communities in the US, reckons it can cut the UK libraries budget by 35%, increase opening hours, raise the number of library users, and still spend ten times more on books. Frankly, it is about time we put libraries out to commercial tender.  Let us specify what they are actually there for – not something that up to now there has been any public debate about – and the outputs we want, and then invite private, voluntary and charitable groups to make an offer. You can be sure of two things. Firstly, they would not build £188m white elephants, but would create libraries near to shops, schools and other places that people find local and convenient. And secondly, that the entire business would be revolutionised in short order, leading to everything that libraries are supposed to be there for being do cheaper and better.

Ending the BBC licence fee

Today, BBC Director-General Lord Hall will say that the corporation will back plans to scrap Britain’s 1930s-style TV licensing fee. That’s good. Unfortunately he wants to replace it with a broadcasting levy on every household – whether or not they own a television. That’s bad. Indeed, it’s crazy.

Why should households pay a levy to support broadcasters, even if they have no television? Or even if they have a television but rarely use it? It’s a broadcasting poll tax, which will impose the biggest burden on the poorest households, like the one-parent families who, already, account for the bulk of the prosecutions for non-payment.

And what’s the logic of it anyway? That we need broadcasters, and the licence fee is no longer a realistic way to pay for them? Firstly, you can question the extent to which we need broadcasters. Many of us live quite happily without needing daily doses of Call the MidwifeDeath in ParadiseCasualty or for that matter Premier League football: why should we subsidise those who can’t? Politicians might reckon that Question Time and Newsnight are essential ‘public service broadcasting’, but precious few of the rest of us would mourn their passing.

Broadcasters are by no means the only people to argue that they are producing a product essential to our lives or culture, but for which it is hard to get people to pay. Newspapers are saying exactly the same: they feed us news, analysis and opinion, but we are buying fewer and fewer of their dead-tree products, picking it all up free online instead. Should we have a levy on households so that Rupert Murdoch can continue to serve us up his vital product? No, definitely not. It is up to those industries to find market ways to charge for what they produce – through advertising, for example, or through subscription mechanisms.

The BBC should do the same. Technology is pretty nifty these days, in ways it wasn’t when the BBC was created in the 1930s. For folk who pride themselves on their creativity, developing a subscription service, from which non-payers can be excluded, should not be too far beyond their wit. Or even using advertising and sponsorship, as so many other perfectly reputable broadcasters do.

If the BBC did not exist, we certainly would not invent it. Today it looks rather like a bloated fixed-line network monopoly in an age of mobile phones. A lumbering dinosaur in an age of fleet-footed niche producers. So why force households to keep subsidising this sad throwback?

‘Munibonds’ and the national debt

Bad news from the Telegraph’s daily email:

Local authorities are on the verge of issuing bonds in order to raise revenues and make up for further cuts to their government grant…. The “munibonds” will be issued by a new municipal debt agency, and are backed by 48 local councils and the LGA. Scotland will also acquired the powers to issue its own debt in what have been dubbed “kilt-edged bonds”.

Why is it such bad news? Shouldn’t government be allowed to borrow, for investment, like the rest of us? Few of us could buy a house from our savings: instead we take out a loan. So why should a local authority – or even a country – not borrow to fund its schools, roads and care homes?

I used to read eighteenth-century authors and economists like William Cobbett (of Rural Rides) and Adam Smith (of The Wealth of Nations) and chuckle to myself as they went on and on against the idea of the national debt. Much of the huge rise in prosperity of our times, I supposed, had been built on debt, much of it government debt taken out to fund market-enhancing improvements in roads, bridges, airports, schools, hospitals and housing.

Now I think the Cobbetts and Smiths were right and I was wrong. If we could rely on governments to make rational, objective decisions about the overall benefits and costs of infrastructure finance, then there might be a case for allowing them to borrow for public investment. But we cannot rely on governments to be so dispassionate and high-minded. The very power to borrow is itself too much of a temptation pulling them in the opposite direction. Consider, for example:

(1) It is impossible enough to measure the ‘public’ benefit of government spending, when there is no such thing as the ‘public interest’ – only a clash of opposing interests. (Think airports, and the convenience for travellers of extra flights and the distress of local residents over traffic and noise.)

(2) The problem is compounded when it is confused by electoral interests. (As Khruschev noted, “politicians will build a bridge, even where there is no river.” All the more so, if there is an election coming up.)

(3) With electoral advantage in mind, it is too easy for those who control the public finances to segue from investment to spending. As Chancellor, Gordon Brown, to his credit, said he would confine borrowing to investment projects. But by his reckoning, anything spent on schools or hospitals was ‘investment’ for the future – even though much of it was patently simply consumption for today.

Such factors help explain why governments have growth so much, and spend money on so many marginal activities. It is too inviting to spend now, earn the applause of the public, and let the next generation, who do not yet have a vote, foot the bill for it all. Public Choice economists call it ‘time shifting’. And in that, of course, the public themselves are complicit. With interest groups, from pensioners to patients, demanding more spending on themselves, and politicians happy to borrow, at little cost to themselves, to provide it, how can we ever expect prudence in the public finances.

It is a draconian answer to say that we should stop government borrowing at all. But actually, the eighteenth century thinkers were right.

It usually begins with Ayn Rand

Ayn Rand was born on this day in 1905. “It usually begins with Ayn Rand,” said author Jerome Tuccille of this Russian-American thinker, novelist and screenwriter. An amazing number of people have come to support a free society and a free-market economy through reading her novels, especially The Fountainhead (1935) and Atlas Shrugged (1957), in their student years.

Those novels may not be works of great literature. The characters are little nuanced, more mouthpieces for Rand’s political and philosophical views. But decades on, they remain hugely influential, because they have what young people – and others looking for some purpose in life – actually want. Their weaknesses are the obverse of their strengths. Her heroes are role models: ambitious, purposive, independent and strong; ruthlessly self-interested and yet deeply moral. These are stories with a message, a coherent worldview that conquers all: the morality of rational self-interest. Atlas Shrugged, for instance, describes a world in which industry leaders overcome the stifling controls of over-mighty governments by closing down production and creating an alternate order based on freedom and strict respect for personal property. Unlikely, for sure: but it makes you think.

No surprise, then, that many of the world’s leading businesspeople have been influenced by this twentieth-century Russian émigré to America, whose fiction and philosophy has sold 25 million copies. One, Lars Seier Christensen, founder and CEO of the hugely successful online investment broker Saxo Bank, gave the Adam Smith Institute’s annual Ayn Rand Lecture in London last year. Even though Rand died in 1982, he observed, her robust individualist approach to economic and social life is needed more now than ever.

Rand held that the key thing that makes human beings unique is their reason. We betray our species and our selves if we do not use it. But to act rationally, we need a long-term view of the world. It might sound good to tax the wealthy and spend the money on education, welfare and much else. But there is no free lunch. Those short-term benefits come at a long-term cost, because taxation depresses risk-taking and enterprise. As in Atlas Shrugged, the majority cannot exploit the minority and expect them to put up with it forever.

The long-term view reveals that most regulation is irrational. Minimum wage laws, for example, might boost the wages of poorer workers; but by making it too costly for employers to hire unskilled or untested applicants, they deny hundreds of thousands of young people jobs and consign them to the welfare rolls. American regulations that forced banks to lend to poorer people gave families ‘affordable housing’ but created the sub-prime crisis and the crash.

It is the same in business. Rational self-interest means long-term self-interest, not short-term greed. Greed comes back to haunt you, as certain bankers will testify. It is interesting that about the only American bank to come out of the financial crash unscathed was BB&T, run by John Allison – an adherent of Ayn Rand’s principles and another past Ayn Rand Lecturer. There are only two stable relationships, he insists: win-win or lose-lose. You don’t need self-sacrifice or even altruism. You benefit yourself by benefiting others.

Money is not the end. Happiness is. If people in a business – from the CEO to the cleaners in the works canteen – know that they are part of an enterprise that makes a positive difference to others, they will have purpose and self-esteem. That will make it a better business – and will make them happier, more complete human beings.