Tom says he's no Rick Santorum. And thank god for that. In 2006, Santorum said he was against individualism, libertarianism, and much more:

One of the criticisms I make is [of] this whole idea of personal autonomy ... this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues.

I'm certainly glad that Tom's no Rick Santorum. You might think Rick Santorums are rare in the UK. If only:

I don't like choice. No, sorry that was a lie. I hate choice. I detest it. Simplicity is best. . . . 

To me, a hospital and a doctor serve a function. Its not complicated. If I get sick I go to my doctor, he gives me a prescription. If I get really sick I phone 999 they take me to a big white building and put me in a bed. Since when did it all get so complicated? I don't want to book a surgeon. I don't want to choose my care, to rate my food, to score my surgeon. This is not X-factor this is my health. I am an historian not a medical genius. I would much prefer it if my doctor or hospital made my choice for me. What scares me the most is that if my entire life experience of consumer choice has been frustration at the rise in prices, why should it be any different in the NHS? Am I crazy? Am I the only person who does not want choice?

That's lefty blogger Eoin Clarke applying the philosophy of Santorumism to healthcare. After reading his whole post at "The Green Benches", including a story about the agony of choice at Starbucks, I wonder if "The Green Ink" might be a better title for his blog instead.

I can't stand the Santorumist view that some jumped-up prig in government should be able to interfere in my private life. Most people in Britain shudder at the thought of Rick Santorum. And so they should. But they should also shudder at his meddling, father-knows-best worldview being applied to the rest of their lives, including their healthcare.

Privacy isn't just a good thing when it comes to sex. Santorum's collectivist delusions about controlling your bedroom are bad, but Clarke's collectivist delusions about controlling your healthcare are hardly any better.

Update: Simon Cooke has more thoughts on choice in bread and cheese, and what that means for healthcare and education.

Perhaps April Fool’s day has come early? In a gift for comedy writers everywhere, Eric Pickles wants us to have a 'big lunch' for community cohesion. More still – Pickles wants to introduce a ‘curry college’ to promote integration!

Joking aside, there are some serious issues here. The Secretary of State for Communities - that meaningless Blairite catch-all – wants the state to promote social integration and has introduced, inevitably, a strategy to do so. Unlike Labour, however, the Conservatives are seeking to promote integrationism rather than multiculturalism. Naturally, this has outraged leftist cultural groups. It is ironic to note that multiculturalism started life in the Netherlands as a response to post-war immigration, encouraged as a solution to labour shortages rather like the German guest worker schemes. Immigrants were to keep their culture as they were ultimately intended to return home.

The argument between multiculturalism and integrationism is a misleading one. Government cannot create or promote cultural cohesion by any mechanism and, more importantly, it is not its duty to do so. This seems to run counter to this government’s own ‘Big Society’ agenda. State-led attempts to do so invariably result in artificial, bureaucratic initiatives that have little grounding in reality and are a huge waste of taxpayer’s money. Witness the failures of the Blair and Brown governments to create social cohesion; if they had succeeded we would have no need of further initiatives. We don’t need Gordon Brown telling us what our national historical narrative ought to be – in a free society there will be an infinite number of differing and possibly contradictory ones, this is healthy. Nor do we need Eric Pickles telling us what society should look like and how it should behave.

At worst, state attempts to promote cultural and social homogeneity result in the aggressive nationalism that plagued Europe in the 20th century and beyond – witness Putin’s Russia or Serbia in the 1990s. Moreover, the state very often promotes social tensions between immigrants and ‘indigenous’ groups as it creates zero-sum games over welfare and housing and thereby conflict. This is typical of state interventionism: on the one hand it creates a problem, on the other it attempts (and fails) to solve the problem using additional spending and bureaucracy. At the same time it creates a host of client organisations who are dependent on such funding for their existence and will protest bitterly if such funding is withdrawn.

The state should not be attempting to tell people what their culture and heritage ought to be and how they ought to relate to each other; it is best left to trial and error to find out. As David Hume observed in the eighteenth century, the English were much less culturally and socially homogeneous than other European nations. Relative to the French or the Spanish, individuals were freer to expresses themselves via standards of dress and taste and a lacked a centrally dictated sense of belief and national identity:

But the English government is a mixture of monarchy, aristocracy, and democracy. The people in authority are composed of gentry and merchants. All sects of religion are to be found among them. And the great liberty and independency, which every man enjoys, allows him to display the manners peculiar to him. Hence the English, of any people in the universe, have the least of a national character; unless this very singularity may pass for such.

As a result, society was much more coherent, stable and economically productive as interest groups were not set up in positions of exclusive privilege and antagonism.

In the contemporary context, as Mark Pennington and John Meadowcroft show, we need to ‘rescue social capital from social democracy.’ The building of ‘social capital’ is best left to free interaction and civil society. The tendency of government, as with economic capital, is to consume the existing and distort the process of formation of new social capital. 

If one phrase were needed to sum up all that is wrong with the choice of Les Ebdon as ‘Fair Access’ Czar of British universities, it must be this:

“I don’t think universities can just say: ‘Oh well it is because they are doing the wrong GCSEs’… Universities have to deal with the world as it is rather than the world as we would want.”

What he means is that universities should not be allowed to maintain high standards and insist on schools meeting them. Instead, universities should supplicate themselves to whatever mania is sweeping the teacher training colleges at the time.

Ironically, Ebdon’s policies mark the latest in the public education sector’s long march away from anything resembling ‘the real world’.

As I wrote in June, this sort of thinking is the result of the ‘progressive’ education establishment’s attempt to combine its love for fashionable theories with the terrible results when those theories are field tested.

Instead of adopting more effective teaching methods, to which much of the teaching profession has developed a certain ideological antipathy, state educators realised that they had another option: move the goalposts that marked success.

This started with the concept of ‘value added’ results. In essence, where schools had to deal with ‘disadvantaged’ groups such as ethnic minorities, immigrants or the poor, educators demanded that grades and league table positions reflect how well they thought they had done, given the poor materials to hand. Instead of seeing these children as challenges, they sought excuses.

But all these illusory achievements count for little when universal standards are applied, as in university applications. Because no matter how hard state educators insist that one child’s Cs are equivalent to another’s As because the first child is black or poor, in the ‘real world’ so beloved of Professor Ebdon a C is still a C and an A is still an A. Grade inflation notwithstanding, of course.

Once again, instead of renouncing failing methods ‘progressive’ educators are instead trying to lower the bar. It is our world class universities that must adapt ‘to the real world’, not our many unsatisfactory secondary schools.

Yet even if you crowbar these children into universities, they still aren’t properly equipped for the experience. Some universities already have to dedicate time in first year to equipping students with the sort of basic skills they should have developed during their A Levels.

These students will be accruing tens of thousands of pounds of debt to acquire second- or third-rate qualifications, all the while denying a place to a more capable student and weakening the strength and international competitiveness of British higher education.

Yet how far can this fantasy be sustained? What happens when these students hit the employment market and find that the illusory value-added grades they’ve been given by lazy educators aren’t actually worth the same as qualifications acquired through impartial assessment and intellectual rigour?

Will the next generation of Ebdons insist on ‘value-added’ degrees, and that employers must deal with the world ‘as it really is, not as they would wish it to be’? Will employers be forbidden from ‘discriminating’ against such qualifications?

It sounds totally outlandish. But following the logic of Ebdon’s appointment, it no longer sounds impossible.

Last week, BBC Radio 4’s PM show each day profiled an unemployed person. On Friday, it featured Leanna Brown, 20 years old, a single mum of  a two-year old, living in Sheffield and unemployed for two years.

Ms Brown said she lives in council housing for which she pays £7 a week rent, gets £100 every two weeks for income support, child tax credit of £60 a week plus unspecified child benefits. She earned nine GSCEs, tried for A-levels but didn’t like it, took a course as a nail technician and now has ambitions of being a youth worker. She said her gas and electric bills come to £60 a week.

Ms Brown says she’s diligent about seeking work with regular visits to a local employment agency and the local Job Centre. She’s frustrated and increasingly depressed from her situation, so much so that she’s lost four stone in weight over the last few months.

Commenting on her case, Jonathan Portes of the National Institute of Economic and Social Research described her situation as “quite typical” and “not her fault”. He said it was a “failure of macro-economic policy rather than anything specific to the individual.”

Well, not so fast. It’s a sad tale indeed and there’s little doubt her immediate prospects are bleak but to blame it all on macro-economic policy misses the point that the macro-economy is nothing more than the sum total of micro-policies and individual decisions.

This admittedly comfortable, free market loving, big government fearing, libertarian worries about the Ms Browns of this world but has a lot of questions before pulling any macro-economic levers. After all, Gordon Brown did that for years – throwing huge sums of cash at any and every problem.

So let’s start with the big elephant in the room, an issue not addressed in the PM profile. Why is Ms Brown a single mum? She said she “didn’t plan the pregnancy” but she clearly also didn’t plan well to not get pregnant. In this day and age, how are we still churning out pregnant teenage girls and then fretting about their resulting situation?  Whatever amount of money our schools spend on sex education is clearly a waste as Britain’s woeful teenage pregnancy rankings in the world attest.

Where’s the father of Ms Brown’s child in all this? And what about any other family of Ms Brown? Neither comes up in the PM profile as if they’re irrelevant to Ms Brown’s situation. Study after study shows that nothing enhances prospects in life as well as a strong family yet our welfare micro-policies are failing to encourage them.

Ms Brown’s initial aspirations as a nail technician and now as a youth worker also raise eyebrows. Is that the result of wise advice from our legions of counsellors? Nobody suggested more broadly useful skills like proficiency with Office software or elementary bookkeeping or food catering?

And what about that £60 a week for gas and electricity? That’s about 2/3s more than what we spend on a four bedroom detached house so either Ms Brown’s flat is really drafty or she keeps all appliances and lights on at all times or the number needs challenging. And if she does indeed spend that amount which micro-economic policies are keeping these utility prices so high? Wind and solar subsidies? Foot-dragging on shale gas development?

To PM’s credit, they also had the upbeat Paul Brown from the Prince’s Trust to comment. He noted that 1-in-5 unemployed youth means 4-in-5 are finding work and pointed to his charity’s success in steering many of this nation’s Ms Browns into a good place. The record of focused charities is far better than the welfare state’s so the more outsourcing to them, the better.

Ms Brown’s case is a tough one. She’s been let down by any number of government agents and by her own mistakes. Blaming it all on a failure of macro-economic policies misses the point – it’s more complicated than that.

Madsen explains why we have firms today. It's all about specialization and economies of scale. This is the point where threads of past videos are beginning to be woven together, adding another layer to the foundations he's laid so far. If you've missed these earlier videos, you're in luck. They're all available on Youtube to watch right now.

Ros Altman, Director General of Saga Group, upbraided the Times for praising QE in a letter yesterday. As Altman rightly argues, QE diminishes the incomes of pensioners and the savings of future pensioners: 'QE has permanently impoverished more than a million pensioners, and thousands more purchasers will recieve reduced pensions each week'. Altman also points out that QE has a more subtle impact on the economy: 'pension liabilities and deficits rise when gilt yields fall, forcing companies to divert resources into their pension funds, rather than growing  their businesses.'

She states that, as a result, 'QE transfers money from middle-class pensions to banks and borrowers, which will reduce long-term [economic] growth in our ageing population'. Altman is quite correct, even if QE is not also adding to more latently to inflation - which may well be the case, further adding to its redistributive effects. Of course, many borrowers are also 'middle class' pension savers. For instance, many people saving via pensions are simultaneously borrowing via mortgages who are being simultaneously punished and rewarded. Either way, class is not a relevant issue here, the issue is whether borrowers - including the government - should be given preferential treatment over savers.

There is a broader point, moreover, that the state is arbitrarily reallocating resources between different groups without the groups themselves, in many cases, and perhaps even the government being aware that it is doing so. Whilst explicit redistribution is problematical, this sort of redistribution is far more pernicious. The impoverishment of pensioners and creation of further disincentives to save throws them even further into reliance on the largesse of current and future taxpayers as well as being destructive of capital formation.

One might quite fairly observe, contra Altman, that pensioners have been unfairly benefitting for taxpayer-funded government borrowing in the form of interest and capital growth in gilts. Two wrongs, however, do not make a right. Further, pension funds are hardly to be blamed for investing in gilts as they present an artificially lower risk than other investments (although clearly not, in the case of some sovereign debt!), not to mention that pension funds are mandated into doing so. As well all are aware, or should be, government fiscal intervention diverts resources from productive areas of the economy and more efficient uses of scarce resources and thus crowds out economic growth. Hence we observe the stagnant, heavily indebted economies of Europe, the USA and Japan not to mention heavily-indebted developing nations with large fiscal burdens funded by inflationary monetary policies.

Unfortunately, Altman rather blots her copybook by arguing that 'the authorities should find ways to lend to small firms directly'. Picking of 'winners' by governments is notoriously unsuccessful and no way to grow an economy. It also carries the risk of incurring further liabilities on the taxpayer if such firms are unviable.  Further, Altman argues that government should 'harness pension fund assets to underwrite infrastructure projects.' This dangerous idea, which has recently been floated by the Chancellor, seems to present carte blanche to governments to 'invest' assets in their favoured white elephant schemes as no doubt HS2 will turn out to be. Pension funds should be left to decide which assets will bring returns, not have the state decide for them. If this latter idea takes root, we're all better off storing our savings as gold bars under the bed. In the final analysis, the state simply should not be in the business of interfering in how much credit is available in the economy; this has been tried and tested to destruction, or pretty near it.  The real solution is to prevent government manipulation of supply and demand for savings, borrowing and credit-creation via the mechanisms of central banking and fiat currency.

The chart above shows total UK public spending between 1997 and 2015 in constant 2005 £. Does that look like radical austerity to you?

This is hardly an original point, but it’s worth restating until people start to notice: Britain is not radically cutting public expenditure. As displayed on this chart, spending was £613bn in 2010 and  £615bn in 2011; in 2012 and 2013 it will be £618bn, and in 2014 and 2015 it will be £617bn. Even in real terms, spending will be higher at the end of this parliament than it was at the beginning. It would be fair to characterize this as spending restraint, but it’s nothing more than that.

Why does public debate bear so little resemblance to this reality? In part, it’s down to the fact that the government is desperate to show bond markets that it is serious about deficit reduction, so that they can keep borrowing cheaply. This makes them dial up the austerity rhetoric, even when its not backed up by real spending cuts.

Another reason is the way the Treasury initially presented the coalition government’s austerity plan – as a recipe for £80bn in cuts. But these are cuts against a baseline of projected increases, not actual reductions in spending. Moreover, these are only ‘cuts’ in Departmental Expenditure Limits (DELs). Annually Managed Expenditure (AME), the other half of Total Managed Expenditure (TME), which includes social security, public sector pensions, debt interest payments, and European Union Contributions, would continue to rise.

And then there’s the fact that the public sector has grown so used to huge annual rises in spending that it struggles to cope without them. When you are accustomed to profligacy, fiscal restraint can be a shock to the system. Indeed, many of the promises made to public sector workers were based on the assumption that spending could grow by 7 or 8 percent a year indefinitely. Now that’s been exposed as a cruel lie, their union representatives are prepared to make a lot of noise about it.

But whichever way you slice it, there is no radical austerity, no savage spending cuts, no public sector apocalypse. Someone ought to tell Paul Krugman.

P.S. Apologies for the fact that my chart is titled ‘This’. For some reason, I couldn’t get ukpublicspending.co.uk to produce anything else!

It will probably have passed most British readers by, but US politicians have been talking a lot about contraception recently. The short version is this. First, the Obama administration decided to mandate that church-affiliated employers offer insurance that covers contraception, regardless of their religious objections. Predictably, a political firestorm kicked off. So the Obama administration came up with a ‘compromise’ – church-affiliated employers won’t be charged for contraception coverage, but insurers have to provide it anyway.

Now, I’m no Rick Santorum. I’m a fan of contraception. But there’s so much wrong with this story that it’s hard to know where to start. Should the government really compel you to buy a service from a private company? It’s probably better than the government nicking your money and providing that service themselves, but for a libertarian it still rankles. Then there’s the insensitivity to deeply-held religious conviction, which not only exposes the ‘liberal’ left’s inability to tolerate social mores that differ from their own, but also highlights the way big government inevitably tramples on diversity and choice with its one-size-fits-all monomania. And then there’s the idiot-economics which suggests that you can force a company to provide a service without anyone having to pay for it. In this case, assuming insurance companies can’t find a way of covertly passing on the cost of contraceptive cover to church-affiliated employers, then everyone else with insurance ends up footing the bills through higher premiums.

But perhaps the biggest problem is the one explained by Sheldon Richman in this Freeman article: contraception has nothing whatsoever to do with insurance.

Insurance arose as a way for individuals to pool their risk of some low-probability/high-cost misfortune befalling them. It shouldn’t be necessary to point this out, but coming of child-bearing age and choosing to use contraception is not an insurable event. It’s a volitional act. It may have good consequences for the person taking the action and society at large, but it is still a volitional act. It makes no sense to talk about insuring against the eventuality that a particular person will use contraception.

This gets right to the heart of the fundamental problem with modern-day healthcare: we rely too much on third-party payment, whether by governments or insurers. As Richman says, taking out insurance (or paying taxes) so that some third-party pays when a big-ticket, catastrophic health expense comes your way is perfectly rational. But paying someone else to take responsibility for your predictable, routine, run-of-the-mill health costs is crazy. It introduces huge dead-weight administrative costs and seriously distorted incentives, and is one of the key drivers of out-of-control healthcare inflation.

As I wrote a while back, “The key to successful healthcare reform is to get patients paying doctors directly for routine services, and returning insurance (of whatever sort) to its natural role.” This Adam Smith Institute report suggested a way of doing it, and we’ll be addressing the issue in greater depth in a forthcoming paper on Singapore’s healthcare system. Watch this space.

Councillor Colin Barrow, leader of Westminster Council, had a post on Conservative Home yesterday boasting about Westminster's council tax freeze:

Today Westminster’s Cabinet will confirm our intention to freeze our council tax for a record fifth year in a row, whilst at the same time responding to the concerns of our residents by putting an additional £2 million back in to street cleansing for the coming year.

Sounds good. Except that, in exchange for freezing council tax, Eric Pickles is offering councils a payment equivalent to a 2.5% rise in their council tax in exchange for freezing their rates. In other words, Westminster's council tax "freeze" has come at a cost to the rest of us that do not live in Westminster and might be facing rises in our own council tax. Eric Pickles's money is taxpayers' money, so this "freeze" is in fact a tax hike for everyone else so that Westminster council can look prudent. 

There's a bigger point here than just the deceptive use of taxpayer money. That the central government can do this sort of trickery to allow councils to look prudent (and to avoid bad headlines for the government) points to a much deeper rot in the system. Councils only get about a quarter of their funds through council tax — the rest is from national taxes and centrally-collected and -allocated business rates. The idea is to use government to redistribute between rich and poor parts of the country. This bears the same zero-sum thinking of all redistributive taxation.

A much better approach would be to devolve fiscal, tax and regulatory powers to councils, so that the poor parts of the country can grow their way into prosperity. If the Barking and Dagenham Council could slash business regulation, it could stimulate business and attract investment to enrich its residents. If the plain people of Islington don't want laissez-faire, fine, but they shouldn't stop poorer places from enriching themselves by cutting back the state.

Alas, it's unlikely to happen. As long as councils are dependent on the central government for most of their funding, their "constituents" will not be council taxpayers but government pen-pushers. No wonder they're happy to boast about tax "freezes" that cost taxpayers even more money.

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