The Pin Factory Blog

I was on the Today programme on BBC Radio4 alongside Tom Papworth of Centre Forum.  John Humphrys asked each of us to nominate three pieces of legislation we'd like to have seen in the Queen's Speech setting out the government's priorities for the year.

My first was a bill to allow all employees of small businesses to be registered as self-employed.  This would create huge numbers of new jobs by lowering the non-wage costs borne by employers.  It would also reduce the paperwork they have to cope with, freeing up time to drum up more business, and keeping prices down by lowering their costs.

Secondly I proposed a bill to set the income tax threshold at the minimum wage level for an average working week, making it so that no-one earning less than that would have to pay income tax.  This would give the low-paid the so-called 'living wage' without it costing jobs by raising the costs to employers.  It would indeed involve lost revenue, but there would also be supply side effects as work became more attractive and significant numbers moved off welfare and into work.

For my third point I called for hard drugs to be medicalized, meaning available to addicts at clinics run by doctors and nurses, and for recreational drugs to be legalized.  I pointed out that the so-called 'war on drugs' was being lost, as it has been for half a century.  The new proposal would take the crime out of drug use.  I said I thought politicians would carry on doing more of what they knew did not work, but that more and more were admitting that a new approach was needed.

None of my proposals is in the actual Queen's Speech, but I am confident that at some stage in the future all of them will.

The Left should back the ASI's objection to having the state make decisions for working class people under the claim that it knows best what is good for them.

The ASI opposes the paternalistic notion that working class people in Britain are incapable of making their own choices.  People in authority, including many involved with the medical profession, often take the view that they know better than ordinary people and are therefore entitled to impose their choices.  They seek both laws and punitive taxes to constrain people into living the lives that 'experts' think they should live.  They ban indoor smoking and hide packets from view, and call for plain packaging and ever higher taxes, and justify all of this on health grounds.  The ASI view is that people are entitled to do unhealthy things if they wish, and while it is acceptable to warn them, the choice must be left to individuals to make.

The same applies to high taxes on alcohol and calls for minimum pricing and restriction on its advertising.  Again, health grounds are adduced, even though Britain is among the low consumers among EU members.  If people feel they derive sufficient pleasure from alcohol to justify any adverse consequences, that is a decision they can freely make.  It is no function of the state to treat them as children incapable of making choices for themselves.  Such an attitude is patronizing.

This is also true of foods deemed by experts to be unhealthy, including fats, salt, sugar and fizzy drinks.  There are proposals for fat taxes, for taxes on fizzy drinks and limits on the salt and sugar content of foodstuffs.  Labelling is acceptable so that people know what they are doing, but measures to force them into diets favoured by 'experts' demean and diminish the values of ordinary people.  These 'experts' never seem to consider that ordinary people, especially low-income people, might find that tobacco, alcohol and appetizing foods add interest and satisfaction to their lives.  These might be what some regard as unwise choices, but they are for people to make as adults, not as the protected wards of an over-mighty state.

Iain Duncan Smith, Secretary of State for Work and Pensions, has called upon wealthy elderly people who do not need benefits to return the money to the government.  His case is that the winter fuel allowance, the Christmas bonus and travel passes are handed out to the elderly without means-testing, so that some undoubtedly go to the comparatively well-off.  Iain Duncan Smith's plea calls to mind the recent paper from the Fabian Society calling for older people to pay more tax, since pensioner couples are in the top half of UK income distribution for disposable incomes, with 80% of them owning their own homes. 

There is no easy mechanism for the affluent elderly to return benefits, as a few celebrities discovered last Christmas when a high-profile campaign was started to encourage people to hand them back.  Even if significant numbers did return their benefits, it would amount to no more than a pinprick to the department's budget, having no more impact on real-world events than the tiny windmill David Cameron installed on the roof of his house.

Not many people think the government would make a better job of spending money than they could manage themselves.  Those who feel their comparative affluence does not entitle them to the benefits have the option of giving the money to a charity instead.  If they choose an appropriate charity, better use will probably be made of the money than the government could manage, given its record of profligate wastage. 

This assumes that a charity will be chosen wisely, of course.  It should not go to a charity that spends most of the money it receives on political campaigns for more taxpayer funds, or on advertising for yet more funds to pay for yet more advertising, all in the name of "raising awareness."  And of course it should not go to charities that spend huge sums on anti-business advertising instead of on actually relieving poverty.  Given these obvious caveats, the chances are very high that the money will be better spent than it would be by government.

The cover of Figaro magazine says it all.  “They are leaving for London, Brussels or New York,” it says, and asks, “Why are they leaving France?”  It then talks of “the ravages of fiscal banishment” and “the youngsters who leave to succeed elsewhere.” The young people shown seem to be happily waving goodbye to France’s punitive taxes.  It bears remembering that there are misguided people in Britain who tell us that taxes do not make people change their behaviour…

6. The ASI supports the decriminalization of narcotics.  The Left should be pleased that the ASI has many times called for the decriminalization of drugs and for drug-addiction to be treated as a medical rather than a criminal problem.

The ASI has expressed the view that the criminalization of narcotics causes much more harm than would result from decriminalization.  Because narcotics are illegal they are in the hands of a worldwide criminal network.  Their illegality makes dealing a risky operation and results in very high prices for drugs, out of all proportion to the actual cost of producing them.  Those high prices result in turf wars between drug gangs and make murder a commonplace.  Addicts often resort to crime to fund the cost of their habit, making innocent people victims of mugging, burglary and theft. 

The ASI has called for most drugs to be medicalized, meaning they would be available at high street clinics manned by doctors and nurses, to be consumed on the premises.  In return for undergoing medical examination and receiving advice, addicts would receive free supplies to consume within the clinic.  While this would work for most hard drugs, no-one would want to consume recreational drugs such as ecstasy and cocaine in such clinical conditions. The ASI suggests that these should be legalized since they do no harm to anyone but the user.

The effect of these reforms would be to cut drug crime to near zero, and to exercise control over the quality of narcotics.  There would be fewer deaths from overdoses or adulterated supplies, and most addicts would come within the scrutiny of doctors and nurses equipped to help them. 

5. The ASI opposes official surveillance and secret powers.  The Left should welcome the ASI's opposition to snooping and surveillance by authority and its support for an open rule of law.

It is not a legitimate exercise of authority for a state to spy on its subjects.  If they go about their peaceful business, their activities are no concern of government, and government has no right to intrude into them. Government is our servant, not our master, put in place by the people to protect them and to safeguard their liberties.  Using the excuse of monitoring possible terrorist acts, government has resorted to quite illegitimate surveillance measures into the lives of its law-abiding citizens.  The ASI has opposed the extension of these powers, and the use of CCTV cameras by local authorities in quite trivial cases such as improper parking, putting out rubbish for collection at the wrong times, or to monitor whether parents live at the addresses claimed in their school applications.

The cry that "only the guilty have anything to fear" has been used to justify the oppressive intrusion of tyrants throughout history.  In fact the innocent have a great deal to fear from governments which demand the right to read their mails, to eavesdrop on their conversations, to record them on camera, and to monitor their movements.  These things are no legitimate concern of governments. 

The ASI supports the rule of law, done openly and subject to public scrutiny.  It opposes secret courts and secret powers, and supports the right of accused persons to trial by jury and full public scrutiny of the judicial process.  Where there is legitimate cause for concern about public safety, and surveillance is indicated, there should be separate application each time, judged on its merits by a magistrate, rather than an automatic and general right to conduct it.

The left-wing commentariat seems to be using the argumentum ad nauseam against the Thatcher record.  This consists of repeating an allegation, no matter how much evidence is produced against it, or how many times it has been shown to be false.  In City AM Allister Heath dealt with some of these assertions, but that has not stopped the anti-Thatcher brigade from repeating them.  Here are ten claims they make which are not supported by the facts.

1.  She destroyed UK's manufacturing base. No. Manufacturing output was 7.5% higher when she left office than when she began.  It did decline as a proportion of the total economy, but only because other sectors, especially services and finance, expanded more rapidly as the economy changed.  This happened in other advanced economies at about the same time as part of a general trend.  It is true that three major industries, shipbuilding, steel and coal, did decline as they proved unable to compete with other countries in these areas, but other industries, such as advanced manufacturing, expanded.

2. She destroyed the Unions' power to protect workers. Her reforms empowered union members rather than union leaders.  Previous Conservative and Labour governments had tried and failed to bring unions under the law.  The UK's strike record, the worst in Europe, did not help workers.  The Thatcher reforms gave union members the right to vote for their leaders in secret postal ballots, and gave them the right to be balloted ahead of possible strike action.  These resulted in more moderate union leadership and greatly reduced industrial unrest.

3. She lowered income tax so that the rich paid less. She did change income tax, but the rich not only paid more, but paid a higher share of the total.  Her governments steadily lowered the top rate from 83% (or 98% on investment income) down to 40%, and cut the basic rate to 25%.  The low rates raised more revenue than the high ones had done as business boomed and the tax base expanded.  The top 10% who had been paying 35% of total income tax saw this rise to 48% (from just over a third to just under a half of the total).

4. She turned vital state industries into private monopolies. Wrong.  The privatization programme turned ailing state monopolies into competitive and successful private ones.  Her government took care when it privatized to build in competition by whatever means it could.  BT faced a competitor called Mercury, with periodic reviews that allowed more competitors.  Most of the utilities were exposed to world competition as well as national competitors.  An important key was to separate the infrastructure from the supply, so that different producers competed to send their products down the pipes or cables to consumers.  Where this was impractical, suppliers had to bid competitively to win the franchise for a limited time frame.  Loss-making state monopolies were replaced by competitive and profitable private companies.

5. She destroyed Britain's coal industry. Britain's coal industry had been in decline for decades.  Many more pits were closed under Harold Wilson's Labour governments than under Margaret Thatcher's Conservative ones.  One reason was the rise of oil and then gas and nuclear as cleaner alternative sources of power.  Another was the decline of heavy industries that depended on coal.  Domestic heating moved away from coal, and North Sea gas replaced coal gas.  Added to this was lower cost foreign coal.  All of these ultimately doomed loss-making subsidized coal mines, and the year-long miners' strike helped reinforce the case for alternatives.

6. She did not really cut taxes. Critics point to a slight increase in the government tax take over her 11 years as proof that her tax cuts were illusory.  There were initial increases, especially of VAT, but under her there were major cuts in income tax and corporation tax that generated substantial economic growth.  After the initial years of dealing with the financial mess and the inflation that had been left, the government took less of GDP.  Tax Freedom Day, calculated by the ASI as the day of the year when people have paid off the government share, for 10 years after that either came earlier or stayed the same.

7. She unleashed the regulation that led to today's crisis. As Philip Booth at the IEA points out:

"the 1980s was not a period of financial deregulation. Insider trading was made illegal in 1980. The life insurance industry, which had been almost free of regulation for over 100 years from 1870, was re-regulated from 1980 to 1982. Bank deposit insurance was introduced in 1979. The sale of investment and insurance products came under statutory regulation from 1986. Further, the first ever regulation of UK bank capital took place under Basel I, agreed while Thatcher was Prime Minister."

The 'Big Bang' did allow more types of firm to trade in financial instruments, but it essentially replaced private regulation with public accountability.

8. She committed a war crime by the sinking of the Belgrano. The UK was in a war situation over Argentina's illegal seizure of the Falklands.  The South Atlantic area was a war zone in which hostilities were under way.  The 200 mile exclusion zone did not restrict fighting to within its limits.  It was a warning to neutral ships to avoid it.  The Argentine cruiser Belgrano was not a neutral ship and was on a zig-zag course, posing a menace to the British task force, and was sunk as an act of war, one that Argentine commanders accepted as legitimate.

9. Hers was a deeply unpopular and divisive government. She led the Conservatives to victory in three elections in a row, all with substantial majorities.  She did not win over 50% of the vote, which no party has done since World War II, but she did win a higher share in 1979 than Tony Blair did in 1997, and more in her subsequent two victories than he gained in his.  Her governments shunned the post-war consensus that had presided over Britain's decline to an economic basket case, and thus divided opinion.  More to the point, socialists had hoped that their ideology might one day rule, but the Thatcher governments ended that hope within the UK and helped to end it on a world scale.  The Left cannot forgive her governments for taking that future from them.

10. Her cuts slashed the public services. In fact public spending increased by 17.6% over the course of her governments.  There were cuts to proposed increases, but core service spending expanded.  Because the economy boomed under Thatcher governments, the total state share of GDP diminished as a proportion of the total.  It declined from 45.1% when she came in to 39.4% when she left. She increased expenditure on health, education and social spending, but by less than the growth in the private economy.

On Tuesday, Madsen took part in an Intelligence Squared debate at the Royal Geographical Society on the motion that "Karl Marx was right: capitalism post-2008 is falling apart under the weight of it own contradictions." Speaking in favour of the motion were Tristram Hunt MP, Robin Blackburn and Frank Furedi, while against it were George Magnus, Madsen Pirie and Judith Shapiro. The vote taken before the start of the debate saw the audience roughly equally divided between those in favour, those against, and those undecided.  The vote after the debate saw a huge majority against the motion, with most of those undecided switching to vote against it. People will be able to watch the debate when it is posted on Intelligence Squared's YouTube channel.  Meanwhile the text of Madsen's speech can be read here:

Like many public figures who leave a legacy, either in their writings or their deeds, Karl Marx was sometimes right and sometimes wrong.  I concentrate on some of the things about which he was wrong.

He was wrong to predict that history would take us to the inevitable triumph of the proletariat and then stop.  History shows no signs of doing either.  Marx was also wrong to suggest that this would happen first in the most advanced economies as the final stage of capitalism.  In fact such revolutions as came took place in less developed economies such as Russia and China.  It has not happened in the advanced economies, and this could be because Marx was wrong about something else.

He predicted that capitalism would drive down wages to survival level before its final denouement.  In fact as economies became more advanced, both wages and living standards rose to levels not even dreamt of in Marx's day, and this seems to have lowered the pressure for revolutionary change.

Marx was also wrong about something more fundamental.  He was wrong about change.  I don't just mean that he was wrong about the changes that would come about; more fundamentally he was wrong about how change takes place.  He took the Hegelian model of change.

Continue reading.

As part of our continuing series, Madsen Pirie discusses some common ground between libertarians and the left.

4. The ASI backs the cause of personal liberties.  The Left should welcome the fact that the ASI is firmly libertarian in its outlook, taking the side of those who express a right of dissent, or who choose to follow alternative or minority lifestyles.

The ASI takes a libertarian approach, believing that people are the best judge of what suits their lives.  They know more about themselves and their circumstances, and should make the decisions about how they prefer to live.  We think people should be entitled to live their own lives, rather than being forced to conform to someone else's idea of how they should live.  Provided they do not harm others or seek arbitrary restraints on their liberties, people should live as they choose.

The ASI does not support imposed conformity.  It recognizes that people differ in their views of what constitutes a family, or marriage, and supports their right to live by different values.  It opposes using state power and state finance to back only certain types of relationship, believing that such choices should be outwith its jurisdiction.

The ASI backs free speech, including the expression of ideas that some might find offensive and insulting.  We might prefer to see people exercise courtesy and restraint, but these are not things that the law should impose.  A free press will at times overstep the boundaries of taste and decorum, but only a free press uncontrolled by politicians can expose their machinations and follies and therefore restrain their excesses.

If anyone had inspected the economic statistics for the UK in 1979 with the name of the country concealed, looking at growth rate, annual rate of inflation, output per head, days lost through strikes, and so on, they would have supposed they were looking at a third world country.  Britain was "the sick man of Europe," left behind since World War II and destined, it seemed, to fall further behind.

Within a few short years Margaret Thatcher had transformed the nation and its prospects.  Britain went from having the highest record for days lost through strike action to the lowest, and from the lowest growth rate to one of the highest.  No less importantly people reacquired self-confidence in the future, together with the optimism that their children would inherit a better world than they had lived in.  They acquired in addition a stake in the nation, with huge numbers of ordinary people who had never before had the opportunity becoming home-owners and investors in Britain's future.

The change was psychological as well as economic, and it was achieved in the teeth of a prevailing pessimism in the political establishment.  The talk then was of "managed decline," and no one thought that Britain's descent could be reversed.  Margaret Thatcher showed that a combination of character and resourcefulness could succeed in turning around the nation where few had thought it possible.  She proved them wrong, and in doing so earned her place as one of the greatest prime ministers who has ever presided over the fortunes of this nation.  More than that, she was one of the few whose resolution and determination stood up to the international threat of Communist tyranny and saw it defeated ignominiously and erased from history.

When her funeral is held in St Paul's with full military honours, there will be many who look back in gratitude at the transformation she achieved against the odds and in the face of opposition from those whose political lives had been lived in the belief that free markets and free choices were simply irrelevant in the modern world.  They never forgave her for proving them wrong, but most others will honour her memory and her achievements with affection and gratitude.  She did well and we thank her.