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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

The Lego movie is the most libertarian film of the year

Written by Anton Howes | Thursday 20 February 2014

There's one important category missing from all the film awards ceremonies this month: The Most Libertarian Film of the Year. And the winner this year is without a shadow of a doubt The Lego Movie. Setting hilarity and great animation aside (and it has boxes of those), The Lego Movie shows us a compelling dystopian world of conformity, regulation and authority where everyone "must follow the instructions" or be "put to sleep". It is a tale of the battle between the chaotic, creative destruction of freedom, and the rigid, forceful regulation of bureaucracy.

The run-of-the-mill protagonist Emmet is blatantly shown to be brainwashed by repetitive and generic tv shows, corporatist celebration days like Taco Tuesdays, and a perpetually playing propaganda anthem called "Everything is Awesome" with clearly collectivist undertones: "everything is cool when you're part of a team". He works with other construction workers to tear down the "weird" and diverse buildings and replace them with generic ones.

But it gets so much better. The dystopian dictator's position as both the CEO of the Octan Corporation and President of the World perfectly encapsulates the problems with corporatism and monopolies on force. Indeed, his evil plan is stultifying regulation taken to the extreme: he wants to use superglue to literally stick everything permanently into the "perfect" position, relying on a robotic army of "micro-managers" to make sure that everything is exactly how he wants it to be before being stuck into place. There could be no clearer metaphor for the perils of intruding technocrats.

The evil Lord President Business wishes to destroy the chaos of innovation, hunting down and killing or imprisoning all the talented and resourceful master builders, and even erecting closely guarded borders between the different worlds in order to prevent the free movement of minifigures and their mixing of cultures into more interesting and diverse configurations.

At the same time, the resistance's enclave, Cloud Cuckoo Land is an anarchist utopia. As the UniKitty tells the heroes, "There is no government, no bedtime, no baby-sitters", though others have suggested this is also a subtle critique of the slightly creepy anti-freedom parts of modern tolerance culture: "Any idea is a good idea ...Except the not-happy ones." The dichotomy is later qualified when it turns out that creativity can work better when constrained within some rules that don't try to curtail it completely. You'd be challenged to find a simpler, more personal and appealing defence of the rule of law as conducive to freedom and human flourishing.

Above all, however, The Lego Movie is a story about the beauty of creative destruction, and how the battle between our fearful controlling impulses and our acceptance of the uncertainty of freedom is a profoundly personal one. It is an enjoyable must-watch for fans of free markets.

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The end of loneliness

Written by Anton Howes | Thursday 26 September 2013

There's a video doing the rounds by Shimi Cohen, called the "Innovation of Loneliness". The thesis is that modern, internet-based social networking results in more loneliness. Impersonal communication displaces the intimacy of conversation. This, combined with the ability to tailor those communications to promote our self-image, results in us claiming "to have many friends while actually being lonely", while technology's promise of constant interconnectedness, causes us to constantly share our experiences in a desperate bid to not feel alone.

Not all of the claims stack up. For a start, sharing is not the only function of a social networking platform, the main one being, of course, to network. Connections are powerful resources that can fulfil a wide variety of ends - not just the selfish-sounding pursuits of "career, wealth, self-image, and consumerism" that Cohen emphasises, but also the intimate pursuits of friendship and romance. You might upload a selfie to Facebook or post on Twitter about your brand new shoes, but you might also use either of those social networks to arrange a drink with friends or, if you're lucky, even a date. Even then, some modern platforms like Skype facilitate the intimate conversations that Cohen fears we are losing. Rather than eroding social and familial connections, modern communication technology allows us to keep in touch with friends and loved ones when they are half-across the globe: there is now simply no excuse to never write home.

The truth is, we're usually well aware of which are our close or intimate friendships, and which are our wider connections. The benefit of having those connections though, is that they have the potential to turn into closer relationships, on a scale that is just totally unprecedented in human history.

Many of Cohen's claims are perhaps simply facts of human nature, rather than the fault of advancing communication technology. Was the age of letter-writing that preceded email much better when it came to wasting our time and energy "pursuing the optimal order of words in our next message"? Given the lengthy delay between replies and the added time and cost of writing and posting, letters were undoubtedly more stressful and time-consuming.

The internet for many people has freed them from the millennia-old tyranny of village gossip. It allows us to forge connections that then more intimate relationships with people who we actually like and agree with, wherever they may be, almost totally freeing us from geographical constraints. It even allows us to choose to whom we cater our self-image. Some of us may well spend hours agonising over our profiles, but it's a small price to pay to also spend far less time agonising about how Bert from next door, who never liked you, could seize upon any quirks and differences from the rest of the village, and make you a social pariah. You can now choose your own 'village' without actually having to move house, and it's no accident that social liberal attitudes are most prevalent among the most interconnected generation the world has ever seen.

Humans have always been lonely at times. The internet can make that fact more obvious, as we gain a remarkably open window into the everyday experiences of more and more people around us - but it is also the technological advance that has done more than anything else in human history to put an end to loneliness.

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Link the personal allowance to inflation

Written by Anton Howes | Friday 12 April 2013

The above chart shows the level of the personal income allowance from 1979 to the present day. The blue line is the nominal level. It seems that chancellors have only ever increased or maintained the current level, and with good reason, given the unimaginable political backlash of decreasing it. But the red line is the real level of the personal allowance, when adjusted for inflation. This tells a different story. Although there has been a general trend for it to increase, there have been many occasions when it has actually decreased, harming the poorest, hard-working families the most. In this way, chancellors have been able to deliver real tax increases, purely through waiting for inflation to have its effects.

In order to stop the abuses of this Inflation Tax, the level of the personal allowance should be linked to inflation. That way, chancellors would only ever politically be able to increase or maintain the real personal allowance.

Secondly, the ASI has long advocated that the working poor be taken out of tax altogether. Thus, the green line shows the level of the national minimum wage since it was started in 1998, assuming a 42.7 hour week (the UK average), for 52 weeks. Even the recent acceleration of the real personal allowance therefore falls far short of taking minimum wage workers out of income tax altogether. To take the working poor out of tax, the personal allowance must not only be indexed to inflation, but raised above this level too.

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Freedom Forum 2013

Written by Anton Howes | Friday 01 March 2013

It's that time of year again. After the roaring success of last year's inaugural conference, the Liberty League Freedom Forum 2013 is only weeks away.

For just £35 per ticket, they've booked out the UCL School of Pharmacy in central London, and will be providing your accommodation, meals, drink and books for the entire weekend, as well as giving you the chance to meet other young pro-liberty activists from all over the UK. If you're based in London, it's £25 without accommodation.

You'll have the chance to meet and debate some of the liberty movement's best speakers, and take part in seminars and lectures with topics such as Bleeding Heart Libertarianism, free-banking and currency reform, the feasibility and desirability of anarcho-capitalism, why healthcare costs seem to always rise, whether the private sector can really build the roads, how innovation undermines Leviathan, libertarian conceptions of the law, free market environmentalism, out-innovating dictatorships, and a whole lot more too.

This will be alongside activism and training sessions exploring and improving skills in journalism, public relations, public speaking, and how to set up and run pro-liberty student societies on campus.

With even more speakers to be announced over the next few days, the list already includes Sam Bowman, Research Director of the Adam Smith Institute, along with Mark Littlewood, Dr Richard Wellings, Brendan O'Neill, Steve Baker MP, Douglas Carswell MP, Abebe Gellaw, Dr Anders Sandberg, Dr Terence Kealey, Dr Kevin Dowd, Professor Mark Pennington, Chris Snowdon, Dr Steve Davies, Linda Whetstone, JP Floru, Wolf von Laer, Professor Randy Barnett, Mark Wallace, Alex Singleton, and Jamie Whyte.

Date: 5th-7th April

Venue: UCL School of Pharmacy, and Generator Hostel, London.

Check out full details all of the sessions and speakers, and book your ticket right away by clicking here: http://uklibertyleague.org/2013/01/14/llff13/

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Reviewing the LSE Growth Commission

Written by Anton Howes | Tuesday 05 February 2013

The London School of Economics' much-vaunted "Growth Commission" has finally released its report, after a year of discussion, debate and work. Unfortunately, the policies it advocates are unoriginal and underwhelming.

They focus on three areas of long-term investment, into human capital, infrastructure and innovation. All of these factors are, of course, conducive to growth. However, beyond that obvious, aggregated view, the authors fail to answer the question of which investment is right for growth; which human capital; which institutions are most conducive to growth.

For example, human capital is not some homogenous gloop to be imparted into the grey matter of students, but can be subdivided into a whole host of different skills and capabilities. Some of these skills will be conducive to productivity growth and innovation. Others will be useless. While improving school autonomy is admirable, the largest contribution of this report is to slap the term "flexible ecology" onto policies already being pursued. At no point do they explain that school autonomy is important because freer interactions allow employers and universities to demand and get the types of human capital that they need, rather than what a top-down state system foists upon them.

Similarly, physical capital in the form of infrastructure is not some magical panacea. While they identify the planning system as a key barrier to private infrastructure investment, the report's authors bizarrely recommend the creation of three new Quangos, one of which is a bank, and to automatically pay more for any infrastructure projects. Perhaps they might have stopped to consider that the implication of a faulty planning system is to reform it, rather than to add more bureaucracy, and pour even more money on the problem. The report's proposals again focus on merely increasing investment, with little regard for quality and sustainability.

The report is weakest on the most important aspect of economic growth: innovation. They identify a lack of capital for new entrepreneurs as the biggest problem. Predictably, their answer is to support current moves towards a government-run "Business Bank", to support new financial regulations, and for yet another Quango to be created to form industrial policy. Again, this is hardly original. All of this ignores the fact that government, and even supposedly sainted "independent" Quangocrats are notoriously bad at picking winners, and are likely to exacerbate any capital misallocations in the economy by diverting it away from viable innovations. The Commission's plan is basically to use taxpayer money to prop up unsustainable start-ups, towards an unclear and likely negligible impact on economic growth.

The LSE Growth Commission's report fails to see that institutions need to be conducive to choosing the right investment, not simply more of it. The value of an economy is only increased if people get what they actually demand. For all its imperfections, free exchange is still the best test of determining what people want, and which innovations are best at meeting those wants.

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The broken Withywindle fallacy

Written by Anton Howes | Tuesday 22 January 2013

Over on the Guerrilla Economist blog, Ust Oldfield discusses the economic consequences of the dragon Smaug on Tolkien's fictional universe, Middle Earth. He argues that the net effect on Middle Earth's economy may well have been positive. Both Dwarves and dragons hoarded the gold, so there would have been no monetary shock from the rapid withdrawal of so much precious metal from the economy. The Dwarves were then forced to offer their labour and skills to the outside world as refugees, contributing to the economy at large.

Perhaps. But there is something wrong with this picture. Ust neglects to mention that much of the Dwarven kingdom of Erebor and nearby Dale were utterly destroyed. Thousands of years' worth of accumulated physical, human (or should that be Dwarven?) and social capital incinerated. In order to have a net positive effect on the economy of Middle Earth, the Dwarves' integration with the wider economy must outweigh this massive destruction of wealth. This is unlikely, to say the least. For a start, the human city of Dale existed because of its trade with Erebor. Therefore the Dwarves were already engaging in peaceful and mutually beneficial exchange with the rest of Middle Earth. The Dwarves' actions as refugees can only have created less value if their highest-value, voluntary choices were forcibly eliminated.

The second problem is an epistemological and moral one. Sure, this is fiction, but Ust should not be so quick to defend forcible actions to create the most value for the most people. In his analysis, the values of a minority are subjugated to that of the population at large in a zero-sum manner. Creating a Dwarven diaspora constitutes the loss of the economic, social and cultural institutions that best satisfy their demands. Dwarves lose, Middle Earth supposedly gains. And yet, in a peaceful world without the destructive interventions of Smaug, both parties gain through voluntary exchange according to what they themselves value most.

Ust, like many other Keynesians, loses sight of what actually matters in economics: economic growth and production are only important because they satisfy peoples' demands and values. Forcibly removing their best avenues for peacefully satisfying demands can only be a net loss to all.

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The mercantilists strike back

Written by Anton Howes | Friday 18 January 2013

Professor Dani Rodrik at Harvard University has offered up a challenge for free market liberals. He is openly, and unashamedly mercantilist: the very ideology that Adam Smith originally set out to defeat back in 1776. While rejecting the historical obsession with amassing precious metals, Rodrik proposes a mercantilist alliance of government with corporations towards common objectives like economic growth.

Swatting aside accusations of cronyism, he offers two reasons to be mercantilist. Firstly, he claims that it works: the recent Asian experience of modern economic growth suggests so, along with the fact that classical liberalism only became dominant in Britain around the 1840s, after it had already started to industrialise. But both of these claims are dubious at best. Regarding the Asian economies, most of them are experiencing catch-up growth, skipping stages of invention. For example, they needed only to import smartphone technology, rather than going through the painstaking process of inventing every single model of mobile phone from the clunky ancient ones to the iPhone. The adoption of capitalism they experienced was not the alliance of the state with business, but the openness to adopting ideas. Indeed, countries like Japan who have recently caught up now experience stagnation. The mercantilist structure does not seem to be quite so conducive to sustained, original innovation, and hence modern economic growth.

As for the British experience of the Industrial Revolution, the original technical innovators, Rodrik's claim does not imply that mercantilism is the better system. Just because the British state did not adopt a liberal attitude to innovation until the 1840s does not necessarily mean that pro-innovation liberalism was not already in action before the Establishment adopted it. If anything, the liberal view is the anti-Establishment view. It wasn't in state-subsidised or state-monopolised industries or businesses that the unprecedented innovation took place. If anything, the much-admired cotton industry of the time had to operate despite protectionist laws like the Calico Acts. Similarly, the invention and increasingly sophisticated application of steam power had almost nothing to do with the government whatsoever. We also have a useful comparison, as post-Revolutionary France was desperately intent on copying the British industrial experience. Yet despite massive subsidies, early attempts consistently failed.

Secondly, Rodrik says that under mercantilism, it is producers rather than consumers who are king. He claims that mercantilists subsidise liberals' vaunted consumption. The obvious question is "Why?" What is the purpose of production if not to satisfy someone's wants or needs? Even people who value work for work's sake are "demanding" the production of something that meets those values. What is the point of having an economy, of interacting and exchanging with others, if not to acquire value for yourself? This does not necessarily mean that you are some selfish miser, obsessed with money, but includes the whole panoply of values you can hold, from equality, to community, to family and to love. If Rodrik's mercantilist challenge is to have weight, he needs to explain what the point of production is, if not to satisfy demand.

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Out-innovate the state

Written by Anton Howes | Friday 07 December 2012

Even in the face of high taxes, borrowing and debt, the history of modernity gives us every reason to be optimistic. Economic growth and the rise in living standards since around 1780 has been immense. In Britain, not even accounting for improvements in the quality and choice of consumer products, the average person is 1500% wealthier than their ancestor in 1780. Crucially, this progress has been the result of sustained innovation, increasing the productivity of existing processes and products, and displacing the markets for old goods with newer and better substitutes in a process of creative destruction. Perhaps more importantly however, innovation is also able to displace government provision and restriction of certain goods.

As I pointed out yesterday, innovation trumps all. It was able to make Britain one of the most prosperous nations even despite its high taxes and protectionist mercantilism back in 1780. Even on a theoretical level, the unlimited powers of human ingenuity and imagination will always be able to find a way around existing physical circumstances. Right now, it continues to undermine existing policies, forcing progressive change, with the effects of the internet still being felt.

For example, massive online communities like Fitocracy provide the incentives to exercise and keep fit. As they grow in popularity and effectiveness, they may undermine the case for government anti-obesity interventions. Similarly, sites like Amazon and eBay have their own internal arbitration and regulation mechanisms for when things go wrong, reducing the role for external governmental regulators. Even education, which has experienced little in the way of productivity increases for centuries, can now be disseminated via free online courses like memrise to people across the world, without the need for expensive state grants to both universities and students.

Even in extreme circumstances, innovation is able to markedly increase living standards while undermining coercive monopolies. For example across Africa, the diffusion of mobile phones has allowed money to be transmitted directly to the intended recipients, circumventing corrupt officials and local elites who were otherwise able to confiscate physical cash as it changed hands or traveled.

Apart from the effects of the internet, emerging technologies like additive manufacturing (3D-printing) promise to totally undermine patenting and copyrighting of physical objects. As it becomes cheaper, the need for production lines will become increasingly irrelevant, allowing producers in the home and in business to create products that are the exact likenesses of otherwise costly brands. Perhaps design will experience the same constant creative destruction as in the fashion industry, where only trademarks are protected. Ingenuity has even been able to circumvent bans on research, for example with recent breakthroughs in extracting stem cells from blood reopening potential avenues for future life-saving medical innovations.

The exciting list of innovations is endless, and should give libertarians and others hope for the future. But we need to keep defending creative destruction from those who favour envy and redistribution, as well as acting upon our words. While there is a role for rhetoric, proving the effectiveness of market exchange and innovation by being the entrepreneur is also vital. Thankfully, some have been urging this revolution onwards. Douglas Carswell's new book, The End of Politics and Birth of iDemocracy, for example, reads as a manifesto for citizens freeing themselves of state-imposed hierarchy through sheer ingenuity. So long as our capacity for progress is celebrated, then we will be able to out-innovate the state.

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Remember innovation

Written by Anton Howes | Thursday 06 December 2012

For the first time in decades, Britain's economic growth is stagnant. With a predicted -0.1% for 2012, Treasury forecasts for the years ahead look wildly optimistic. Yet the Chancellor's tinkering around the edges is unlikely to achieve much. The problem is that the debate over achieving higher economic growth totally ignores its causes. It forgets the important distinction between what the Nobel Laureates Kenneth Arrow and Robert Lucas Jnr. describe as "level effects" and "growth effects".

Level effects are one-off shifts that cause some economic growth by reshuffling resources to their most valued uses. For example, pushing for free trade and the division of labour are only likely to get you so far. They allow resources to be reallocated towards more valuable uses, but they don't substantially alter the trajectory of economic growth. Adam Smith, David Ricardo and Thomas Malthus, all champions of the gains to trade, recognised this. They thought that after tearing down domestic and foreign barriers to trade, that growth would eventually plateau to a stagnant, "stationary state". 17th Century Holland would be a pretty good approximation of where they expected the pinnacle of economic progress to be.

Advanced as it was for the age, 17th Century Holland doesn't remotely compare to today. Fortunately for us, growth effects can put us on a trajectory of sustained economic growth, with innovation as the crucial factor. What Smith, Ricardo and Malthus didn't see coming was the Industrial Revolution: not steam and chimney stacks, but a wave of sustained innovation in all industries. In a nutshell, modernity began. Britain became the envy of the world not only for its ability to invent, but its remarkable capacity for adopting others' inventions and making them work. An instructive contrast is between France and Britain. France poured significant government funding into trying to make industrialisation work, and had lower taxes and lower external trade barriers too. Yet Britain had the comparative advantage in innovation, trumping all. It undermined taxing governments, guilds and aristocracies in the 1770s, and endured 1970s socialism too.

If Britain really wants sustained economic growth, it needs to radically improve the conditions for innovation. But this requires a cultural change as well as government allowing it to take place. The eminent economist and historian Deirdre McCloskey describes this as the dignity and liberty for innovation: a willingness to embrace and celebrate the creative destruction of new products and processes supplanting the old. Modernity was born when Britain went from condemning Shakespeare's Shylock in the Merchant of Venice, to honouring James Watt with a statue in Westminster Abbey. But we are in danger of falling back into the ancient distaste for commerce and innovation. As Allister Heath rightly pointed out in his address to the ASI Christmas Party, we must combat the emerging politics of envy and redistribution, and embrace the optimistic impulse of innovation.

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Forget competitive exam boards, we should abolish O-Levels altogether

Written by Anton Howes | Wednesday 27 June 2012

Michael Gove’s proposal to abolish competing exam boards for his new O-levels has sparked an important debate within the free-market movement. On the one hand, Liz Truss MP leads the approving side, while Dale Bassett of Reform, James Croft of the Centre for Market Reform of Education, and I, have all cautioned against the dangers of establishing subject-by-subject exam board monopolies.

Liz Truss’ main response to our criticism has been that competitive exam boards represent a “pseudo market” where government determines content, and that we have misunderstood the proposed structure: it is to be a franchise system rather than a monopoly. Similarly, she cites successful genuine free market qualifications like that of the Chartered Institute of Management Accountants (CIMA), who don’t have competing exam boards within their structure.

However, a franchising system is nothing more than a temporary monopoly. There may well be fierce competition for each contract, but it can only serve to restrict the hitherto limited number of competitors even further, as some fail to land contracts and go out of business. This sort of limited competition is also even more conducive to succumbing to the pressures of lobbyists and thus grade inflation as the ‘buying’ is done by a single body rather than by each individual school. As James Croft has pointed out, centralisation also concentrates risk, making it less likely for qualifications to gain and sustain confidence in their standards. Overall, the points made against monopolies still stand.

Nevertheless, the real problem is the persistence of a state-run and state-designed qualification. Comparing CIMA and O-levels is to compare apples to oranges: one is private, and one is not. Where politicians have control, centralisation must be avoided at all costs. The proposed abolition of the National Curriculum suggests that schools will no longer be bound to use O-levels, and will have more freedom to choose from an abundance of existing and potential alternative qualifications. But O-levels’ very existence as a state-run and state-sponsored qualification will necessarily crowd out the competition, leaving it in a dominant position.

Instead, perhaps both sides of the debate could agree to abolish O-levels (and A-levels) altogether. Superior private alternatives already exist, and would welcome the prospect of a more level playing field without government distortions. Even better, existing institutions’ experience of setting exams and designing syllabuses should be used, perhaps by encouraging the currently competing exam board companies to set up their own, entirely separate qualifications. This increased competition could also produce a variety of qualifications that meet employers’ and universities’ demands by including them in syllabus-setting processes. Rather than debating the design of a government qualification, we must be truly radical and propose its abolition.

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