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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

Our Spring sixth form conference

Written by Sally Thompson | Wednesday 02 May 2012

Last week we held our first sixth form conference of 2012 in Westminster. ISOS, the Independent Seminar on the Open Society, has been running for many years and is extremely popular with sixth formers and teachers.

One teacher I met at our conference told me how her pupils were much more free market than her and were keen to come to all our student events. A number of pupils attended independently and a couple of students travelled all the way from Yorkshire to take part. Hundreds of the free books we provided were snapped up within minutes and we were inundated with requests for work experience and for more events for sixth formers.  The enthusiasm of those attending and the quality of the questions asked were truly inspiring - encouraging me that there may be many more libertarians amongst the next generation.

As always, the speeches at ISOS were excellent and can be viewed on our YouTube page [We didn't get the debate at the end of the day between Jamie Whyte and the nef's Nic Marks, but I'm going to embed rest of the videos on the blog later today - ed.]. Dr Tim Evans’s talk on ‘The Morality of Markets’ was the highlight of the day for me and sparked challenging discussions on the myth of ‘market failure’ and controversial topics such as whether the banks should have been bailed out.

I wasn’t alone in my enjoyment of the day. In our feedback forms, 100% of the attendees rated the day as ‘excellent’ or ‘good’ (with the majority voting excellent!). The comments on the forms were all very encouraging with pupils writing “Absolutely great, outstanding and highly intellectual seminar. Thank you!” and “Excellent conference. Really widened the way I thought about the topics discussed.” And that’s just a glimpse. The feedback was overwhelmingly positive and served as a great reminder to us of why we choose to focus so much of our energy on student work.

Plans are already underway for our next ISOS conference in November 2012 and details will be out soon. If you are a sixth-former who is interested in attending, please do get in contact. And if you are a teacher or know of a teacher who would benefit from hearing more about our student conferences, please do drop me an email at sally@adamsmith.org.

We’d really like to increase the frequency of these events, but that is only possible with the support of people who share our vision of educating the next generation on the importance of free markets and a free society. If you would like to donate towards our work in this area, we would of course be delighted to hear from you!

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ISOS 2012

Written by Sally Thompson | Friday 20 April 2012

Next Wednesday (25th April) the ASI will be holding its next Independent Seminar for the Open Society (ISOS) in Westminster. The one-day conference is aimed at sixth-form students and undergraduates with an interest in politics and economics. Named for philosopher Karl Popper’s book ‘The Open Society and its Enemies’, ISOS explores the principles and practicalities of an open, free and tolerant society.

Political views are formed from an early age and it’s a sad fact that far too few people come across free market and classical liberal ideas during their formative years. However we at the ASI are pretty confident that classical liberal ideas are very appealing to young people because they emphasise individualism, peace and mutually beneficial exchange. ISOS is just part of our work to inspire young people with the ideas of liberty and free markets.

On Wednesday we will have Dr Tim Evans talking on the morality of markets and Dr Madsen Pirie giving a short talk, based on his ‘Economics is fun’ videos, on economics for real people. Chris Snowdon, author of our cigarette plain packaging report, will be lecturing on prohibition and its discontents and Tony Gilland will be talking on the right to be offensive. The day will finish with a debate between Jamie Whyte and Nic Marks on whether it is the role of government to make people happy.

There are still some places available for sixth formers and undergraduates so please email isos@adamsmith.org if you would like to attend. Full details on the conference are here: http://www.adamsmith.org/events

For those of you who don’t fall into that bracket, but are interested to find out more about our work with young people or interested to support our student work, do feel free to email us!

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ASI budget coverage highlights

Written by Sally Thompson | Thursday 22 March 2012

The Adam Smith Institute appeared on a variety of TV, radio, print and online news sites commenting on Osborne's announcements both pre and post speech. Below are some of the highlights:

  • Dr Eamonn Butler on the Jeff Randall Show, Sky News discussing the expected changes in taxes.
  • Dr Madsen Pirie on the Today Programme arguing against government intervention in business and for less regulation and taxes.
  • ASI Fellow Alex Singleton on the Jeremy Vine Show defending the need to scrap the 50p tax rate.
  • Sam Bowman on Al Arabiya TV giving his reaction to Osborne's announcements.
  • Dr Madsen Pirie writes in City AM an entrepreneur's wish list for the budget.
  • Sam Bowman writes in the New Statesman on his dream budget proposal: legalising and taxing drugs.
  • Sally Thompson writing on Politics.co.uk on the need to reduce the tax burden and simplify the tax system to generate growth.
  • Tom Clougherty's criticises the tax hike on cigarettes in The Sun.
  • The ASI's reaction to the 50p tax rate and lowering of the 40p tax threshold feature in the Daily Mail and Daily Telegraph and ConservativeHome.

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The disaster that is HS2

Written by Sally Thompson | Tuesday 10 January 2012

Following the announcement on High Speed Rail, Sam Bowman, Head of Research, has given the following reaction:

"There are big questions remaining about the viability of HS2, and in all likelihood it will become a major burden on public finances in the years to come. Past experience in Britain and elsewhere suggests that governments tend to wildly overestimate the demand for high-speed rail, and it is telling that there are only two high-speed lines in the world that do not rely on a taxpayer subsidy. Britain's past experience with high-speed rail, the line connecting London St Pancras to the Channel Tunnel, was a disaster – it sold for less than half of its construction cost and passenger numbers were less than a third of the projected number. 

"The potential for overspending, too, is worrying. A tunnel in transport minister Cheryl Gillan MP's constituency will add £500m to the £32bn bill – at £190,000 per yard, or £5,300 inch, it raises the possibility of massive extra spending to keep key MPs happy. At £32bn, the project is enormously expensive and its first stage will reduce the journey time from London to Birmingham by twenty minutes. It is staggering that the government is prepared to use so much taxpayers' money for such a risky, costly project which will almost certainly require a significant long-term subsidy to remain operational."

Our report released last year 'High Speed Fail' pointed out the many flaws in the HS2 plans. Its key arguments are detailed below, but you can read the full report here

The facts on HS2:

  • HS2 will be an expensive taxpayer-funded project – the first phase to Birmingham will cost £17bn, with completion of HS2 to Leeds and Manchester bringing this to £30bn and the planned eventual extension to Scotland bringing the total to £50bn. The HS2 project will therefore cost taxpayers approximately £1,500 per household.
  • HS2 is extremely expensive even for high-speed rail: its cost is equivalent to £130m per mile and is a staggering four times the cost of the average European high speed rail line.
  • Around the world, all but two high-speed rail lines depend on government subsidies for their ongoing operation. The TGV in France has caused SNCF’s debt to rise to c£25billion. The World Bank warned in 2010 of the debt created by high speed rail systems talking of the ‘near certainty of copious and continuing budget support for the (high speed rail) debt’.
  • The potential for going far above the £4bn “optimism premium” set aside for overspending is high, especially in light of current inflation. Public pressure for more tunnels (which cost much more per km to build) through environmentally sensitive areas such as the Chilterns will push up construction costs, as has been demonstrated by the £5,300/yard tunnel expected to be approved to win the support of Cheryl Gillan MP for the project.
  • Predictions of passenger numbers and demand for High Speed 2 may also be overambitious. This would have huge repercussions for HS2’s profitability. Britain's previous experience with high speed rail – the HS1 line between London St Pancras and the Channel Tunnel – proved far less popular than its promoters had predicted, with actual passenger take-up coming to one-third of the predicted amount. 
  • HS1 cost £5.7bn but raised only £2.1bn when sold off, raising the possibility that HS2 may also incur a significant loss upon completion. If HS2's sale made the same magnitude of loss as HS1, it would mean a loss to the taxpayer of nearly £20bn.
  • The outstanding questions about HS2's profitability make it appear extremely likely that the project will require a significant ongoing taxpayer subsidy upon completion and may well make a loss upon its sale. The promise of slightly faster journeys to Birmingham, Manchester and Leeds do not warrant this risk-taking with taxpayers' money.

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The NHS needs radical reform

Written by Sally Thompson | Friday 09 December 2011

  • The NHS is a monopoly that does not provide comprehensive or high quality healthcare.
  • A social insurance scheme needs to be introduced, funded by employer and employee contributions along with co-payments from patients
  • Hospitals should be removed from government ownership and sold to private groups to create genuine competition and choice for patients

In a report released today, the Adam Smith Institute calls for radical reform of the NHS. The government’s current plans are trying to introduce competition to improve health care quality, but seek to do so only in a limited and overly bureaucratic way.

Instead, our report proposes the gradual selling off of all hospitals to multiple private groups, in order to introduce real competition and drive up standards. The sales receipts from this would be used to establish a health insurance fund.

The fund would be entirely self-financed through employer and employee contributions and co-payments from patients.  With the NHS no longer needing the £105bn in government funding the treasury could afford to cut direct and indirect taxes to offset the additional contributions individuals would make to the health fund scheme.

The report also argues that co-payments are essential for any health care system to be viable in the long term. Without them, costs will keep spiralling upwards uncontrollably. Introducing co-payments would move English health care towards a European-style social insurance system (with proven better performance than the NHS). It is proposed that these co-payments should be set at around 20% of treatment costs, but limited to a maximum of £6000 per patient per year.

To ensure costs are not onerous for patients, private insurers should be encouraged to enter this secondary market on a needs-blind basis. As the maximum insured risk is only £6000, insurance cover should be available for around £250 per annum.

The report’s author, Chris Davies, has experienced over 45 years of NHS care and writes candidly about the many ways the service has failed him. Many of the health conditions he has experienced were caused by incorrect and inadequate past NHS protocols, forcing him to spend large amounts on private healthcare or on going abroad for treatments to fix problems caused by the NHS.

After being failed repeatedly by the NHS, which he sees as a fifties-style nationalized service that does “time wasting and inconvenience on a monumental scale”, he has written ‘Reforming the National Health Service: Reflections on four and a half decades of NHS care’ to argue that the NHS cannot continue failing patients and should be radically reformed.

Tom Clougherty, Executive Director of the Adam Smith Institute, adds:

“Britain’s anachronistic healthcare system is failing its patients and the government’s proposed reforms will do little to change this. The NHS continues to consume a large amount of the government’s budget but does not deliver the quality of service that is to be expected in a wealthy, developed nation.

“As our author points out, we urgently need to reform the NHS and seek out alternatives to a one-size-fits-all nationalised service. Adopting a European-style social insurance model, and transferring England’s hospitals into diverse private ownership, will inject real choice and competition into healthcare provision and give us the patient-centred system we desperately need.

“We must not let nostalgia about the founding of the National Health Service get in the way of the desperately-needed reform of this sector.”

Read the report here.

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Taxing talent: How Britain can attract and retain the world’s best workers

Written by Sally Thompson | Wednesday 12 October 2011

suit

Our new report, ‘Taxing Talent: How Britain Can Attract and Retain the World’s Best Workers’, looks at the challenges the UK will face in terms of migration policy over the coming years. It argues that Britain must focus on attracting highly skilled migrants and that the key to doing this is to lower income taxes.

The report reveals how critically important immigration is to the British economy. With an ageing population and a looming pensions crisis, the UK needs to attract about 270,000 new migrants each year. Furthermore immigration is important in creating a flexible workforce, which is necessary if we want to see economic prosperity.

Although we have the 4th highest number of highly skilled immigrants in the OECD, we also have one of the highest rates of emigration by highly skilled workers. In light of this, the government needs to focus on policies that will both attract and retain the most valuable migrants and native workers.

The report reveals that there are a number of factors that impact a migrant’s decision to move to or stay in Britain. These include social and professional networks, employment prospects, wages and professional development prospects. However the report also revealed that the tax burden is a crucial factor influencing highly skilled workers’ choice of where to emigrate to. Furthermore it is one of the only variables that the government can influence in the short run with any success.

Where tax breaks have been tried, they have failed. Tax breaks don’t retain migrant workers: Instead, the government should abolish the 50p tax rate and reduce the 20p and 40p rates to attract the most productive migrants to Britain. We need to have an internationally competitive tax system if we want to keep our native highly skilled workers and attract talent to Britain.

The government’s current policy of an immigration cap could lead to negative economic consequences. Instead our report proposes introducing an “open borders, closed public accounts” system, which would make migrants use private insurers for healthcare and other large welfare expenditures. This would make the UK open to migrants whilst addressing concerns over public service abuse.

If we want to see the UK’s economy revitalised, we need to make Britain amongst the top places in the world for highly skilled workers to live. As our previous report on the 50p tax outlined, it’s crucial we cut taxes to remain internationally competitive. As our report argues, we cannot afford to keep on taxing talent out of the UK.

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Inspector Ratched

Written by Sally Thompson | Sunday 06 March 2011

This week my housemate, who is a teacher, discovered her school was facing the dreaded Ofsted inspection. She has since been living on a few hours sleep a night as she gets all her teaching folders up to speed. It made me reflect on how we evaluate good teaching, and ask myself whether the Ofsted inspections inflicted on teachers really have any worth.

Having taken a PGCE, I remember the prescriptive means by which teaching is assessed. It was a source of much frustration seeing how the National Curriculum and threat of Ofsted inspections stifled creativity as teachers’ time was eaten up teaching to the exam syllabus whilst desperately trying to keep up with their teaching folders and paperwork. My experience of teaching in the state sector taught me that teaching is currently much more a task in box ticking than instilling a love of learning and nurturing children’s talents. In my view Ofsted inspections just place unnecessary extra stress on teachers with no obvious positive educational outcome. As Chris Woodhead pointed out last year the focus is not ‘education, education, education’ but ‘compliance, compliance and yet more compliance’.

Fortunately, Michael Gove has made some steps to free up the teaching profession, including allowing high performing schools to be exempt from Ofsted inspections. However, a lot more needs to be done and the whole mechanism of how schools are assessed needs to be re-examined. Ofsted inspections are costly, unreliable and don’t lead to better schools. If Ofsted inspections fail to improve educational standards then they have very little purpose. Moreover, what’s the point in providing parents with information on school performance if there is still no choice over which school you send your child to?

If Gove really wants to free up schools and teachers it’s time he scrapped Ofsted inspections and continued to push through with his free schools agenda. If un-inspected schools seems a scary, there’s always the possibility of voluntary school assessments run by private companies. Sadly, such solutions still seem a long way off being considered.

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Make fostering and adoption easier

Written by Sally Thompson | Friday 04 March 2011

I was frustrated to read this week about the Christian couple, Eunice and Owen Johns, who can no longer care for foster children due to their moral opposition to homosexuality. I was most struck by the bizarre standards the equality laws force on prospective foster and adoptive parents.

Let’s be clear here, the Johns are not zealously anti-gay or seeking to impose their views on sexuality on anyone. They simply refuse to compromise their religious values to fall in line with the 2007 Equalities and Sexual Orientation regulations. It’s not enough that the Johns said they would love any child irrespective of their sexual orientation. These regulations state that homosexuality must be endorsed and failure to do so is effectively harmful for foster children.

Given that there is a shortage of 10,000 foster families in the UK, it seems bizarre that the Court would rule to ban the Johns from fostering, especially when they have successfully done so in the past. Foster care provides children with respite from their abusive, unstable and damaging home environments. Turning down good foster carers like the Johns is essentially depriving such children the safe home, security and love they so desperately lack.

Having worked with children from vulnerable backgrounds and daily had to hand them back to their unpredictable, alcoholic and abusive parents, I can safely say that it is vastly more harmful for the State to make fostering more difficult than it is to allow people with unfashionable or outdated opinions to foster. Ultimately, children who are adopted and fostered into any sort of family do better than ones who are institutionalised or stuck in abusive environments.

It’s time the political-correctness zealots recognised that their equalities agenda must sometimes be overridden for the greater good. Certainly, we need to screen foster parents to ensure that children do not fall into dangerous hands, but at the same time it is ridiculous to try and shelter them from any carer who holds any sort of prejudice. It’s time we made it easier for British families to foster and adopt, and gave more children in the UK a better start in life.

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Buy ethically: Buy sweatshop

Written by Sally Thompson | Sunday 30 January 2011

sweatIn light of news this month that ethical shopping and the success of Fairtrade has grown in spite of the recession, I felt it was about time to defend sweatshops. Outrageous as it might sound, I would rather buy sweatshop-produced than Fairtrade-labelled goods. Far from being evil, sweatshops are a necessary rung on the ladder of economic development and lift millions of people out of poverty across the developing world.

Although the long hours, low pay and unpleasant conditions associated with sweatshops may seem abhorrent to us in the West, it’s pointless comparing their pay and work environment to those in the developed world. If we were to enforce a minimum wage and our work conditions in factories in the developing world, then there would be no reason for manufacturers to build there. The lack of a minimum wage and high labour supply are what give people in these the competitive advantage when it comes to manufacturing. Remove these advantages and sweatshop workers would be forced back into destitution or relying on unpredictable subsistence farming. The choice is between poorly paid work in a sweatshop and terribly paid work in agriculture.

Sweatshops, particularly in countries such as Bangladesh, mostly employ women. Before the arrival of sweatshops these women had no work and no economic rights, mostly living in rural communities with no access to education. Working in a sweatshop allows them to have for the first time the ability to provide for themselves. Even at such low wages they can be self-reliant and save money, giving them the freedom to choose who they marry and to invest in further education to improve their employment opportunities. In comparison women in rural undeveloped regions have no choices, no education and no possibility for self-determination or improvement. For these women working in a sweatshop is not slavery. It’s a choice that brings for them significant benefits and freedoms.

If we really want to help developing world countries lift themselves out of poverty we should buy more of everything they produce, not just Fairtrade products. The supposedly ethical boycotting of sweatshop-produced items or the pressuring for the closure of factories could in fact have devastating effects on micro and macro levels. So next time you pick up a t-shirt made in Cambodia, don’t feel bad. You're helping a poor country – and poor people – get richer, potentially helping a young women become economically empowered and contributing towards a raising in the standards of living for millions as they are lifted out of extreme poverty.

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Robots don't go on strike

Written by Sally Thompson | Thursday 20 January 2011

tube

When I read that Mayor of London Boris Johnson had raised the prospect of driverless Tube trains in a recent speech I couldn’t help but let out a little cheer. As much as I don’t like to see people potentially losing their jobs, it’s great to see that politicians are willing to stand up to the RMT and TSSA unions. Such a move would create a better service and would probably be cheaper in the long run than the current Tube system.

For far too long the Unions have shown complete disregard for their consumers’ needs and desires. They deliberately seek to create maximum disruption in order to push for outlandish pay and conditions at a time when public finances are tight. Apart from infuriating commuters, these strikes have a negative economic impact. The London Chamber of Commerce calculated that each day that the Underground is closed costs the UK economy £48million. So the five strikes cost us £240million last year, whilst it has also been argued that once all the Tube trains are converted to automatic systems it would save a further £141million a year. With such tempting savings the Tube drivers should be wary that their demands don’t one day do them out of their jobs.

As a result of the unions having entered into unreasonable wage negotiations, increased labour costs have led to Transport for London (TfL) increasingly using machines to top up Oyster cards instead of manned ticket booths. The more strike-prone the workforce becomes, the more TfL will be incentivised to look for alternative, less labour-reliant solutions like automated trains. Previous research into driverless systems found that automated metros allowed the operators to provide exceptional service quality whilst reducing operating costs. They also led to shorter waiting times, greater cleanliness and better information and safety. All of which we commuters would very much welcome.

Disappointingly, such improvements are not to be expected anytime soon. That being said, I do believe the time seems to be nearly up for the unions. With increasing technological advances, tube workers will no longer be able to hold the city to ransom. As a result we may one day have a truly reliable and pleasant Tube network, which will no longer inflict so many costs on individuals and businesses. So come on Boris - the sooner we embrace change on the Underground the better for London and its businesses.

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