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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

There's plenty of fat for councils to trim

Written by Daniel Meeson | Tuesday 26 October 2010

trimmingfatMuch has been made of the ‘regressive’ cuts and the claim that the poor, the sick and the elderly will bear the brunt of the pain. Now it seems that councils will be added to this list, condemned to years of misery because of reduced spending of 35% by 2014-15. Most of this is exaggerated scaremongering.

The obvious solution for many would be to increase council tax, and so revenue, to save services. However, this is no solution. Tax levels are already painfully high, and many areas have had their rates doubled since 1997. The government seems to recognise this, having put pressure on councils to keep levels stable.

Despite much of the gloom espoused by journalists, there is plenty of administrative fat to be trimmed from councils. Three London councils have already found savings of £50m to £100m a year by sharing administrative staff. This is an incredible saving; especially as it (apparently) has been found within two days. While inevitably this will produce job losses, the real fear is that this local governance will be centralised into super-regional decision making, undermining its very purpose. However much of this ‘centralisation’ is exaggerated. Westminster, Hammersmith & Fulham and Kensington & Chelsea do not all need to separately employ different people each making the same decisions. Not every area of spending is unique to the area.

Savings such as these will not be available across the country, yet before politically insensitive things such as disability payments are slashed instead, there is great potential for another solution: privatisation. In the face of huge budget cuts, Chicago Mayor Richard Daley controversially leased many of the city’s unnecessary areas of expenditure, such as toll roads and parking meters, to the private sector, gaining billions of dollars as a result. Refuse collection is a service where there is considerable room for development as low barriers to entry and much competition mean the private sector could provide much cheaper services than current council initiatives. Exeter City Council has made significant progress in this area, with IBM beginning to provide services.

This all goes without mentioning the bloated salaries and pensions that many councillors enjoy. If your council begins to cut frontline services, be aware they probably do not need to.

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A review of the Independent Seminar on the Open Society 2010

Written by Daniel Meeson | Saturday 23 October 2010

isos 

Wednesday was an interesting day in Westminster, because just down the road from the Chancellor’s Comprehensive Spending Review delivery, 200 sixth-form students attended a day of lectures entitled “An Agenda for Reform: Politics, Economics and Society” as part of the ASI’s Independent Seminar on the Open Society (ISOS) programme.

The day began with a speech from the MP for Wycombe Steve Baker, whose speech was entitled “The Ethics of Welfare”. Baker argued that current welfare benefits are highly damaging to the country, regardless of the monetary cost. He pointed out that since 1997 British poverty levels had increased and many millions remain living off of the state, despite (or because of) increases in state handouts. This was coupled with the problem that individuals will always spend their own money more effectively than central governments. Baker praised the Universal Working Credit as a step in the right direction to fixing these problems.

Next was philosopher Jamie Whyte, who discussed the concept of fairness and its application in the public sphere. Students were asked whether a race between Gordon Brown and Usain Bolt was “fair”, and used this thought experiment to show the different impacts that equality of outcomes and equality of rules. Whyte argued that using the government to create equality of outcomes was counterproductive, as it would concern itself with finding the “good life” – an impossible task given that we all have our own disparate desires.

Caroline Boin, from the International Policy Network, spoke about the impact that wealth creation has in protecting the environment. She showed that rich nations had clean rivers and air precisely because they had the wealth and efficient industries to provide this cleanliness. She said that poorer countries would experience the same environmental improvements as they developed – implying that economic growth in the developing world should be the critical issue for environmentalists.

James Tyler finished the lectures with a damning view of the current banking system, showing that regulation and government intervention make banking one of the most governmentally-influenced sectors of the economy, and explaining the importance of money in economics. Tyler gave an Austrian economics-based perspective on the financial crisis, which was particularly valuable for sixth-formers, most of whom had not heard Austrian ideas before.

The day ended with a debate on the topic of trade vs. aid in promoting the interests of the developing world. The students voted overwhelmingly that aid was detrimental to lifting nations out of poverty, with free trade essential to future prosperity.
The day was a success, not simply because it was so interesting, but because it gave a new perspective to students who may not have had a strong exposure to free market ideas before.

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Tax the bankers and you tax us all

Written by Daniel Meeson | Wednesday 20 October 2010

johnsonYesterday, the shadow chancellor outlined Labour’s approach to dealing with the enormous fiscal deficit. He said that 60% spending cuts to 40% tax rises were “about the right balance” to halve the deficit over the term of this parliament. In doing so he conceded that something must be done to fix the nation’s finances, and that cutting the size of government is the most urgent priority. Importantly, he mentioned clawing much of his tax increases from the bankers and not from “ordinary people”.

Much of this is influenced by Mr Darling’s one-off bank levy on bank bonuses, which raised £3.5 billion. The current government is continuing with a reduced version of the levy, while Johnson wants banks to contribute an extra £7.5 billion. His proposal is flawed. For banks to deal with a consistently greater tax burden, they only have options that will be harmful to the economy.

Firstly, and most easily, many investment banks could relocate away from Britain, taking with them one of the most profitable sectors of the economy and therefore many billions in lost tax receipts. This would compound the fiscal problem. Secondly, banks could increase their prices, making credit more expensive for the essential small and medium size businesses that the recovery depends on. Higher borrowing rates are also painful for the poor, making mortgage repayments and credit bills harder to repay. Thirdly, banks could cut bonuses, but in doing so lose talent to overseas companies free of the levy and reducing the strength of the country’s financial sector. All three of these options hurt the poor and are destructive to the economy, yet are somehow sold by Johnson as “pro-growth”.

His words came on the same day that key business leaders gave support for the government’s approach to cuts, emphasising the importance of eliminating the deficit. Their argument is straightforward: the deficit must be dealt with swiftly, to avoid a collossal debt bill hanging over us for the coming years. Tax rises on banks will weaken a key part of the private sector and should be avoided at all costs.

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A dangerous addiction – drug prohibition

Written by Daniel Meeson | Friday 23 July 2010

Drug prohibition is an idealistic, puritan response to an alarming real-world problem, of which limited freedom is the only viable solution. It is a problem that is consistently ignored by the majority of the political class; surprising in these times of deficit reduction and prevailing liberal attitudes. Under the simple justification of protecting its citizens, the state has created a monster that, like many other well-meaning public legislation, creates the exact opposite of protection. Ultimately, prohibition is an unnecessary policy of incredible economic cost based on flawed principles.

The social and economic cost of drug prohibition cannot be overstated. A study by the drug-reform think tank Transform only last year stated that the net cost of drug prohibition is, at their lowest estimate, in the region of £17bn per annum. When compared to the net cost of regulated drug markets at the highest estimate of £11bn, to lowest of £3.5bn, we can see there is a cheaper option. However such conclusions should be obvious. The international behemoth of drug production and consumption is under the immense pressure of the law and thus not able to engage in free markets. This inevitably drives all those involved to keep their trade strictly underground. Freed from public scrutiny, the drug industry is free to wage war against its customers; in the form of ever inflating prices, and in a highly inelastic market pushing many addicts to crime, and its competition; with monopolistic, violent gangs. All such social costs unnecessarily aggregate in the form of high taxes and high crime.

Yet the argument on principle is the strongest, and goes to the core of the freedom debate. John Stuart Mill famously fought for individual liberty and the sovereign individual. But politicians ignored such cries, frightened by the harsh realities of drug abuse, drawing a line through personal freedom by banning any drugs which they deemed necessary. But the principle demands politicians meddle further – it compels they ban all dangerous activities, from horse riding to driving – a flawed logic in many respects.

Therefore freedom and regulation is the only solution that would deal with the problems drugs bring to society. Market forces will control drug prices, thus crime. Addiction should be dealt as a health issue, as is currently for the legal drugs in society; alcohol and cigarettes. It will eventually be seen that freedom of choice is ultimately better for society than prohibition and control.

Daniel Meeson is the 3rd prize winner in the 2010 Young Writer on Liberty.

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