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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

Some 2014 budget nasties

Written by Whig | Monday 24 March 2014

The ASI has already given its response to the budget. We should also remember that the UK's fiscal position is basically unsustainable even if economic growth is sustainable - and I find that extremely hard to believe. The UK economy needs massive fiscal consolidation, supply side reform and sweeping tax cuts if it is going to prosper.

Moving away from those macro-type issues, there are some very troubling aspects to the 2014 budget that it seems worthwhile highlighting, if only to remind us of the madness that is UK public policy. You won't read much about these in the popular press, which is more concerned with bingo and beer.

Changes to annuities regulations will increase tax take in the short to medium-term

As this article points out, pensioners taking a lump-sum payment will still face very large tax charges which will make a tidy sum for HM Treasury

In the longer term, changes to pensions are being funded by higher taxes on contributions

The Chancellor has reduced the relief on higher rate income tax for pensions contributions. Osborne has reduced the cap on tax-free life-time savings from £1.5m to £1.25m. Sounds like a lot of savings, but given the current rate of inflation, this will probably be about average by the time a lot of current workers retire. Anyone breaching this cap will face a 55% tax charge, which promises to raise about £5bn for the Treasury. I won't spell out the long-term economic effects these sorts of raids on saving have on the UK's economic growth prospects, but people need to start recognising that we cannot have sustainable, real economic growth without savings.

HMRC has been giving sweeping new powers

As if the (much-ignored, but hugely significant) General Anti-Abuse Rule (GAAR) of 2013 hasn't given HMRC enough. Essentially, the GAAR grants HMRC the discretion to determine, retrospectively, what is 'reasonable' practice, which, as Jamie Whyte points out strikes at the Rule of Law. Less seriously, but dangerous from an investment perspective, is that it creates huge uncertainty in the UK's tax position.
HMRC has received a £1bn increase to its budget and powers to confiscate funds directly from individual's bank accounts. This is hugely worrying from a civil liberty perspective, but we should also bear in mind that reducing the level of tax avoidance (which is, or ought to be, legal behaviour) simply represents tacit increases in taxation, which already stands at very high levels.

Changes to the rules on LLPs have been pushed through

The changes, outlined here, threaten to have potentially serious tax consequences for LLPs. This is in spite of a request by the House of Lords that they be delayed because of the uncertain impact of the new measures.

New rules on SDLT are very problematic

The Chancellor has signally failed to change SDLT despite the huge 'fiscal drag' and distortions to the property market it creates. As property prices rise, this will increase - no wonder the Government is extending its 'Right to Buy' scheme! As this article points out: "In the 2012 Budget, Osborne announced that homes worth more than £2m would face a stamp duty rate of 7 per cent.

Osborne said: “We are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company. We will expand the tax on residential properties worth over £2m to those worth more than £500,000."

This is a smoke-screen, however, as individuals were using this to avoid IHT on properties, and not SDLT. The reliefs available for landlords are very difficult to obtain, and essentially these changes will result in higher tax charges on landlords, thereby increasing rents and reducing availability, in a rental market which is already unaffordable to many and is plunging those on middling incomes into 'housing poverty'. 

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Blame the planning system for flood damage

Written by Whig | Friday 10 January 2014

Much of the coverage over recent winter flooding in the UK has focussed on immediate issues. The Prime Minister was given a grilling in Yalding over failures to restore power supplies. This neatly demonstrates our loss of the principle of subsidiarity - the PM is not, and should not, be responsible for power supplies, they are both beneath and outside his purview. If we expect our politicians to control such matters, they will, invariably with unintended and deleterious consequences. Such is the creeping collectivism evident in our society, it is no wonder we have such an over-mighty state.

Some debate has centred around whether flood defences are sufficient or whether future funding will be reduce - much of this is simply political point-scoring. Again, there is the question of whether the state should be responsible for such issues - if we worry about the state delivering insufficient supply, surely this is an argument for private supply? Further, how can we discern whether the state is, actually, over-supplying flood defences? Without a price mechanism in operation, there is no means to tell.

Subsequently, the debate seems to have shifted over to whether the floods are related to climate change. Without adopting any stance on climate change, it is 'bad science' to link such particular weather event to the phenomenon. Environment Secretary Owen Patterson has been castigated by the left-wing press for 'climate scepticism' - in reality his position of moderate, evidence-based scepticism (in the philosophical sense) seems far more reasonable than the PM's comments.

In reality, the floods demonstrate something quite different - the failure of planning policy. The problems have been caused not by the flooding itself, which is actually pretty common in winter, but increased levels of building in floodplains leading to - surprise, surprise - increased flooding. To quote the Chair of the Flood Protection Association '“It is absolutely barking mad to build on a flood plain when there are so many other places that could be built on.”

Why, therefore, is development taking place in such unsuitable locations? Step forward our old nemesis Planning Policy. Instead of allowing a sensible, functional market in land planning, which would factor in such costs and mitigate against such illogical development. Instead, the bureaucratic and public choice factors inherent in collectivised control of land use lead to such suboptimal outcomes - not only do we have grossly insufficient new housing we also have it poorly situated. Moreover, such policy further imposes costs - flooded voters demand flood defences, funded out of additional the tax system and with all the deadweight costs associated with bureaucratic management. This is a typical feature of most interventions - they create additional costs and unintended consequences.

What this does tell us about climate change is that government policy is a poor way to deal with its effects, but also may well worsen them. Central planning creates suboptimal choices and inflexibility. Dynamic phenomena such as environmental demand adaptability, entrepreurialism and efficient allocation of resources. Political and bureaucratic choices offer none of these. 

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Regulating the press

Written by Whig | Wednesday 20 March 2013

Libertarian regulation theory shows us how state power, apparently used for benign purposes, ultimately results in the exploitation of consumers and the misallocation of resources. Of the two great threats to our economic progress and liberty - state spending and regulation - I would argue that it is regulation that is the greater threat.

State spending is often contested and its results are at least clear to see (although the fact that state spending in the UK is vast and growing should not be forgotten). Regulation, on the other hand, is a far more subtle threat and seems to gain approval across the political and public spectrum. The corporatist pseudo-markets created by regulation in banking, energy, rail and so on are decried as evidence of the failure of capitalism when they are anything but.

As we have a current example of new regulation, it is interesting to apply the theory and see what might be the result. Regulation* is often introduced when there is assumed to be a case of 'market failure'. Broadly, the impact of regulation is to create barriers to entry which protects existing market players and tends to promote consolidation within the industry. Small and more innovative firms, which would otherwise enter a market where large profits are to be made, are thus excluded. Existing players are thus able to dominate the market and drive up prices or prevent innovation. 'Government failure' is thus ignored but it is the consumer and the society at large which suffers.

In the case of Press regulation, many of these features may occur. We cannot call the print media a 'free market' but it is freer than, say, the broadcast media which is dominated by the BBC and bound by tight regulation on objectivity. An instance of perceived 'market failure' in the form of phone hacking was used to justify regulation, ignoring the fact that phone hacking was illegal under existing laws. We can already see how regulation might drive out small players who are currently undermining the profits and market share of the established Press.

The position of small internet bloggers and innovative media news outlets is jeopardised - will the Pin Factory blog be forced to sign up to the press regulator? What influence would we have there? What if the new regulator imposed punitive fines on us?

In many markets, it is the large occupants who welcome regulation and - in fact - connive at its introduction. While they have to sacrifice some control to regulators, they are guaranteed a protected market share and healthy profits whilst avoiding the trouble of innovating against and out-competing small rivals. Further, large firms often have a 'revolving door' to regulators and are able to undertake expensive lobbying to further protect their positions.

Some portions of the Press are opposed to the new regulation, a condition which probably stems from an ideological position unique to this industry. However, it is clear that, under the system of state regulation, it is the large, extant players who would dominate the regulator and be in a position to use this power against potential rivals. In many industries, the emergence of corporatism would be unfortunate. In the case of the Press it threatens to be fatal to liberty.

*We must take care to distinguish 'regulation' from 'law'. Regulation is intervention designed to control the size and shape of a market, prices and quality. Law is (or ought to be) solely concerned with property rights. 

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Doctors and celebrities: the enemies of liberty

Written by Whig | Monday 18 March 2013

If asked which groups posed the greatest threat to individual liberty in modern Britain, I would unhesitatingly cite two groups. These groups are, broadly, the medical profession and those who are generally called 'celebrities' - pop stars, film stars and so on. You may think that I am being somewhat tongue-in-cheek (and in some ways I am), yet there is a serious set of issues at stake here.

Firstly, the medical profession. Hardly a day goes by without some group of doctors or medical scientists calling for a ban on this or some sort of government intervention in that. The latest example seems to be the attempt to set a minimum price of alcohol sales, a terrible idea which, hopefully, has failed. Consumption of tobacco, salt, sugar, fat plus associated advertising are all deemed dangerous and suitable subjects for medics to attempt to ban or circumscribe via price increases . Medics also see fit to spend public money to instruct us how to live our lives and what choices we ought to make.

Some of the rationale for this comes from the doctor's protective monopoly, the NHS. As the health costs of unhealthy lifestyles are born by the state, it seems quite justified for doctors to call for bans and price hikes. Naturally, this simply demonstrates the lunatic incentive structure that state-provision of healthcare creates, especially free-at-the-point-of-delivery healthcare which externalises the costs of unhealthy behaviour. However, the chief threat from doctors lobbying stems from their apparently impartial and expert position as guardians of health and security. Unfortunately, most of their calls ignore the Public Choice and Knowledge Problem implications of the state interventions which result.

Celebrities have an even less programmatic threat to liberty, unsurprisingly for such a diverse group. They usually adopt a single-issue approach. For a long time we have had Bob Geldof and Bono calling for state spending on international aid. The greatest current threat stems from Hacked Off's campaign against a free press. Celebrities will often lead opposition to reductions in public spending or state activity such as Arts Funding. They have a powerful ability to rally strong public opinion for or against a cause, no matter how strong the case against - whilst Joanna Lumley's campaign to allow Gurkha's to settle in the UK hardly represents a major threat to liberty, although it has had some unintended consequences for Aldershot, it serves to demonstrate the power without responsibility that celebrities wield.

In distinction to the recent past, where ideological opponents of liberty tended to possess a coherent ideological programme of state intervention and control, these groups are far more pragmatic and opportunistic. Thus, in many ways, they are far more dangerous because they cannot be so easily shown to be a threat. It must be said that both groups 'mean well' - they cannot really be accused of a malign plot to oppress people. However, both represent a serious threat to liberty.

Regulations and public spending, once in place, are rarely repealed and tend to expand as they crowd out private responses. Innovation is prevented and alternative solutions are foregone. Bans and prohibitions create black markets and often serve to create other problems without solving the first (viz. recreational drugs). Whilst everyone has a right to free speech, those lobbying for state intervention need to be aware of the consequences and problems created by their support for the insidious expansion of the state into yet more aspects of our lives.

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The Bank of Dave and our broken banking laws

Written by Whig | Friday 01 March 2013

Channel 4's follow-up to the "Bank of Dave" made for highly enjoyable viewing. The programme was subtitled 'Fighting the Fat Cats', but it was bureaucrats rather than Fat Cats that caused the problems.

The show followed the experience of Dave Fishwick's Burnley Savings and Loans community bank. The bank offers 5% AER to savers and small loans to local businesses, with profits given to local charities. In many ways, the concept has much in common with the old Credit Unions, Mutuals and Co-ops as well as the German Sparkasse (which, as the programme showed, have had similar struggles with regulation). Without knowing the full details of the business, it seems that Fishwick had a very successful model and a very low rate of non-performing loans.

As the programme portrayed it, however, Fishwick was lucky to survive a heavy-handed assault by the FSA. The regulator appeared to object to the simple business model and tried to impose a greater level of complexity of the savings accounts. This is typical - regulators want all banking institutions to conform to a chosen model, which may well be inappropriate. How is a regulator to know what customers want and which is the best means for suppliers to provide that? Fortunately, Fishwick is a charismatic character and was able to motivate public support and win some influential backing, particularly the support of the excellent Steve Baker MP.

This serves to demonstrate exactly why there is so little competition in the UK retail banking sector and why there have been so many financial scandals (PPI, Libor). In banking, as in any other market, regulation creates barriers to entry to small businesses. Not every small bank is lucky enough to have a crusading Dave Fishwick, but they should not need to. The regulatory barriers to entry drive consolidation and prevent small businesses entering and outcompeting established players. It is this which allows uncompetitive practices and harms the consumer. Big businesses have a symbiotic relationship with regulators and there is frequently a revolving door between the two. This is why we have ended up with banks that are too big to fail, but yet we still have the cry of 'more regulation'.

We should remember that, with the possible exception of energy, banking is the most heavily regulated sector of the UK economy. Moreover, it is one of the few sectors where the prices are controlled by the state - the nominally independent Bank of England in this case. It is ironic that populist demagogues such as Vince Cable and Ed Balls jumped on the Fishwick bandwagon, as it is they who advocate heavier regulation of the banking sector.

Competition in banking, as in any area of the economy, can only come from deregulation. Lowering barriers to entry, allowing small banks to enter and allowing caveat emptor by both savers and lenders (together with the re-introduction of sound money and privatisation of the Bank of England) is the only way to fix the broken banking sector. 

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Regulation as a barrier to free trade

Written by Whig | Wednesday 20 February 2013

Tim Worstall expressed his exasperation as to why free trade negotiations are going to take two years to complete. He's absolutely correct that, in a sane world, trade negotiations wouldn't exist - in the nineteenth century Britain simply unilaterally repealed tariff and legal barriers. Despite being a less substantial player in the world economy, there's no economic reason why we ought not do this today, although there are many political ones. It's reasonable to blame politicians for the problem, although I would argue that politicians are representative of both special interest groups - (business lobbies, labour lobbies and ideological protectionists) who seek to erect trade barriers-  and a supine and ignorant population. 

However, there is a genuine cause to the length and complexity of trade negotiations, namely: regulation. Tariff barriers between the US and EU aren't particularly high - the European Commission puts them at 3% on average. The real block to EU-US trade is the non-tariff barriers derived from 'from diverging regulatory systems (standards definitions notably), but also other non-tariff measures, such as those related to certain aspects of security or consumer protection'. The other area at issue is agriculture - the US and EU heavily subsidies these industries.

To enable the regulatory barriers to be removed or reduced - whilst maintaining the same levels of regulation - requires both jurisdictions to have a reasonably common standards. Because there is so much regulation and it is so complex, this requires considerable care and runs the risk of imposing costs against either EU or US producers by altering their regulatory regime.

Of course, the EU itself has for many years been engaged in the process of standardising regulation across its multiple jurisdictions. In theory this is sensible as it does, indeed, allow free trade. However, instead of simply eliminating or greatly reducing regulation,  the EU has instead added greater complexity and bureaucracy whilst harming consumers in the process - the horsemeat scandal illustrates this perfectly. Instead of simplifying regulations in the EU and US, the trade negotiations will simply force exporters to conform to a common set of standards at a high level of complexity. This is good for large-scale enterprises, who find the costs of compliance lower, but it imposes high costs on smaller and more marginal firms and encourages monopolies. So, growth will result and this is desirable, but it may come at the price of even greater dominance of the large multinationals that big-government loving interventions love to hate, but are actually promoting.

Worse, such trade negotiations will still not open EU-US markets to external trade. It's all well and good to create free trade areas but we should remember that free trade blocs are often protectionist to those not lucky enough to be within the bloc. In this case, that's most of the developing world. In the absence of high-tariff barriers, it's regulation which presents the greatest barrier to global free trade in the modern world. The process of standardising regulation across jurisdictions is slow, complex and open to abuse. It protects monopolists and harms the consumer whilst continuing to shut out trade from outside the bloc. Whilst trade bi-lateral trade negotiations will deliver some growth, what we really need is the standardisation of regulation by eliminating it altogether. 

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Horsemeat, moral panic and the failure of regulation

Written by Whig | Monday 18 February 2013

Is there anything more terrifying and dangerous to liberty than a 'moral panic'? I use the term in its sociological sense as the horsemeat saga fairly seems to fit the bill. One can almost write the script: a small finding, further investigations hit the front pages, the press become fixated and call for the heads of those responsible, government steps in, calls go out for a public enquiry and regulation or a toughening up of the rules and more spending on enforcement... In a few weeks the issue itself is largely forgotten except that the resultant regulations last forever. Worryingly, the scandal has also prompted attacks on international trade in food products and displayed the economic nationalism we see in this country with calls to eat only British meat.

The most puzzling feature of this particular saga and many others is the belief that additional regulation can solve the problem. In many ways, food was one of the first areas of the economy to be regulated under the Food Adulteration Protection Act of 1860, prompted by noticeably similar Victorian fears. In a curious and amusing echo of the banking crisis, we already have a regulator called the FSA, the Food Standards Agency (is the repetition of acronyms just coincidence, or a sign that we have so many quangos there aren't enough names?), which runs a Food Authenticity Programme. Although the FSA has been at the centre of the scandal, DEFRA also has powers in this area.

It is clear that there has been widespread adulteration of food products despite the presence of these institutions. Indeed, as with the banking crisis, it may be that regulation has encouraged it in various ways. Interestingly, a former bureaucrat at the FSA has suggested that the EU may be partially responsible owing to its ban on 'de-sinewed meat'. What is evident is that regulators will not prevent such events happening. Instead, as the ban on de-sinewed meat suggests, regulation will cause unintended consequences. Additional requirements for 'traceability' and more enforcement will increase costs for supplier which will be passed on and further drive up food prices for already hard-pressed low-income consumers, or it will promote cost-cutting and thus adulteration. Regulation will tend to drive smaller firms out of the marketplace, allowing room for monopolists to dominate the market. One should note that food industry lobby groups are usually happy to call for more regulation as well.

Surely, it would be better to allow a more competitive and de-regulated marketplace, where consumers could choose whether they paid additional costs to guarantee the quality of their products and where market innovations could find more effective ways of policing?  Why is it that, whenever a crisis such as this occurs, calls for more regulation emerge despite (i) the failure of existing regulation (ii) the evidence that regulation may actually have contributed to the crisis and (iii) the effect of regulation will allow monopolistic behaviours and ultimately harm the consumer?

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A dismal decade

Written by Whig | Monday 04 February 2013

One should 'Never make predictions, especially about the future'. However, it seems pretty certain to me that the next medium-term picture for the UK economy is bleak. There's nothing particularly novel here, but it's worth summarising the position.

From the fiscal perspective, the present government has made appalling progress with deficit-cutting: borrowing has increased, spending is still increasing and whilst growth-destroying taxes have risen the size of the state has not decreased. Apparently only 6% of the public realise that this is the case. Any hope of the UK being able to balance its budget let alone amortize any of its vast debt by running surpluses is years in the future. In the best-case scenario, an outright Conservative electoral  victory in 2015 might bring the time and the will needed to eliminate the deficit but this is unlikely even if that is the result.

Unfortunately, the present government has portrayed the present situation as one of austerity when it is not - what 'pain' is being felt is from the reallocation of spending from one Department to another and to increased interest payments. It might be that a sensible left-wing government actually finds it easier to cut the deficit, like New Zealand's Labour, as they avoid accusations of being Tory 'toffs' or some such nonsense. However, the present Labour Party seem committed to fiscal recklessness, not to mention the dire prospects such a government would have for deregulation and supply-side reform. All the while, the Lib Dems claim credit for 'restraining' the Conservatives from cutting government, as if this were positive. Essentially, the UK's fiscal position seems unlikely to improve any time soon and government will continue to spend around 45-50% of GDP, a position seriously deleterious for growth.

On the monetary front, we seem committed to a policy of inflationism and dis-saving and the incoming Bank of England Governor sounds even more committed to loose monetary policy than the present. Inflating the national debt away may take the burden from politicians in having to make real spending reductions, but it has serious impacts on saving and capital formation and thus future economic growth and risks the formation of new asset bubbles.

Contrary to popular belief, the Thatcher-Major governments of the 1980s did not really reduce the size of the state but instead - in general - restrained its growth compared to the size of the economy. This economic growth was predicated on supply-side reform, particularly in privatisation and increased labour flexibility. The present government has tinkered but has not really delivered any substantial supply-side reform. What happened to the Great Reform Bill? Where is the slashing of Red Tape that we were promised? The 'bonfire of the quangos' was a flash in the pan and Big Government has continued whilst Big Society died.

Whilst I don't think a major economic or fiscal collapse is likely, it is not beyond the bounds of possibility. The Coalition government are not seriously pursuing any of the reforms necessary to bring about economic growth: a proper programme of major fiscal consolidation combined with sweeping supply side reform and underpinned by sound money. Labour's policies score even worse.  In brief, the next ten years and beyond seem to offer the UK prospect of mild (or perhaps more serious?) stagflation.

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We don't need repatriation from the EU – we need de-patriation

Written by Whig | Thursday 31 January 2013

The debate over the UK's relationship with the EU has stepped up. The PM has adopted the position of negotiating with the EU with the threat of an in-out referendum in his pocket. Personally, I think Cameron is just about in the right position, in theory. As Eric Pickles has argued, quite sensibly, EU membership should be on a cost-benefit basis. If it is clearly the case that withdrawal would benefit the general good more than remaining in the EU we ought to withdraw and vice-versa, regardless of any special-interest privileges.

Whether Cameron can make this work in practice is unlikely. After all, the EU is a large and growing bureaucratic institution with many vested interests operating within it - bureaucratic powers are unlikely to be ceded any more easily in Brussels than they are in Whitehall.

The finer points of the political debate notwithstanding, there is definitely something missing from the debate. On the one hand, there stands a massive, wasteful, unresponsive bureaucracy led by profilgate politicians in hoc to special interests. On the other hand, there is the EU. The problem with the EU is not that it has absorbed powers which should be vested in Whitehall but that these powers are vested in any government whatsoever. The principle of subsidiarity should be extended to its ultimate conclusion - the proper authority for all bar a few aspects of socio-economic life must rest with individuals, not governments be they local, national or supra-national. What the UK and the EU needs is not repatriation of powers but (to coin a clumsy neologism) 'depatriation'. There is no point removing powers from Brussels and handing them over to politicians and bureaucrats in the UK. These powers should simply be handed back to where they belong, in the hands of individuals.

I would be very happy to be a fully paid-up member of an EU and even a Eurozone that, say: operated a sound, gold-backed currency, ferociously enforced fiscal discipline, liberated markets, open doors to trade and migration, drove privatisation and de-regulation across all areas, decriminalised drugs (well said the Lords, on that subject) and generally pursued free-market and classical liberal policies.

Sadly, that's just wishful thinking but it is not as if the British government under any party is likely to follow this course either. On balance, especially given the nature of many EU governments and societies and the EU itself, it is probably more likely that this would occur under a UK government than under a federal EU one even if the UK's track record on this score is fairly poor. Ultimately, Britain faces a Hobson's choice between large and profligate EU governance and large and profligate British government whilst under present conditions it is saddled with both. 

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Overcoming the public choice dilemma

Written by Whig | Friday 11 January 2013

With the death of James Buchanan, it is interesting to reflect on some implications of public choice theory. Public choice theory presents a powerful explanation of why democracies tend towards government expansions that are difficult to reverse. As Dr Butler succinctly puts it: 'small groups with sharply focused interests have more influence in decision-making than much larger groups with more diffused concerns, such as taxpayers.'

Buchanan and the public choice school stress the importance of constitutional restraints on the size of government. Indeed, many Americans revere their Constitution’s ability to check the growth of government. Some of the Founding Fathers understood the public choice-style implications of large government and the tendency towards it, even if they did not express these fears in the same language.

But American constitutionalism has not been entirely successful in restraining the growth of government. For all its merits in guaranteeing enunciated political liberties, over time the US has seen such significant erosion of many of the economic liberties of the US that in many respects it is not greatly different from European 'social democracies' in terms of government spending or economic regulation. 

Fortunately, it is not inevitable that large government will favour special interests. Public choice assumptions account for only part of the rationale for collective action. There are significant variations between and within different polities in relation to particular levels of government activity. There have been points when large group interests have coalesced to prevent further exploitation by special interests. Without siding with critics of Public Choice, it is important to recognise that its explanatory power is not total.

I would argue, following Robert Higgs (his fascinating lecture series is well worth a listen), that ideology also presents a major explanatory factor that runs counter to 'instrumental' interests.  In the US, this would suggest that the growth of government and the 'failure' of the Constitution has been caused as much by the development of new ideologies such as Socialism, Progressivism, Keynesianism and so on as by pure instrumental interests (particularly because the results of such ideologies often run counter to the instrumental interests of many of those who support them). By the same token, the American Revolution itself emanated from a Whiggish culture and ideology which was imbued with a scepticism of powerful government and a desire for liberty. Ideology, as much as interest, also explains say, the abolition of the slave trade or Thatcherism.

Those advocating a smaller state should, therefore, take some heart that public choice theory does not provide a remorseless logic of concentrated special interests overpowering the general interest.

Public choice presents a powerful ideological reason to oppose big government and rent-seeking, and ideas about how to do so. But, alongside public choice critiques of government, we must also promulgate an ideology of a free society and limited government. As Higgs points out, prevailing ideologies can be shifted, sometimes rapidly.

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