Small firms and the EU: Curate's Exports

It's good that Business for Britain is looking at the cost of regulation to small business, says Tim Ambler, but by focusing on devolution they push in precisely the wrong direction—more unified markets are lower regulation markets.

Only those firms who export to other parts of the EU should have to comply with EU regulations or so says Business for Britain (Daily Mail, 18th January).  Business for Britain claims that as 95% of UK firms do not trade with the rest of the EU, £7.5bn. could be saved for the UK. The knee-jerks in response were what could be expected from those pro and sceptical of the EU.  The proposal has had little considered analysis.

Business for Britain has re-ignited the debate about exempting small firms from most regulation.  Brussels has accepted this in principle but has done little or nothing about it.  Briefly the arguments are: • As a percent of turnover, the cost of regulation is far higher for small than large firms.  This is unfair and distorts the market. • Regulation is a barrier to entry and therefore reduces competition. Start-ups in a market are typically small and require a low regulatory threshold to facilitate entry. • Small companies are more regulated, in effect, by market competition than their oligopolist big brothers and therefore require less legal regulation.

The Business for Britain proposal is therefore welcome insofar as it brings pressure for the relief on small businesses.

On the other hand, their proposal is flawed in the following respects;

• Having a single market across the EU, albeit with standard reliefs for small firms, is such a fundamental principle of the EU that there is no chance Brussels, or the EU Court of Justice, would tolerate these concessions for domestic firms.  It would give domestic firms competitive advantage over importers from other EU member states.

• Business for Britain expect that other member states would reciprocate and that Brussels should therefore accept that the arrangements were even-handed.  However allowing all member states to make up their own rules for domestic businesses would put UK exporters, or those doing business in other member states, at a competitive disadvantage.  Since the rest of the EU is a great deal bigger than the UK, the net effect would be negative for the UK.

• The UK economy desperately needs more exports and overseas trade, notably in the EU.  Having to step up, as Business for Britain suggest, from no EU regulations to implementing them all the minute one sends a box to Calais would be a major disincentive to overseas trade. One of the EU’s great successes has been to make EU exports easy.  It would be a mistake to reverse that.

• A single market is defined by having a single set of regulations.  The EU is slowly, too slowly, moving in that direction.  Yet the last 20 years have seen far more UK business regulations than we have endured from Brussels.  Whitehall is happy to fan the flames towards Brussels but the fact of the matter is that all UK business regulation is “gold plate”. I am not referring to the relatively trivial matter of adding to EU Directives but to the much bigger matter of having a huge number of UK regulations in addition to the EU ones.

• In a single market, if the UK needs a regulation, then so does the rest of the EU.  If the rest of the EU does not require a regulation, then nor does the UK.  Yes, we should jettison much EU regulation but that needs negotiation.  Dumping UK business regulation does not.  A major reason why Brussels rejects pleas for deregulation is that Whitehall sets a bad example and then blames Brussels.  We need to put our own house in order first.

• It has been suggested that other large countries, such as the USA and China, are single markets which nonetheless have separate regulations in separate states.  Of course there are shades of grey in all this but the USA and China, and other large markets, are not single markets.  In the USA, for example, it is illegal to trade alcoholic products across state borders.  Each state is its own market.  The low regulation single market may be an impossible ideal but it is a clear goal towards which we should push.

• The UK is unpopular within the EU family not least because it is always demanding concessions for itself without regard for the community as a whole.  The Foreign Office and government ministers play to UK media headlines with calls for red lines and such like.  This may get a good UK press in the short term but it reduces Britain’s standing in the eyes of others.  It is poor EU negotiation. The French and the Germans get their own way, to a great extent, by framing their arguments as being good for the EU.  The more the issue is really for their sole advantage, the more they stress the EU perspective.  The only significant UK negotiating successes have been Thatcher’s Rebate and Major’s opt-out of the Social Chapter.  Unsurprisingly both were resented and Blair handed most of them back without any offsetting UK benefits. In presenting their case as an advantage for the UK, Business for Britain compromises Britain’s overall negotiating position.

• The Common Market is what the British public signed up for.  Prime Ministers Heath and Wilson knew perfectly well that the fine print included social and political integration but most of us only cottoned on many years later. We should now do all we can to promote the benefits of the Common Market for the EU as a whole to our fellow member states.  We are not alone in our concerns about political and social standardisation but we should accentuate the good rather than attack the dubious.

The Business for Britain are right to put the spotlight on regulatory relief for small businesses and it would be good to see that issue taken forward.

Equality: as cheap as 50p?

Peter Oborne argues that Ed Balls' pledge to raise the 45p top tax rate back up to 50p is a good idea. While the extremely high marginal rates (top main rate 83%, plus a 15% surcharge for "unearned income") of the 1960s and '70s might have been driven by "socialist envy", George Osborne's dropping the rate from 50p to 45p in was "profoundly shaming and offensive", Oborne contends. This is because, echoing Stanley Baldwin and his brand of Toryism, the conservatives should represent the whole country, not the rich or any other factional interest.

Apparently the Coalition has "devoted a great deal of effort to lowering the living standards of the poor", and this move to "make the rich richer" is inappropriate when the poor are getting poorer. I contend this by arguing that inequality is down to 90s levels under chancellor Osborne, while the worst-off in society are the only group to actually see their living standards improve the since the recession hit. And the (ugly, unpleasant, and regrettable) attitudes that have emerged towards benefits claimants are probably driving government rhetoric in that area, rather than vice versa.

In general, it annoys me when a columnist writes something apparently trading on what everyone just knows. Sometimes the common view is incorrect. Funnily enough, politics is the area where people err most profoundly and with the most regularity. And I would argue that Oborne is trading on falsehoods in his piece; would it still be a coherent argument if it started with the factual premise that inequality in the UK fell back below its 1997-8 low in 2011-12, 0.34 measured by the GINI coefficient? That the top 10% of earners endured the biggest blow to their incomes since the onset of the recession? And that the bottom 10% by income were the only one to see a rise in living standards taking inflation into account? I don't think so.

The IFS reports I link above predict that by 2015-16 inequality will rise back to roughly its pre-recession level, so perhaps Oborne could refocus his attack on the future inequality Osborne possibly has a hand in. But in all likelihood there is probably little the government can do about inequality over the long-term, caused as it is by very fundamental trends and robust as it is to institutions even such as the USSR's. Most of the extra inequality since the 60s and 70s has come from couples engaging in much more assortative mating. And very long-term trends are mainly dominated by heritability of social class—those with Norman surnames are 28% more likely than a random sample of similar others to get an Oxford place.

Just how far we've come in two decades

OK, so this is largely a result of Moore's Law allied with some clever technologists but still, it's interesting to see quite how far it is that we've come.

The back page of the front section on Saturday, February 16, 1991 was 4/5ths covered with a Radio Shack ad. There are 15 electronic gimzo type items on this page, being sold from America’s Technology Store. 13 of the 15 you now always have in your pocket.

...

You’d have spent $3054.82 in 1991 to buy all the stuff in this ad that you can now do with your phone. That amount is roughly equivalent to about $5100 in 2012 dollars.

I've bought myself an off contract smartphone recently for around £100, or $150. Which shows how far we've come over these couple of decades really.

Which in and of itself is just an interesting observation (as is the one that the run of the mill smartphone these days packs more pure computing power than a Cray 2 from the early 1990s). However, this sort of technological change is something that our economic statistics deal very badly with. For several unfortunate reasons.

The first being that we do indeed try to adjust for the improving quality of things, through what are known as "hedonic" adjustments. But there's no one who really thinks that we've got this right as yet. Secondly, the advances in such things as our phones allow us to do things that were simply impossible before. And there's no real way os squeezing those into the GDP statistics. For the third reason: and awful lot of what we can do with these new technologies is actually free at the point of use. So therefore, not being charged for, it dsoesn't turn up in the GDP figures. And fourthly, those things that we used to be able to do but now can do them more conveniently have actually fallen in price. And given that it is the market prices that GDP tracks the contribution here is actually negative.

And this is indeed a problem with our economic statistics. I think a case could be made (I'd argue it, but not want to have to prove it) that the coming of smartphones has been recorded in GDP as a reduction in GDP. Which, given that we can now all do things we couldn't before, do things we could more cheaply, and do other things simply better seems like a remarkable indictment of the basic statistic.

But then we all know that GDP isn't the be all and end all of everything: it's maximising utility that is. GDP is just an indication that there might be more utils out there to enjoy: but not, sadly, a terribly accurate one.

A capitalist crime which should be heavily punished

Much of my time is spent in explaining how this capitalist/free market mix leads to the best of all possible outcomes. Except when I'm explaining that in this or that instance it needs a little nudge or limitation. However, there are times when it's necessary to condemn, in no uncertain terms, the purported actions of certain capitalists or capitalist firms. And this alleged price fixing (and do please note that "alleged" there) in the wages of engineers in Silicon Valley is one such instance. The claim is that the big companies agreed not to try and poach staff from each other thereby reducing the wages spiral that might have ensued:

In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact with Google’s Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other’s employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”

It is said (note, alleged) that this practice them spread across the major firms in the area. And there's two major problems with this sort of cartel behaviour. Obviously, one is that the wages of said engineers were not bid up and they did not gain the full value of their scarcity. Sure, companies reported higher profits as a result, shareholders made more money. But we're not in fact capitalists, trying to make sure that this is what happens. We're actually free marketeers and this is one of those times when the two creeds conflict.

The second is perhaps even more important for us market types. One way of looking at said market is that it is the Great Calculating Engine of our society. Indeed, the only one we have that can have any possibility of correctly allocating resources. And if, through coordinated action such as this, people then damp those prices then our market allocation is going to be wrong. For example, depressing the wages of engineers in California would have led to some (maybe only a few, but this all happens at the margins of course) quants deciding to go off to Wall Street instead. And yet free market pricing would have told them that their skills were more highly valued in the computing rather than finance sectors.

At root of course this is again that conflict between markets and capitalism. We marketeers are very sure indeed that while capitalism is all very well it is competition in markets that harnesses and controls it. And if the capitalists do ever collude, whether it be in the prices for vitamins or the pay of the workers, then we're going to end up with a very much sub-optimal outcome. Which is why if we do find such collusion that we want to punish it very severely indeed.

If this sort of thing had happaned in Europe then the EU could levy fines of up to 10% of global turnover of each company that participated. I don't know what the potential US penalties are but I wouldn't think those numbers would be out of line with a just outcome.

We simply cannot allow such cartels to operate and should punish those who try severely.

An Indonesian answer to George Monbiot's question

George Monbiot got very hot under the collar recently about a provision in hte various trade treaties that are under negotiation at present. Arguing that the ability of an investor to take a matter to arbitration was a vile undermining of democracy:

They have good reason to ask. The commission insists that its Transatlantic Trade and Investment Partnership should include a toxic mechanism called investor-state dispute settlement. Where this has been forced into other trade agreements, it has allowed big corporations to sue governments before secretive arbitration panels composed of corporate lawyers, which bypass domestic courts and override the will of parliaments. This mechanism could threaten almost any means by which governments might seek to defend their citizens or protect the natural world. Already it is being used by mining companies to sue governments trying to keep them out of protected areas; by banks fighting financial regulation; by a nuclear company contesting Germany's decision to switch off atomic power.

And here's an example of what it is actually all about:

Freeport-McMoRan Copper & Gold Inc. (FCX) and Newmont Mining Corp. (NEM), the largest U.S. miners, said new Indonesian rules on metal export duties infringe on contracts they have with the government. Indonesia issued regulations on metal exports this month that curbed the shipping of unprocessed ore and placed duties on exports of copper concentrate, a semi-processed ore that’s shipped from mines to smelters. The rules have resulted in delays to obtain export permits, and Freeport plans to defer some production, according to the Phoenix-based company, the world’s biggest publicly traded copper producer. The duties on copper, which begin at 25 percent and will rise to 60 percent by mid-2016, took Freeport by surprise, Chief Executive Officer Richard Adkerson said yesterday on a conference call with analysts. Indonesia, where the company operates its biggest mine, the Grasberg copper and gold operation, accounted for 19 percent of its third-quarter revenue, according to data compiled by Bloomberg. Newmont’s Batu Hijau mine in the country contributed 6.8 percent of the miner’s total sales, the data show.

Indonesia has banned, in hte case of nickel, and heavily taxed, in the case of copper, the export of ores and or concentrates. They want the minerals to be processed within the country. Well, OK, I don't think that's sensible, you may or may not, but what is obvious is that this seriously changes the positions of those companies who have already invested billions into mines in the country. And that's what the right to go to arbitration is about.

If a government says, right, here's the terms upon which you can invest in our country then that's just fine. And it's also just fine if the government decides that it wants to change the law. However, if it does change the law it also has to compensate those who the law change affects. For example, Indonesia is entirely at liberty to nationalise those mines if it should wish to. But it does also have to pay market value when doing so. Similarly, the country is entirely within its rights to ban the export of concentrates. But it must compensate those who have invested on the understanding that concentrate exports would be allowed.

And the only purpose of arbitration is to make sure that the people deciding upon what the compensation should be are not controlled by the government that will have to be doing the compensating.

That's why these clauses exist in these treaties. Essentially, to make sure that governments keep their word.

Err, no, this is a solution to the problem being described, not a problem in itself

I have promised Madsen that I won't talk about Richard Murphy here too often. And this is one of those "not too" moments for he's provided us with a target rich environment. Murphy is arguing that corporations are piling up cash, cash which they don't know what to do with. Therefore mutter mutter higher taxes!

One problem with this is that Murphy's response to everything is as with the Underpants Gnomes, "this, therefore, mutter mutter, higher taxes!". But in this instance we've a graver logical error to explain:

The first is that the tax system encourages it. In the US in particular, but in other states too, the tax system encourages profits to be recorded and retained in tax havens.

Yes, this is absolutely true. The US has one of the highest corporate tax rates in the world and US corporations do indeed park large portions of their foreign profits offshore in order not to pay it. This also means that they cannot distribute this cash to their shareholders via either dividends or share buybacks. It is indeed an explanation for why there are such large cash balances in corporates (some $1.7 trillion of the 2.8 trillion being complained about in fact).

Third, they do nothing because they have no clue what to do with their cash.

This is ascribed to their not knowing how to innovate: and I'm willing to go along with that. Innovation generally comes from new market entrants, not from established players.

So, that’s why cash is accumulating. What to do about it? The obvious answer is that we need a progressive income tax. As profits increase so should the corporate tax rate. The IMF has warned of growing inequality around the world. This cash fuels it. There is a need to tax it to reduce that inequality. The problem is, of course, that at present the cash is hidden away from tax. The answer is the one that I, the Tax Justice Network and others have promoted, which is unitary taxation. This taxes global corporations as if they are single entities, so wherever their cash is located it will be within the scope of a tax charge. Second, we may need to consider specific taxes on excess cash holdings. One of the reasons for tax is to correct market failings. It is a market failing that a corporation can accumulate too much cash because of monopoly power. An excess tax charge would correct this. The time for it has obviously arrived. Third, tax haven abuse needs to be tackled, of course, but so does the shift in corporate tax systems towards territorial taxation need to be addressed. The UK is positively encouraging this trend towards offshoring cash unproductively under George Osborne. That is absurd.

Therefore, mutter mutter, higher taxes!

Except there's that glaring error there about territorial taxation systems. As above, the majority of this corporate cash is sitting on the offshore balance sheets of US companies. And they won't bring it onshore and won't distribute it to shareholders because they would then have to pay that 35% on it. But in a territorial tax system foreign profits don't pay tax at all when they are repatriated. That's actually rather the point of a territorial system. Apple's profits in Europe simply don't get taxed by the US tax man.

So, therefore Apple can pass those profits through to investors. Who might spend it (Keynesian stimulus!) or pay taxes on their income or possibly even invest it in new firms capable of innovation.

That is, a move to territorial tax systems solves, entirely, the very problem that Murphy is complaining about. It shifts those cash reserves from the corporations who don't know what to do with it to the investors who quite probably do have an idea of what to do with it.

And yet, note, he's claiming that the solution to his problem is exactly the thing that should not be done.

Now, I've had fun over the years with various of Murphy's ideas but we must remember that he's not entirely a figure of fun. He really is trying, with his friends at the Tax Justice Network and the like, to determine how the entire international tax system should be changed. And yet he's using this sort of logic I've described above to do so.

Remember, a territorial tax system stops companies piling up profits offshore, for a territorial tax system means that they can distribute those offshore profits to investors. Therefore Murphy is claiming that we must not have a territorial tax system in order to stop companies piling up profits offshore.

Eh?

Reform of the international tax system is one thing but might we ask for at least a modicum of logic in the proposals being put forward?

Explaining the boom in the profit share in the US economy

That chart is of corporate profits in the US economy as a percentage of GDP. And it's the cause of much muttering: see how the little guy is getting screwed over by the corporate giants etc.

But we also need to add this little observation to it:

it is important to realize that around 50 percent of the SP500′s earnings are generated overseas

Total profits for the constituents of the S&P 500 index are of the order of $1.1 to $1.12 trillion in this past year (not all have reported yet so difficult to be exact). And if 50% of them are overseas profits then that's $600 billion or so.

Or, when we put it into the context of US GDP, that's about four percentage points of GDP.

Taking that off the 11% of GDP that is US corporate profits leaves us with 7%, or much more like the long run average.

The rise in GDP of corporate profits has at least something to do with the increased globalisation of the economy rather more than it does with the oppression of the workers by capital. As so often, the devil is in the details of the measurement.

One such detailed point: we could assume that foreigners must also be making profits in the US and therefore there's 3 or 4% of GDP being paid out again to foreigners. But that's not actually quite how they measure it, there's an asymmetry here. Corporate profits are measured from Federal income tax returns: companies who have invested in the US will be reporting their US profits on such forms. As will US corporations who have made foreign profits. Thus this measure includes the corporate profits made in the US by foreigners as well as the foreign profits made by US companies.

The machines are going to steal all our jobs!

The Economist has another of those breathless pieces worrying about what's going to happen when the robots come for all our jobs. There's one basic error in the piece and one slightly more technical.

The basic error is that they fail to note that when the robots have taken all our jobs then we'll all be incredibly rich. One of the comparisons they make is to the first industrial revolution and that's appropriate. So, let us think about what happened when the mechanisation of cotton production killed off the hand weaving (and linen although more slowly) industries. Yes, certainly, some people lost their jobs: but the entire population now became rich enough to be able to wear cotton underwear simply because the production costs of cotton fell so far. And only those who have suffered through the woollen kind will know how rich that makes us all.

It's a very, very, basic observation: if the machines are making everything then everything becomes extraordinarily cheap. This is the same statement as the one that the machines taking all our jobs makes us all very rich indeed.

The more detailed mistake is here:

But though growth in areas of the economy that are not easily automated provides jobs, it does not necessarily help real wages. Mr Summers points out that prices of things-made-of-widgets have fallen remarkably in past decades; America’s Bureau of Labour Statistics reckons that today you could get the equivalent of an early 1980s television for a twentieth of its then price, were it not that no televisions that poor are still made. However, prices of things not made of widgets, most notably college education and health care, have shot up. If people lived on widgets alone— goods whose costs have fallen because of both globalisation and technology—there would have been no pause in the increase of real wages. It is the increase in the prices of stuff that isn’t mechanised (whose supply is often under the control of the state and perhaps subject to fundamental scarcity) that means a pay packet goes no further than it used to.

So technological progress squeezes some incomes in the short term before making everyone richer in the long term, and can drive up the costs of some things even more than it eventually increases earnings. As innovation continues, automation may bring down costs in some of those stubborn areas as well, though those dominated by scarcity—such as houses in desirable places—are likely to resist the trend, as may those where the state keeps market forces at bay. But if innovation does make health care or higher education cheaper, it will probably be at the cost of more jobs, and give rise to yet more concentration of income.

This is Baumol's Cost Disease of course. Those things where it is more difficult to increase the productivity of labour in their production will rise in price in comparison to those things where raising that productivity is easier. Exactly those services like college education and health care complained about.

But...but...if we're now stating that we're worried about automation attacking the jobs in those areas we're in fact making exactly the same statement as that they're about to become 20 times cheaper. Just as happened with the widgets. You can't both complain about the price reductions that come from the robots stealing our jobs and also about increasing inequality. For if everything falls, over only 30 years, to one twentieth of the starting price then what the hell is there left to have any consequential inequality about?

Positional goods? Sure, the Louvre will still have the world's only Mona Lisa, there will still only be a handful of houses in Eaton Square but beyond that, seriously who cares? The end state, if the robots to start doing all the work, is that we get all the food, healthcare, clothing, housing (but perhaps not exactly where we might want it), education and all the rest that our greedy little hearts could desire.

And this is something that people think governments have to start having policies about?

Heavens preserve us. 

What's the true free market monetary policy?

Let's imagine we are in a world where central banks are given key roles in the macroeconomy, and have been for decades or even centuries in almost every country. In this imaginary world, studies into the relative efficacy of free banking regimes have been undeservedly overlooked, and the orthodoxy among major economists, even ones otherwise sympathetic to free markets is that they are a bad idea. Major policymakers, let's imagine, are completely unaware of the free banking alternative, and most even use the term to mean something completely different. Proposals to enact free banking have not been mentioned in law making chambers for decades or centuries, if at all. It has not been in any party's policy platform for a similar period of time, in this imaginary world.

What's interesting about this imaginary world is that it is in fact our world. Economists like George Selgin, Larry White, Kevin Dowd (among many others) have done very convincing research about the benefits of free banking. And free banking may one day become a real prospect, perhaps in a new state or a charter city. But free banking has lost the battle for the time being, and abolishing the central bank and government intervention in money is as unlikely as abolishing the welfare state. Now one might say that if free banking is a desirable policy, it is worth continuing to wage the intellectual war for the benefit of future generations, who could benefit from the scholarship. Work done now could end up influencing and improving future monetary policy.

I do not discount the possibility this is true. At the same time, free banking is a meta-policy, not a policy—a way of choosing what monetary regime to enact, rather than a specific monetary regime. After all, it is at least possible that free banks could together target consumer prices, the GDP deflator, the money base, the money supply measured by M2, nominal income/NGDP. And for each of these different measures there are an infinite number of theoretical growth paths, and a large number of realistically plausible growth paths they could aim for. Now, free bankers say that the market will make a good decision, and I can buy that. But let's say we're constrained to choose a policy without the aid of the market mechanism: can we say there are better or worse central plans?

The answer is: of course we can! Old-school monetarism, targeting money supply aggregates, was a failure even according to Milton Friedman, whereas CPI targeting, for all its flaws, delivered 66 quarters of unbroken growth and a period so decent they named it the Great Moderation. The interwar gold standard brought us the stagnation of the 1920s (in the UK) and coming off us brought us our relatively pleasant experience of the Great Depression. Literally the order in which countries came off the gold standard is the order they got out of the Great Depression. And even though the classical gold standard worked pretty well, few of its benefits would obtain if we went back. Some central plans (the interwar gold standard, M2 targeting) don't work, some work a bit (the classical gold standard, CPI) and arguably some work pretty well (NGDP targeting is one in this category, according to Friedman, Hayek and I). If we are stuck with central planning, then why not have a good central plan?

And just because I'm allowing the term "central planning" to describe NGDP targeting, we needn't describe it as "government intervention in money". I don't think they are really the same thing. "Government intervention in money" brings to mind rapid inflation, wild swings in the macroeconomic environment; in short the exact circumstances that NGDP-targeting aims to avoid. Targeting aggregate demand keeps the overall macro environment stable—a truly neutral monetary policy—allowing firms and households to make long-term plans, and preventing recessions like the last one, caused as it almost certainly was by drastic monetary tightening. Indeed, as monetary policy determines the overall path of aggregate demand, we might easily call "sound money" policies aiming for zero inflation or a frozen base as dangerous government meddling—they allow the actually important measures like nominal income to fluctuate drastically.

Consider an analogy: school vouchers. Many libertarians may favour a system where parents can spend as little or as much as they want on schooling (considering distributional concerns separately), rather than having central planners decide on the voucher-set minimum. But we usually see a voucher system as an improvement on the status quo—parents may not be able to fully control how much is spent on their children's education but at least they can pick their school. Popular and successful schools grow to accommodate demand, while unpopular and unsuccessful schools can be wound down more quickly. Libertarians may see this as a way from the ideal situation, but none would therefore denounce the policy. The analogy isn't perfect, but I like to see NGDP targeting as similar to school vouchers, versus status quo schooling as the CPI target. Libertarians shouldn't make the perfect the enemy of the good.

Motorways, pubs and nannies

A new pub has opened in Beaconsfield, Buckinghamshire. That's news in itself, given that around 1200 pubs closed down last year, thanks (or no thanks) to the weight of retail and employment regulation that makes pubs so darn expensive to run.

But the Hope & Champion is of doubt interest, because it is in the Extra Motorway Service Area at Junction 2 of the M40. So the people who go there are almost certain to get there by car. So naturally there have been plenty of critics complaining that this initiative sends out all the wrong signals about drinking and driving.

Well, pubs in the UK are licensed, precisely because we know the potential problems that can go with alcohol consumption. But the fact is that the local police did not object to the licence, nor did the local authority. And the local paper is giving the new pub splash coverage. So local people don't think there's a problem here.

The real problem is the message that the critics send out, yet again – that the political class in Britain thinks the adult population of their country are completely incapable of making their own choices, and that their lives have to be micro-managed for them. This pub, like most others these days, is basically a restaurant that also serves alcohol. It opens at four in the morning and starts selling alcohol at nine - though apart from one stalwart getting stuck into a pint for the cameras, most people there this morning were getting stuck into nothing more life-threatening than a Full English Breakfast. And if a group of people want to stop off the M40 for lunch or dinner, why should the passengers be denied the pleasure of a small sherry just so that drivers are 'kept away from temptation'?

Weatherspoons, the pub owners, are a responsible chain. Their menus carry Drink Aware slogans and information. Their staff do not serve people who have already had enough. People know that there are legal limits on drinking and driving - and they know that even drinking below the legal limit can slow down your reactions. So most drivers who visit the pub, alone or with a group, would probably not have alcohol anyway, and their passengers would probably not want them to.

So as the police and local authority figure, there's no problem. The only problem is all those people who deem it their business to treat us like children.