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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

A sensible approach to party funding

Written by Alex J. Williams | Friday 30 November 2007

poundcoins.jpgThe party funding scandal that has engulfed the government will undoubtedly be used as an excuse for more regulation and more state funding of political parties. This is a mistake. The Labour Party is in trouble precisely because it has broken existing laws and been found out, not because there was not enough regulation to guide their conduct.

Indeed, what this new scandal should show us is that placing restrictions on party funding doesn't really work. More regulation does not produce better ethics, just as more state funding would not reduce political corruption – it would just make the taxpayer foot the bill.

In any case, British politics is not an industry awash with money, and all parties are under pressure to make ends meet. So why not go for a more straightforward approach and say: “Let them get it where they can”. The role of the law should limited to insisting on transparency.

The usual argument posed against this approach is that it would enable a few rich people to dictate the policy agenda. But political parties are ultimately driven by a desire to win power, and thus it is the will of the people that dictates policy (for better or worse). A rich man’s money is no good if it is conditional on the implementation of a programme no one wants to vote for.

It is also generally unfair to ascribe sinister motives to party donors. Like most people in politics their desire is to make the world a better place (as they see it), rather than to pursue a purely instrumental agenda. And when 'influence' is sought, it usually only takes the form of after dinner speeches or informal 'face time' with politicians.

Ultimately, if we try to regulate the finances of political parties, we are only setting ourselves up for disappointment. Letting the market do its thing is the only sensible way forward.

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A sensible suggestion at last!

Written by Tim Worstall | Sunday 02 December 2007

It's unfortunately rare but it does occasionally happen. Someone makes a sensible suggestion for a government policy (err, writing for a think tank perhaps that should be sometimes people not working for this think tank also make sensible suggestions...).

Cocaine addicts should be prescribed the drug by chemists and nurses to help them overcome the habit, the Government’s drug adviser said yesterday.

If we're not going to be able to make people see sense on the liberty front (your body, ruin it as you wish) can we at least have policies which reduce the harm to the rest of society, of which this is obviously one. 

The ACMD also backed a change allowing nurses and chemists to prescribe diamorphine, cocaine or dipipanone to addicts under licence from the Home Office, in a bid to manage their problem. Ministers will now consider the proposal. But David Davis, the shadow home secretary, said: “If Gordon Brown signs up to this, it would show yet again that Labour merely seek to manage drug addiction rather than end it."

So yes, the idea is that this will be, for addicts at least, legalisation of a sort and thus a way to end some of the worst effects, impurities, disease, overdoses and the lethality of the scramble for profit in the illegal trade (btw, I looked it up: diamorphine for an addict would cost about £20 a day. Vastly cheaper for us as a whole than the current idiocy of the War on Drugs.).

My apologies to David Davis on this one (he is rumoured, as an ex SAS Territorial, to be able to kill me with a plastic spoon) but you're at the wrong end of the argument here. We've shown over the past few decades that we cannot end drug addiction (even if we were to destroy every vestige of liberty, as Milton Friedman pointed out) so all that is left to us is the possibility of managing it. We can do that sensibly, by making clean and pure drugs available to those who would take impure and grossly expensive ones if those were their only option, or we can carry on with the current policies which a) don't work and b) kill people.

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A sensible Tobin Tax

Written by Tim Worstall | Wednesday 08 January 2014

This might come as something of a surprise but there is, out there in the real world, a proposal to have a sensible Tobin Tax. As opposed to the deeply not sensible Tobin Tax as supported by the Robin Hood Tax campaign. That's a financial transactions tax which would be a completely appalling idea. The sensible one is in fact from China:

Britain’s bid to become a global hub for trading in Chinese assets has run into a major snag after a top Chinese official suggested a ‘Tobin Tax’, a levy on financial transactions to curb capital flows. Yi Gang, director of the State Administration of Foreign Exchange, called for an “in-depth study” of a Tobin tax, particularly on foreign exchange trades and flows of speculative hot money. SAFE is the world’s biggest fund, commanding the central bank’s $3.7 trillion in foreign reserves. ..... Mr Li, who is also deputy chief of China’s central bank, wrote in the Communist Party journal Qiushi that curbs may be needed to ensure an “orderly” transition as the country opens up its internal capital markets and moves towards a free float for the yuan.

It's worth recalling what Tobin himself actually advocated. Back at the end of the fixed exchange rate system known as Bretton Woods he wanted to increase the power of governments over markets. To do so he advocated a small tax on all foreign currency transactions. This would slow down, or reduce, the amount of money washing through the echanges and thus make it easier for central banks to manipulate the exchange rates. He saw this as a good thing, we now do not, therefore we're not in favour of such taxation.

However, there is still a place for such taxation: no, not such a tax to be imposed on our now free markets in currency (or anything else) but as a stage to be gone through when moving from a near entirely non-market system to a free market one. And it's in that context that China is suggesting one on their currency, the yuan. The liberalisation of such a market is a good idea, obviously. But there's very definitely an element of not quite wanting to go to complete and total liberalisation in one fell swoop. There's a good 70 years of economic mismanagement there to overcome and the shockwaves of an immediate and pure free market would be considerable. Not a bad idea at all to take it step by step.

The real problem with this of course will be that those Robin Hood, the FTT, people will say that if it's OK for China to have a Tobin Tax then why wouldn't it be a good idea for us to have one? The answer being that China having one is part of the transition from a rigged market to a free one: our having one would be an entirely unwelcome move back in the other direction.

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A sensible welfare proposal

Written by Jason Jones | Wednesday 28 May 2008

The Conservative Party plans to harden the line for welfare recipients if it wins the next election by requiring any able-bodied person on welfare who is under 21 and unemployed for three months to attend an intense work-training program. It is hoped that the proposed course would improve their work discipline and teach the skills necessary to obtain work.

Even better, they plan to "ask private sector companies and voluntary organisations to run the… centres." But what if they still don’t find a job? After a year of unemployment, they’ll be required to work full-time in community programme.

This proposal should increase productivity and decrease government spending on a deadweight program. By using private companies and charities, the worker-incentive program has a much better chance of being both effective and efficient.

As the party’s welfare spokesman Chris Grayling said, "Staying at home doing nothing will be a thing of the past."

It all fits in nicely with our line on welfare reform, which you can read more about in our 2007 report, Working Welfare.

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A short history of the social rights myth

Written by Blog Administrator | Wednesday 25 March 2009

Jack Straw, the UK’s Justice Minister, has proposed to introduce a new British Bill of Rights, which would establish ‘rights’ to education, housing, healthcare, and so on. Click here to see our latest think piece by Rachel Patterson, in which she examines the evolution of the ‘social rights’ myth, and concludes that while we do have rights to life, liberty, and property, the provision of public goods is simply a matter for the government of the day.

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A sickening policy

Written by Tom Clougherty | Monday 17 December 2007

stethoscope.jpgAccording to a front-page story in yesterday's Sunday Times, "A woman will be denied free National Health Service treatment for breast cancer if she seeks to improve her chances by paying privately for an additional drug."

Preventing patients from topping up their NHS care privately is standard practice in the UK, and in accordance with Department of Health guidance. The Department seems to think that you have to be either a private patient or an NHS patient, and that any mixing is unacceptable: "Co-payments would risk creating a two-tier health service and be in direct contravention with the principles and values of the NHS."

I find it sickening that the government persists in putting their Soviet-era ideology ahead of the health of patients (which is surely the ultimate principle and value of the national health service). Rather than challenging the wholly artificial and enormously damaging public/private divide in health services, they would rather we simply received a lower quality of care. Their position is immoral and impractical.

It is also incoherent. People can already pay for private rooms in NHS hospitals, and for other non-clinical benefits. If it's ok to pay extra for your own television set, why on earth should you not be allowed to pay extra for a better drug?

Most importantly, their position may be illegal. I was recently at a luncheon addressed by one of the UK's leading medical lawyers. His position was as follows: the NHS Act entitles you to receive care that you reasonably require. You can only be refused that care if there is some legitimate reason to do so. Limited resources is such a legitimate reason. But if you are willing to pay for an additional treatment yourself, resources are not an issue and no legitimate reason to deny the reasonably required treatment exists. Thus you should be free to top-up your NHS care with privately purchased treatment, without being forced to foot the bill for the NHS services as well.

Immoral, impractical, incoherent and possibly illegal. This is just the kind of thing we've come to expect from government.

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A sign of the times?

Written by Blog Editor | Thursday 02 July 2009

A very interesting article in The Times here, on stripping the Bank of England of its power and letting the market set interest rates.

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A sign of the times?

Written by Junksmith | Friday 18 February 2011


A new US Congressman's welcome banner. I wonder if any MPs would put up a similar sign in their offices...

(Hat tip: Club for Growth)

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A silly argument with serious consequences

Written by Cameron Willard | Tuesday 23 March 2010

Sino-American relations have been fragile lately as American legislators levy accusations of unfair trade practices against the Chinese government. A certain amount of anti-China rhetoric always accompanies a new White House administration – in fact, the Obama administration has had relatively peaceful relations compared to the early Clinton years. And Treasury Secretary Timothy Geithner is well versed in Chinese affairs and has done what he can to avoid labelling China an official ‘Currency Manipulator”. But inevitably, and particularly with Democratic presidents, there is pressure from unions and economic nationalists to face down the perceived Chinese beast.

Of course, an appreciated Chinese currency would drive the prices of Chinese consumer goods up, which would in turn affect importers of Chinese goods. And of course, bilateral trade deficits are meaningless, given the multilateral nature of industrial inputs. But American politicians seem more interested in pseudo-populist rabble-rousing than in opportunities for growth.

The Chinese government does freely engage in protectionism, but the best thing the US government can do is to do nothing. Divisive accusations and tariffs will only create an escalating trade war that will hurt both sides. This is particularly true because the Chinese government is eager to appear independent of foreign influence before hawkish Chinese nationalists. China is less likely to appreciate its currency or take other steps to reform if it is being chastised. Both governments would do well to keep their hands off trade. Minimising petty recriminations and provocative rhetoric will make that more politically feasible.

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A simple guide to America's borrowing

Written by Blog Editor | Monday 21 January 2013

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