We should emphasise here that we are not in favour of Osborne's new national living wage. The correct answer to some people being perceived as having too low an income is not to start price fixing, messing with the market. Instead it is for those who insist that those incomes are too low to put their hands into their own pockets and top up those incomes they perceive as being too low. Yes, it is simply moral that those doing the insisting do the paying.
President Obama recently told Cuban kids not to worry about the philosophy of communism or capitalism, but just go with what works. I have little problem with that because most people are indeed not bothered with matters of philosophy, and we know what works – and it isn’t communism. So if they do what works they will end up as capitalists.
But I do get angry when it is suggested that there is ‘little difference’ to choose between these two philosophy. The trouble is, that there is very little difference between communism and what’s called capitalism these days, largely because our politicians do not understand the philosophy themselves.
Maybe it’s just my recent speed-dating of Ayn Rand rubbing off on me, but I think we need to promote a much deeper understanding of the principles underpinning our system, in particular their ethical roots, nature and results.
Obama, for example, is at pains to point out that capitalism is just fine, provided that we make sure it has a proper ethical dimension. Which shows that he thinks that, by itself, it doesn’t, and that it somehow needs to have morality regulated into it.
Yeah, well what about the ‘moral' basis of communism? It’s not capitalism that murdered 3,000 people a day when it was going strong (add them up: Stalin, Mao, Pol Pot’s purges just for starters). And capitalism at least treats people like human beings rather than as tools in someone else’s thinking, and respects their lives, families and property. In Cuba, you have a cow and because your family is starving you kill it to eat. Then you go to jail because it’s not ‘your’ cow, it’s the state’s cow. How moral is that?
Sure, you have to be nice to communist leaders if you want them to talk to you and maybe then have an impact on them; but there must be ways of letting them know that as a matter of plain fact, it’s communism that stinks, not capitalism, both in theory and practice. The general mass of their own population, of course, already know that.
The EU referendum campaign is presenting us two competing choices. On the one hand a vision of Britain as part of a steadily-integrating EU (at whatever speed) or a vision of Britain completely outside it.
For the Remain side, we are required to anticipate what may happen over the next generation which, if the last 40 years are anything to go by, will mean a gradual growth of EU power into more and more areas of competence - the ratchet towards “a country called Europe”.
The vision of Britain outside generally uses a number of arguments employed over a long period: of the need to regain our sovereignty and become a self-governing democracy again; to have the flexibility to deregulate; to spend the UK’s EU contributions on something better inside the UK; to drive forward better trade deals with countries beyond the EU; and to constrain immigration.
However let’s take this from a different angle and set out a third vision - a Leave proposition that rejects some of the arguments outlined above. In short, a liberal case for Leave.
We would not say, ourselves, that we are greatly in favour of the burkini and other such manifestations of Islamic prurience. Yet we would, as with people saying things we might not agree with, insist that the populace should be allowed to dress themselves in any such manner that doesn't actually frighten the animals.
We've another of these dirges about how the libraries are under such great threat:
Nearly 350 libraries have closed in Britain over the past six years, causing the loss of almost 8,000 jobs, according to new analysis.
In a controversial move that sparked protests by authors including Philip Pullman and Zadie Smith, councils across the country have shut their reading rooms in an effort to make deep savings.
Children’s author Alan Gibbons warned the public library service faced the “greatest crisis in its history”.
All of which brings out our inner Karl Marx. Who did insist that the forces of production (ie, technology) determined social relations. And if we're to be a little more narrow about this, technology determines, or at least should, how we go about doing certain things. The economic historian Brad Delong has long pointed out that the university teaching style of a lecture is really just a hangover from medieval days. When books were vastly expensive (a scholar might hope to accumulate a library of perhaps a score volumes over a lifetime) then having one person reading that very expensive product to 200 made some sort of sense. When a copy of the book costs less than the hourly wage of the reader perhaps less so.
So it is with libraries. When books were much more expensive than they are today then increasing the Solow Residual (in exactly and entirely the manner that Uber and so on do today, the sharing economy) through reuse and lending made great sense. But technologies change, relative prices change. It may or may not be true that we have reached that tipping point just yet, where the value of the books being lent is less than the cost of running the lending system, but we think we can all see that that is going to happen at some point.
The point is thus not that libraries are closing, nor that we should all fight the power to prevent it. What should actually be the discussion is, well, do we need libraries any more? And if we still do then when won't we?
But of course, as C. Northcote Parkinson pointed out, there's nothing as conservative as a bureaucracy considering its own existence.
Almost everyone on the libertarian free-market side recommends a similar top ten books, including the classic works of Hayek, Popper, Friedman and the others. They are in my top ten, too. However, I have drawn up a second list, one of books less celebrated, but which sustain, if more obliquely, a similar philosophical outlook.
That Tesco's brands a few of its products with the names of fictitious farms is amusing, as is the outrage that this has brought forth from the usual suspects. But then matters take a turn for the worse as we get a question of such driveling stupidity as to potentially make our brains leaks from our ears. Or possibly to ponder whether this has already happened to the questioner. We refer to this from Yvonne Roberts:
How have we allowed a system to emerge that squeezes the whole supply chain in the name of profit and seduces us into ignoring our carbon footprint for that dubious consumer privilege called “choice”?
For this is the point and purpose of having an economy in the first place. Both Adam Smith and Frederic Bastiat tell us that we must always look at economic questions from the point of view of consumption. And we can and do go further than that ourselves: the point of this whole economy thing is to maximise the consumption possibilities of the population. What is to be consumed, how such consumption is to be valued, being the choice of said population. If choice is what said people value then an increase in such choice is an addition to the value they gain from consumption: which is, again we insist, the reason we have this whole structure of markets, exchange, production and all the rest. This is the very purpose of our efforts: to increase consumption opportunities.
Profit is simply a method of keeping score along the way. If you make a profit in your production process then that means that you are adding value. The value of your outputs is greater than the value of your inputs. More accurately, the alternative uses of those inputs would produce less value added for consumers to enjoy. Thus profit is a good thing, losses bad, for losses indicate that you are subtracting, rather than adding, that value which can then be consumed.
If growing a pig in Belgium, slaughtering it in Germany and eating it in England produces more value for the consumers to consume than to grow, slaughter and consume a similar pig in England then so be it: this is the very point of it all, to produce the greatest value of output that may be consumed from the limited resources at our disposal.
Choice, consumers, consumption, these are not things to be disdained from the comfort of an Islington eyrie, they are the entire damn point of having a society or an economy in the first place.
Take the Easter egg. The salt may have come from China; palm oil from south east Asia; whey from New Zealand; sugar from the Caribbean; cocoa from South America, on and on. Britain imports food from more than 180 countries.
Ain't it just fantabulously wondrous?
School competition works in exactly the same manner as other forms of competition that is. It's something that happens at the margin, that margin then dragging up the performance of others:
There is no evidence that academies perform better than council-maintained schools. The white paper highlights impressive improvements in primary schools – 85% of those are still maintained. 82% of maintained schools have been rated good or excellent by Ofsted, while three times as many councils perform above the national average in terms of progress made by students than the largest academy chains. Where a school is failing, there is no question that action must be taken – but converting every school to an academy will not tackle those issues.
Think of a different arena to study the effects of competition. We know very well that the firms who export are those at the productivity boundary: exporting firms are near always significantly more productive than the other domestic firms in that same sector. Now think of the flip side of that statement: imports from Germany into Britain expose British companies to the finest and most productive German forms. This is one of the major channels by which trade improves productivity. Domestic firms must compete against those imports and near by definition those imports are coming from firms with greater than average productivity. Thus the domestic firms have to pull their socks up.....or be replaced by those who do.
Imports are not, of course, a majority of the UK economy: but that exposure to the best does improve matters over the whole economy. Now back to academies and schools: that some small portion of the education system are academies is exactly what, entirely analagous to that effect from trade and imports, is improving the non-academy state sector. To state that non-academies are improving too is not some symptom of a failure of the program, it's evidence of the success of the program: competition works.
At which point, turning all schools into academies. If it works, as it does, if it's working, as it is, then why not? After all, we do all believe in evidence based policy making, don't we? Good, academies, the competition and freedom to experiment that they bring, are improving the school system by their existence. Thus let's do more of it so as to have an ever better education sector.
Unless, of course, we'd prefer to return to the policy based evidence making of yore which insisted that competition was a bad thing....