Propaganda and truth telling

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Yes, of course we all know the difference between the two. Propaganda is the bit you don't agree with, truth telling the part you do. So an interesting little story of our past truth telling makes an appearance:

My classes started today; I'll be wearing my "I buy goods from poorer countries" wristband that the Adam Smith Institute sent me

This is triggered by this piece from Nicholas Kristof which contains this:

But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children....(...)...In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn’t the bottom.

Which reminds me of this from our most recent Nobel Laureate* in economics:

These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.

That's basically the story of the globalisation of the past few decades. You can call it soulless, you can call it amoral pursuit of profit, you can call it greed if you like. The nett result has been the biggest reduction in poverty in the entire history of the human race. Hundreds of millions now have that something significantly better. You can even, if you really wish, call that buying goods from poor countries propaganda: as long as you'll admit that it actually works in doing what we all want to happen. Aiding hundreds of milions of our fellow humans up out of abject poverty.

* Yes, we know, Swedish Bank, honour of, and we don't care.

Personal budgets in the NHS

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On Friday the Department of Health announced the extension of 'personal budgets' to healthcare (following their successful introduction in social care) for people with long-term conditions such as Multiple Sclerosis. What this means is that patients will receive direct payments that they are then able to spend on the health services of their choice. 

This is good news. Individuals know their own needs and preferences far better than the state or its agents ever can. Putting them in charge of directing their own care improves outcomes and increases cost-effectiveness.

But why can't the government make the very small leap of logic from saying that people with long-term care conditions should have personal budgets, to saying that we should all be given the freedom to manage our own healthcare. If it's good for people in social care, and good for people with long-term conditions, then why not for the rest of us? The same logic applies regardless of who you are talking about.

It's easy to see how it might work. Assuming we stick with an egalitarian, tax-financed system, we could all be given health savings accounts, which the government would credit annually with our basic personal budgets. Then we would simply pay directly for the care we needed, as we needed it.

The best thing about this is that we would quickly get a healthcare sector shaped by the individual choices of hundreds of thousands of people and driven by consumer control, rather than one designed by central planners and commanded from the top-down. In other words, we'd have a market instead of a Soviet-style 'service'.

Working, what’s the point?

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“Working, what’s the point?" This is the title to a piece on the BBC that highlights the dim prospects of work for two un-employed twenty-somethings, in a former mining town in Northern England. But it’s also a question that they themselves raise in discussion.

So let me answer the question for them: The point is so that I can pay for others to survive whilst they look for work as opposed to insuring against my loss of income should I lose my job. I work so that I can pay for the healthcare of others should they become ill rather than paying to secure my good health in the future. I work so that other peoples’ children can gain an education, yet I know that should my own children ever want an education I will struggle to pay. I work so that the wages and pensions of those that redistribute my earnings into services I don’t require are generous. Far more generous than I could ever imagine. I work so that I can pay more to the government when I use services, when I drink, when I eat, when I read, when I heat my home, when I light my room. I work so that you don’t have to. And for that I’m left wondering, “what’s the point?"

A small percentage of my money does end up in the right place. It pays for a police force to keep the streets safe for others and me. It pays for an air force, navy and army to keep the nation safe and it pays for a justice system that prosecutes transgressors. (Or it should in theory).

Perhaps the day is fast approaching when I and others like me shrug one morning, roll over, hit snooze and also say quietly, “Working, what’s the point?"

Blog Review 842

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While everyone is haring off trying to repeat or even outdo the New Deal, there's still a lot of controversy about whether it actually worked and if it did, which parts did?

What, in the words of a modern liberal, distinguishes a modern liberal from a classical. Arguing back is so easy that it is left as an exercise for the reader.

For example, we hear a little about government failure, but what do you do when a government is actually crazy?

Or even crazed?

Or, can't we make the modern liberal system simple enough that the incoming Treasury Secretary can understand it?

A very good point about stability.

And finally, on occupied space.

Lazy civil servants

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Donald Trump, in the original Apprentice, made famous the words, “You’re Fired!" Perhaps Sir Alan Sugar and he could team up and take those two words into the depths of the civil service, dispensing them to the staff that Lord Jones seems to have found lurking there. Speaking to the Commons Public Administration Select Committee, he said: “Frankly the job could be done with half as many, it could be more productive, more efficient, it could deliver a lot more value for money for the taxpayer. I was amazed, quite frankly, at how many people deserved the sack and yet that was the one threat that they never ever worked under, because it doesn't exist."

Lord Jones seems to be adding to the point the Conservatives made a few days ago when they claimed that there were 4,000 civil service staff ‘doing nothing’. As a culture of malaise now hangs over the civil service then it’s time to cut our losses and find another way of implementing the odious government initiatives. We already have a vast array of management consultants working on government policy, some £3bn as of 2007 (perhaps we could take them on full time). Though I’m not sure we’d still be getting value for money there.

In ideal world the civil service would be operated along the same lines as any other business. At present it is weatherproofed against hard times, as firms are trimming the fat, the civil service continues on regardless. A point supported by the head of the civil service union, Mr Baume, who said, “the government's love of launching initiatives - and the current economic crisis - meant that there was an argument for more civil servants rather than less." It is easy to predict that the governments debts will grow ever deeper and we shall continue to furnish the pockets of those, who in any other business, would be deemed surplus to requirements.

Oh, and if you are in the public sector and not doing much click here.

Expenses disgrace

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Leader of the Commons, Harriet Harman, has tabled proposals that will give MPs an exemption from the Freedom of Information Act. The aim is to circumvent rulings by the High Court and Information Tribunal demanding the receipt-by-receipt breakdowns of how public money is spent.

The motivation behind this is straight forward. MPs are covering their own backs. Harriet Harman is not alone; there is little appetite among MPs to let their constituents know how they spend their taxes.

Liberal Democrat MP, Norman Baker, has decided to speak out against Harman, stating: “After the fiasco of MPs’ expenses there is a great deal of work to be done rebuilding confidence in the Commons. This simply undermines it again." He must have seen the light, for his reputation on this front is far from squeaky clean.

Jon Craig, on the Sky News website, rightly compares this move to the actions of Silvio Berlusconi. MPs would be the only public servants exempt from the Freedom of Information Act. This is Public Choice Theory in practice, and not even the High Court can hold them to account.

Should government bail out carmakers?

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On Sky News this week I debated Derek Simpson of Unite, who thinks the government should give short-term subsidies to the car industry in order to preserve its long-term future.

He's wrong. There's no point bailing out carmaking in the short term, because it won't survive in the long term. UK carmaking has been on the skids since the 1960s. Once it was low-cost competition from Japan, now Slovakia, India, China and many others can produce cars more cheaply than we can. The only reason car sales have held up is because we've had a huge boom, engineered by governments. Now we're in for a huge bust. When the dust clears, it'll be obvious that we've been producing too many cars, too expensively, for more than a decade.

And where would a subsidy to carmakers come from? From the pockets of people running small businesses, shops, cafes, hairdressers, who are all struggling to pay their rates and National Insurance. Every pound you take from them drives them nearer to bankruptcy. The cost of saving thousands of jobs in Sunderland or Coventry is losing thousands of other jobs in other places. But those jobs are lost a few at a time, so politicians don't notice them, and don't realize the damage that their policies inflict.

Most carmakers are foreign-owned anyway. I don't know why a barber in Bolton should pay higher taxes in order to bail out the Indian billionaire who owns LandRover. And we could bail out Honda or Vauxhall, only to find that their bosses in Tokyo and Detroit pull the plug anyway, and our cash has been wasted.

The whole country is going to be bailing itself out, at this rate – paying out money with one hand as taxes and getting it back with the other as subsidies. It's no way to run an economy. Business should be driven by market returns, not by the arbitrary vote-garnering whims of the political class.

Blog Review 841

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A party game: since the millennium, can anyone point to an advance rather than retreat of civil liberties?

So will Gordon Brown get howled down the next time he breaches this Treasury rule?

An update from the Department of Wibble.

This won't last long. An outbreak of common sense in government.

A return to normal, an outbreak of nonsense in government.

If only someone would tell our own harpies. Slavery and sex work are not the same thing.

And finally, we'll miss him when he's gone.

Property bubbles, credit bubbles, and land value tax

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As I explained in yesterday's post, all existing taxes that relate to property ownership, occupation, or wealth generally (Council Tax, Business Rates, Stamp Duty, Inheritance Tax, Capital Gains Tax, the TV licence fee and Insurance Premium Tax) could easily be replaced on a fiscally neutral basis with a flat annual tax on underlying non-agricultural land/location values once prices have bottomed out and stabilized.
 
Average total property values per square yard for each postcode sector are easy to calculate on the basis of actual selling prices and plot sizes as recorded by HM Land Registry. This total value could be split into 4/5 that relate to the exempt bricks and mortar value (probably on the high side) and 1/5 that relates to the location value (probably on the low side), to prevent there being endless appeals that the assessed value of the location value of each plot is too high. Going by long run price-to-income ratios, the fiscally neutral rate when prices bottom out would be in the region of 7% per annum (or around 1.5% of the total market value of each property).
 
Besides raising the money required to cover the core functions of the state – like the legal system, policing, street lighting, and so on – a tax of 7% of capital values in excess of the bricks and mortar value would serve a useful purpose in dampening the cycles of property price and credit bubbles that have plagued the UK economy since the Second World War.
 
These bubbles are two sides of the same coin, of course. Strict planning laws limit the amount of residential and commercial premises, so easy credit fuels rising prices rather than creating additional supply; the increased values are then accepted as collateral for further loans and so on, until the double bubble eventually bursts, tipping the economy into recession or worse.
 
It would be administratively easy to update total property values on the basis of existing sales in each sector each year. If the 7% flat tax were applied to all value in excess of the original bricks and mortar value (adjusted for inflation), i.e. to the bubble element as well as the location value, this would act like a much higher interest rate thereon, and thus dampen down property price bubbles (and hence credit bubbles) as well as sending a "market signal" to existing home-owners that planning permission is being far too strictly rationed.

Guest author Mark Wadsworh regularly blogs here.

Patrick McGoohan, Number 6 in The Prisoner, dies

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Patrick McGoohan, lead actor in the 1960s cult TV series The Prisoner, has died in Los Angeles aged 80.

In the series, which was a surrealist libertarian masterpiece, McGoohan plays an agent in some secret government organization, who has a row with his bosses and wakes up next morning in a kind of fantasy village. It’s a place where everyone is known by number (his is Number 6), rather than names. Nobody knows or imagines anything outside The Village – as the place is called. The maps don’t even show anything beyond it.

It’s always a beautiful day in The Village. Everything there is benign, and faultless harmony prevails. Spontaneous parades and events take place all the time, and everyone seems keen to participate in them. But Number 6 just doesn’t fit in. He does not see why he should follow the strange rules and rituals of the others. He sees no merit in the trivial things they think important. One of them chastises him: ‘You have no values.’ He responds tersely: ‘Different values.’

The analogy with Britain today is chilling. Everyone is expected to fit in, to conform, and to rejoice in their conformity. Those who do not conform are publicly branded as immoral, and are scorned and vilified. But who is more bizarre? Those who follow the mainstream conventions imposed on them by the myopic political correctness of officialdom and the state? Or those who regard all that political correctness as shallow and destructive, and prefer to trust values based on experience and common sense?

As Britain’s values become subverted by the trite, dysfunctional, and bizarre values of the Westminster Village, I begin to feel for Number 6. Be seeing you.

Abstracted from Eamonn Butler's forthcoming book The Rotten State of Britain (Gibson Square)