Edward Heath's "Conservative" government

On June 19th, 1970, the Conservative Party, led by Edward Heath, was declared the winner of the General Election, and asked to form a government. The result was an upset because previous polls had given Labour, led by Prime Minister Harold Wilson, a comfortable lead. A poll on election day, however, showed a small Tory lead, and the Conservative Party, which the included the Ulster Unionists, gained a majority of 31 seats.

Their term in office under Heath was not a comfortable one. The had been elected on the "Selsdon Manifesto," a radical free market agenda that repudiated the post-war consensus. Soon after taking office, however, Heath abandoned the 1970 manifesto in the face of bitter opposition from the trade unions. He concluded that free market ideas were simply not appropriate in the modern world. His Chancellor, Anthony Barber, attempted a Keynesian-style "dash for growth," printing money like there was no tomorrow, stoking up a massive inflation that provoked union militancy.

The unions never accepted Heath's 1971 Industrial Relations Act, and staged a series of crippling strikes. Heath U-turned on his pledge not to bail out failing businesses by doing precisely that. Government spending increased far ahead of revenues, and he failed to modernize the outdated and relatively unproductive UK economy. The result was a new phenomenon: high unemployment combined with stagnation, or "stagflation." He introduced wage and price controls, both disastrously ineffective.

Heath undermined Britain's relationship with the US and its former dominions by taking the UK into the European Economic Community, not recognizing its ambitions to become a political entity. His downfall was his inability to cope with the 1973 oil crisis caused by the OPEC embargo. He instituted a 3-day week for offices, factories and public buildings, and saw frequent power cuts as militant unions went on strike to bring down his government. The economy went into recession. He called an election in February 1974 asking the electors, "Who governs Britain." They replied, "not you," and removed his majority. Labour formed a minority government, and the following year Heath was ousted as Conservative Party leader by Margaret Thatcher.

It did not help Heath that he was widely regarded as arrogant and rude. He went into a massive sulk that lasted for years, refusing even to mention the name of "that woman." Meanwhile Margaret Thatcher adopted the free market policies Heath had discarded, and from winning the 1979 election, used them to take Britain to renewed growth and prosperity. She succeeded where Heath had failed in taming the unions. She abandoned controls that he had brought in and that Labour had continued. Britain boomed, taxes were lowered, jobs were created, and people who had been dependent on the state now bought their own homes and often shares in the newly-privatized state industries. The ones that Heath had needed to subsidize massively now became profitable private businesses that paid taxes instead of consuming them.

History has not looked kindly upon Edward Heath and his administration, and is unlikely ever to do so. Even the museum at his home, to which he left the vast bulk of his estate to establish in his memory, failed to attract enough visitors, leading the trustees to seek permission to close it down and sell off its assets to other charities. A compromise was reached in which it remains open for part of the year as a centre for charitable activity related to Heath's interests, principally yachting and music.

Listeria's not a reason to bring NHS catering in house

Listeria’s an excellent excuse to bring National Health Service catering in house, it’s just not a good reason to do so. But that seems to be the way Matt Hancock is taking matters:

Eight NHS hospitals have been hit by the listeria outbreak which has killed five patients, the Health Secretary has revealed.

Matt Hancock made the disclosures as he said he was keen to see the health service take NHS catering back in-house, in a bid to improve safety.

The Health Secretary on Monday named six NHS hospitals which have been hit by the outbreak, linked to pre-packed sandwiches and salads, as he vowed to “take the necessary steps” to restore trust in hospital food.

That sandwiches are made by this group over here, rather than that group over there, doesn’t particularly increase nor decrease the risks of food bourne illnesses like listeria. It’s possible to argue it either way in fact. Centralisation might mean higher standards but greater damage if and when they’re breached, while decentralisation out to each individual hospital would mean any particular outbreak being less damaging but it could raise the number of them.

Mr Hancock has now set out plans for a “root and branch” review of hospital food, to improve its nutrition, as well as its safety.

And he said he would be keen to see an end to outsourcing of hospital food.

He told the Commons: “There are dozens of hospital trusts that have brought their catering inhouse and found that you get better quality food more likely to be locally produced and better value for money by bringing the delivery of food services in house. And that is something we are going to be examining very closely because i am very attracted to that model and it also has the potential to reduce the risk of safety concerns like this.”

Clearly he already wants to do this anyway. Listeria is an excuse, not a reason.

Waterloo – the victory that set the future of a continent

It was the battle that determined the shape of Europe for decades, and which led to the UK's hegemony on the world stage. It was fought on June 18th, 1815, at Waterloo. Wellington had, as always, inspected the battlefield beforehand, noting which low rises would conceal troops of his Anglo-Dutch army, and decided to give battle at the Mont-Saint-Jean escarpment. Napoleon had performed his usual manoeuvre of rushing his troops forward to attack his enemies one by one before their forces could combine. He defeated Marshall Blücher's Prussians at Ligny, before they could combine with Wellington's forces. Crucially, however, he overestimated his victory, and underestimated the moral courage of Marshall Blücher.

Blücher had retreated in good order and promised Wellington that the Prussians would join him at Waterloo before the day was out. Given that pledge, Wellington committed to battle and withstood repeated French attacks throughout the afternoon, with both sides sustaining heavy casualties. Realizing that the Prussians were approaching, Napoleon committed his Imperial Guard, the "Immortals," in a desperate last attack. Never before repulsed, the Imperial Guard retreated under heavy fire, even as Blücher's Prussians entered the field, with General Bülow breaking through on the French right flank. Wellington counter-attacked, sending the French into headlong retreat.

Blücher had delivered on his promise, and his entry onto the field late in the day, swung the battle. Napoleon fled in his carriage, leaving his personal possessions as well as his troops, bringing an end to French dreams of ruling Europe, and closing the page on the years of constant war that had followed the French Revolution. On 21 June, 1815, at London's East India Club, Major Henry Percy presented the Prince Regent with four captured French eagles and Wellington’s victory despatch from the Battle of Waterloo. The news was then announced from the balcony to the crowds that had gathered below. The room where this took place is now known at the Club as the "Waterloo Room".

Four decades of comparative peace ensued, marked by scientific and technological progress and economic expansion. The UK gained most from the victory. It put an end to centuries of Anglo-French warfare, and left Britain's navy ruling the high seas, protecting a worldwide empire "on which the sun never set." The Industrial Revolution, briefly interrupted by the needs of war, now accelerated, bring unparalleled material prosperity to the nation. Britain became, for a time, the workshop of the world, exporting the machines that powered the industries that other nations were developing in her wake.

Wellington himself, the last non-royal person awarded a dukedom, became a successful Prime Minister, helping to usher through the major reforms that transformed Britain into a modern power. At the Great Exhibition of 1851, the one that showed off Britain's technical, scientific and manufacturing expertise to the world, it is reported that the loudest cheer from the crowd was for the 82-year-old warrior himself. When he died the following year, Queen Victoria insisted on a lavish state funeral. Napoleon, meanwhile, had died in 1821, a solitary prisoner on the Atlantic island of Saint Helena.

It could easily have gone otherwise. Wellington said, "It has been a damned nice thing — the nearest run thing you ever saw in your life," (often summarized as "a damn close-run thing"). In his official dispatch, Wellington wrote that victory would not have been possible without the timely assistance of Marshall Blücher. It was the battle that day which determined that liberal Britain, rather than autocratic France, would come to dominate world culture, and that English would become the lingua franca of the modern world.

The entirely ghastly idea of National Service

To be of service is of course entirely normal - it’s the way we all make our living, producing something of value to others. National has its value too but the idea of National Service becomes repellent. For it’s the forced theft of the time and effort of the individual. As is conscription itself.

Thus this is an horrific idea:

Earlier this month, though, some of his growing fan club were aghast that he had taken leave of his senses. In one of his social media salvos, Stewart announced that if he were to become prime minister, he would introduce compulsory national service for every 16-year-old. Cue horror: compulsion? Service? Marching jackboots and itchy blankets? Even though Stewart made clear this would not be military service, the Twitter hordes were up in arms.

But national service is an idea whose time has come (again). Bear with me. I know that this is a proposal fetishised by a certain kind of person; the kind who thinks life was better when teachers could wield the cane, when men were men and women wore skirts, when bad people swung from the gallows. Yet strip national service down to its bones and what is it but a collective endeavour for all young people, a mixing of tribes, a rite of passage into deeper patriotism? And this — in these rancorous, anxious times — is exactly what our country needs.

It always is something imposed by those too old to have to undergo it. We’d have rather more sympathy - more but not enough - if it were politicians insisting that politicians must lose some years of their life to the State’s force, or columnists ditto. That other people, those too young to be able to successfully complain, must do so isn’t, we think, quite fair. Actually, it’s repellent.

It’s also true that for any parent who wishes to so encourage their child, for any child who so wishes, there is already that option. Over and above Scouting and Girl Guides there are varied forces related cadet forces, The Woodcraft Folk, Pathfinders, HaNoar HaTzioni, Habonim Dror and the Boy’s Brigade - which we’re pretty sure includes girls at this point. And that’s just from a idle scan of Wikipedia, we’re sure there are many more out there.

That is, everyone who wants to do such a thing may. The only addition that National Service would bring is the power of the State to force. And that’s what’s so repellent about the idea of course.

When Lady Liberty arrived in New York

It was on June 17th, 1885, that 200,000 people went to the docks at New York to greet the French steamer Isère as it arrived with the Statue of Liberty. The statue was not in one piece. Having been put together in France, it was disassembled and put into crates for its transatlantic voyage.

The statue, made of copper sculpted by Frédéric Auguste Barthold clad onto an interior framework built by Gustave Eiffel, was a gift from the French people to those of the United States. Based on the Roman goddess of liberty, she holds a torch in her right hand and a tablet in her left hand, inscribed with the Roman numerals that represent July 4th, 1776, the date of America’s Declaration of Independence. At her feet is a broken shackle and chain to denote the recent abolition of slavery in the US.

Visitors can climb inside it via 2 spiral staircases leading to an observation deck in her crown. Lifts were installed during renovations. Access to the torch via a long, narrow ladder is now restricted to staff, but originally the public could ascend. There is a brass plate, originally mounted inside the pedestal, but now in the museum in the statue’s base, that contains the famous words of “The New Colossus,” a sonnet by Emma Lazarus.

"Keep, ancient lands, your storied pomp!" cries she

With silent lips. "Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tossed to me,

I lift my lamp beside the golden door!"

Generations of immigrants were inspired by the sight of Lady Liberty as they sailed into New York, though some might have felt misgivings at being described as “wretched refuse.” She has been a powerful symbol of freedom ever since she arrived there herself. She reminds us to keep aloft the light of liberty, and to value the constitutions that protect it.

Her fame is such that she has appeared in many movies. The torch was the location of the climax of director Alfred Hitchcock's 1942 movie “Saboteur.” The statue’s most famous appearance was in the 1968 picture “Planet of the Apes,” in which it was seen at the end, half-buried in the sand. It was toppled in the science-fiction film “Independence Day,” and in “Cloverfield” it was beheaded by the monster.

The Statue continues to inspire to this day, and sees troops of schoolchildren and tourists visiting her to learn about the value of liberty and the need to guard it. Some think democracy is an end in itself, but the statue reminds us that it is a means to an end, and that liberty is that end. The US is not a democracy, though democracy is embedded in its fabric. It is instead a Republic, one whose Constitution was designed to protect the liberty the statue represents.

Finally, a sensible drug policy

We agree that we’ve been a little stentorian in our critique of current drug policy. We argue for full legalisation - with certain limitations upon who may partake of course - of all drugs. Not just decriminalisation. Partly on the grounds of simple civil liberty - consenting adults get to do as consenting adults, absent third party harm, wish. But also on the grounds of harm reduction.

The problem, for example, with heroin is not heroin. It’s shared and dirty needles, the brick dust it can be cut with as a result of the illegality, the variable doses as a result of the same illegality, the dealing conducted to afford it as a result of the illegality and - well, it’s the illegality. Someone taking pharmaceutical grade heroin in measured doses with clean gear at the prices of an actual legal and free market isn’t a problem other than the possible wasting of that particular life’s potential.

This is thus good policy:

Heroin addicts are to be given free supplies of the illegal class A drug as the Home Office awards the UK’s first licences for “shooting galleries.”

The controversial move is being led by the police and crime commissioner and doctors in Cleveland who will use medicinal grade heroin in a last-ditch bid to wean “hard-core” addicts off the drug.

Under the Home Office licence approved this month, the addicts will inject themselves up to three times a day supervised by health staff at a centre open seven days a week from the Autumn. Without the licence, anyone caught possessing heroin can be jailed for up to seven years.

There is another reason we know this is good policy, not just that reasoning from first principles. It’s that this is not that far away from what used to be policy. Those decades and decades back addicts used to be prescribed their heroin. As a result there was none of that dealing in order to finance, no attempts to suck in new users in order to gain the customer base off which profits to continue consumption could be gained. The abolition of this system certainly coincided with - we would argue caused - the mass expansion of the addiction problem itself.

We are moralists here in the sense that we think it moral for every adult to carve out their own life according to their own desires - that’s the liberty and freedom thing. But above that we’re pragmatists. What system solves, as best can be done in this complex world, the problem under discussion? Given that the major problem with heroin is the illegality of the drug then legal provision is going to solve it.

Venezuela Campaign: The destruction of Venezuela’s oil industry

Venezuela is an oil-rich nation. Oil is Venezuela’s biggest export, largest foreign currency earner, and it has the largest proven reserves in the world. It therefore stands to reason that Venezuela would take a prominent place amongst the OPEC nations. However, nearly two decades of corruption and incompetence have rendered Venezuela’s oil industry impotent. OPEC’s June 2019 report on the oil market suggests that Venezuela’s oil production has shrunk to just 741,000 barrels per day, sharply down from the 1.9 million barrels produced in 2017 and tiny when compared to Saudi Arabia’s the 9.7 million barrels per day. This is a stunning collapse in the Venezuelan oil industry, which produced 3.6 million barrels when Chavez came to power in 1998. Today’s production is just 20% of that level and below that achieved in the 1940s.

The speed of the recent collapse obscures its long-term causes. Venezuela’s oil production has not dwindled because of US sanctions (the US continued to buy Venezuelan oil until March 2019), but because decades of underinvestment have eroded its ability to extract and refine oil. Venezuela earned more than $1 trillion in oil revenues during Hugo Chavez’s presidency. If even a little of this money had been reinvested into the oil industry together with some sensible policymaking, then Venezuela could be producing seven times as much oil as it currently does. Instead, for almost two decades Venezuela’s oil wealth has been stolen, misused, or squandered, first by Chavez, then by his successor Nicholas Maduro.

Firstly, members of the regime, especially Chavez’s family and close associates, have enriched themselves through larceny of the highest degree. Chavez’s daughter is worth an estimated $4 billion, his former driver $1 billion, and myriad other former ministers and hangers-on have squirrelled away untold sums in various offshore account and overseas properties. Many are now under investigation by authorities around the world for corruption, and their frivolous spending is being revealed in lurid detail within court documents.

Secondly, Chavez began using oil to increase his political power both domestically and internationally. Venezuela has supplied Cuba with large quantities of oil in return for security and intelligence support essential to the survival of the Chavista regime. Cuba still receives about 55,000 barrels of highly subsidised oil a day, as well as shipments of petrol, despite pervasive petrol shortages in Venezuela that require citizens to queue for days. Chavez similarly provided heavily subsidised oil to neighbouring Caribbean countries through the so-called ‘Petrocaribe’ initiative to buy their political and diplomatic support in international fora such as the UN. Some money was also used to intervene in foreign elections.

Thirdly, oil revenues were squandered through indiscriminate subsidies. Petrol is heavily subsidised in Venezuela, so much is stolen by regime insiders and sold abroad. In keeping with this theme, energy subsidies accounting for some 20 per cent of oil revenues have largely benefitted the better-off. Chavez further wasted money on consumption subsidies to buy domestic political support. These measures had no sustainable effect in reducing poverty and progress was quickly reversed when money ran out.

Lastly, Chavez wasted huge sums on grandiose state-owned industrial projects such as the Iranian-built Cerro Azul cement plant. Many of Chavez’s vanity projects never started production, and those that did failed to meet their expected production output, typically due to incompetent management. Nowhere is this more evident than in the energy sector, which cannot consistently keep the lights on.

Aside from chronic underinvestment, Venezuela’s oil industry has also suffered from a skills shortage. After a general strike in 2002-03, Chavez fired 20,000 employees of the state oil company PDVSA. Unfortunately, those 20,000 employees were mostly engineers, managers, and geologists; Chavez replaced them with unqualified political supporters. For a while the industry was still helped by foreign experts, but in 2007 Chavez nationalised the assets of foreign oil companies and forced them out of the country. This expropriation has of course ended foreign investment in the oil industry, exacerbating the overall lack of investment. Maduro has responded to Venezuela’s oil crisis by doubling down on Chavez’s policies, recently appointing a General to head PDVSA.

Oil industry experts are damning in their verdict; according to Jose Bodas, general secretary of the Oil Workers Federation trade union, “what we are witnessing is a policy of destroying the oil industry”. Reversing decades of destruction will be a difficult and time-consuming task. New laws will be required to permit desperately needed foreign investment and expertise. PDVSA must be cleansed of corrupt and incompetent staff and a culture of professionalism reinstated. High quality specialists will need to return to collapsed Venezuela. The sooner Maduro leaves power, the sooner Venezuela can begin the long process of rebuilding.

More information on the Venezuela Campaign can be found on their website. 

A tribute to Adam Smith

Adam Smith, born on June 16th, 1723, was the founder of modern economics. One of the biggest mistakes made by enemies of the free markets he praised is the notion that he stood for self-serving behaviour, and claimed it served the common good. This is far from what he did say. In his “Theory of Moral Sentiments,” published in 1759, 17 years before his “Wealth of Nations,” he asserted that the most salient human characteristic is our propensity to share sympathy with our fellow human beings. In modern terms we would today call that “empathy.” We identify with our fellow men and women.

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it.”

What Smith is telling us is that we are social animals, not atomistic individuals. We live among our fellow humans and we interact and exchange with them. We identify with them and share their sorrows and joys by reflection. We behave morally towards them because we value their esteem. Indeed, we construct in our minds an “impartial spectator” who represents them, and sees our behaviour from their point of view rather than our own. When tempted to behave in our exclusive self-interest, that inner spectator cautions us that those whose respect we seek will not value us if we do.

This impacts on our economic behaviour. When the butcher, the brewer and the baker provide us with our dinner, they do so from their desire to advance their own welfare, and not from benevolence. But they are human beings and want to behave morally and decently to us. They must not cheat us, because exchange is founded on trust. We pay money for their meat, beer and bread because we prefer that meat, beer and bread to the money they cost us. We value them differently than their producers. They would rather have the money; we would rather have the dinner. Both of us gain something of greater value when the exchange takes place if it takes place honestly. We create wealth when we trade. And because each of them specializes, they can give us better value than if we produced such goods ourselves. But trade depends on trust.

In university economics lecturers often teach that we buy from the cheapest supplier. If any of them had any experience of business they would learn that people like to rely on long-term relationships of trust. You like to deal with people you are comfortable with. You often choose to avoid the risks that come with an unknown contact by sticking with a relationship you know is founded on mutual trust, perhaps with people you have dealt with over the years and whom you know you can rely on.

The point is that while we are motivated to engage in what Smith called “the uniform, constant, and uninterrupted effort of every man to better his condition,” (and every woman, too), we do so within a moral framework. We don’t cease to be human beings when we buy and sell things. That is the subtlety that Smith’s latterday critics fail to grasp.

A most revealing line about climate change

It’s amazing what people will enable themselves to believe. The source of this is:

Susanna Rustin is a Guardian leader writer

The statement is:

If the world is to come together as we need it to, human values will have to assert themselves over the forces of capital.

The solution to climate change is that priority of human values over capital.

Now, it may well be true that someone whose living is made writing leaders for The Guardian thinks that the power of capital must be abolished. We’d rather think it comes with the territory. But to think that the solution to climate change is going to require that is an error. Actually, it’s a delusion.

Firstly because all do indeed say that massive investment is required in order to avoid climate change. And what the heck is investment other than the deployment of the forces of capital?

But even if we talk about “capitalism” this is still not true. The problem being identified is that we humans like to consume, like having more. The assertion is that we can’t have that if we’re to beat climate change. And yet that desire to have more isn’t anything to do with capital or capitalism - they’re just the effective means of meeting that innate human desire. That East Germans fled across the Wall if they could - actually, that East Germans were fleeing to cause the building of the Wall - shows that the absence of capitalism doesn’t remove the desire for that more.

Then, finally, in empirical detail, we also know that the absence of capitalism doesn’t lead to that absence of climate change. In the standard economic models used to even predict the existence of climate change itself we have studies of what the world will could like in that future. With and without globalisation, with and without capitalism and free markets. The one that leaves humans with what they want, those increased riches and also no climate change, is the capitalist and free market one, globalised, using more renewables and fewer fossil fuels. A1T in the naming jargon of those economic models.

The various socialised/socialist models studied produce very much worse outcomes. So it isn’t just projection to worry about here, it’s an actual ignorance of the subject under discussion. Which perhaps isn’t the best way of producing newspapers.

National Beer Day in the UK

The date of June 15th was designated National Beer Day in the UK to celebrate English ale. It was chosen because it was the date on which King John signed and set his seal to the Magna Carta in the meadows at Runnymede.

In the Middle Ages it was a staple drink of England, brewed and drunk everywhere and by all classes. It was drunk at every meal because it was safer than water - alcohol kills germs. Such is our historic acquaintance with it that we have an enzyme, alcohol dehydrogenase (ADH), to help metabolize it. Those who drank beer survived in greater proportion than those who drank water. In the Far East those who drank tea survived because it involved boiling the water. East Asians have a lower alcohol tolerance because they never drank it to survive, and did not inherit the enzyme.

Beer is quintessentially English. It is top fermented, and traditionally finished its fermentation in casks in the cellars of public houses. It contrasts with bottom fermented beers popular in Continental Europe, which include the light coloured pilsners that only became popular in Britain in the second half of the 20th Century.

Before the use of hops gradually became widespread from the 15th Century, an uphopped beer was called an ale, with the term “beer” reserved for those made with hops, and brewers could originally make either, but not both. Magistrates and officials were not interested in limiting the amount produced or the quantity drunk, but in ensuring it was of the appropriate quality and strength. A 1577 survey of pubs in England and Wales, done for tax purposes, lists 14,202 alehouses, 1,631 inns, and 329 taverns, representing one pub for every 187 people. The 1830 Beerhouse Act enabled anyone to brew and sell beer and cider, either from a pub, or from their own home. It led to hundreds of new pubs setting up. It was passed to reduce the excessive consumption of gin, “the quickest way out of Manchester.”

Public Health England has a more Puritan attitude, advising no more that 14 units of alcohol a week. This works out at about 5 pints a week of a cask-conditioned ale. The claim is that by choosing an absurdly low number they will prompt drinkers to limit their consumption, whereas the reality is that people just ignore the recommendation, knowing that it was plucked out of the air with no scientific basis to support it.

There are probably health risks associated with beer, as there are with most things, but there are positive aspects too. Beer promotes social interactions as people drink with friends, and it lowers levels of stress, which is reckoned to be among the causes of early death.

Beer has been part of our culture. It almost certainly sustained the archers who fought at Agincourt, and it was always a feature of what is appropriately named “Merrie England.” The nannies and killjoys disapprove, as they do of everything that brings pleasure, but on National Beer Day, we’ll drink a toast and wish good health to everyone else.