Living Freedom Conference 2018

Some of our readers might be interested in the Living Freedom conference organized by the Academy of Ideas. It's a 3-day school for 18-25 year-olds to be held from 6pm on Thursday 6th April to 7pm on Saturday 8th April.

"Taking place at the CIEE Global Institute in central London over the course of three days (with hostel accommodation provided to all attendees for two nights), Living Freedom provides a stimulating forum for around 40 young advocates of freedom to attend expert talks and participate in meaningful debates."

Applications must be in by the end of the day on Monday 5th April, so anyone interested should hurry! Click here to find out more!

We thoroughly approve of passports for sale - very Georgist

This story is, predictably, causing outrage. The very idea that rich people should be able to just rock up and buy a passport, citizenship, just for mere filthy lucre. We think it's an absolutely marvellous idea: 

The Russian oligarch Oleg Deripaska has bought a Cypriot passport under a controversial scheme that allows rich investors to acquire citizenship and visa-free access to the European Union, the Guardian can reveal.

Deripaska, an aluminium magnate with connections to Donald Trump’s former campaign manager Paul Manafort, is one of hundreds of wealthy individuals who have applied for Cypriot nationality. His application was approved last year.

The revelations will revive concern about oligarchs with Kremlin connections buying EU passports. Large numbers of the Russian and Ukrainian elite featured last year in a list of hundreds of people granted Cypriot citizenship over the past four years.

There is the obvious point that this enables freedom through exit. However robber baron or worse the Russian state becomes those who can flee are free of it. This neatly reducing the incentive for the state to dispossess of course, to the benefit of those who do not so flee.

But also consider the more subtle Georgist point. The value of land depends hugely upon what the surrounding society has built to increase said land value. That's the argument for taxing land values and it's a good one. The value of citizenship is the value that surrounding society has built. A good society, created by those little platoons over the centuries, produces a greater citizenship value than a not good society. We can see this in the migration rates in and out of certain countries, values do differ.

So, yes, just as with land value taxation, society should tax back the value society has created. It's not just that we could sell citizenship, it's that we ought to.

OK, perhaps be a tad more selective over who may buy it but the basic concept is sound. 

Chewing gum tax - both a good and bad idea

The idea of imposing a tax upon chewing gum has its merits - there is a cost associated with it after all:

A chewing gum tax should be introduced to help pay to clean up British streets, the Local Government Association has said. 

A cross party motion has been tabled in Parliament along with a petition asking Government to crack down on the "nuisance and unsightly blight imposed throughout the UK by the careless disposal of chewing gum".

Local councils currently spend £60 million a year scraping an estimated two million pieces of gum, dropped daily, from pavements.

The campaign is being backed by the LGA and campaigners Clean Up Britain, which has also called for the chewing gum industry to belegally forced to contribute towards paying for the problem.Chewing gum is the second most commonly dropped litter after cigarette butts.

The petition says: "The Government must hold billionaire gum producers accountable for the huge costs their product inflicts. Currently they pay nothing towards these costs.

Standard theory says it's just fine to impose a Pigou Tax where there are third party costs.

However, there are a number of things wrong with the idea too. Firstly, such taxes should not be hypothecated - the revenue doesn't go to trying to clean up the mess. Rather, we're trying to alter market prices so that those imposing the costs have them included in the decisions to act or not. 

That leading to the second problem - it's not the manufacturers either imposing these costs nor is it them we'd like to carry them. The costs are imposed by those who spit the stuff out onto pavements. Those are therefore the people we'd like to be paying the costs.

That is, a proper examination shows that we'd like to have a "spitting chewing gum onto the pavement" tax rather than one supposedly upon manufacturers. As it happens, we do already have taxes and fines for littering. We thus just need to enforce current law, not have a new charge.

The idea is thus just fine in that third party cost impositions should be carried by those who impose them. But we do have to correctly identify the actors and then direct our impositions at them. It's people spitting the gum imposing the costs - fine them. 

If fascism can't happen then is it still a democracy?

If it's not possible for a country to become fascist then is that place still a democracy? Not that we think there will be a sufficient popular upsurge for that form of government but then we think that about communism and socialism too. And that's rather the point of the surmise:

My argument is pretty simple: American fascism cannot happen anymore because the American government is so large and unwieldy. It is simply too hard for the fascists, or for that matter other radical groups, to seize control of. No matter who is elected, the fascists cannot control the bureaucracy, they cannot control all the branches of American government, they cannot control the judiciary, they cannot control semi-independent institutions such as the Federal Reserve, and they cannot control what is sometimes called “the deep state.” The net result is they simply can’t control enough of the modern state to steer it in a fascist direction.

This is, as stated, true of any radical group. And radical can be pretty milquetoast as well. Certainly Nigel Farage and his compadres have been described as such for wishing to over turn the EU order.

Our point being that we do have a reasonable and workable definition of democracy - can we throw the bastards out? And if we can't then we're not. What Tyler Cowen above is insisting is that we can't throw that deep state out - so, are we still a democracy? 

On St David's Day, a look back and a look forward to a better Wales

Today is Wales’ national day. I personally remember it being a day where you dressed up in itchy woolen trousers, a miniature waistcoat and a flat cap. Oh yes, and it was all topped off with a daffodil or leek tied to my lapel that was about half the size of me. We would then spend the entire day sat in a cold hall in a border village getting prizes for handwriting and reciting poetry in a language not one of us spoke. 

Nowadays I see it more as a chance to take a look back at my homeland and wish better times lay ahead for the country. Wales has languished at the bottom of the UK league tables for decades now in education, productivity, incomes, and health. It’s depressing. It needn’t be this way. 

Wales was once a by-word for capitalist ambition. The Coal and Shipping Exchange, in Cardiff Bay, was completed in 1886 by Edwin Seward as Cardiff became the busiest coal port in the world. The centre saw 10,000 people per day at its height walk through the building, conducting trade negotiations for coal from the South Wales Valleys to be sent across the world. In 1904 the building saw the first ever £1,000,000 contract signed. 

A lot of time is spent in political debate in Wales on the effect of privatisation, the effect of reduction in state subsidies and the impact changing demographics and industries has had on Welsh communities. But little is ever mentioned about the impact of nationalisation on the private sector in Wales. The companies that brokers and traders at the Coal Exchange were negotiating on behalf of were privately owned until nationalisation of coal mining in 1947. 

The private ownership of companies, and the market reflection of prices resulted in much more elastic labour markets. Between 1851 and 1911, some 366,000 people moved into the South Wales’ coal mining areas. The peak of this migration occurred at the height of Wales’ production power between 1901 and 1911 when 129,000 people moved into the area. These were heavily international areas, with migrants not just from Wales (and large numbers from England, Scotland and Ireland) but also from Spain, Italy, Russians, Poles and French moving to the site of an economic boom. Oddly enough migration brought wealth, vibrancy and a sense of opportunity to locals as well as to newcomers, there were few calls to restrict the flow of labour back in the late nineteenth and early twentieth centuries.

But resource booms that can’t compete with new entrants on the world stage also faced busts. Between 1919 to 1939, after the First World War, there was mass unemployment. Fewer jobs and price responsive mines meant 500,000 people left the valley communities during the interwar years. The Rhondda saw around 36% of its population leave between 1921 and 1951.

Nationalisation stymied the flow, with security cited as part of the reason why taxpayers from across the UK should subsidise loss-making mines and industries. It saw control move from private owners to Whitehall and the costs of extraction and contract fulfillment moved to the general taxpayer. Oddly enough political pressure kept subsidies flowing for decades and the final curtailment (under Wilson and then Thatcher) meant a heavier and more sustained negative shock to the economies of these regions. Public ownership meant also that what was profitable didn’t even stay in the area or provide dividends to shareholders. Government, not shareholders, determined what was the priority and government often chooses losers. It shouldn’t be of any surprise that productivity and GDP per capita is lower in Wales now than in the rest of the UK. 

To this day Wales has an over-reliance on public sector employment. 27.6% of the Welsh workforce is employed by the state or in state-owned industries and there is little move by the dominant Labour party to reduce the tax burden, to increase property or share ownership and get Wales back on the rise. 

What is positive though is that people are once again on the move. Wales’ productivity now relies on city growth and places like Cardiff, Swansea and Wrexham are making overtures towards building homes and reducing prices to make it profitable to set up or move businesses to them. Cardiff aims to get 11,000 new homes in the city by 2022, with 41,000 new dwellings built by 2026. It will need them, with population growth of 1.2% per annum. What it needs is proactive planners and a national framework that reduces costs. Sadly, ever increasing burdensome regulation is something that the Welsh devolved government is good at. 

Welsh housebuilder Redrow found that the average cost of building a home in Wales as opposed to England (once land costs were removed) was over £4000 more due to increased regulation. Rather than avoiding Help to Buy’s subsidy effect on demand, the Welsh government copied Westminster. Sam Bowman, said of the scheme at the English level that it was like “throwing petrol onto a bonfire” and that “supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses just raises house prices and makes homes more unaffordable for people who don't qualify for the Help to Buy subsidy.”

Wales’ proposed vacant land tax for properties with permission will just mean fewer applications for permission. As my colleague Sam Dumitriu has argued before permissions are mostly underused because of the way that delays or political risk mean chances of getting future approvals are unpredictable. 

What Cardiff should be aiming for is a reduction in tax (income and business rates), a simplification of the planning system, and a promotion of inward migration. Wales could benefit from greater agglomeration. Cardiff certainly has the ambition to build homes, attract new businesses, and support the growth of connected urban public transportation. What it now needs is joined up thinking in the Senedd to match it. 

Dydd Gŵyl Dewi Sant hapus i bawb!
A Happy St David’s Day to you all!
 

Drug legalisation is the only way to tackle skunk

Today, I'm in The Times arguing that legalising recreational cannabis is the only policy that can protect young people and deprive violent gangs of control over an unregulated market.  You can read the full piece here (register for free to access). Here’s an extract:

Growing up as a teenager in Essex, my friends who used cannabis all smoked skunk. Dealers were often teenagers themselves and never asked for ID. They didn’t know the strength of their product and offered no information on the potential health effects. Some were even robbed at knifepoint after travelling to meet dealers in alleyways to reduce the risk of getting cautioned or arrested by police. Others (especially teenage girls) risked worse when they climbed into strangers’ cars to buy cannabis.

All of these problems could be solved under a legal, properly regulated system.

You can also read former Executive Director Sam Bowman's previous Thunderer piece on the same topic here. If you're interested in joining the push to change our failed system of prohibition then check out Cannabis in the UK: a project of our friends at VolteFace.

Conjectures and Refutations

Today is World Book Day, and my contribution to it is to talk briefly about a book that totally captivated me. It was Karl Popper’s “Conjectures and Refutations,” first published in 1963, but which I first read the 3rd edition of in 1969, and which the author signed for me.

It is Popper’s most readable book, though it sacrifices none of his intellectual force in being accessible to the intelligent lay reader. Popper had earlier solved Hume’s problem of induction in his “Logic of Scientific Discovery,” and this book develops that theme. “We can learn,” says Popper, “from our mistakes.”

Instead of committing ourselves to the ungrounded belief that tomorrow will be like yesterday, we conjecture theories and then test them to see if they hold up under experiment. It is from our creative brains that these conjectures come, as do the experiments that might refute them.

The book is subtitled “The Growth of Scientific Knowledge,” making the case that each of these pieces of “knowledge” is tentative, and might have to be rejected if experiment goes against what it predicted. “Conjectures and Refutations” was not written as a book, but is a compilation of many lectures Popper had given in and around its central theme.

The book is a powerful antidote against all-embracing theories which purport to “deduce” knowledge systematically. No, says Popper, it is more like inspired guesswork coupled with a methodology for exposing and rejecting what doesn’t sit with observed reality.

“What we should do, I suggest, is to give up the idea of ultimate sources of knowledge, and admit that all knowledge is human; that it is mixed with our errors, our prejudices, our dreams, and our hopes; that all we can do is to grope for truth, even though it be beyond our reach.”

It is powerful stuff, and beautifully written. It sets out the methodology which has brought us thus far in understanding the universe we inhabit and has enabled us to send our sounding line to the brink of infinity.

George Monbiot's - correct - argument that we shouldn't have national parks

As ever, this isn't quite what George Monbiot thinks he is arguing but it is what he is so. We shouldn't have national parks at all:

Visit any national park in Britain and ask yourself what you are seeing. Is it the “wild”, “unspoilt” landscape the brochures and display boards promised? Or is it eerily bereft of wildlife and rich ecosystems? Is it managed in the interests of the nation or for a tiny, privileged minority? I suspect that if we saw such places called national parks in another country, we would recognise them for what they are: a complete farce.

One of the reasons for this dire state is burning. Much of the land in our national parks is systematically burned, with the blessing of the agencies supposed to protect it. This vandalism is sometimes justified as a “conservation tool”, but it bears as much relationship to the conservation of wildlife as burning libraries bears to the conservation of books. So weird has our engagement with nature in this country become that we can no longer tell the difference between protection and destruction.

On Dartmoor and Exmoor, the national park authorities and the National Trust, charged with protecting the land, instead torch it to favour sheep.

We do not, mean, not at all, that there should be no wild areas. Nor that we don't enjoy, luxury in in fact, that great outdoors ourselves. Rather, that the centralised control of these things will always lead to this sort of result.

This is, again as we've pointed out before, an implication of Mancur Olson's predictions. The State is the manner in which special interest groups fight each other for their share of us and ours. When such centralisation takes place - and the National Trust is as with the national park administrations, really a part of that state these days - then only those significantly and seriously interested in the outcome are going to fight for their desires.

Sure, we can dream that disinterested and impartial civil servants will do what's best but that ain't the way it turns out. The special interests are intensely interested in the deliberations and decisions of those central authorities - thus they strive and all too often succeed in taking them over. Bye bye that disinterest and impartiality then.

Not having the concentration of power into national parks and the National Trust etc would mean that the system would be more difficult to take over. Leaving land to be managed as those who own it wish would equally lead to a wider palette of decisions over what to do with it. It is our very concentration of power in order to exercise it which means that the power is co-opted against our desires.

The answer being don't concentrate the power in the first place. But then the argument that we must abolish the national parks in order to save the environment is always going to be a difficult one to make. Even if it is the one George Monbiot is making if only he knew it.

A worrying move in South Africa to undermine property rights

At the end of last week I went to my favourite South African restaurant and toasted the fact that Jacob Zuma had stepped down as President of the Republic of South Africa earlier this month. It was an exciting moment, I thought that a cloud had passed from the rainbow nation and that brighter times lay ahead. My enthusiasm, it seems, was misplaced. 

“The battle for freedom,” wrote Milton Friedman in 1994 as part of his reintroduction to Hayek’s seminal work, The Road to Serfdom, “must be won over and over again.” As depressing as it may seem, that is a sentence that has remained depressingly true. 

The Economic Freedom Fighters (EFF), a radical left party led by Mugabe wannabe Julius Malema, brought forward a bill that would allow land to be expropriated by the state from white farmers without compensation. It was supported by the governing ANC in the South African parliament. Malema is a man who even the South African Communist Party thought of as too extreme when he brought forward plans to nationalise the country's mines.  

In his own words yesterday Malema said he intends to use this change of policy to force a fundamental reform of the economy that will be utterly ruinous for South Africa if he gets the chance:

"There is no motion there saying expropriation of rural land. We're saying expropriation of land without compensation. So the question of urban or rural doesn't arise," 

"Every land in South Africa should be expropriated without compensation and it will be under the state. The state should be the custodian of the land," 

"No one is going to lose his or her house, no one is going to lose his or her flat, no one is going to lose his or her factory or industry. All [that] we are saying is they will not have the ownership of the land," 

But why have the ANC moved? Well, beyond the fact that they’ve calculated losing voters to the DNC will be fewer than the numbers they risk losing to a more hardline EEF, the ANC found that few farmers were signing up to have their assets bought from them below market price under its ‘willing-buyer willing-seller policy’.  

But this is just the action of a country far away, the legacy of apartheid, and could never happen here? Wrong. It is the logical conclusion of the thoughts of people like McDonnell and Seamus Milne. In fact, the moves towards these arguments have already been made. 

When McDonnell said that he’d be keen to nationalise industry he was quickly rounded on by work done at the Centre for Policy Studies that claimed there was a going to be a high price of £176bn for Labour’s plans. But John had an ace up his sleeve. He repeated a line he used on the Marr show back in November: “it will be parliament who sets the price on any of those nationalisations.” Well it will be parliament that sets the price of expropriation of assets in South Africa, and they will set it at zero. 

They are, as Milton Friedman wrote in Capitalism and Freedom, “Impatient with the slowness of persuasion and example to achieve great social changes they envision, they’re anxious to use the power of the state to achieve their ends and confident in their ability to do so.” But their impatience threatens the very freedoms that are the bedrock of our prosperity under capitalism. 

Ownership matters. The ability to own, sell or lease at leisure matters. Free personal choice matters. Property rights “… are the most basic of human rights and an essential foundation for other human rights." As Friedrich von Hayek explained if the state owns all of the property, then it alone has power to decide who does what, when and where. Property is a fundamental for liberty, giving owners self-determination over it and free competition, exchange and wealth creation.

As my old colleague Sam Bowman put it “overriding property rights capriciously undermines the incentive people have to hold off from consuming and invest in their futures instead, because they will be unsure about whether they’ll actually get to enjoy the returns of that investment. This is extremely important in the developing world, where weak or nonexistent property rights preclude capital accumulation and growth.”

South Africa’s move to help its poorest by taking control of assets of richer farmers because of the colour of their skin, in an attempt to redistribute wealth, will end up curtailing the growth rate of the country. It is a move they can ill afford and a lesson they should have learned from the basket case economy in Zimbabwe to their north where fellow expropriator Mugabe has fortunately been removed from power. 

Investors shun countries that take control of property from private hands, for obvious reasons. And if you do want to work with companies in those countries there are hefty costs from banks, insurers and other third parties that have to prudently manage their risk. Each deal requires higher scrutiny, more credit checks, more credit committees, more insurance and more due diligence. Obviously it comes with higher risk. This risk means more cost and that hits the poorest countries hardest as it delays and makes rival contracts and rival investments more attractive. In cases like Venezuela and previously in Zimbabwe it meant a complete curtailment of any transactions by reputable institutions, leaving them at the mercy of less scrupulous regimes and companies. 

We can ill afford that here, and it should be resisted at all levels. This week South Africa has taken a backward step, it will have scared many that work across borders. Time for them to put their best foot forward and promise to reverse this decision. 

The NHS should pay kidney donors

I'm in CapX along with The Niskanen Center's Samuel Hammond arguing that we should that we  the NHS should pay kidney donors to eliminate the transplant waiting list and save lives.

"Couples in the UK, where paying egg donors is illegal, often travel to the US for IVF, where paying donors is legal. In many provinces in Canada, paying for blood plasma is illegal, and as a result 80% of Immune Globulin is imported from America, where college students earn money by selling blood plasma. Iran created a regulated market for kidneys in the 1980s, and by 1999 the kidney transplant waitlist was almost entirely clear.

"Kidney donors not only save lives and allow patients to come off dialysis, they also save the NHS money. According to the National Kidney Federation, each kidney transplant saves the NHS over £200,000 by reducing the need for expensive dialysis treatment. That’s significantly more than $40,000 price the Nobel Laureate Gary Becker and his co-author Julio Elias estimated would be necessary to eliminate the kidney shortage altogether.

...

"Then there are those who are simply repulsed by the idea of paying for organs, per se – the strange notion that “commodification” risks a greater abrogation of human dignity than a culture that permits hundreds of avoidable deaths. The tragedy is that paying for organs is inevitable. Either we choose to pay donors directly, or society pays through an utterly predictable loss of life and treasure."

Read the full piece here.

Photo credit: North Dakota National Guard