Arthur Shenfield’s point to Milton Friedman

It was an influential intervention at a 1970s meeting of the Mont Pelerin Society. It was not recorded, but this is how I remember it. The topic was the UK’s rising inflation as the government printed more money to meet aggressive union pay demands. Milton Friedman said with his trademark smile, “It’s easy. Just take your foot off the accelerator and put it on the brake.”

At this point Arthur Shenfield intervened to say, “That’s easy to say, but when you are being chased down the highway by a bunch of gangsters firing sub-machine guns at you, it’s not that easy to hit the brake!”

The point registered with me, and joined with other thoughts I’d had on Public Choice Theory to coalesce into an approach already developing in my mind. It wasn’t enough to urge politicians to behave sensibly on the economy; you had to make it easy for them to do so and sufficiently attractive to encourage them. In other words, you had to tweak ideas on free markets and enterprise, and craft them into policies that would appeal to legislators because they would bring popular results that could help them be re-elected.

Thus, instead of trying to set council house rents at economic levels rather than subsidized ones, offer the tenants the chance to buy those homes at discounted prices. Instead of forcing through privatizations in the teeth of opposition from union leaders, offer free or discounted shares to those who worked in those industries, bidding direct to the members over the heads of the union leaders. Instead of trying to confiscate union powers, as Heath and Wilson had famously failed to do, why not redistribute those powers instead to the members, paying for secret ballots to elect union leaders and vote on any proposed strike action? Instead of taking on interest groups by trying to confiscate the benefits they enjoyed, why not take them on board by offering them other benefits in their place?

It became the characteristic and influential approach of the Adam Smith Institute, and it was triggered in part by an intervention from the floor at a meeting.