David Cameron as Prime Minister

It was just 9 years ago, on May 11th, 2010, that David Cameron accepted Queen Elizabeth's invitation to form a government and became Prime Minister. In doing so, he became, at age 43, the youngest one since Lord Liverpool in 1812. His Conservative Party had not won a majority, but it emerged from the election as the largest party, and was able to negotiate a coalition, Britain's first since 1945, with the Liberal Democrats. Their leader, Nick Clegg, became Deputy Prime Minister.

In assessing his record, future historians might reach a more favourable verdict on his tenure than contemporary commentators. He will probably be praised for his leadership in legalizing same sex marriages, putting it through with the support of Labour and Lib Dem MPs, even though a majority of Conservative MPs voted against it.

He might well be praised for steering the UK through the turbulence that followed in the wake of the Financial Crisis, reducing both deficit and debt as a proportion of GDP, and restoring stability.

His referenda will undoubtedly feature in any assessment. He agreed to hold one in 2014 on Scottish independence, giving voters a straight "yes or no" choice, without a third option for enhanced devolution. He backed the Better Together campaign, but kept a low profile, wisely reckoning that an English public-school-educated figure would not resonate well with Scottish voters. The convincing rejection of Scottish independence vindicated his stance.

He had agreed to a referendum on changing the voting system as a condition of the coalition agreement, but campaigned personally against changing to an Alternative Vote system. Again, the result favoured the status quo by a comfortable margin.

Another referendum, called in 2013, asked the Falkland Islanders if they wished to remain an Overseas Territory of the UK. This was to counter Argentina's assertions of sovereignty. On a turnout of 91.94%, 99.8% opted for the status quo, with only 3 people voting for change.

His final referendum, the 2016 one on EU membership, went against him. Some commentators suggested he had only agreed to it to ward off a UKIP challenge, expecting to lead another coalition government that would prevent it happening. When his party won an overall majority in 2015, he had to follow through with his commitment and hold it.

In retrospect, he might be remembered for the one thing he did not want to happen, the UK's withdrawal from the EU, and the biggest constitutional change in half a century. If the UK prospers on the world stage after regaining its sovereignty, he might be remembered more kindly as the Prime Minister who made that possible.

It worries us that we even half agree with Paul Mason

We tend to regard Paul Mason as being akin to Polly Toynbee, a reliable indicator of exactly what not to do in any particular circumstance. If either tell us that our glasses are on the end of our nose then that’s the one place we know absolutely that they aren’t. It’s therefore somewhat discomfiting to find that we at least half agree with Mason here:

When they finally noticed the discontent raging in places like this, people with power assumed it could be put right using money. Tony Blair and Gordon Brown did it through welfare payments. Even now, as she flails around over Brexit, Theresa May wants to do it through a billion-pound bribe to former mining towns. I propose putting it right by giving them power. What’s missing is the power to take decisions about the most important things in their lives: whether a local hospital should close; how often the bins should be emptied; whether a school should be under the control of the local authority or a faceless corporation; where the infrastructure should go that might – just might- attract investment in something other than vape shops and slave-driving sports-goods empires.

What form of constitutional change is best suited to delivering power to English towns such as Wigan? In this part of England – which has seen power drain towards London, wealth flow upwards into the hands of asset holders and technological change driven mainly from abroad – we are going to need something close to regime change to flatten the socio-economic divide between north and south.

That might be a bit more colourful than the language we would normally use but yes, devolution of power to those who actually do things, have skin in the game being played, makes sense to us. So much so that we’ve been suggesting it for many decades now. Some powers do indeed have to be national and concentrated - we’d prefer that Berwick not be able to declare war unilaterally again. Or be left out of a peace treaty. But to us the test is what absolutely must be done nationally and in that concentrated manner? Everything else should be done at whatever lower level makes sense. So, yes, the devolution of economic power, why not?

The first building block has to be a national industrial strategy.

Ah, Mason’s normal service is resumed. That’s absolutely what there shouldn’t be. For having national strategies is what got us here in the first place. Devolution of economic power should be to those who do indeed have skin in the game - to those who are participating in the economy. Rather than a bureaucracy directing and strategising the national economy we want, consistent with a rule of law and the keeping of the public peace, as much of a laissez faire regime as possible. Precisely because this does devolve economic power down to that level where it is useful and righteous - to the market participants who are that economy.

Mason’s just suggesting a change in who tells us all what to do. Perhaps, if we’re kind about it, a change in what it is that we’re told to do. We insist that the solution is that we get to do as we wish. That actually being what an economy is, voluntary interaction so why don’t we return to that voluntary form of it?

Panic in the streets

On May 10th, 1837, an extraordinary panic began with New York banks, and sparked a recession that lasted several years. It was in many ways a classic example of a self-sustaining feedback loop, in which depositors, fearing for the safety of their deposits, rushed to withdraw their deposits, and by their actions weakened the banks and made deposits unsafe.

The chain of events that triggered it started with the Bank of England response to a fall in its monetary reserves. It decided to edge interest rates up from 3 percent to 5 percent to attract specie and curb lending. US banks had to follow suit or risk losing out to the higher rate of the Bank of England. When New York banks did so, and cut back on lending, it led to some businesses defaulting and started a wave of bankruptcies. The cotton industry of the South was particularly hard hit, but the effect rippled to most of the US.

On May 10, 1837, banks in New York City announced they would no longer redeem commercial paper in gold and silver at full face value. It caused panic and hysteria as people rushed to withdraw deposits. Banks collapsed, businesses failed, prices fell, and there was mass unemployment, maybe as high as 25 percent in some places. The recession lasted about seven years.

Psychology played a part, as it did in the 2008 Financial Crisis. I vividly remember walking past the Northern Rock branch in Cambridge watching the queues stretching round the block as people withdrew their deposits as quickly as they could. When Lehman's went down it triggered a financial earthquake. Fortunately, some had learned the lesson of the 1929 crash, and responded by loosening credit rather than tightening it. Thus there was no ten-year Great Depression repeated.

It does indicate the somewhat precarious nature of modern financial structures. Some have responded by urging an end to fractional reserve banking, or even a return to the gold standard. Others, including ourselves, have urged that the system be more open to competition and easier for new banks to enter. Yet others have more modestly urged requirements for banks to have greater reserves to cushion against future shocks, but few have confidence in the current system's ability to cope with future shocks. There will be shocks, though, because people grow complacent in prosperous times and less careful about the risks they undertake. It takes the next shock to remind them and to moderate their behaviour.

Those who take these shocks as proof that the whole financial system should be replaced seem to overlook the benefits it has brought in terms of unparalleled advances in living standards over centuries. There have been few major international crises, and world finance has survived then, recovered, and learned their lessons. The point is that the future cannot be controlled because it is unpredictable. What can be controlled to some degree is our ability to learn from events and to adapt to the challenges they present.

George Monbiot might be right but remarkably unobservant

George Monbiot tells us that the fishing industry isn’t working - in which he’s right. We wouldn’t go so far as to recommend his solution, that all just stop eating fish, but we agree that sorting out the structure and incentives of the business is not just a good idea but a necessity.

This means that the first duty of a journalist is to cover neglected issues. So I want to direct you to the 70% of the planet that was sidelined even in the sparse coverage of the new report: the seas. Here, life is collapsing even faster than on land. The main cause, the UN biodiversity report makes clear, is not plastic. It is not pollution, not climate breakdown, not even the acidification of the ocean. It is fishing. Because commercial fishing is the most important factor, this is the one we talk about least. The BBC’s recent Blue Planet Live series, carefully avoiding any collision with powerful interests, epitomised this reticence. There was not a word about the fossil fuel or plastics industries – and only a fleeting reference to the fishing industry, which is protected by a combination of brute power and bucolic fantasy.

This is not in fact something that has been ignored. Far from it in fact. We know the theory behind what is wrong here. It’s a real and actual example of Garret Hardin’s Tragedy of the Commons. We also know what the solution is, we either have to regulate access to the resource or we have to privatise it, make it property.

For if we have that unlimited access - as, say, George Monbiot fishing in Cardigan Bay from his kayak - and we’ve 7 billion people doing it then we’re going to exhaust that resource.

We can go further too. We’ve tried that regulation bit and as the abomination of the Common Fisheries Policy shows that doesn’t in fact work. Do recall Hardin’s point that which solution we use, socialism or capitalism, is not a prejudicial or political decision, it’s one based upon the details of the matter under discussion. Dependent upon those details one philosophic approach will work and the other won’t.

It’s entirely true that many inshore fisheries are accessed by groups small enough to use Elinor Ostrom’s communal self-regulation. But the major fisheries simply are not.

We’ve even tried that capitalist method of assigning ownership of the fish stocks to known and named individuals. It works too. One of those details which makes it work is that a stock well above sustainable levels is more profitable. A profit maximising owner thus runs the fishery at well above merely sustainable levels of stock. But that owner must be able to exclude others to avoid that Commons Tragedy.

We’ve no problem, of course we don’t, with people identifying problems which need to be solved. It’s even true that at times, as here with fisheries, we’ll agree that it is a problem that does need to be solved. What does irk is people complaining that no one is paying attention - when for a couple of decades now it’s been known and obvious that there is a solution. It’s been tested - notably in New Zealand and Alaskan waters - and it works. When fishermen own fish stocks as farmers own fields and cattle then our commons problem over fish will be solved.

So, assign ownership of fish stocks and solve the problem. Far from being ignored the problem is solved - of only those shouting about the issue would listen then implement.

Celebrating Europe Day, perhaps

There are two “Europe Days.” The Council of Europe celebrates it on May 5th, but the EU does so on May 9th, the anniversary of the Schumann Declaration of 1950 that paved the way for the European Iron and Steel Community. It was issued by French Foreign Minister, Robert Schumann, and put French and German coal and steel production under a single authority, open to other Western European countries that wished to join.

Schumann was explicit that it was designed to bond France and Germany economically, so that no more wars would break out between them. He wrote, "World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it.”

He also said, revealingly, “The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe.”

Note the words “first step in the federation of Europe.” Right at the start of the process of closer unification of Europe, there were people at the heart of it bent on steering it into a federal union, a United States of Europe. The European Iron and Steel Community morphed into the Common Market, that morphed into the European Economic Community, that segued into just the European Community. And that, after the Lisbon Treaty, became the European Union in 2009.

There is little doubt from recent moves and statements that the European Commission looks to a European unitary tax system, with taxes paid direct to Brussels, European law, a European army, EU embassies and an EU seat on the UN Security Council. This is not what the UK thought it was signing up to when it affirmed its membership of the European Economic Community.

At the time of the 2016 referendum, when people were asked the simple question as to whether we should remain in the EU of leave it, a ‘Remain’ vote was presented as a status quo, versus a ‘Leave’ vote that would take a leap into the unknown. In fact there was no status quo option. A ‘Remain’ vote would have kept the UK into a rapidly evolving juggernaut hurtling towards the “ever closer union” of unitary statehood, and with no means of preventing that.

Parliament delegated the decision on EU membership to the people of Britain, and in the People’s Vote they opted to leave.

It is today unlikely that European unity is the only thing preventing another war between France and Germany, so it is possible to argue that it did the job that lay behind its initial impetus. Thus we might hail its success and celebrate Europe Day on this May 9th, but we will celebrate it from the outside.

If only Aditya Chakrabortty had the first clue of the business world he attempts to write about

Aditya Chakrabortty wants to tell us that it’s Thatcherism which explains why the UK has no equivalent of Huawei. The explanation being that if the old GEC was still around then we would have. This is not quite how it did work out:

Namely, where is Britain’s Huawei? How does one of the world’s most advanced economies end up without any major telecoms equipment maker of its own, and having to buy the vital stuff from a company that enjoys, according to the FBI, strong links with both the Chinese Communist party and the People’s Liberation Army?

Well, the most obvious answer is that the Chinese company is better at producing that equipment. We here have heard of that idea of the division and specialisation of labour along with the trade in production that follows. But there’s more error here:

Perhaps the pinstriped jeering got to Weinstock. Even as he protested “we’re not a company to render excitement”, he too began indulging in the 1980s business culture of “if it moves, buy it”. Between 1988 and 1998, academics found that GEC did no fewer than 79 “major restructuring events”: buying or selling units, or setting up joint ventures. But it was after Weinstock stepped down in 1996 that all hell broke loose. His replacement was an accountant, George Simpson, who had made his name, as the Guardian sniffed, “selling Rover to the Germans”. The new finance director, John Mayo, came from the merchant-banking world detested by Weinstock. Together the two men looked at the giant cash pile salted away by their predecessor – and set about spending it, and then some.

They sold the old businesses and bought shiny new ones; they flogged off dowdy and snapped up exciting. In just one financial year, 1999-2000, they bought no fewer than 15 companies, from America to Australia. Suddenly, GEC – or Marconi, as the rump was rebranded – was beloved by the bankers, who marvelled at the commissions coming their way, and the reporters, who had headlines to write.

Then came the dotcom bust, and the new purchases went south. A company that had been trading at £12.50 a share was now worth only four pence a pop. In the mid-2000s, Marconi’s most vital client, BT, passed it over for a contract that went instead to … Huawei.

Indeed so. But what was it that they were trying to do? Well, the GEC of old didn’t in fact have the technology to build those whizzy new mobile telephone networks. They had System X, the digital exchanges for landlines. A great technology of course. But not one that addressed that new world. The reshuffling of businesses was to drop the older technologies and to create a world beating position in these new ones.

Sure, the execution was, how to be polite about this, less than successful. But the aim was to create a Huawei. The entire Simpson plan was to be market leader in mobile and internet technologies, ones that GEC didn’t have as a result of Weinstock not investing at that leading edge of technology.

So the critique fails at a certain level. And yet it gets worse than this again, for it fails at another more basic level. Note again this:

sold the old businesses

What they did was some shuffling within the corporate envelope. Much of the old GEC - suitably tempered by the passing of the decades - still exists within Siemens for example, and that’s not the only home of those operating businesses. What didn’t happen is, as Chakrabortty is implying, that all those centres of excellence, or whatever we might want to call them, disappeared, got closed down, thrown on the scrapheap. It’s just that a different set of capitalists - these days, just a different series of pension funds - own and manage them.

That we buy in telecoms from China and export Range Rovers to China isn’t a problem - this is called trade and it’s wealth enhancing. To blame this on GEC’s failure is an exotic argument, given that the failure was an attempt to build that very modern telecoms powerhouse that would have changed those terms of trade. And finally, corporate reshuffling is just that, a change of ownership, not a ceasing of the existence of the operating units.

All of which it would be useful for a journalist to know if they were to attempt to analyse why Britain is - or isn’t - buying from Huawei.

Happy birthday, F A Hayek

F A Hayek, born on May 8th, 1899, was one of the major intellectual influences of the 20th Century. He was a leading proponent of the Austrian School of Economics, of its empirical, rather than its deductive, wing. For his academic work he was awarded the 1974 Nobel Prize in Economics, jointly with Gunnar Myrdal.

Hayek led the resurgence of classical liberalism after World War II, founding the Mont Pelerin Society in 1947 in company that included figures such as Milton Friedman and Karl Popper, in order to combat intellectually the collectivist and socialist mentality that was then so dominant. Several of Hayek’s works became best sellers outside of academe, including “The Road to Serfdom” in 1944 and “The Constitution of Liberty” in 1960.

He emphasized the limits to what people could know, claiming that societies which generate naturally contain more knowledge and wisdom than any that are dreamed up by intellectuals. He regarded the price system as part of a spontaneous order, rather like that of a language, and something created by human beings, but not designed by them. This was the notion of a “spontaneous order,” superior to a centrally planned order because it contained the inputs of millions, and had knowledge dispersed throughout it. It reacted faster than any system that needed to collect information in order to react to changing events. The spontaneous system did this naturally.

Hayek, as much as anyone, deserves credit for the spread of neoliberal and free trade ideas, and for the rise of opposition to central planning and controls. When Antony Fisher asked Hayek how he might help the cause, Hayek suggested he eschew politics and disseminate ideas instead. In response Fisher founded the Institute of Economic Affairs. Hayek was also a good friend to the Adam Smith Institute, serving as Chairman of its Academic Advisory Board. On his twice-yearly visits to meetings of the British Academy, of which he was a Fellow, he would visit the ASI and spend an afternoon in our company discussing ideas.

He received many honours in his lifetime. He was appointed a Companion of Honour in 1984 for "services to the study of economics,” and was awarded the Presidential Medal of Freedom in 1991 from President George H. Bush. His more lasting legacy is on thought, and it continues still, and will do so long into the future. He died in 1992, at the age of 92, having lived just long enough to see the Berlin Wall come down and the totalitarian socialist regimes of the Iron Curtain replaced by liberal and relatively free market societies instead.

Digital markets: more Victorian than you thought

In 2015 the EU embarked on a landmark project to create a frictionless free market for digital services in the mould of the European Economic Area. The scheme, christened the Digital Single Market, is hoped to be complete by 2020 and may contribute up to €415 billion per annum of economic growth, as well as increased competition and a shift in focus for the Single Market to embrace the digital future of the European economy.

As Britain leaves the bloc, however, it is faced with the chance to return to its free-trade roots at a global, rather than a regional, level. The rationale behind the Digital Single Market may prove a key catalyst for this, as well as an opportunity to embrace free trade principles without the heavy taxpayer-funded bureaucracy that dominates the European approach.

Culture is one of the greatest exports of modern-day Britain. Organisations like the British Council and Commonwealth have a global presence and provide worldwide access to British values and heritage. The economic benefits of this appear to be substantial: a recent report estimated that when two countries are Commonwealth members, cultural links like the English language and parliamentary democracy can boost FDI by 10% and trade by twice that.

Many Commonwealth countries are far more dynamic than those in the EU; economic expansion in states like India has led to the dominance of the tech sector. Such rapid modernisation has already been practiced in some former Soviet states like Estonia, jumping from a near-agrarian economy to a technological one, boosting its economic significance. The competitive advantages of Commonwealth states are evident in places like Bangalore, where economic liberalisation has led to a competitive dominance with an English-speaking workforce operating at a fraction of Western costs.

Post-Brexit Britain could benefit from free trade policies suited to the increasing digitalization of the world. If the future is digital, why engage in the lengthy and often burdensome negotiations required to set up a bureaucratic trade bloc? Alternatives like the Commonwealth could lend themselves remarkably well to a unified digital economy without barriers, providing effortless wealth flow around the world and a powerful incentive for developing economies to deregulate their tech sectors. Digital free trade is a concept that seems purpose-built for a global Britain, and provides an opportunity to marry its roots of Victorian laissez-faire economics with a modern-day annihilation of distance.

Peter Wollweber is the winner of the 18-21 category in the ASI's 'Young Writer on Liberty' competition.

How free trade can kickstart a GM food revolution

The first genetically modified food was approved for release in 1984. It was known as the Flavr Savr Tomato and had been engineered to have a longer shelf life by inserting an antisense gene to delay ripening. Despite its failure, GM foods have come a long way over the past 35 years, continually bringing new and more sophisticated benefits. Whether it be their greater nutritional content or medical benefits, it is evident that they are becoming increasingly prevalent in today’s society. However, following Brexit, technological advancements in GM foods may stall, due to various limits of trade agreements. Nevertheless, it is certainly possible for free market policy reforms to help rectify this complication.

UK International Trade Secretary, Liam Fox, has made it clear that he wishes to strike deals with pro-GM foods nations: Brazil, Argentina and the US. In order to continually accelerate the technological progress in developing GM foods, it is imperative that we strike such free-trade agreements. Low tariff barriers caused by such an agreement will help increase the trade of GM foods exponentially while providing a greater investment incentive for firms developing GM foods. Moreover, domestic firms developing GM foods will face competition from abroad, and therefore be incentivised to cut costs and increase efficiency.

Furthermore, monopolies competing at a global level, such as Bayer, a German multinational pharmaceutical company, will be stripped of their market power. A free trade deal would encourage new firms to enter the global market, increasing competition and further incentivising them to innovate. Moreover, by advocating a free-trade agreement, technology can cross over borders more freely, which can effectively help accelerate improvements in technology involved in developing GM foods. In addition, by adopting a free-trade agreement, firms developing GM foods can specialize, allowing them to benefit from economies of scale and lower average costs, which can be crucial due to the high fixed costs typically associated with the development of GM foods.

Unfortunately, in the case of manufacturing a free-trade agreement, it is often much easier said than done. However, if nations are wise enough to notice the vast benefits associated with such an agreement, it would most certainly help stimulate the development of genetically modified foods in the future.

Prerak Goel is the winner of the under 18s category in the ASI's 'Young Writer on Liberty' competition.

Humans take care of those things that are worth money and don't those that aren't

There is a great misunderstanding out there over the value of things. For we humans - this is just the way that we are, not a moral reflection - take care of those things that we value and we don’t take care of those things we don’t. This should be obvious of course - to take care of something is a demonstration of valuing it.

This demand to allow the international trading of ivory therefore makes great sense:

African nations home to more than half the world’s population of elephants on Monday called for an end to the ban on sales of ivory.

Delegates from six countries attended a summit in Botswana this week where they discussed how to persuade the world to lift the 30-year-old ban imposed by the Convention on International Trade in Endangered Species, CITES.

The attendees, which included heads of state from Botswana, Zambia, Zimbabwe and Namibia, stressed they want to be able to sell huge stockpiles of ivory to boost funds for conservation and anti-poaching.

Mokweetsi Masisi, the president of Botswana, said on his arrival at Kusane that the summit's theme was: "Towards a common vision for the management of our elephants."

Animals that humans value persist out there in the environment. There’re many more cattle out there than a purely wild world would have because we like to eat cattle. They are of value to us so we ensure they exist. Elephants producing value for humans will continue to exist. Those that don’t, well, they won’t, will they?

We can indeed say that the simple existence of elephants out there is of value to us. That warm glow we get when viewing a National Geographic documentary. But it’s equally obvious, given what is happening to those herds that such a valuation isn’t enough. For we don’t in fact cough up enough money to ensure their survival. Thus something more must be done to allow the capture of that value which will ensure that survival.

To say that we ought to value elephants without making billiard balls of them is fine - nothing wrong with a bit of moral exhortation. But management of the world needs to depend upon the facts about us, not the better angels we aren’t.