ASI at Conservative Party Conference

After some great events at both Labour and Liberal Democrat Party conferences, we at the ASI have just wrapped up conference season with the Conservatives. 

On Monday we launched the Neoliberal Manifesto, a collaborative project with opinion platform 1828. An agenda for a freer, more prosperous Britain, our Head of Development Morgan Schondelmeier took to the stage alongside the Telegraph’s Helena Horton (chair,) London Assembly Member Andrew Boff, Head of Research at the Entrepreneurs’ Network Sam Dumitriu and founder of 1828 Jack Powell for a discussion on the manifesto - and the ideas we put forward. You can find the manifesto here.

At 4pm, our Head of Research Matthew Lesh chaired a fascinating discussion on the future of aviation with John Penrose MP and representatives from Heathrow West, Virgin Atlantic and Rolls Royce. In our recent report Ready for Takeoff.

We rounded out Monday with a great discussion on Housing. Our Deputy Director Matt Kilcoyne chaired ‘Build Our Way Out.’ Thanks to LondonYIMBY’s John Myers, Fingleton Associates (and ASI’s) Sam Bowman, Marc Vlessing of Pocket Living and Andrew Carter of Centre for Cities.

We kicked Tuesday off by Giving the Green Light to Legal Cannabis. If a legal cannabis market is the way forward - what exactly would that look like? Chaired by Volteface’s Lizzie McCulloch, our audience were treated to great insights from our Head of Programmes Dan Pryor, MP for Reigate (and Chair of the Conservative Drug Policy Reform Group) Crispin Blunt, CEO of CDPRG Rob Wilson, and George McBridge of Hanway Associates. Loads of interesting questions - enthusiasm for a regulated market is growing!

At 4pm, we said No to the Nanny State. We laid on a gourmet feast for our audience of haribo and wine and Philip Davies MP, Andrea Jenkyns MP, our Dan Pryor and Professor Peter Hajek of Queen Mary University London railed against the encroaching nanny statism under the watchful eye of Hugo Gye, Deputy Political Editor at the i paper. Queues out the door for this one!

And our panel series was wrapped up by our own Matt Kilcoyne at 6pm. Dan Hannan MEP, Ted Bromund of the Heritage Foundation, High Commissioner for Singapore Foo Chi Hsia and High Commissioner for Australia George Brandis laid out the case for free trade in the post-Brexit world to a packed room. Thank you to all who came!

Away from the Chester Suite of the Midland Hotel, Matt Kilcoyne was up bright and early on Monday for breakfast with Julia Hartley-Brewer - talking about the issues of the day. Our Senior Fellow Tim Worstall has the Times’ Thunderer today - making the case for lower taxes for workers. Our Research Associate Matt Gillow hosted a housing debate in the exhibition hall with youth group Blue Beyond, Dan Pryor talked medical cannabis to Conservative Health, Matt Kilcoyne spoke to Transport for the North on how to do devolution right. Our incoming Head of Government Affairs, Charlotte Kude, spoke to the Telegraph about how the Conservatives can win back the youth vote.

Thanks to everyone who came to see us in the Chester Suite in the past few days - some brilliant free-market solutions to the pressing problems of the day.

Redesigning the car, Issigonis style

We said goodbye to Alex Issigonis, who left us on October 2nd, 1988, but not before he had revolutionized motoring for millions of us. Sir Alex Issigonis, CBE, FRS, RDI, was the son of Greek and German parents, born into the Greek community of Smyrna, the Ottoman, now part of Turkey. He moved to the UK in 1923 after being evacuated to Malta by Royal Marines when the Turks captured Smyrna. He studied at Battersea Polytechnic, now part of the University of Surrey, and went into the auto industry working for Humber and competing in racing events.

He was very proud of the part he played in developing the Morris Minor, but he leapt to fame when Sir Leonard Lord, head of the British Motor Corporation, tasked him with designing an ultra-small car following the fuel rationing that resulted from the Suez Crisis of 1956. He had prototypes running the following year, and the car was launched in 1959

The car, launched originally as the Morris Mini Minor and the Austin Seven, was a sensation. It was revolutionary, with front wheel drive, a transverse engine, 10-inch wheels, and managed to fit 4 adults into a very small car by making efficient use of space. It had a few teething troubles, such as a pull-cord door handle on the inside that many owners replaced with a lever handle. It tended to accumulate condensation in the door well, leading to rust, but this was rectified in later models.

It gained immediate cult status, with the basic model selling at just under £500. A hotted-up version by Cooper featured amazing acceleration and grip, and began winning rallies all over the world, prompting one cartoonist to remark that “if God had meant it to go that fast, he’d have given it bigger wheels.” The cars became known simply as minis.  

It became the best-selling car in British history, with 5.3 million units being produced. I owned two myself at different times - a second hand red and black version I bought as a summer runaround, and later a mini Traveller, like a tiny estate car. I found both of them to be reliable and fun, though being so close to the road took some getting used to.

In 1999 it was voted the second most influential car of the century, after the Model T Ford. The Volkswagen Beetle, whose original drawing specifications, penned by Adolf Hitler, are still in a safe deep within their HQ, came 4th in that poll, and was not as revolutionary as the mini. It democratized motoring, as the Model T and the Beetle had done earlier, bringing car-ownership within the range of humble pockets. For many people, it brought a new freedom to explore the countryside and to travel. It opened up opportunities.

When people look at the hard facts of wage levels, they often forget that those wages buy things that were unavailable previously. Inventive and innovative business introduces products that make wages go further in terms of what they enable people to do. The iPhone did that, and half a century earlier, thanks to the brilliance of Alex Issigonis, the mini did the same.

Worth pondering what actually would make us bad ancestors

An argument being deployed to insist that we must do everything, right now, to beat climate change:

Bad ancestors: does the climate crisis violate the rights of those yet to be born?

Our environmental vandalism has made urgent the question of ethical responsibilities across decades and centuries

An interesting question to ask and one that deserves an answer. A compete and correct answer including all the other things we might do for our descendants. For example, we might bequeath them a much larger economy so that they are richer. Being richer is generally thought to lead to living a more comfortable life after all.

We can also look back and think of what we’re happy we have been left by our own ancestors. Most of us here in the UK are pretty happy with the idea that absolute poverty - that $1.90 a day kind - was finally abolished in the 1930s at the latest. In the way is still hasn’t been in some countries, in the way it wasn’t for 40% of humanity as recently as 40 years ago.

We could even be extreme and welcome the manner in which we’re that much richer as a result of past efforts that we’re on the right side of the environmental Kuznets curve now - we’re rich enough to be worrying about and spending upon that environment.

We could even look at the IPCC’s own economic models. If we tangle with climate change carefully and correctly then our descendants will be up to 11 times richer than we are and also enjoy a cleaner environment without that climate change by 2100. Do it badly and they’ll be perhaps 3 times richer on a dirtier, warmer, planet. The nice thing about those IPCC models being that globalised free market capitalism - you know, neoliberalism - is not just a part of that better solution, it’s integral to it.

That environmental question, what do we owe the future, is entirely valid. It’s just that most of the answers environmentalists give to it aren’t valid.

The People’s Republic at 70

Chairman Mao Zedong declared China to be a Communist People’s Republic on October 1st, 1949, 70 years ago. The small triumphal parade then will be dwarfed by the modern one. Tanks, planes, missiles, and thousands of marching feet will parade through Tiananmen Square, watched over by the current Communist Party leader, President Xi Jinping. They will celebrate 70 years of Communist Party rule, demonstrating China’s power, wealth and status.

Mao Zedong will be honoured for his founding role. What will not be mentioned is that he was a disaster for China, holding back the talent and enterprise of her peoples, and it was only after Mao died and was replaced that China began the achievements that are being celebrated. It was only when the party abandoned collectivism, central planning of all economic activity and the prohibition of private ownership, that China’s forward surge began. It was not achieved under the total control of the party; it happened only when the party loosened its grip on the economy.

Mao’s first disaster was the Great Leap Forward from 1958 - 1962. It was designed to lift China rom being an agrarian society into a modern industrialized socialist state. Collectivization and industrialization were the key elements, with backyard furnaces turning valuable metal tools into worthless pig iron, and collective farms falsifying their miserable output figures. Tens of millions died from starvation; Chinese historian Yu Xiguang suggests the death toll might have been 56 million.

Stalin was right about one thing: “a single death is a tragedy; a million deaths is a statistic.” Yet each one of those tens of millions was a son, daughter, brother, sister, parent, husband, wife, lover. Each death blighted the life of loved ones. The grief that Mao unleashed is on an unprecedented and incomprehensible scale.

Far from learning from his mistakes, 5 years later Mao unleashed the Great Proletarian Cultural Revolution to purge China of the remnants of traditionalist and bourgeois capitalism by insisting on purity of thought, Mao Zedong’s thought. From 1966 - 1976 it set loose a reign of terror and murder. So-called ‘renegades’ were beaten to death, their bodies dumped in ditches. The death toll again ran into millions, each one a life, each one a person.

 Fortunately for China, Mao died in 1976, and Deng Xiaoping outmanoeuvred the ‘Gang of Four’ who wanted to continue Mao’s madness, and he became China’s Paramount Leader. It is from then that China’s progress dates. The abandonment of collective farms vastly increased food production, making China self-sufficient. The establishment of special economic zones brought in investment and growth. Allowing private businesses to set up and prosper brought an economic boom that still continues. China under Mao killed tens of millions, post Mao it has lifted more than a billion out of subsistence and starvation.

Yes, let us celebrate China’s achievements, but let no-one suppose they are down to the Communist Party. They were accomplished once it allowed independent activity not directly under its control. And while they parade on their 70th anniversary, let us recall the Soviet Union’s 1987 October Revolution parade in Red Square, celebrating the 70th anniversary of their 1917 Revolution. Communist Party General Secretary, Mikhail Gorbachev, and other members of the Politburo, were on the grandstand of Lenin's Mausoleum in Red Square. They celebrated then, as the Chinese do now, 70 years of Communist rule that had seen millions killed. Two years later, the Soviet empire was crumbling into dust, blown away on the winds of the world…

Why you might not want to get your economic analysis from the New Statesman

There are limits as to how far into the wilds even we’re willing to go in order to study economic incomprehension which is why we’ve only just discovered Grace Blakeley, economic correspondent at the New Statesman.

Her analysis of what ails Britain makes the usual British left wing mistake of confusing the capitalism/socialism divide with that of markets and planning. The first is about who owns and there’s no doubt that swathes of the economy do work better if it’s the people doing the actual work. What is self employment, or even a partnership, other than worker ownership? Equally, the workers in a steel plant or oil refinery are going to have serious trouble in raising the capital for the tools they work with. Outside capital is a necessity and that’s capitalism. The second is really about the information flow in the economy. Who makes what, how, where and at what price? To be against markets is to claim that John McDonnell, or Sajid Javid, know all those answers better than the people who actually do and desire things. A difficult contention to support.

But there’s that lovely signifier of someone who doesn’t know what should happen - they don’t know what has happened.

This inherently unsustainable system collapsed in 2008. The economic malaise we have experienced since the crash – characterised by stagnant wages, falling investment, the growth of international monopolies, rising consumer debt and huge increases in inequality – simply represents a deepening of trends visible before it.

Inequality has decreased since 2008. This is obviously true globally as the higher growth of the poor countries compared to rich ensures it. It’s also true within the UK.

Income inequality has increased by 1.3 percentage points over the past three years. However, despite this small rise, it remains lower than the 34.1% it reached just prior to the economic downturn in FYE 2007.

It shouldn’t be difficult to understand this. Inequality does fall in recessions. Profits and capital incomes fall faster and further than labour incomes, both more than benefits. Thus a recession is associated with a compression of inequality.

We’ve not had huge increases in inequality, we’ve had a reduction in it.

And if your economic analysis starts from facts that just aren’t so then it’s going to be terribly difficult to navigate through to a useful prediction for a path for future policy.

We’re left therefore with merely wondering at how there can be such an echo chamber of groupthink leading to substantial numbers of people gaily repeating as facts things that simply are not so. Not in this universe at least.

The plane that changed the world

People were astonished as the new plane was unveiled in public for the first time on September 30th, 1968, 51 years ago. It was huge, bigger than any civilian aircraft they had seen. It was, of course, the Boeing 747, the first wide-body passenger plane to take to the skies. Its distinctive shape, with a bulge on top at the front, made it instantly recognizable. That bulge accommodated the upper deck, where there was a first class bar and lounge or additional seating, with the pilots at the front. Some first class passengers downstairs in the nose of the plane were (and are) ahead of the pilots upstairs.

It was designed as a successor to the highly successful Boeing 707, and to carry 50 percent more passengers over greater distances. Its most common current variant, the 747-400 can cruise at Mach 0.85 for a range of 8,350 miles.

It was very costly to build, requiring a whole new factory built from scratch, and Boeing had to borrow heavily. The company 'bet the farm' on its new plane, going deeply into debt with a banking syndicate. During the final months before production, Boeing had to go back several times for additional funds which, had they been refused, would have bankrupted the company. Its debt exceeded $2 billion, and the $1.2 billion it owed the banks set a record for all companies.

The gamble paid off. The 747 was popular with airlines for its extra passenger seats, and with passengers for its great range and low ticket costs. It was so successful that for many years Boeing enjoyed a virtual monopoly in the construction and sale of large passenger aircraft. Indeed, its market dominance was a major factor in the formation of Airbus, to give European manufacturers a foothold.

Boeing expected its giant, the first plane to be popularly called a jumbo jet, to become obsolete after it had sold 400 of them. It thought that the future lay with supersonic travel, and that others would follow the route of the Anglo-French Concorde, making subsonic passenger jets obsolete. In fact the 747 was designed to be easily converted to become a cargo carrier by removing seats and installing a front cargo door. The company expected its passenger role to give way to supersonic aircraft, but that it would have a much longer future as a cargo carrier. They overestimated the economics of supersonic travel, and underestimated the durability and popularity of their big bird. Production passed the 1,000 mark by 1993, and as of this summer, 1,554 had been sold.

It changed the world by bringing low-cost long-range travel within the budget of ordinary people. What had once been the prerogative of the well-to-do now became available to average families taking package holidays. It made holidays to Disney World in Florida accessible to ordinary British families. A private company took a big gamble and called it right, reaping the rewards of success.

Concorde was not so fortunate. Funded by the UK and French governments, only 20 were built, 6 of which were prototypes, with only 14 entering service. Because of the sonic boom, it could only pass the sound barrier over water, which limited its routes. It was a technological marvel. I flew it 5 times and found each one thrilling, but the economics were not good. Research and development had been costly, since it crossed new and untried frontiers. If the development costs were written off, BA and Air France could operate it profitably, but it became increasing costly to maintain. If further offshoots had been built, like stretched versions, the development costs could have been spread over several models, but it never happened.

When supersonic passenger travel returns, as it soon looks set to, it will be private companies and private investment taking the gamble, as it should be. Several models are nearing the test flight stage, with smaller planes travelling below Concorde's Mach 2.2, and with designs to avoid the sonic boom, looking likely to blaze the trail. Some of the early ones will be business jets, but ordinary passenger versions will follow. No doubt they will be fun to fly in, but it is unlikely that any will have the world-changing impact that Boeing's first jumbo had.

Finally The Observer gets something right

Sadly it’s in the letters page but still, an advance on matters as usual:

Stop killings: legalise drugs

Deaths from drug turf wars will continue until we legalise drugs (“How London tourist hotspot became a flashpoint for drug gang killings”, News). Drugs should be treated like cigarettes. They should be legal, they should be taxed, packaging should show graphic health warnings, the strength (and, of course, purity) should be controlled, making them safer, and there should be no advertising. Banning drugs does not stop consumption; it merely hands over a massive business to criminals, making it impossible to tax and impossible to regulate.

Richard Mountford

We would add two things. The first being that there’s that liberty and freedom argument. The one we consider rather important. Freedom is that consenting adults get to be consenting adults. Yea up to and including the ingestion of things that may not, or even aren’t, good for them.

The second that advertising should not be banned at all. Perhaps a certain lack of “Get High, inject scag!” posters around the place but branding - a form of advertising - is not just desirable but necessary. For it’s exactly that which holds the manufacturer to those promises of purity and strength.

As the toll of overdose and disease deaths shows, it’s the lack of regularity in those two which kill. Thus our solution should be focused upon ensuring them both.

Ludwig von Mises

One of history's most influential economists was born on September 29th, 1881. Ludwig von Mises was born into a very talented family at Lemberg in Galicia, then part of the Austro-Hungarian Empire, now Lviv in Ukraine. By the time he was 12 years old, he could read Latin, understand Ukrainian, and was fluent in German, Polish and French.

One of the most famous of the Austrian economists, von Mises was influenced by Carl Menger, the founder of that school, and had attended the lectures of Eugen von Böhm-Bawerk. He worked for a time in the finance department of Austria's civil service, but worked and wrote as an academic after fleeing Austria in 1940 and moving to the United States.

Mises was an economist, an historian and a sociologist. Amongst his many original and influential publications, he is perhaps best remembered for 'Human Action,' described as "the largest and most scientific defence of human freedom ever published." Mises used what he called praxeology, the scientific study of human action, the purposeful behavior that characterizes us. He was at pains to point out, though, that it could never be like the physical sciences because it deals with human motivation, something we cannot know because there are no windows into the soul. Mises thought we could make logical deductions from the undeniable fact that humans exist and act, and made this the foundation stone of his economic system.

Under capitalism, he said, the price system translates individual subjective values into the objective information that enables resources to be allocated rationally. Socialist economies, with the emphasis on production rather than on the satisfaction of consumer demand, can never do this. There are no real prices, so the central planners can never allocate investment rationally to meet real needs.

Mises was a hugely influential figure in the postwar revival of the ideas and values of liberalism. He was a founding member of the Mont Pelerin Society, and a teacher and friend of F A Hayek. In His book, "The Transmission of the Ideals of Freedom," Hayek pays his respects to the influence of Mises in the 20th century libertarian movement.

Mises examined why it was that intellectuals, especially American academics, opposed free market ideas. In "The Anti-Capitalist Mentality," Mises explained that they resented the necessity of obeying mass demand, which is the basis of prosperity in big business. Hayek made a similar point in "The Intellectuals and Socialism" that academics resent the fact that intelligent people (like themselves) are not in charge of things.

The deductive system of von Mises is in the tradition of Aristotle and Aquinas, and later Ayn Rand, in that it moves from what are posited as undeniable axioms through logical steps to its conclusions. Hayek himself was of more empirical bent, and thought that a closed deductive system shut out the learning process that he thought was an essential feature of economics. He revered his mentor, though, and said, "I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument."

What Mises brought to economics was a thoroughgoing and systematic study of why capitalism works with the grain of human nature, and why socialism does not. He showed in detail why it is that capitalism succeeds, whereas socialism never does.

When public policy collides with reality

It’s usually reality that wins when there’s a conflict with what those making public policy would wish were true. This being a useful lens through which to consider proposals for public policy of course:

Mr Goldsmith said: “The fight against trophy hunting of endangered animals matters. It is clear that it is morally indefensible and that is why I am delighted that the Conservative Government will consult on a ban on the import of these trophies. By placing a higher value on animals alive rather than dead, we will begin to turn back the tide of extinction.”

The last sentence works. We humans work that way which is why it does. Things that are of higher value we preserve, even produce more of them. So, yes, we would like to make those endangered animals worth more.

Banning trophy hunting unfortunately doesn’t do that. A live predator has a negative value to those around it. Because, you know, predation. Things with negative values we humans usually try - and often succeed in doing so - to get rid of. Britain is, and has been for some centuries now, entirely out of wolves and lynx.

Trophy hunting produces a positive value to the existence of those live predators. And “predator” has a wide meaning here, elephants predate upon crops and gardens for example. A value because people will pay handsomely to come shoot the predators and collect the trophies.

So much so that there are farms raising animals such as lions for the express purpose of their being shot to create a trophy. Humans raising animals because they have value being a pretty good way of stemming extinction risks - we’re not short of cattle nor fur foxes as examples.

That is, the way to increase the value of animals is not to reduce their value. Obviously, although that’s what the government has just announced it’s going to enact. Reality differs.

An accidental Nobel Prize

The Scottish scientist Alexander Fleming recounted that the discovery of penicillin dates from September 28th, 1928. That was when he entered his laboratory in the basement of St Mary’s Hospital in London and found that one of the Petri dishes of Staphylococci that had been mistakenly left open had been contaminated by mould entering from an open window. It formed a visible blue-green growth, but around it was a ring of inhibited bacterial growth. Fleming concluded that something in the mould had killed the bacteria, and set about finding what it was.

The rest, as they say, is history. Fleming isolated it and grew a pure culture of it, naming it Penicillin chrysogenum. It became the first of a range of antibiotics that have saved millions of lives since that first discovery. Penicillin itself, once mass-produced, principally in America initially, saved many lives and limbs of injured soldiers in World War II.

Fleming’s laboratory is now part of Imperial College in London, and Fleming was awarded the 1945 Nobel Prize in Medicine, along with Howard Florey and Ernst Chain, who helped in the development of penicillin. Fleming was knighted in 1944, and in 1999 he featured in Time magazine’s list of the 100 most important people of the century.

It was not all down to the luck of that first discovery. While it was serendipitous that it happened, less skilled and less informed eyes might never have spotted the significance. As Popper says, there is an almost infinite number of things that our senses could focus our attention upon. We pick out those we regard as significant, perhaps those that reveal something new, or which do not fit in with our preconceived theories about what we expect. To Fleming, because of his intellect and his training, the sight of the Petri dish became an observation. He realized its significance and built upon it.

This is a very common feature in human progress, where something unexpected is recognized by trained or astute eyes as having a significance that merits investigation.

By coincidence, exactly 33 years before Fleming’s observation, Louis Pasteur had died on September 28th, 1895, after a lifetime of achievement in microbiology and chemistry. He had observed that environment mattered in the spread of diseases, and found that healthy silk-worms became ill when they nested in the bedding of those suffering from disease. He further observed that for wine to turn to vinegar, it must be open to the air, and concluded that microbes could be airborne and contaminate what they contacted.

From this he developed and researched the germ theory of disease, disproving the notion of the spontaneous generation of organisms that had previously prevailed.  It was the basis of massive advances in medicine, and in preserving foodstuffs. The word ‘Pasteurization’ honours his achievements.

Progress is more likely to be made when there are opportunities for research to be done that is somewhat outside the accepted paradigms of the time, and where observations of the unusual can be pursued, and where discoveries can gain a hearing. Competition for glory is part of what motivates researchers, so Royal Society accolades and Nobel Prizes play their part in advancing human knowledge and achievement, as do the cash rewards that often follow.