Merry Christmas to one and all

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This is the time of year when for many of us thoughts turn to family and friends and home.  The team at the Adam Smith Institute wish all those who enjoy reading this site a merry Christmas.  To those journeying to be with family and friends we wish a safe trip, and to all we hope the festive season brings fulfillment and pleasure, and that the New Year ahead will bring the promise of opportunities and achievement.  Our thoughts and good wishes are with you.

Are the Tories the party of the rich?

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Andrew Grice in The Independent cites a Comres poll they commissioned which attempts to portray the Tories as the party of the rich. There are certain questions you can ask which will elicit predictable responses, which is probably why they did it. But is it true? And is its implied converse true, that Labour is the party of the poor?

For all the class war rhetoric from Gordon Brown, the poor have fared worse under a Labour government, and social mobility has declined, not increased. This Institute's inspiration and patron saint, Adam Smith, favoured markets and trade because they offered most chance of improving the lot of poor people, those at the subsistence end of the economy.

First of all market policies and trade augment the wealth of the economy, and create employment opportunities not available in a poorer economy. Secondly, they tend to produce goods and services in larger quantities and at more affordable prices, giving poorer people access to what were once limited to the rich. Thirdly, an economy featuring market and pro-trade policies tends to develop products that narrow the gap between the lifestyles of rich and poor. This is not the gap in incomes, but the difference between what the rich and poor do.

As Arthur Shenfield described it in his Myth & Reality in Economic Systems,

Thus in capitalism the inequality of condition is little more than the difference between the Cadillac and the Chevrolet, the Parisian couturier's model and the excellent mass-produced copies of it, caviar and the equally nutritious cod's roe. In pre-capitalist societies it was the difference between the mansion and the hovel, between silks and rags, between exquisite luxury and frequent famine.

For these reasons and others, the party which will implement pro-market and pro-trade policies is truly the party of the poor, in that it will act to better their condition. The party that attacks achievement, success and the wealth they can bring, undermines the chance of improvement for the poor by doing so. Take your choice.

The easy fire and easy hire

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An article published in 2008 by Ruud Muffels and Ruud Luijkx argues that the Anglo Saxon and the Nordic labour markets are the most flexible when it comes to labour mobility in the world. However, looking at the rules and regulations in the UK concerning when you would like to hire or fire a person, it is clear that this process is in fact far easier in the Nordic countries.

If you began looking for government regulation in Denmark on how to fire and hire people in the private sector you would end up using a lot of time, simply because there is not much. In the Danish system there is no legislation regulating reasons or notice periods of dismissals. According to most mutual conventions however, employers are required to give notice in advance excepting dismissals due to criminal offences or unsuitable behaviour in the workplace. Additionally employers are not required to justify the reasons for dismissal. In the UK, it is relatively difficult for en employer to fire employees because of the several notices and the necessity for a reason for the dismissal. By slowing down the firing process, the UK of course creates hesitation among employers to hire when the economy is changing. Just what you don’t need as the country tries to drag itself out of recession.

This sort of government interference in labour market issues is counterproductive and is ill suited to deal with a quickly changing international economy. Letting those people who are in touch with the economy on a daily basis deal with labour market contracts would by far increase the adaptability of the system and help increase job creation.

Learning from Copenhagen

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Despite the hot air and elaborate promises being thrown about the before its start, Copenhagen has been classified by pretty much everybody as ‘a failure’.

Regardless of your belief in man-made climate change and the need for global government regulation, the shortcomings of the Copenhagen Summit reflect the problem of demanding people to unite behind one universal goal and solution.
Wealthy European nations tend to have governments keen to get involved in every area of public policy, and are therefore happy to sign up to large, attention-grabbing emission cuts and vocally drive their own moral agenda through conference.

However, most Americans are skeptical about man made global warming and are therefore unenthusiastic about emission cuts, while developing countries are strongly against any moves to constrain their development and economic growth with puritanical regulation. For its part, China wishes to show its political and economic muscle, and remind the rest of the world of the importance of its cooperation. The result of trying to mediate these conflicting interests is a vague, last minute Accord that absolutely nobody is satisfied with. It is obvious that you simply cannot reach a dramatic conclusion when different incentives don’t align.

The difficulties at Copenhagen could also be applied to national government. A political elite frequently has the incentive to delve further into public life, creating more legislation with the belief that society will be better off in the future because of it. However, these beliefs and solutions do not sit well with everybody, and attempts to impose them can lead to public outcry, dissent- or worse- a fall in the polls. In order to take onboard a range of opinions, a half-formed, middle of the road option is passed, which is unlikely to satisfy or improve the lives of anybody. Just look at some of New Labour and Cameron’s policies.

Governments and super-groups need to accept that there is a limit to the extent that groups with different interests and needs will co-operate with their own set of values and priorities. If their continual exercise of power does not lead to tyranny, it can lead to stagnation in a middle ground. By stepping back and letting smaller groups pursue their own ends, better progress and innovation is likely to come.

Czech Drug Policy

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As of January 1st, the Czech Republic’s drug policy is changing. While the personal use of illicit drugs was decriminalized a year ago, possession of the vague “larger than small" amount of a substance still lead to prosecution. The difficulty the public, police and courts faced in judging this amount has lead to government clarifying the levels acceptable for personal consumption, such as 15 grams of Marijuana, 4 tablets of ecstasy, a gram of cocaine and 1.5 grams of heroin. Setting out the law in a clear way and using common sense to designate a ‘reasonable’ level of drug possession makes it easier for all to monitor and respect the law.

While any move from the outright prohibition of drugs is positive, Czech reform is half-baked. The possession of drugs (apart from small amounts of certain drugs) remains a crime; this will ensure that drugs will continue to be procured, trafficked and traded illegally, and often by large organized gangs. The total ‘cost’ of drugs is thus likely to remain high. The new reform does allow the Czechs to own a small number of their own cannabis plants, which is a positive step in allowing the controlled production of illicit drugs to take place. However, such tolerance must be applied to the whole of the drugs market.

The fact remains that to minimize the damage of drugs they must be dealt with maturely and logically. If they were to be legalized and subsequently regulated in a method similar to tobacco or alcohol, the source and quality of substances would be better regulated. Drug use would become safer, the scale of drug use could become better monitored and those needing help may be more likely to ask for it. Personal liberty would also be increased, which is no bad thing. The moves in Latin America, Portugal and the Czech Republic to adopt a more sensible drugs approach should be encouraged. Perhaps in time our own leaders may learn that you cannot legislate a problem away.

The micro-politics of hospital privatisation

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Introduction
Mindful of a likely change of government in 2010, Nurses for Reform believes that the NHS should be renamed the National Health SYSTEM and that it should work through the universal supply of independent hospital care and treatment. Simply put, there should be no hospitals in this country owned by the state or managed by its agents.

Cheaper and Better
There was once a time before the industrial revolution when food production was onerous and costly. Many could not afford a nourishing, diverse or pleasurable diet and all too often people went hungry.

There was a time before the invention of the steam, internal combustion and jet engines when options for travel were limited and any significant distance remained the preserve of the rich.

There was also a time, not so long ago, when telephones were rationed and lengthy calls were beyond the means of most people.

Yet today, thanks to open and innovative markets, people can afford diverse food, extensive travel and outstanding telecommunications. What was once beyond the dreams of avarice are now part of every day life and taken for granted.

Universal Independent Hospital Provision
That is why the next government must liberate health provision from the rationed and expensive world of top-down of un-innovative state control. All NHS hospitals must be returned to the independent sector, not least so that such provision reflects actual needs and not the political whims of vote-motivated politicians. At a practical level this means the following key points:

• In the post-bureaucratic age the Secretary of State for Health must no longer have any say over when or where hospitals are built, opened or closed.
• Following the planned changes in education, local planning laws must be reformed so as to enable a much greater diversity of - and investment in - independent provision.
• The planned Independent NHS Board should oversee the return of all UK hospitals to diverse forms of independent ownership (for-profit and not-for-profit).
• Health censorship must be outlawed and patients must be empowered with greater access to information. In this context hospitals, doctors and other health professionals including pharmaceutical suppliers should be free to advertise and build trusted brands. Only by allowing reputations to be built openly from the bottom-up will the government be able to realise a lighter touch in regulation.
• To encourage openness, diversity and greater opportunity for staff, employers and patients, an incoming Conservative administration must also adopt the principle of subsidiarity when it comes to human resource management. Hospitals, care homes and all other health facilities should be able to set pay and conditions for staff as they think appropriate and take the lead in all medical and health training. National collective pay bargaining and professional monopolies should be abandoned in favour of a more post-bureaucratic approach.

By putting these key initiatives in place not only will there be a vast improvement in the provision of healthcare but, these changes will enable further micro-political changes to health funding. Overall, these reforms are necessary so that healthcare is pushed through the beneficial reforms that we now enjoy in so many other areas of our daily lives.

Dr Helen Evans is a fellow of the Adam Smith Institute, and the director of Nurses for Reform.

It wouldn't happen here

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Public outrage has been expressed at a US cop who pulled a gun during a friendly Washington snowball fight. The detective, who was calmed down by uniformed police called to the scene, has been suspended pending disciplinary action.

This could not possibly happen in the UK. In Britain five or six squad cars would have pulled up and disgorged police officers in full body armour and brandishing automatic weapons. A couple of dozen of them would have quickly contained and penned in the crowd of snowballers and detained them under the Prevention of Terrorism laws. They would have been cautioned, and their DNA samples taken and kept on record. Any who objected, or tried to otherwise interfere with the police carrying out their duties would have been sectioned under the Mental Health acts. We're lucky we live in a free country rather than in gun-crazy America…

Appealing to reason

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A year or so ago I attended a launch party for Nigel Lawson’s excellent book that questions the policies of dealing with a changing climate: An Appeal to Reason. During the Q&A a very impolite man berated Lord Lawson with a small clan of followers chipping in and egging him on. They were not bright for they failed entirely to distinguish (as Lord Lawson so clearly does) between the science and the policy dealing with climate change.

It was not the disagreement that was the problem, but the manner in which it was expressed that was surprising at the time. This was the first glimpse for me of the fanaticism that climate change engenders in its ‘supporters’. Crucially these ruffians did not stumble in off the street; they were – and presumably still are – affiliated with top London universities. Not one, it turned out, was actually au fait in the latest climate research, but all were part of that odd cabal festering in the pit of our research institutions.

Just because they ready and willing to use such strong-arm tactics to express their strongly held beliefs does not mean they are wrong, but it does show that they are not the impartial scientists in pursuit of knowledge that so many in media have built them up to be. Let the media’s silence not kid anyone. As things stand, the peer review process lies in tatters, internet geeks have exposed many of the scientific tricks that these ideologues have been using.

This is the view expressed by the excellent Patrick J. Michaels of the Cato Institute in an article for the WSJ entitled ‘How to Manufacture a Climate Consensus’. Clearly that famous split between rational science and faith-based belief is far from complete. To make matters worse scientists have aligned with leftist economists, politicians and big business. This is bad science, bad policy and bad thinking. It is liable to lead to a chronic misallocation of resources and possibly another economic bubble that somewhere down the line the truth will come along and pop – with all the attendant job losses and misery for the people of the world.

Strands of British conservatism

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The latest Total Politics contains the results of an interesting poll, which surveys the ‘ideology’ of MPs. One part of the poll asks Tory candidates and MPs “what strand of Conservatism best characterizes your political philosophy?" – Cameronism, Thatcherism, One Nation Toryism, Libertarian or Cornerstone. For MPs, One Nation Toryism scored 38%, Thatcherism 26%, Cameronism 12%, Cornerstone 6%, and Libertarian 3%. For candidates, Cameronism scored 43%, One Nation Toryism 22%, Thatcherism 19%, and Libertarian 7%. But what do these labels actually mean?

I’ll assume that readers of this blog are fairly well acquainted with libertarianism, meaning (broadly) free markets, individual freedom and limited government. Cornerstone, on the other hand, represents the socially conservative, traditionalist part of the Conservative party. Some of its members are free market, others are not.

The term One Nation Toryism comes from one of Disraeli’s novels, but is basically another term for ‘Butskellism’, the name given to Conservative acceptance of the post-war, Keynesian consensus through the fifties, sixties and seventies. This is the big government, paternalist part of the Tory party.

Thatcherism, meanwhile, represents the rejection of / opposition to the post-war consensus. It isn’t something with a clearly defined ideology of its own, but some of its main characteristics are identifiable: monetarism and supply-side economics, coupled with a belief in a strong nation state and a tendency towards centralization. Thatcherites were the ‘dries’ to the One Nation ‘wets’.

But what of Cameronism, the ‘philosophy’ that 12% of MPs and 43% of candidates believe in? I’m tempted to say that it isn’t a distinct strand of Conservatism at all, and that it is actually more of a style or marketing strategy than anything else. When it comes down to the specifics, it is little more than a fudge (call it a ‘third way’, if you like) between One Nation Toryism and Thatcherism – an attempt to keep everyone happy.

But perhaps that is a little harsh on David Cameron, because he does at least claim to have a ‘big idea’. That idea is that before the frontiers of the state can be rolled back, ushering us into a ‘post-bureaucratic age’, the state must first re-make ‘society’ – that is, use its policies to rebuild those non-governmental institutions that statism has undermined. This is really what the Conservatives are getting at when they talk about the family, about communities and charities and co-operatives and so on.

It is important to draw a distinction here between this ‘Cameronism’ (Jesse Norman’s Compassionate Conservatism provides a good introduction) and Philip Blond’s ‘Red Toryism’. Certainly there are outward similarities – both aim to strengthen ‘society’– but in fact they are fundamentally different. Red Toryism is entirely collectivist: its proponents believe that the state and the market both exist to serve ‘society’ and should be so directed by politicians. The individual does not enter in to the equation. By contrast, Cameronism’s proponents would see the role of both the state and society (understood as ‘institutions’ rather than just a collective) as empowering the individual.

And this, to me, is the ultimate ideological divide: individualism vs. collectivism. Compared with that, all the other labels pale into insignificance.

Royal Mail: Universal Failure

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In a new think piece, published today, ASI Fellow and communications expert Eben Wilson examines the future of the UK postal service, arguing that price controls and regulation has taken a heavy toll on the Royal Mail, preventing innovation, stopping them from matching revenue to costs, and letting the organisation be captured by special interest groups. In this context, he conciudes that a free market approach built around privatization, deregulation and competition is the only rational way forward. Click here to read to full article.