Harman and prostitution


I see that Harriet Harman, the UK's minister for women's affairs, thinks that Governor Schwarzenegger should close down the website PunterNet, which is based in California but posts reviews on UK prostitutes.

PunterNet must be delighted with this publicity. At least they are sensibly out of Ms Harman's grasp over in Sacramento. But the worrying thing about that is what she would say – and do – if the site were based in Britain. No doubt any website that offended her metropolitan middle-class sensibilities would be facing the axe. You can forget free speech when politicians have attitudes like that.

Ms Harman is already seeking to make it illegal to pay for sex, under the guise of preventing coercion (her legislative proposal talks about prostitutes 'controlled by another person' – though not even the cops have much idea of what that 'controlled' is supposed to mean). And she praised a police raid on a Birmingham massage parlour which 'freed' nineteen 'trafficked women' (it did nothing of the sort: it just nicked women who had come freely, if not always legally, from Eastern Europe to work in a wealthier country).

Now where people are sold into any trade against their will, we should move to stop it. But the small number of such cases are no reason to squeeze prostitutes out of a living because Ms Harman considers the activity immoral. Yes, prostitutes travel – it used to be to the next town, now, thanks to Ryanair, its the next country – to go where the money is better, and to protect their future employability (as Gary Becker puts it, their human capital) against tut-tutting neighbours and relatives. But where prostitution is a voluntary bargain, why should the state intervene? There may be issues of public health, but those are better fixed when prostitution is out in the open, than when it is forced underground.

The excellent book Prohibitions from the Institute of Economic Affairs points out that prostitution should, properly, be regarded as a caring profession, like nursing. There are many people who, for one reason or another, have no sex partner. If that leads to a voluntary agreement to exchange sex for cash, then both parties benefit. Ms Harman objects that this is 'exploitation of women'. Well, I had a look at PunterNet. Yes, I'm sure, in the shadowlands of prostitution today, the agencies take about half the fee. But even then, at anything up to £500 an hour, I'm pretty sure it's not the women who are being exploited.

Dr Butler's book The Rotten State of Britain is now in paperback.


Lord Turner attacks independent financial advisers


FSA proposals could halve the IFA industry, leaving only the rich able to afford investment advice

Lord Turner of Makebelieve is at it again. His Financial Services Authority (FSA) is introducing new rules for Independent Financial Advisors (IFAs) that will probably drive half of the 20,000 or so IFAs out of business by 2012. The requirements of the FSA's new Retail Distribution Review (RDR) will make life impossible for the smaller IFAs, many of whom are on the breadline now.

Ironically, the FSA is supposed to protect the consumer from biased financial advice and yet the RDR will drive all but the wealthy into the arms of the same big banks who are responsible for most consumer complaints. 59% of these complaints are about banks as against 3% complaining about IFAs. Once again the FSA is seeking to destroy the UK financial services sector rather than improve it.

The FSA is failing effectively to regulate the big banks and driving more consumer business into their arms. Not, of course, that advice from your friendly banker is ever biased.

Hat-tip to Simon Mansell who has the whole chapter and verse. He can be contacted through his website here.

You can also sign a petition deploring the FSA proposals at the Downing Street website.

New UK nuclear build?


Events over the last few days have dented the prospects for UK new nuclear-build.

In Germany, the success of the CDU/CSU and FDP coalition has been welcomed by the markets. The shares of both E.On and RWE have rallied in the expectation that Germany’s controversial nuclear phase-out policy will be abolished – thereby massively boosting their free cash flow.  Such a reversal does not mean that new nuclear-build will be undertaken in Germany.

It would mean, though, that both companies, along with EnBW and Vattenfall, could extend the lives of their nuclear plants whose capacity exceeds 20,000 MW. Furthermore, both E.On and RWE may well undertake investment at their existing nuclear plants to boost output. Against this background, their interest in participating in UK new nuclear-build may wane. And, in E.On’s case, with net debt of c£40 billion, reducing capex – rather than increasing it – is the compelling priority.

The UK Government’s new nuclear-build hopes also centre around EdF, which is 84% owned by the French Government. EdF has just confirmed the appointment of a new Chairman, Henri Proglio, who has spent most of his career at Veolia Environnement: he will now be top of DECC’s must-meet list. Central to his new responsibilities will be the reduction of EdF’s burgeoning net debt, which presumably will involve reversing some of the ambitious international expansion of late. The sale of some UK electricity distribution assets is anticipated.

Consequently, EdF’s hitherto robust commitment to new nuclear-build in the UK may erode. After all, it will not yield any revenues until 2018 at the earliest. Add to that, the more general weakness of oil and gas prices – at least compared with the boom times in 2007/08 when new nuclear-build interest peaked – and it is no surprise that the UK new nuclear-build programme is wobbling.

Is this unduly pessimistic?

The state of radio in Denmark


In a country where freedom of speech has become the most important cause, commercial radio is increasingly impossible because of the concession costs the radio companies have to pay to the state.

The largest commercial radio station in Denmark “Radio 100 FM" owned by Talpa Radio Denmark. However, it is now seeking bankruptcy protection, after running large deficits over the last couple of years. The main reason is due to the fees it has to pay to the Danish state. Talpa Radio isn’t the first Radio to go out of business in Denmark, in 2005 Sky Radio had to stop their transmissions and in 2008 TV2 Radio, owned by the largest semi commercial TV operator in Denmark had to shut down as well. Just recently 100 FM was awarded “Radio station of the year" at the Radiodays conference in Copenhagen, nonetheless being the best just wasn’t enough.

The Danish minister of Culture now says that the Danish government will try and help 100 FM as much as it can, because as “she is much focused on keeping competition alive in the Radio market". It seems though that government policy is actually what kills the Radio stations, as like in the UK, free market radio competition is far from a reality.

The Danish Broadcasting Corporation (DR) dominates 4 out of 6 national FM channels and has recently finished building a new concert hall and headquarter buildings with a total budget overdraft of more than 1.4 billion Kr. (app. 170 million GBP).

Competition? I don’t think so!

Repeal the Human Rights Act


Due to the Human Rights Act, the revisionist interpretation of the European Court has influenced British courts and thereby altered the traditional British notion of freedom and human rights. Repealing the Human Rights Act and replacing it with a British Bill of Rights based on classic civil and political rights and freedoms would counter the influence of the Court’s activism at the domestic level. Moreover, it would send a clear signal to the Court that the UK is no longer willing to accept the Court’s usurpation of powers that rightly belong to national parliaments nor the erosion and dilution of the freedoms included in the Convention. It is not unlikely that other nations would follow suit forcing the Court to change its course or lose its legitimacy.

– Jacob Mchangama 'A UK Bill of Rights should be the first step in a human rights (counter)-revolution' ConservativeHome

Bismarck beats Beveridge


The Euro Health Consumer Index (ECHI) 2009 was released this week, and got lots of media coverage in the UK because it ranked the NHS 14th out of 33 countries and said the British health service was let down by waiting lists and "uneven quality performance". Only 4 counties in the EU15 (Western Europe, roughly speaking) got lower scores – Italy, Spain, Greece and Portugal.

The report is full of interesting information, but one point (on p9) particularly interested me. In their words, "Bismarck Beats Beveridge – yet again!" To explain:

Bismarck healthcare systems are "based on social insurance, where there is a multitude of insurance organizations... who are organisationally independent of healthcare providers." They are named after Otto von Bismarck, who founded the German welfare state.

Beveridge systems are "systems where financing and provision are handled within one organisational system, i.e. financing bodies and providers are wholly or partially within one organization." They are named after Wiliam Beveridge, who founded the British welfare state.

Anyway, the point the reports makes is that, "Looking at the results of the EHCI 2006 – 2009, it is very hard to avoid noticing that the top consists of dedicated Bismarck countries, with the small-population and therefore more easily managed Beveridge systems of the Nordic countries squeezing in. Large Beveridge systems seem to have difficulties at attaining really excellent levels of customer value."

The following list shows the rankings of Western European healthcare systems according to their 2009 score. The Bismarck countries are in bold:

(1) Holland, (2) Denmark, (3) Iceland, (4) Austria, (5) Switzerland, (6) Germany, (7) France, (8) Sweden, (9) Luxembourg, (10) Norway, (11) Belgium, (12) Finland, (13) Ireland, (14) UK, (15) Italy, (16) Spain, (17) Greece, (18) Portugal.

Clearly there is something in what the authors of the ECHI say. They suggest two points which could explain the comparative underperformance of Beveridge systems:

(1) Managing organizations of this size (the NHS employees 1.5m staff) requires management skills which just don't exist in the public sector. (I'd say they are extremely rare in the private sector too.)

(2) The primary loyalty in Beveridge organizations tends to be to politicians and other top decision-makers, rather than patients.

Adopting a competitive social insurance system like Holland's would be a huge step forward for the UK, even if – in an ideal world – I would prefer something based on medical savings accounts. You can read more about it here, in our excellent 2002 report NHS Reform: towards consensus?

"Go" Orders: Guilty without charge


During the Labour party conference Home Secretary Alan Johnson revealed yet another reason to boot the party out at the next election.

Renewing Labour’s pledge to ‘clampdown on crime’ (read: creating more punishments and bureaucracy under the pretence of ‘action’), he has unveiled plans to bar alleged wife beaters from their homes through the Domestic Violence Protection Order. “Go" Orders can be placed on suspects, banning them from their homes for up to two weeks, while allowing victims of abuse time to consider legal action.

Apparently, this has been dreamt up to close a ‘loophole’ in legislation whereby the Police can only ‘protect’ a victim of domestic violence if a suspect has been charged with a crime. This ‘loophole’ sounds horribly similar to the long-standing practice in the UK of no-one having their liberty infringed upon without sufficient evidence to suggest it is in the public interest to do so.

If the police cannot prove a crime has been committed and an alleged suspect has not been charged, let alone convicted of an act, then that suspect has every right to be treated as a law-abiding citizen. It is inevitable that some of those banned from their own home will be guiltless and that some people affected by this order will not have charges brought against them. These people would be seriously wronged by such measure.

The breaking of a “Go" Order could land you in the magistrates for Contempt of Court and risking imprisonment. In practise, Johnson is stating that someone who has not even been charged with a crime could face a spell in jail, simply for breaking an order that was imposed without evidence and without justification.

Whilst in power New Labour has continually undermined a major right in the UK legal system: the presumption of the accused’s innocence until proven guilty. They have treated those yet to be tried as convicts through the use of Control Orders and treated those proven innocent as guilty through the retention of details on the DNA database. They are now seeking to treat as guilty those who are yet to be even charged with a crime.

Lions led by donkeys


One wonders sometimes whether the British Government is entirely worthless, not least when they are leaving valiant men and women to fight without protection and inadequate support, and then retreating behind a curtain of lies and half truths to defend their own actions and behaviour.

The government is piling pressure downwards through the Ministry of Defence to prevent the truth about what is actually happening in Afghanistan reaching us. But we are nonetheless all aware of the inadequate equipment and the shortage of helicopters that exemplify the poor treatment of the armed forces by their political leaders. One is reminded of the phrase 'lions led by donkeys'.

This article by Michael Yon makes a compelling case that unless politicians’ attitudes to the troops, to the public, and to reporters changes, meaningful progress in Afghanistan will be impossible. Not only does it outline his own poor treatment at the hands of puppets of the Ministry of Defence, it also explains how troops on the ground are routinely lied to by the politicians back home. This is a war that is fast becoming a political quagmire. The UK government desperately needs to rethink it's attitude towards the armed forces.

Fiscal alcoholism


Thanks to our Senior Fellow Tim Ambler for introducing me to a new phrase: fiscal alcoholism. It was coined by György Kopits, a member of the Hungarian National Bank's monetary council, in the Wall Street Journal recently. The phrase neatly sums up the illness in Hungary's public accounts – and in the spending habits of many other countries around the world. They know that they should be giving up their reckless spending and borrowing. But they like the high it gives them. And they reckon that one little bit more spending or borrowing can't do them much harm, can it...?

This is why we get booms and busts. When things are not going well, governments reduce interest rates, or print more money, or embark on any number of 'stimulation' packages. The immediate effects seem nice: business flourishes, investment increases, and unemployment falls. People take out loans to buy bigger houses, and new factories, and everything booms. But it is a boom built on sand: it was the cheap credit that created it, not some revolution in productivity and efficiency, or an influx of new customers. Bigger and bigger doses of the credit drug are needed to keep the high going. Eventually, it falters and the result is an awful hangover.

So I think fiscal alcoholism is a good way of describing this phenomenon. Unfortunately the G20 meetings simply provide an opportunity for all the fiscal alcoholics to get together and buy each other more drinks. It's a shame we don't have regular fiscal AA meetings where they all come and fess up: 'My name is Gordon Brown and I'm a fiscal acoholic...'

Or perhaps we should go further and take a leaf out of the Political Correctness manual. Round up the financial responsibility deniers and cart them off to jail. Then at least, with three-quarters of the world's politicians in jug, the other quarter could get on with balancing the books.

Dr Butler's book The Rotten State of Britain is now in paperback.