Let people decide how much they work

Labour Party Shadow Chancellor John McDonnell’s idea to force a 4-day work week have now been debunked by a Labour-commissioned report.

Matthew Lesh, Head of Research at the Adam Smith Institute, says the people should be free to decide how much they work:

“It is damning that even the report commissioned by the Labour Party rejected the idea of a 4-day work week as unrealistic and undesirable.

“John McDonnell’s bizarre idea to force people to work less will mean lower wages and fewer opportunities for millions. If we force people to work less they will inevitably earn less. The British economy will also be a much less friendly place to invest and start businesses if staff cannot work a full week. We should celebrate people who work hard to provide for their families, not take away this freedom. Low income Brits in particular want to work more, not less.

“Just forcing people to work less will not magically improve productivity. We need to embrace technological advancements to allow us to work even less in the future. In historic terms we are already working less than ever before, about 30 fewer hours compared to before the Industrial Revolution.”

Consent held back by pride and prejudice

A new paper from the neoliberal think tank the Adam Smith Institute says UK Government should update British laws on consent in body modification to become more liberal and permissive.

  • British laws on grievous and actual bodily harm are outdated with consent not a valid defence.

  • Judicial rulings that body modification and sexual practices (such as BDSM) are unlawful raise philosophical and legal questions about consensual activities in which neither party is aggrieved. 

  • The law is applied inconsistently with personal prejudice and public opinion impacting on interpretation of the law to the detriment of minority groups.

  • The development of transhumanism - technology to evolve beyond our current physical and mental limitations - could also be limited by existing laws that prevent body modification.

  • Government should enable greater personal freedom, protect minority expressions, and enable emerging technologies, by reforming the Offences Against the Person Act so consent becomes a valid defence to charges of ABH and GBH. 

Britain’s consent laws are utterly outdated and harmful to minority groups and individuals, argues a new paper by free market think tank the Adam Smith Institute. 

Although undoubtedly well intentioned, and designed to protect individuals or society from harm, the law surrounding consent  Offences Against the Person Act and actual or grievous bodily harm is too vague and poorly applied allowing personal prejudice of judges and public opinion to impact on the interpretation of the law. 

The law in question, the Offences Against the Person Act stems from 1861 and the think tank says attitudes have changed since its inception. It has resulted in the conviction of some of the country’s most violent offenders, but it has also resulted in situations in which people have seen their rights curtailed by the state, unfair incarceration, and the stigma and loss of opportunity that comes from a criminal conviction.

The report says that it's high time the law was reformed so that consent becomes a valid defence to charges of ABH and GBH on a broad range of activities not currently allowed for under the law. 

While certain levels of consent have become included, such as surgery and tattoos, the lack of a permissive approach discriminates against minority groups who haven't been able to lobby for opt outs for their rituals or personal tastes. 

Under the plans put forward by the Adam Smith Institute, the onus in future would be on the defendant to prove that the alleged victim had consented to the acts. This way the government could enable greater personal freedom, protect minority expressions, and enable emerging technologies.

Sexual, cultural, and ethnic minorities are most likely to suffer from the current laws that do not allow individuals to consent. At present minority groups sit in a grey area waiting for a judge to determine if their ritual or activities meets their judgement as being in the public interest.  

In 2018 a tattooist called Brendan McCarthy (self-styled ‘Dr Evil’) was convicted of GBH after performing a number of procedures on willing and paying customers including: removal of an ear, removal of a nipple, and splitting another’s tongue so it forked. While extreme, in each case the customers gave consent and over 13,000 people signed a petition in favour of his case.

The think tank argues that this case and others show that courts have allowed personal feelings of disgust (and media around specific cases) to shadow the interpretation of the law. Minority groups receive this most often with a disgust reaction triggered when people bear witness to something which clearly deviates from the norm.

This has implications for the future too. Transhumanism promises to transcend the human experience with the promise of helping eliminate disease, tackle the effects of ageing, live longer, healthier, and happier lives the think tank argues it’s important to reform the law now so Britons that want to adopt and implant technology are free to do so.

With the law already out of date, and the world changing apace, it’s time to look again at consent.

Ben Ramanauskas, author of the report, said:

“It is a well established principle that a person should not face prosecution for partaking in consensual acts. However, the law currently criminalises people for activities taking place in private and involving consenting adults. The law needs to change. A more liberal approach would uphold individual liberty, reduce harm, and help to ensure that as humanity engages with futuristic technology Britons can benefit.”

Matthew Lesh, Head of Research at the Adam Smith Institute, says: 

“People should be free to consent to activities done to their body, even activities that make most people squirm. It is outrageous that you can consent to some potentially harmful activities - such as ear piercings, contact sports and religious flagellation - but cannot consent to body modification or pleasurable sexual activities. We should apply the law consistently, not in a way that hurts minorities and subcultures. Updating the bodily harm laws, to include a consent defence, is also necessary for emerging transhumanism technologies, that will allow us to evolve beyond our current physical and mental limitations.”

Notes to editors:  

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07904 099599.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Doing our duty by Hong Kong

A new paper from the free market, neoliberal think tank the Adam Smith Institute says UK Government should extend residency rights to Hong Kong nationals in response to violent scenes at protests in the city and a nearby military build up in Shenzen.

  • The United Kingdom has a duty under the Sino-British Joint Declaration to uphold the rights of Hong Kong citizens until 2047

  • While the United Kingdom cannot act within the territory of Hong Kong it can still act to maintain and enhance the rights of Hong Kongers within the territory of the United Kingdom.

  • The United Kingdom should offer British National (Overseas) status to all Hong Kongers born before and after the 1997 handover, along with an extension of full residency rights to British National (Overseas) persons equivalent to the status of full British citizens.

  • This would follow precedent as seen in arrival of Ugandan Asians in the 1960s and 1970s.

Following two months of protests in Hong Kong and more aggressive policing, a military build up in mainland China near the city, and more disruptive acts by protestors, the free market think tank the Adam Smith Institute argues that Britain has a duty to uphold the rights and civil liberties of Hong Kong’s citizens.  

In a paper today the think tank says that, while there’s little scope for action within the territory of Hong Kong, the UK Government could (and should) provide citizenship and the right to move and live in Britain to all current British Nationals (Overseas) in the territory and allow residents there to apply for that status freely. 

This would mean the 169,000 British Nationals would gain the right to move to and work freely in the UK, as well as open up the application process to the 4.5m Hong Kong nationals.

Britain has taken similar action in the past to help ex-citizens of the UK fleeing state violence with the most famous example being the persecution of Ugandan Asians by the dictator Idi Amin that saw tens of thousands of refugees come to the UK. Highly educated and with strong English language skills these refugees integrated quickly into society and they and their children are amongst the most likely to be in highly skilled professions, academia or own a business — famous Ugandan Asians include Lord Popat and Shailesh Vara MP, while Priti Patel the Home Secretary’s parents were from Uganda too. 

The UK has a unique role to play in de-escalating any violence in Hong Kong and upholding the rights and civil liberties of Hong Kong’s citizens stemming from a treaty between Britain and China preceding the handover of the colony in 1997. The Sino-British Joint Declaration, the think tank argues, requires the British government to maintain the rights of Hong Kong citizens until at least 2047, but says nothing about where this has to happen. 

The think tank therefore argues that the civil liberties that Hong Kong’s citizens enjoy now, should they be reduced by a heavy handed crackdown by the embattled Chief Executive Carrie Lam or by action from Beijing, could be offered in Britain instead. 

It follows similar calls by Tom Tugendhat MP, chairman of the Commons Foreign Affairs Committee, this week and in a Telegraph column.

Matthew Kilcoyne, from the Adam Smith Institute and report author, said:

“Britain has a duty to uphold the rights of the citizens of Hong Kong in the face of excessive force being used toward protestors and laws that infringe on the autonomy of the city. While the UK is far away, the country has a special link to these islands, and it has a responsibility and the ability to offer a home away from Hong Kong should the need arise.”

Notes to editors:  

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07904 099599.

The report ‘Doing our duty: how Britain can help Hong Kong’s citizens’ is available here.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

UK banking system an accident waiting to happen

New report shows UK banks still sickly, nearly 12y on from run on Northern Rock

  • Latest round of Bank of England stress tests conducted in 2018 drastically underestimated the vulnerability of the UK banking system

  • UK banks are still highly leveraged and a major shock could cause the banking system to collapse

  • Had the Bank carried out its tests using market valuations of bank capital and appropriately high pass standards, then all major UK banks would have failed

  • Big 5 UK banks have issued over £34 of debt for every £1 of equity

  • Average Leverage of the Big 5 Banks has increased from 27.8 in 2017 to 34.4 in 2018

  • The Bank of England’s stress tests are worse than useless because they offer false risk comfort that leaves the economy needlessly exposed

The British banking system is an ‘accident waiting to happen’ according to a new report released today by the Adam Smith Institute, nearly 12 years after the run on Northern Rock heralded the beginning of the financial crisis.

Kevin Dowd, author of the report and professor of finance and economics at Durham University, says the Bank of England’s stress tests continue to greatly overstate the financial resilience of the UK banking system.

High bank leverage was a key contributing factor to the severity of the financial crisis and UK banks are still highly leveraged.

“In market-value terms, the big 5 UK banks have issued over £34 of debt for every £1 of equity. That’s an enormous level of leverage,” said Professor Dowd. “Indeed, the banks were in worse shape in 2018 than they were the year before. What we are seeing is retrogression.”


Market-valuations of bank capital are more reliable than book valuations and indicate that markets believe that banks are still carrying large hidden losses that are not reflected in book valuations or in the stress tests. And if the markets don’t believe the Bank of England, why should anyone else?

Like their predecessors, the central purpose of 2018 stress tests is to persuade us that the UK banking system is strong when the evidence indicates that it is not. The banking system is weak now, before any ‘worse than financial crisis’ stress scenario, not strong after one.

The free market think tank argues that stress tests are compromised by conflicted objectives, an inadequate number of stress scenarios, low pass standards, reliance on unreliable metrics and questionable modelling.

Had the Bank carried out its stress tests using market values and using more appropriate pass standards, then the banks’ true weakness would have been revealed. The ‘worse than useless’ stress tests provide the public with false reassurance about the financial health of their banks.

Professor Dowd suggests that the stress test programme is so severely compromised that it should be scrapped. Instead, the Bank of England should focus on the reforms really needed to get the UK banking system on its feet – raising capital standards, shutting down zombie banks, establishing tighter corporate governance and reforming accounting standards.

Kevin Dowd, senior fellow of the Adam Smith Institute and author of the report, said:

“The fifth set of Bank of England stress tests is about as useful as a cancer test that cannot detect cancer. The stress tests seek to demonstrate a financial resilience on the part of UK banks that simply isn’t there.

“The fact that UK banks are still weak after a long economic recovery is testimony to the failure of the Bank of England to perform its core job function and rebuild the strength of the banking system after the trauma of the crisis.

“The Bank of England constantly sounds a false alarm on Brexit but is hopelessly complacent about the banking system. It should stop its Project Fear nonsense and focus on what is should have been doing all along, fixing the banking system.

“Another crisis is a matter of time and neither the UK banking system nor the Bank of England are remotely ready for it.”

Matthew Lesh, Head of Research at the Adam Smith Institute, said:

“A little bit of knowledge can be a dangerous thing. The misleading conclusion of the Bank’s stress tests is serving to hide the underlying vulnerability in the sector. We heard that ‘everything is fine’ before the financial crisis - which resulted in hundreds of billions of pounds of taxpayer bailouts and economic and political effects that are still being felt today. We should be wary of allowing banks to maintain their highly leveraged position on the presumption that their risky behaviour will be bailed out by taxpayers."

Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications,matt@adamsmith.org | 07584 778207.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Freeports to provide safe harbour in turbulent times

Freeports show that the government is taking the opportunities of Brexit seriously and we at the Adam Smith Institute are very pleased to hear that our Director and founder Dr Eamonn Butler has been asked to join the Freeports Advisory Panel to help bring them to fruition.

Director of the Adam Smith Institute, Eamonn Butler, said:

“Britain has a long and illustrious history as a global seafaring nation. Our prosperity has for centuries been built on free trade. Freeports will provide safe harbour for trade in turbulent times and show that hi-tech hubs of enterprise, low taxes, deregulation and trade without restriction can rebalance the economy and benefit regions that have been left behind. Free trade and freeports will set Britain on the right course as we sail out of the European Union and into the world.”

To arrange an interview or further comment, please contact Matt Kilcoyne on mobile (07904099599) or via email (matt@adamsmith.org).

UPDATE: news on freeports has been extensively covered in the media, with the Adam Smith Institute featuring in coverage by the BBC, ITV, the Guardian, the Telegraph, the Scotsman, and the brilliant Grimsby Telegraph. A comment piece by Dr Eamonn Butler featured in the Telegraph, and one by Dr Madsen Pirie appeared on the Spectator.

Buck starts with Boris' ASI policies

The Adam Smith Institute’s Head of Research Matthew Lesh welcomed Boris Johnson’s first speech as Prime Minister:

“Boris Johnson’s first speech begins to give meaning to his free enterprise-backing agenda. He has begun to outline a plan to reboot Britain’s economy, for unleashing the productive power of every corner of England.

“The ASI has long supported expanding capital allowances to boost investment in capital and research, free ports to reinvigorate forgotten parts of Britain and free trade that has helped lift billions out of poverty. It is also welcome that he has also spoken of the importance of ending the anti-science GM rules that prevent crops that will feed the world, of expanding homeownership and cutting taxes.

"The buck stops with Boris, and he's right to start by ensuring ordinary people keep a bit more of it for themselves."

To arrange an interview with a member of the Adam Smith Institute, or further comment, please contact Matt Kilcoyne on 07904099599, 02072224995, or email matt@adamsmith.org

Sadiq Khan's rent control demand is economically illiterate

Sadiq Khan's report out today demanding more powers devolved London to control rents shows that he's economically out of his depth and ineptly stepping outside of his brief while London's housing crisis worsens and violent crime rises.

Matthew Lesh, Head of Research at the Adam Smith Institute, takes the Mayor to task:

“Rent control would wreck London’s housing market. It would discourage developers from building homes for London’s residents, and shut London’s door to immigrants by making it harder to find an apartment in the city. Sadiq Khan is showing he is economically illiterate by not realising the damage that rent control does to cities.

“Since they were implemented in Stockholm, you now have to wait up to 35 years for a rent-controlled apartment, with an average wait of 10 years. It has meant bribes, patronage, a black market, and poorly maintained apartments. Only the socially connected can get into apartments, reducing access for the poor and minorities.

“London's Mayor should get back to fixing the issues within his control – like the Crossrail delay and knife crime – and spend less time demanding powers that would worsen the housing crisis.”

If you would like to arrange an interview with a member of the Adam Smith Institute or request further comment please do get in contact with Matt Kilcoyne via email (matt@adamsmith.org) or phone (07904099599 / 02072224995).

Dank on demand

A new paper from the free market, neoliberal think tank the Adam Smith Institute recommends a six point plan to legalise cannabis to reduce crime, reduce health risks, raise revenue from tax, and increase consumer awareness of risks.

Britain has fallen behind the rest of the world on recreational cannabis with Canada, ten US states and Uruguay having legalised and New Zealand organising a referendum to decide whether to legalise the drug.

  • One-third of Brits have used the drug at some point in their life, and nearly a fifth having done so in the past year 

  • Support for cannabis legalisation continues to rise rapidly, from 43% in May 2018 to to 59% in October 2018

  • Bring in £2.26 billion in tax revenue, and free up as much as £100 million in taxpayer funds and 1.04 million police hours  

  • UK’s cannabis providers should follow the takeaway delivery app market to compete with black market dealers that can provide at any time to anywhere.

There now is a clear appetite for recreational cannabis reform in the UK, a new paper by the Adam Smith Institute argues, saying legalisation could result in £2.26bn of revenue for the treasury but only if a competitive market is created that can undermine the power of black market players.

Far from being the fringe concern it once was, the debate over cannabis has moved into the mainstream following revelations of previous drug use by tory leadership candidates, and in the aftermath of high profile cases of Billy Caldwell and Alfie Dingley, who needed cannabis-based medicines to alleviate their frequent and dangerous seizures last year and medical cannabis’ subsequent legalisation.

Over the last year support for the legalisation of cannabis has skyrocketed. An October 2018 poll by Populus showed that the general public are now almost twice as likely to support the legalisation of cannabis than they are to oppose it. This is a significant shift in opinion since May 2018, with those supporting the legalisation of cannabis increasing from 43% to 59%. Just a third of Brits now think that the sale and possession of cannabis should be a criminal offence.

Recreational cannabis is unlawful to use and supply in the UK. The Misuse of Drugs Act, introduced in 1971, stipulates that the possession of cannabis can result in a five year prison sentence for users, an unlimited fine or both. Police can also issue a warning or an on-the-spot fine of £90 if a person is found with cannabis. Supply-related offences are treated much more harshly, with offenders facing up to 14 years in prison, an unlimited fine or both.

The first section of the paper, written by Liz McCulloch from the drugs policy advocacy groupVolteface, has looked into the evidence from the UK and around the world and concluded that “the evidence supporting the introduction of a legally regulated cannabis market in the UK is vast.”

She argues that “as the evidence builds that a legally regulated cannabis market would protect children, eliminate the illicit market, education people on the effects of cannabis and encourage safer cannabis consumption, that the debate should move beyond whether cannabis should be legalised and onto how”.

The Adam Smith Institute’s Daniel Pryor has done just that, creating a six point plan for cannabis legalisation:

  1. Private enterprise: The free market should be responsible for cannabis production and retail to ensure providers are responsive to consumer-wants and to avoid shortages driving a persistent black market. Recreational cannabis could be sold in dedicated licensed stores, behind the counter by trained staff in pharmacies like Boots and mobile apps to compete with drug dealers.

  2. Advertising and branding: Some forms of advertising and branded packaging should be allowed—as in many US states—in order to signal quality, consistency, and safety, giving legal products another advantage over the black market.

  3. Consumption: Edibles and vaping cannabis products should also be allowed to help people move away from tobacco joints.

  4. Taxation: The taxation of cannabis must be low enough to ensure the final product is as cheap as illicit cannabis, or risk continuation of the black market like in California. High potency cannabis (skunk) should be taxed more than lower potency varieties, encouraging consumers to switch to safer products.

  5. Education: Users should be presented with the latest evidence on the health effects of cannabis at point-of-sale — like in Canada.

  6. Criminal justice: Those currently or previously involved in the illegal cannabis industry should have pathways to transfer in to the regulated, legal market. The Government should also expunge previous cannabis convictions, where appropriate, in order to limit the damage that criminal records cause to the life chances of low-risk offenders.

The government has to be careful during any form of legalisation, the report argues, as the way in which cannabis is regulated in a legal market is almost as important as the debate over its legalisation in the first place.

The Adam Smith Institute suggests that it should be a core aim of reform to: reduce underage and problem use of cannabis; reduce the size of the illegal cannabis market and the various harms it causes; encourage cannabis users to switch to less harmful patterns of consumption; reduce the negative impacts of public cannabis consumption on local communities; inform the general public about evidence of cannabis use.

In order to undermine the power of players in the black market, legal providers will have to be able to compete in a free and competitive market. With drug dealers across the country sophisticated in use of technology and delivery on demand. To keep up, the free market think tank suggests that licensing restrictions on sales should be kept to a minimum, and we should expect delivery on demand and advertising to form part of the legal cannabis economy.

With a commitment to protect young people, improve public health, crack down on violence in our streets, promote social justice, boost tax revenues, and let responsible adults choose whether to use a regulated consumer product; the Adam Smith Institute says it’s time to give a green light to cannabis legalisation.

Daniel Pryor, report author and the ASI’s Head of Programmes, said:

“With most Brits in favour of legalising recreational cannabis, the UK is likely to do so in the next few years. When we do, it’s vital that we learn from other countries who have taken back control of their cannabis markets.

“We should avoid the mistakes of Uruguay and instead involve the private sector: preventing shortages and snuffing out the criminal market through competition between regulated products and different licensed business models. We should embrace Canadian-style efforts to inform people about the health effects of cannabis at point-of-sale and through public information campaigns. And we should shift people towards less harmful ways of using cannabis: taxing high-potency cannabis at a higher rate and making safer alternatives like edibles available as many US states do.

“If we seize the opportunities of legalisation, we can protect children, cut crime, boost the economy, and help adults make safer cannabis consumption choices. Politicians should catch up with public opinion and give the green light to a legal, sensibly regulated cannabis market.”

Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07904 099599.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Privatize the air!

A new paper from the free market, neoliberal think tank the Adam Smith Institute explains how we can boost competition in the aviation industry and why Boris and Hunt must commit to competition when expanding Heathrow.

  • For the first time, there are multiple applications to build the new terminal at Heathrow Airport.

  • Terminal competition — separate construction, ownership, and management for the new terminal at Heathrow — would encourage innovation and lower prices for passengers.

  • Boris and Hunt must commit to competition in the £14bn+ expansion project.

  • Landing and take-off slot auctions — ending the EU’s administrative allocation system that massively benefits incumbents — could enable 16 million more passengers a year, and raise billions of pounds, the ASI has calculated.

  • Auctioning low-altitude airspace corridors for forthcoming forms of transport such as air taxis and autonomous freight drones.

The Adam Smith Institute today calls for a major shake up of competition in the aviation sector, including terminal competition for the first time in the UK, auctions for landing slots to break up cartels and monopolies in the industry and reduce prices for air passengers, and auctioning low-altitude airspace for air taxis and autonomous freight drones to enable the new technology.

The free market think tank explains that competition forces firms to innovate, reduce costs, and be responsive to provide greater consumer benefits. It ensures resources are put to best use. Monopolies lead to stagnation, laziness, overcharging, market manipulation, and higher prices for consumers.

Within aviation, competition has improved from the days of national carrier monopolies, allowing millions of people to fly regularly for their holidays, for work and to see their families. But there is still some way to boost competition and innovation. The free market think tank argues for three recommendations that could radically increase competition, keep the UK at the forefront of the aviation industry, and reduce prices for passengers.

1 - Terminal competition

As the issue of Heathrow Airport expansion makes its way into the Tory leadership debate, the Adam Smith Institute says that separate terminal ownership should be considered. A new terminal at Heathrow could be built and operated by a separate entity, creating competitive pressure to keep expansion and ongoing costs low for passengers. This is the model is used at many leading global airports, including JFK Airport in New York City. There are now two proposals for Heathrow expansion, but no tender-like process to decide which proposal to pursue.

As the sole owner of all the terminals at the congested global hub, Heathrow Airport Limited has substantial market power. HAL’s revenue is capped by the government to a proportion of their total assets. Therefore, the more they spend on expansion and maintenance the more profit they can make. This creates a perverse incentive to overspend and has led to accusations by major airlines of Heathrow ‘gold plating,’ including wanting to charge £74,000 to chop down a tree and £61,000 per car park space at Terminal 2. This results in among the highest costs of any airport in the world for airlines, passed onto consumers in higher ticket prices. Heathrow charges about £20 per departing passenger, and has the second highest operating expenditure per passenger of any major airport in the world. A separate terminal would reduce the ability of Heathrow to excessively charge and overspend.

2 - Slot auctions

The ability for a plane to take-off and land at a particular time — known as a ‘slot’ — is a valuable resource at a congested airport. But EU regulations require these to be given away for free. This system allows the old airlines to hoard slots, preventing new profitable competition in the airline industry. British Airways now has over half the slots at Heathrow Airport. With Heathrow now the government’s preferred expansion plan for a new runway, the of market control by a single airline becomes more stark.

The ASI argues that slot auctions would ensure lead to each slot being used most efficiently and provide opportunities for new and mid-sized carriers to expand; report author Matthew Lesh argues this would help increase market competition, encourage innovation, and avoid arbitrary decision making and political interference.

Slot auctions for Heathrow alone could provide an additional 16 million passengers and giving the country an extra £171.2m of economic benefit every year. This system, endorsed by the Competition and Markets Authority in 2018, would undermine the historic position of larger players and allow new entrants to expand, increasing airline  and increased competition for airlines.

3 - Privatise the air
Air taxis will soon be able to transport passengers from Heathrow Airport to the City of London in 8 minutes and from London to Brighton or Oxford in 23 minutes. Hundreds of hourly take-offs and landings could congest the skies, requiring allocation of scarce air corridors.

Bureaucratic allocation of access to congested airspace would be unresponsive to changing technology, entrench early movers, and lead to inefficient allocation.

The auctioning of rights to operate an aerial travel corridor, at a specific altitude over for a period of time, would deliver efficient use of the space, and raise substantial revenue.

Flying between 200ft to 5,000ft above ground, air taxis and freight could transform the economy in the UK and other developed countries; the global air taxi market has been estimated to become worth between $615 billion and $3 trillion by 2040.

Matthew Lesh, report author the ASI’s Head of Research said:

”From flying taxis to faster and further flights, the future of transport is going to be awesome. But we have to get the policy right to foster competition and innovation. We must not make the same mistakes as the past. The Department for Transport should carefully consider the potential for terminal competition at Heathrow Airport, particularly in the context of competing Development Consent Order applications. The Government should pursue slot auctions to ensure new capacity is used efficiency, delivering more passengers and a big boost to the economy. To prevent the mistakes of the past, the government should also auction airspace for air taxis and autonomous freight drones. This would ensure the increasingly congested space is put to its best use.”

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07904 099599.

Internet red tape strangles free speech & the economy

A new paper by the Adam Smith Institute claims proposed online regulation is a serious threat to freedom of speech and entrepreneurship and argues for a sea change in the Government’s approach to technology post-Brexit:

UK politicians are becoming increasingly hostile to technology, undermining the free speech and innovation that is essential to economic progress

  • The Government’s Online Harms White Paper, which creates a new online speech regulator, is a serious threat to a free internet

  • Platforms—like Google, Facebook, and Mumsnet—must not be made liable for the speech of their users, as otherwise they will be forced to censor swaths of online speech

  • Despite fears about ‘big tech monopolies,’ closer analysis reveals that there is intense competition in the sector, including substantial R&D investment

  • New regulations would create barriers to entry that would hurt start-ups and entrench incumbents

  • A global top 500 company is 10x as likely to set up in the go-getting USA, than over-regulated EU, the ASI has calculated

  • The Government should embrace ‘permissionless innovation’ to encourage entrepreneurship

Technology is improving our lives, connecting people, creating communities, and contributing to Britain’s economy to the tune of £170bn a year. Internet companies alone are estimated to be responsible for 400,000 jobs and 80,000 businesses, and growing twice as fast as the rest of the economy in recent years. A new report, Safeguarding Progress: The risks of internet regulation, by the Adam Smith Institute makes the case for permissionless innovation to be put at the heart of the government’s approach to dealing with the digital economy.

Despite its positive contribution, the internet has been under attack from politicians of all stripes in recent months — from calls for companies to be broken up to the Online Harms White Paper which would create a new online censorship regulator, as well as privacy risks from demands to give security services access to encrypted private communications. The increasingly pessimistic rhetoric about new technologies risks undermining the sector.

The ASI has calculated that a large company is ten times more likely to develop in the United States than in highly-regulated Europe, after accounting for population differentials. The report argues Brexit provides the opportunity for the UK to diverge from the excessively precautionary approach of the European Union, therefore attracting substantial tech investment and creating jobs.

The report calls for a ‘permissionless innovation’ approach, meaning allowing entrepreneurs to experiment with new business models and technologies, and only intervening when there are clear, demonstrable harms to the public.

The ASI argues that the Government should adopt Five Principles for Permissionless Innovation in technology if it wants to achieve an keep an open internet, and our tech industry competitive:

  1. Identify and remove barriers to entry and innovation;

  2. Protect freedom of speech and entrepreneurship by retaining immunities for intermediaries from liability;

  3. Rely on existing legal solutions, the common law, and competitive pressures to solve problems;

  4. Push for industry self-regulation and best practices;

  5. Adopt targeted, limited legal measures for truly hard problems based on evidence.

These principles are adapted from the work of Adam Thierer of the Mercatus Centre at George Mason University.

The report discusses two major regulatory issues facing the sector: liability exemptions for platform intermediates and competition issues.

The report argues that we should continue to see online platforms more as libraries than as publishers, with companies not liable for illegal activity of their users (although should continue best practice working with police and security forces) much like a library is not responsible for the content of the book on its shelves. The platform liability in the EU e-Commerce Directive and Section 230 in the US were fundamental to the development of the internet,

Laws forcing platforms to be liable for user content to restrict hate speech have prompted social media companies to engage in excessively risk-averse moderation, undermining freedom of expression. Threats of fines, jail time and website blocks have perverse, illiberal consequences. Liability would also, according to 72 per cent of tech investors, entrench the global tech giants who have the resources to comply by hiring moderators and developing AI.

Further, the report argues that claims that there is a lack of competition and innovation in the sector are a myth. Online firms compete (e.g. Facebook, Snapchat, Twitter, Tumblr, Netflix Fortnite, Amazon, TripAdvisor) for user attention and in specific product markets. They also heavily invest in R&D, which shows they are not lazy or stagnant as tends to happen in monopoly markets. History shows that concern about monopolies has been greatly exaggerated, as seen with the rise and fall of Myspace.

It is also argued that regulators should not intervene if there is harm to consumers demonstrated by excessive profiteering - that is not the case for tech firms that provide free services for consumers.

Nevertheless, new regulations, such as excessive data regulations, create barriers to entry and excessive costs. This is particularly harmful to startups and small-to-medium sized enterprises (SMEs) that have fewer resources for compliance. Eighty-one per cent of tech investors agreed that ‘policy and/or legislation in order to target specific companies (i.e. global giants) could lead to poor outcomes that inadvertently hurt or hinder tech startups’

Matthew Lesh, report co-author and the ASI’s Head of Research said:

“The UK Government is on the verge of making our internet the most censored and highly regulated of any Western democracy. This is a fundamental threat to our status as a free society and our global reputation as a liberal democracy. The creation of new online speech regulator, as proposed in the Online Harms White Paper, will not only make it harder for start-ups to establish and grow, it will undermine our core right to freedom of expression. Regulating the internet means crushing the internet and dismantling Britain's liberal freedoms.”

Philip Salter, report co-author and Founder of The Entrepreneurs Network:

"The growing burden of tech regulation risks strengthening the market position of tech giants by raising the barriers to entry. Treating platforms as publishers would hit startups hard. Facebook and Google can afford to hire an army of moderators, but their would-be competitors will struggle. While the Copyright Directive risks stymieing creativity, funding and innovation for disruptive tech entrepreneurs. Britain's tech sector is the envy of Europe. If we are to remain a world challenger, we need to up our game and factor in the significant cost of poorly targeted regulation."

Daniel Dyball, UK Executive Director at Internet Association, who represent leading global internet companies, said on the release of the ASI’s new report:

“This report highlights a number of important areas as we look towards the future of the internet and internet policy in the UK. Intermediary liability protections, for example, are fundamental to the success of the internet as we know it. Internet Association is committed to working with the government to find a regulatory framework that deals with genuine concerns about keeping people safe online, while retaining the significant economic and social benefits that internet companies provide to the UK.”

Jim Killock, Executive Director of digital rights organisation Open Rights Group said:

“This report is a timely reminder that regulation can have adverse consequences, especially for free expression. Regulation impacting free speech can have unintended consequences and needs to be cautious. The strong link between free expression and economic innovation is also well described. Policymakers should consider why the UK has lost sight of these important considerations in recent years."

Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07904 099599.