Telegraph.co.uk: Free markets promote good morals

By Eamonn Butler (August 29 2008)

Nick Spencer of Theos complains that the Right's "almost monomaniacal focus" on markets "has blinded it to the fact that the market does not necessarily foster ‘good character' and may, if allowed to eat its way through communities and civil society, actively destroy it."

Now I'm as strong a believer in paying unto Caesar as Nick is: there are some things - like St. Augustine's "corporately felt commitments and unarticulated impulses" (what we might call community spirit and human decency) - that are simply outside the market sphere.

But far from eroding such virtues, the market actually promotes them. It rewards us for providing the goods and services that other people need, and it rewards them for providing what we need. It's a vast, efficient, worldwide mutual-cooperation device. And to enjoy its full benefits we have to obey its rules - treating others with honesty and respect.

When resources come through the state, however, such civility and good character evaporates: reward comes not through cooperating with others, but by promoting your claim above theirs an elbowing them out of the way.

Markets are also about choice. They give people options, both in the range of goods and services they strive for, and in the way they choose to deal with others.

And from that, we learn. People need choice to grow - economically, politically and morally. A government that tells us how to behave and what we will consume produces a society of ciphers, not a civil society in which "good character" might develop.

Published by telegraph.co.uk here

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Telegraph.co.uk: Some privatisations for Gerry Grimstone to consider

by Eamonn Butler (August 28 2008)

You know the economy must be bad when even Gordon Brown decides to sell off some of the family silver to plug the hole in the Government's finances. As the Sunday Telegraph reported, he has hired Standard Life chairman Gerry Grimstone to help him sell a large number of his precious state assets.

It's a daunting job, but Grimstone, someone who has overseen perhaps 20 privatisation deals, is just the man to do it. In Mrs Thatcher's Treasury he was put in charge of privatisation policy, and in the private sector he carried on structuring more state sell-offs.

Fortunately, a lot of the work has already been done for him. Last April, in the Adam Smith Institute's Privatization: Reviving the Momentum, city analyst Nigel Hawkins identified a whole list of privatisation targets that should bring in a cool £20bn or so.

Grimstone might like to start with the Royal Mail, worth about £4bn in itself. Other countries' post offices are booming since being privatised, so we don't we liberate ours from the state too?

Then there's BBC Worldwide, a back catalogue of programming which would bring in another £2bn at least. He could throw in Channel 4 for another £1bn or so.

Among the utilities there is Scottish Water, £5bn, Glas Cymru £4bn, and Northern Ireland Water £1bn, British Energy and the atom company Urenco would net a useful £10bn. Then there's air traffic control, the trust ports, the Commonwealth Development Corporation, and the state betting shop, the Tote.

Published in Telegraph.co.uk here

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1962

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The Times: Immigration to make Britain Europe’s most crowded nation

by Rory Watson in Brussels and Richard Ford (August, 27 2008)

Britain is set to become Europe’s most highly populated nation within two generations, driven by immigration.

Forecasts published by the European Commission suggest that Britain will overtake Germany within 50 years as the population rises from 60.9 million today to 77 million.

The projected 25 per cent increase triggered renewed calls for the Government to stem the flow of immigration, which has surged since Labour came to power 11 years ago. Increasing population, together with a rise in the number of elderly people, will heap further pressure on public services, particular the NHS.

Dominic Grieve, the Shadow Home Secretary, said that the report showed a coherent strategy was needed to deal with population growth. “This not only requires an annual limit on immigration, which takes into account its impact on the public service infrastructure and cohesion," he said, “it also requires us to tackle other issues like family breakdown which have a direct effect on resource use in our country, as well as to improve our skills base."

A Home Office spokesman said that the Government was introducing a points-based immigration system to ensure only those individuals that Britain needed could come here to work or study. “The points system is flexible, allowing us to raise or lower the bar according to the needs of business and the country as a whole," he said.

The latest figures suggest that the number of people over the age of 80 in Europe will almost triple from 22 million to 61 million within 50 years, when there will be two people of working age to support every pensioner. The current ratio is four to one.

While Britain’s population is set to rise by a quarter, the biggest increases will be in smaller countries. The population of Cyprus will rise by 60 per cent and those of Ireland and Luxembourg by more than 50 per cent, the Commission estimates.

The population of France, which has the highest birth rate in Europe, will increase to 72 million, while Spain will grow from 45 million to 52 million. Germany, by contrast, will shrink from more than 82 million inhabitants to about 70 million, because of a trend towards smaller families.

The populations of 14 of the EU’s 27 members are expected to be smaller in 50 years than now. The most significant changes will be in countries that have joined the EU only recently. The population of Bulgaria is forecast to fall by 28 per cent, Latvia by 26 per cent, Lithuania 24 per cent, Romania 21 per cent and Poland 18 per cent.

EU statisticians predict that within seven years deaths will outnumber births and that the only source of population growth will be migration as people on Europe’s eastern and southern flanks look to improve their lot by emigrating to the Union.

In the short-term, the number of citizens in the EU is expected to rise from 495 million today to 521 million by 2035. But from this peak, it will gradually decline to 506 million in 2060.

A European Commission spokeswoman said: “We are concerned with finding out whether our member states will be able to pay for the costs linked to ageing, and whether future generations will not be overburdened."

Tom Clougherty, the policy director at the Adam Smith Institute, said that the projected 25 per cent increase in Britain’s population would have a significant impact on infrastructure and public services. “The main implications will be for housing and transport, both of which are already in short supply," he said.

“In the former, we have a market that is restricted by planning regulations, preventing developers from meeting demand, while in the latter there has been a lack of government investment."

Public services would also come under strain. “In healthcare the rationing that we are seeing already is likely to get worse," he said.

However, John Salt, from the Migration Research Unit at University College London, said: “I do not think anybody is really in a position at the moment to plan for what is likely to be happening in 50 or 60 years time. There are too many variables. For instance, we do not know how long the present trend on net migration is going to continue."

Published in The Times here

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1959

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Business Standard: The politician's tragedy - From hubris to nemesis

by Deepak Lal, Senior Fellow in Globalization (August 26, 2008)

Manmohan Singh is the sort of hero that Homer knew — a man of strength, courage and wisdom.

Observing the political scene two phenomena are notable. First, that academic political social science’s claims to be able to predict political outcomes through quantitative analysis are little more than statistical snake oil (see my April column). Second, that many political careers have the lineaments of Greek and Shakespearean tragedy. This column is about this politician’s tragedy.

Political scientists as well as many historians remain sceptical of the role of individuals in determining political outcomes, relying instead on deeper social and economic causes. For them the Greek tragic sense, also embodied in Shakespeare’s tragedies, is an archaic and irrelevant form of explanation. It is useful to see how this has come about. There is no better guide than the eminent literary critic George Steiner, whose 1961 book on The Death of Tragedy I have been rereading.

The Greek tragic sense of life asserts that “the forces which shape or destroy our lives lie outside the governance of reason or justice" (p. 4). The Fates govern human lives. Amongst them is Lachesis, chance, the element of luck that a man had a right to expect. But, he can suffer from hubris: through offending the moral law or overweening pride. Such imprudent mortals were pursued by Nemesis — the divine anger — and destroyed.

This Greek tragic sense, Steiner argues, is alien to the Judaeo-Christian sense of the world, which sees Jehovah as just, even in his fury. Not only are the ways of God just, they are also rational — a view strengthened by the Enlightenment, particularly Rousseau. “The misery and injustice of man’s fate were not … the consequence of some tragic, immutable flaw in human nature … The chains of man ... were man-forged. They could be broken by human hammers" (p. 125). Marxism inherited this Judaeo-Christian and Enlightenment insistence on justice and reason. Marx repudiated tragedy. “Necessity," he declared, “is blind only in so far as it is not understood." Tragic [Greek] drama arises out of precisely the contrary assertion: necessity is blind and man’s encounter with it shall rob him of his eyes, whether it be in Thebes or in Gaza" (p. 4-5). The end of this Greek sense of tragedy in the modern world was replaced by the “rationalist" pretensions of political science and sociology.

Now consider how the Greek sense of tragedy still imbues some recent political careers.

The first is the fall of Margaret Thatcher, and the consequent banishment of her party to the political wilderness for over a decade. Her hubristic moment came with the introduction of the Poll Tax. This gave the opportunity for her political assassination by her colleagues. But, as in Julius Caesar, their resolve, self-belief and hold on power were undermined, as was Brutus’ by Caesar’s ghost at Philippi. Only with the retirement of that whole generation of Conservative conspirators has the party finally escaped the stain of her assassination.

The second example of hubris followed by nemesis is the embattled Labour prime minister, Gordon Brown. He achieved his life time ambition last June — albeit by a coup against his elected predecessor — and glowed for a few months in public adulation, as he dealt with Biblical style afflictions: floods and terrorist attacks. His position seemed so unassailable that every one thought he would call a snap general election last October, which he would have won, legitimising his ascent to the top of the greasy pole. But then like Hamlet, he prevaricated. Since then, his and his party’s poll ratings have plummeted. Conspiracies to assassinate him politically are rife. Watching him lurching, bruised at PM’s Question Time in the weekly joust with David Cameron, who like the legendary Mohammad Ali seems to “float like a butterfly and sting like a bee", one forgets that as a young opposition politician he was a formidable debater. Though his claims to have abolished the trade cycle, and to being the greatest Chancellor since Gladstone, can be looked upon as tempting the Fates, he can hardly be blamed for Britain’s current economic woes. His current woes defy a rational explanation. It does seem like hubris followed by nemesis.

The third exhibit is Pervez Musharraf. Two years ago, his position seemed unassailable. He was triumphantly promoting his autobiography on the steps of the White House. He had deftly made himself indispensible in the US-led War on Terror, even as it now seems the ISI continued to be involved in promoting the Taliban’s resurgence in Afghanistan. His moves for a rapprochement with India on Kashmir, and attempts to counter Islamist influences at home, seemed to augur well for making Pakistan a “normal" secular Muslim country like Turkey. His well-chosen technocratic economic team engineered an economic boom, albeit on the basis of large inflows of foreign aid. Then, inexplicably, he decided to sack the Chief Justice of the Supreme Court, and the rest is history. No rational explanation seems to explain this change in his fortunes, except hubris followed by nemesis.

A final, but less politically weighty example is provided by Manmohan Singh’s coalition partners (in particular Comrade Karat), who have exercised power without responsibility. Having over-reached themselves on the US-India nuclear agreement, they find themselves on the way to being consigned to the dustbin of history. Hubris, bred of their sense of electoral indispensability, has led to nemesis: no more dining at top tables, or being wooed by the TV channels!

The Greeks, however, also believed in heroes. Homer saw the Greek hero as a man of strength and courage or one who was especially venerated for his wisdom. India today has such a hero — Dr Manmohan Singh. He has in his two terms of political office saved India from the economic, and (if the Indo-US nuclear deal is completed) the foreign policy morass in which India had been mired. Being an accidental politician he will, hopefully, not suffer from the politician’s tragedy.

Published in the Business Standard here

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BBC: Eamonn Butler on The Westminster Hour

Click here to see this item on the BBC website.

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1979

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The Scotsman: Business Miscellany

(23 August 2008)

CATCH UP ON THE WEEK

MONDAY

THE UK faces recession in the next six to nine months, particularly if interest rates are not cut, the British Chambers of Commerce warned, referring to a "difficult and risky climate". UK growth will be slightly negative or zero in the next two or three quarters. It said a major recession is unlikely.

TUESDAY

STERLING continued its dramatic fall against the dollar and slipped versus the euro after Bank of England policy maker Tim Besley, left, said inflation will fall by the end of next year, adding to the case for interest rate cuts. The currency extended its longest sequence of declines against the dollar in more than 37 years. Increases in food and energy prices are likely to slow.

WEDNESDAY

BAA, the airports operator owned by Spain's Ferrovial, was told by the Competition Commission that it may have to sell either Edinburgh or Glasgow airport. It may also have to sell two of its three London airports – Heathrow, Gatwick or Stansted – to end its near monopoly. The ruling will be subject to a consultation process, but is likely to be rubber-stamped by the commission in a final report due early next year.

THURSDAY

RETAIL sales increased by 0.8% last month, according to the latest figures from the Office for National Statistics. The unexpected jump went against analysts' predictions of a 0.3% drop and called the scale of the consumer slowdown into question.

FRIDAY

OIL briefly rose above $121 a barrel on mounting tension between the US and Russia, boosting European energy stocks but hurting Government bonds as inflation worries resurfaced. The rise follows similar hikes in crude prices which have gained more than 6% amid tensions over Russia's military intervention in Georgia. There is speculation that Saudi Arabia may halt the increase in production, made after appeals from the US and Britain, to increase supplies.

GOOD WEEK

Sir Martin Sorrell The chief executive of WPP, the world's second-largest advertising company, shrugged off the economic slowdown in the United States, the UK and Europe to report a 15% rise in first-half profits.

BAD WEEK

Colin Matthews The chief executive of BAA was left reeling after the Competition Commission announced plans to break up the airports operator.

WORDS ON THE WEB

"The latest economic growth statistics, which show that growth in the second quarter stood at a less-than-impressive 0%, deny Brown one of his proudest boasts, that the UK economy's enjoyed '63 quarters of successive growth'."

Peter Hoskin, www.spectator.co.uk/coffeehouse/

"Water, it seems, is the new frontier in environmental campaigning. The WWF has released a report entitled UK Water Footprint: the impact of the UK's food and fibre consumption on global water."

www.adamsmith.org

QUOTES OF THE WEEK

It's not getting any worse."

Mike Farley, group chief executive of Persimmon, the UK's biggest housebuilder, who said that after a collapse in sales in April volumes had stabilised.

"I've been celebrating all morning. This is the best decision in the history of aviation ever."

Michael O'Leary, chief executive, Ryanair on the Competition Commission's provisional report which suggests that BAA should sell three airports.

"I'm willing to sit down with them again, but I want to talk to them privately. I don't want to conduct it in the media."

Richard North, chairman of Woolworths, defending the decision to reject an offer from Iceland founder Malcolm Walker

Published in The Scotsman here.

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1980

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Spectator.co.uk: On Britishness

by Tim Worstall (21 August 2008)

Sounds like things are all well and good in Britannia's realm:

Britons lack "national purpose" according to a study which found that most people prefer to spend their Bank Holiday watching television or surfing the internet rather than celebrating the country's heritage.

Excellent, there's nothing more repellent than a "national purpose". We hire the State to do for us the things that must be done both collectively and with coercion. To solve free rider problems more than anything else.

This doesn't mean that said State is then invested with all our hopes and dreams, nor that there is any destination in mind: certainly not that we should all agree on said destination or purpose.

Get on with defending the place, providing a criminal justice system and leave us all alone seems to be the populace's opinion and there's really not a lot more British than that.

But only 55 per cent of those quizzed by Mintel thought there should be another Bank Holiday between the end of August and Christmas, and only 50 per cent said it should celebrate Britishness.

Sadly, we still seem to have 55% of the population entirely deluded. As my colleagues over at the Adam Smith Institute have been arguing for years, we don't want more Bank Holidays, we want to abolish the very concept. Simply add the days to annual leave allowances and let people take them as, if and when they will.

This however is entirely bizarre:

The survey of 2,000 adults found that only half think there should be a special day each year in honour of Britishness, and fewer than a third want street parties and festivals such as those enjoyed across Europe.

There are street parties and festivals across Europe celebrating Britishness? Entirely apt of course, something very much worth Johnny Foreigner aspiring to but are we sure that these aren't laments for not having won the lottery of life by being born British?

Published on Spectator.co.uk here.

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1981

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The Guardian: Will the internet kill thinktanks?

by Richard Reeves (20 August 2008)

It has been a difficult couple of weeks in thinktank land. First the Smith Institute was rapped over the knuckles by the Charity Commission for allowing itself "to become exposed to concerns it had supported government policy and was involved in party political activity inappropriate for a charity" – and lost both its chairman and director. Then Policy Exchange, described as "David Cameron's favourite thinktank", issued a report suggesting that the population of the north may be better off being shipped down to new towns in the south. Tim Leunig, the report's co-author admitted some of his ideas might seem "barmy": and in this, at least, he was right.

Both incidents point to a constant tension for all the thinktanks, which is how they position themselves politically. Under charity rules they are banned from engaging in party politics, but through their choice of personnel and subject matter it is usually clear where they stand. It would be madness to deny, for example, that the Institute for Public Policy Research is close to the Labour party when its alumni include David Miliband, Patricia Hewitt, Yvette Cooper, James Purnell and Dan Corry (current head of the No 10 Policy Unit). Likewise Policy Exchange and the Conservatives: two of its last three directors, Anthony Browne and Nick Boles, now work for Boris Johnson while the third, James O'Shaughnessy, is now policy director for David Cameron.

Thinktanks exist to bring fresh ideas to bear in policymaking and politics. They win their influence either through intimacy with their principal political "clients" or through independent technical expertise. They are listened to either in the way that you might listen to your spouse or your GP. The intimacy model guarantees media coverage because political journalists can easily make a story out of a report from a thinktank that represents a particular party or faction within a party. But this is a double-edged sword, as Policy Exchange discovered to their cost last week. In reality of course, thinktanks strike a balance between the two, and most aim to be critical friends of their political soulmates rather than getting into bed with them.

At the same time, it is inevitable that the shifting sands of politics will ensure that there is at least one "hot" thinktank, the one associated with the coming forces in politics and which finds it easiest to raise money – and raise a stink. Right now the thinktanks closest to Cameron are enjoying these mixed blessings; but IPPR, the Adam Smith Institute, the Centre for Policy Studies and Demos have all had their moments in the sun, too.

Looking forward, the erosion of the lines between the parties in many areas of policy and ideology suggests that a looser relationship to specific political groupings might be appropriate: Demos, for example, aims to be intensely political but not party-political. So long as a thinktank is clear about its intellectual centre of gravity, it ought to be able to engage with politicians from across the spectrum.

Some are now wondering whether the whole thinktank model is bust. The Labour minister Jim Knight suggests on his Facebook page that thinktanks, "ultimately very elitist top-down institutions populated with very bright people who politicians sometimes seem to sub-contract their thinking to", are out of date in an era of online networking, blogs and wikipedia. "Network-enabled policymaking" may replace boring old thinktank reports, he says.

The transmission, testing and collision of ideas in an environment with the immediacy of the web is certainly a huge challenge for thinktanks: but surely an opportunity too. So long as think-tanks can demonstrate real expertise – be "elitist" in the best sense of the term – they should welcome the heat of online debate.

And right now the political environment is an attractive one. Labour is trying to renew itself in office, a difficult task akin to fixing a car while driving it. The Liberal Democrats are anxious to build a distinctive political identity. And the Conservatives are searching for new ideas and intellectual frameworks to help them win and use power. So long as politicians are hungry for ideas, thinktanks have a bright future.

Published in The Guardian here.

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1982

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Telegraph.co.uk: How can the Government engender trust in road pricing?

By Eamonn Butler (August 18 2008)

We pay for the particular clothes we choose to wear, the particular home we live in, and the particular foods we eat. So why should we pay for roads any differently?

At present, those of us who choose to drive on busy city streets in the morning and afternoon peaks, contributing to congestion, pay just the same 50p a litre as Sunday-afternoon drivers on wide-open rural roads. It gives people no incentive to use roads like the scarce resource they are.

That's why I'm in favour of road pricing. It would alert people to the real value of roads. Users would be more aware of the congestion, noise, accidents, and stop-start pollution that their peak-time road use impose on everyone else. And it would make road planners more precisely aware of where motorists were actually prepared to pay for new and better roads.

Yes, there would be winners (mostly in rural areas) and losers (those in cities whose travel times were inflexible). But user charging, for roads or anything else, is a more rational funding mechanism than indiscriminate taxation.

However, the fact that over a million people signed a petition against road pricing shows that the public just don't trust politicians to make road pricing fair. They think it will be an additional tax, not a substitute for car and fuel taxes.

They don't believe that the authorities will give them alternatives to the car, like better public transport or better cycle paths and walkways. They don't believe that politicians can be trusted with the knowledge or where and when they use the car.

And yet, we need the many benefits that road pricing can produce. So how the system be made trustworthy?

Easy. Get politicians out of it. Put the roads into the hands of an independent roads trust, answerable to road users rather than politicians and officials. Something like was proposed, in fact, when the "road fund" motoring tax came in.

Ensure it provides alternatives to those who want to stop using their cars on the high-priced, peak-time, congested roads. Let it spend the revenues on road improvements where drivers demonstrate that they are prepared to pay, rather than where politicians think a new bridge might win votes.

That - and the prospect of traffic flowing freely once more - might just restore confidence in the idea.

Published by telegraph.co.uk here

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