Business Standard: Libertarian Paternalism

by Professor Deepak Lal, Senior Fellow in Globalization of the Adam Smith Institute (30/9/08)

The Nanny State must not be allowed to replace the Planned Economy.

With the ending of political debates about the plan versus the market, Western politicians, particularly on the Left, have been searching for new areas to rouse the political interest of their electorates. Increasingly they have turned to interventions in the previously protected private domain. It began with the attempts by Clinton’s New Democrats and Blair’s New Labour to find a Third Way between collectivism and liberalism. Since this ended in a blind alley, British and US politicians (Obama and Cameron) are embracing a new ruse — “nudging" — to justify their interventionist instincts. This moral paternalism is the subject of this column.

Moral paternalism has a long lineage in social democratic thought, which makes its adoption by the UK’s Tory leader surprising. A clear exposition was provided by the distinguished Oxford legal theorist and philosopher Herbert Hart in a debate with Lord Devlin in the 1960s (Law, Liberty and Legislation, 1963) about the legalisation of homosexuality. Hart upheld Mill’s principle of liberty that an individual is at liberty to undertake feasible actions if they do not harm others, in advocating the legalisation of every consensual private sexual activity. But, he abjured the classical liberal case against moral paternalism, on the specious grounds that individuals are not really free to choose. So while sexual permissiveness is legitimate, all forms of paternalistic supervision or coercion are needed to ensure that all other individual choices are in fact freely made. As these choices are psychologically determined, it becomes imperative to exercise thought control: to make “windows into men’s souls". This is not classical liberalism but the route to 1984 and Big Brother, which classical liberals would eschew.

The most recent manifestation has been labelled “libertarian paternalism" by its progenitors, the behavioural economists Richard H Thaler and Cass R Sustein (in Nudge, 2008). Based on the findings of psychology, behavioural economists have found many anomalies in the standard economic model of an individual’s maximising utility subject to the usual budget constraints. The centrepiece of these findings is the problem of self-control, or akrasia, as the Greeks called it. A divided self is postulated with the short-term myopic self being tempted not to act in the interests of its longer-term rational self. Just as Ulysses tied himself to the mast to prevent his destruction by the voices of the Sirens, it is suggested that “nudges" can help the far-sighted Planner self “to promote your long-term welfare … [which] must cope with the feelings, mischief, and strong will of the Doer [self], who is exposed to the temptations of arousal" (p. 42).

Paternalism is advocated because “of the false assumption that almost all people, almost all of the time, make choices that are in their best interest or at the least better than the choices that would be made by someone else" (p. 9). They are libertarian because instead of coercing people to serve the long-term Planner self, the public and private “choice architects" would merely use “nudges" to point people in the right direction as in the male urinals at Schiphol airport in Amsterdam. These bear etchings of a black housefly, and an economist’s “fly-in-urinal trials found that etchings reduced spillage by 80 per cent" (p.4). But as the economic journalist Tim Harford rightly remarked: “I am no more in favour of spillage than the man standing at the urinal beside me, but how is this libertarian paternalism? ‘We recognise your right to wet your shoes, but in case that is not your objective we will structure your choice environment to help you’" (FT, 22 August, 2008).

But if the ‘nudges’ fail, as in the case of smoking, the State has moved towards coercion.

This is justified by moral paternalists by basing themselves on Mill’s correct argument against a person’s freedom to sell himself into slavery, namely that “the principle of freedom cannot require that the person be free not to be free. It is not freedom to be allowed to alienate his freedom" (On Liberty, Everyman edition, p. 158). Amartya Sen (FT, 11 Feb, 2007) has claimed the smoking ban in the UK is based on Mill’s principles of liberty: “as habit-forming behaviour today restricts the freedom of the same person in the future". But as I and others pointed out, this is a complete travesty of Mill’s argument against slavery (FT, 15 Feb 2007, and especially S Simpson, FT, 2 March 2007). Mill’s robust arguments against bans on addictive substances like alcohol and opium do not mention his argument against slavery as being relevant in any way.

The argument for prohibiting addictive substances, based on assuming a divided self, postulates a negative inter-temporal consumption externality facing potential addicts. Current consumption depends on past consumption but not future consumption. This omission is repaired in the rational addiction models of Becker and Murphy (Journal of Political Economy, 1988). They show how even with inter-temporally inconsistent preferences, consumers maximise utility over their life cycle taking account of the future consequences of their actions in consuming addictive substances.

More seriously, as the economic theorist Dew Fudenberg’s (Journal of Economic Literature, 2006) critical review of behavioral economics rightly notes: “Even if we believe people do make systematic errors in evaluating how various choices will influence the appropriately defined measure of their ‘welfare’, we might not trust that the government or policy analysts would make better evaluations. For this reason, it is consistent to believe both that people make mistakes and that government policy should be based on the assumption people’s actions and ex-ante predictions are the best guide to what is in their own interests" (p.707). Quite!

But, this does not mean that in teaching our children “how to live", they should not be encouraged to exercise self-control and think of long-term consequences. But this is the domain of preachers. There is nothing libertarian about “libertarian paternalism". It is paternalism which should on Mill’s principle of liberty play no part in the public policy of the good society. The Nanny State must not be allowed to replace the Planned Economy.

published in Business Standard here

Slug path

asi-in-the-news/asi-in-the-news/business-standard-libertarian-paternalism

Joomla-id

2208

Old Teaser

The Guardian: Sentamu and the City

by Dr Eamonn Butler, Director of the Adam Smith Institute (September 25, 2008)

The archbishop's criticism of the markets is misplaced; it's governments and regulators that are responsible

I was beginning to like Dr John Sentamu, the Archbishop of York, who seems to have solid views on issues like Robert Mugabe and political correctness. So it's disappointing that he's fallen for the politically correct line on the markets crisis, calling share traders who cashed in on falling prices "bank robbers and asset strippers".

Then, in a pincer-movement of stupidity, I see the Archbishop of Canterbury, Dr Rowan Williams, giving Spectator readers his views about banking regulation. Well I've got a few theories of my own about how Christ fed the 5000, but I don't publish them in the media because I figure lots of people know more about it than me. And the men in mitres should know better than to proclaim such superficial – and wrong – views on finance.

Sentamu told bankers that the financial market "seems to have taken its rules of trade from Alice in Wonderland", and of course he's right. But it's the monetary and regulatory authorities who set these rules, not the players. You've had the Fed dishing out money and credit for the past dozen years, slashing interest rates from over 6% to just 1% as it tried to stave off the alarm of 9/11, the dotcom crash, bird flu, the Russian default, and much else. You've had a British government that's been spending wildly beyond its means. And a regulatory regime so inept that it allows banks to turn one pound of deposits into 10 pounds worth of loans, and then lets other funds ratchet that up even more. It's been a Mad Hatter's tea party right enough, but it's been the authorities who've been inhaling the mercury.

"To a bystander like me", said Sentamu, "those who made £190m deliberately underselling the shares of HBOS … and drove it into the arms of Lloyds TSB, are clearly bank robbers and asset strippers". And in the same vein, Williams backed the curb on short-selling.

That's maybe just how it seems to the uninformed. But short-selling is a risky business. If a £1 stock falls to zero, you make £1. If it rises to £100, you lose a fortune. You need to be thoroughly clued up about the company you are shorting. Short-selling is actually a valuable signal that something is wrong with a company – and that managers or regulators should take action.

When Pakistan banned short-selling back in July, it halted the market's downward drift for a couple of days but had no long-term impact. Nor will ours. It's so easy for pious folk to see a problem and say that more regulation is the answer. Maybe smarter regulation is the answer. But the real bank robbers, who've dipped into our pensions and savings and given the world a decade-long party from which we're now suffering the hangover, are those who were supposed to be controlling this market, not those inside it.

Published in The Guardian here

Slug path

asi-in-the-news/asi-in-the-news/the-guardian-sentamu-and-the-city

Joomla-id

2196

Old Teaser

RTE: Markets shaky over US bad debt plans

Click here to listen to Keith Boyfield, Senior Fellow in Regulation

Slug path

asi-in-the-news/asi-in-the-news/rte-markets-shaky-over-us-bad-debt-plans

Joomla-id

2170

Old Teaser

Los Angeles Times: Europeans on left and right ridicule U.S. money meltdown

 

by Sebastian Rotella and Janet Stobart (September 20, 2008)

 

They list greed and Greenspan among the culprits, and there are comparisons to . . . Albania. But amid the gloating, there is fear for financial systems in Britain, Spain, Italy and elsewhere.

 

LONDON -- It's a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street.

The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.

 

"Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict.

"The system is collapsing, exactly like the Albanian pyramids collapsed," Tremonti said. "The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . . The return of rules is accompanied by a return of the public sector."

On the other end of the political spectrum, among leftists who have long predicted calamity for what they call the "savage neoliberal capitalism" of Wall Street, there were gleeful allusions to the stock market crash of 1929.

"Between the dread of a world in the midst of collapsing and the shiver of pleasure that finally something serious is happening to the kingdom of liberalism, how to orient oneself?" Eric Aeschimann wrote Thursday in the newspaper Liberation, a voice of French intellectuals whose disdain for capitalism persists in the 21st century.

Expressing nostalgia for "the good old days when bankers jumped out of windows," Aeschimann condemned as "extortion" the rescue of U.S. corporate giants by the very state that free-marketeers resent.

But fear accompanied gloating. The crisis threatens to worsen woes -- inflation, unemployment, weak growth -- of regional powerhouses including Britain, Spain and Italy. Joaquin Almunia, an ideologically moderate Spanish Socialist who is the European Union's economic commissioner, offered a simple analysis.

"It has been a problem of greed," he told El Pais newspaper. "In Europe it can't be said that we did nothing, European banks bought toxic products. . . . Nobody knows when this will end."

Anxiety was acute here in London. Britain's FTSE 100 stock index swung wildly this week, dropping about 8% between Monday and Thursday, then rocketing nearly 9% on Friday.

Among the European economies, it is Britain's that most resembles America's in its vulnerability. The big news of the week drove that home: an announced $22-billion rescue-takeover of the wobbling HBOS bank by Lloyd's TSB.

In ordinary times, regulators would have opposed the merger of the giants as anti-competitive. But beleaguered Prime Minister Gordon Brown, whose economic expertise is one of the last arrows in his political quiver, pushed for the deal.

"The financial tsunami that has engulfed Wall Street since the weekend hit these shores yesterday," the Daily Telegraph declared in an editorial Thursday. "It swept away the country's biggest mortgage provider -- and with it, much of the [financial sector's] regulatory machinery. . . . The government has prevented a banking collapse that would have had unimaginable consequences for the economy."

But a more optimistic school of thought saw the week's events as an inevitable period of reconfiguration from which the markets -- and U.S. economic dominance -- will emerge reasonably unscathed.

This analysis gained ground with the strong recovery of European markets Friday.

In addition to the FTSE, France's CAC 40 rose more than 9% and Russia's RTS index jumped 22% after trading resumed after a two-day suspension.

"This time next year we'll be seeing things back to normal," said Eamonn Butler, director of the Adam Smith Institute, a think tank here. "The last thing we need is to slap more rules on the system. . . . From time to time, businesses fail and the worst thing a government can do is to bail them out because that just passes the cost on to the taxpayer and creates a moral hazard."

The spectacle across the ocean has left a lasting impression on many Europeans. Hanna Evers of Berlin, a cellphone retailer interviewed in the shopping district of Wilmersdorfer Street, said she was angry about the amount of money that had been "burned" in recent days.

"And I'm furious when I see the pictures of Americans who thought they were on the sunny side of life and now have lost their homes and have to live in their cars," Evers said. "I definitely do not feel sorry for the bankers who lost their jobs in the last couple of days. I can't believe that a country like the U.S.A. could have been so careless on a money issue!"

"I was taught that the U.S.A. is the motherland of moneymaking," she added. "And now all I can see is a herd of headless chickens running around on Wall Street."

Published in the Los Angeles Times here

Slug path

asi-in-the-news/asi-in-the-news/los-angeles-tmes-europeans-on-left-and-right-ridicule-us-money-meltdown

Joomla-id

2161

Old Teaser

Yorkshire Post: In these hard economic times we need unity and leadership

By Ruth Lea, Senior Fellow, Economy (September 9, 2008)

THERE is little doubt that the economy is skirting recession. GDP, the measure of total economic activity, was flat in the second quarter of this year. And most economic indicators are indicating that conditions are deteriorating.
The highly respected OECD suggested recently that the UK economy would, indeed, slip back in the second half of this year and record two consecutive quarters of "negative growth", which would mean a recession in the technical sense.

A toxic brew of high commodity prices, though, thankfully, oil prices are now easing, and the continuing credit crunch, is driving the economy down. The Bank of England is between a rock and hard place. There is pressure on it to cut interest rates to alleviate the difficulties in the housing market and rising unemployment, but its remit is to control inflation, which is still rising.

The "nice" decade of "non-inflationary continuous expansion", as Bank Governor Mervyn King has described the period from the mid-1990s to the mid-2000s, is comprehensively over.

Contrary to Gordon Brown's hubristic claims at the dispatch box in budget speech after budget speech during this period, these happy economic circumstances were not of his doing but a lucky combination of the economic golden legacy that he inherited from the outgoing Conservative Government in 1997 – and exceptionally benign international circumstances.

It is at times like these, when confidence in the economy is increasingly shaky, that there is a need for a Chancellor in whom we can have confidence. But this cannot be said of Alistair Darling's performance to date. Of course, his problems are not all his doing. Whereas Brown inherited a thriving economy from the Tories, Darling inherited a damaged one from Brown.

Chancellors should, first and foremost, be careful custodians of the public purse. And, secondly, ensure that tax and regulatory systems for all users, whether personal or business, are as easily understood and straightforward as possible.

Alas, Brown, for all his reputation as a great Chancellor, fails on both counts. The public finances are a mess and the tax and regulatory systems, endlessly tinkered with by Brown, are horrendously complex.

The story of Gordon Brown's flirtation with Prudence has been told many times. But, in truth, Prudence was dumped in the early 2000s, when he left her for another. Over the decade from 1998 to 2008, state spending rose in total by more than 80 per cent, significantly greater than the growth in GDP.

Much has been wasted. But waste apart, the public finances, which were heading towards the black when the Brown became Chancellor, are now an
increasing sea of red ink. At the time of the Budget, Darling forecast public borrowing of £43bn for this year. Sadly, it could be nearer to £60bn.

There is now little left in the cupboard, especially after the £2.7bn tax giveaway to compensate losers from the abolition of the 10p tax band. Any further measures to revive the housing market – the recent measures were a £1bn damp squib – and/or help for those in fuel poverty, can only be thin gruel. The economy grew well for a decade and generated considerable revenues. The Treasury's coffers should have been bolstered at that time for spending in a rainy day. Well, it's raining now, and the coffers are empty.

Turning to the tax regime a good indicator of its complexity is provided by Tolley's yellow Tax Handbook, the tax bible. Brown increased tax legislation so much that Tolley's guide has doubled in size since 1997. The cost of complying with this makes our companies uncompetitive and explains graphically why so many are taking the radical decision to up sticks and leave the UK.

Darling cannot, therefore, be blamed for his inheritance. And there is another reason for suspecting that his poor performance is not all of his own doing. The Press regularly carry stories, speculative or otherwise, about interference from, and Darling's clashes with, Number 10.

But having said that, Darling is the Chancellor of the Exchequer and head of the Treasury. The buck really should stop with him when it comes to the handling of economic policy. And it has to be said that, whatever the mitigating circumstances, his tenure at Number 11 is strewn with mishandled issues. They range from Northern Rock, to the taxation of "non-doms", the changes to the capital gains tax regime and the tax compensation package for the losers from the abolition of the 10p band.

Added to which, proposals such as the retrospective windfall tax on energy companies are allowed to run for far longer than they should, suggesting that he is not in control of economic policy. Such events breed uncertainty and, given the current economic climate, are especially damaging to business and economic confidence.

Darling's comment that the economic conditions faced by Britain and the rest of the world are "arguably the worst they've been in 60 years" and will be "more profound and long-lasting than people thought" was extraordinary. Of course, he should be honest about the economy's woes, unlike his predecessor. But such a remark, which bordered on hyperbole, was irresponsible and, unsurprisingly, the already beleaguered pound fell further on the comment.

The economic circumstances are clearly not as poor as they were in the mid-1970s, or the early 1980s or even, yet, the early 1990s.

In troubled economic times, we need economic leadership. The respective incumbents of Number 10 and Number 11 should bury their differences, if, indeed, they have differences, and provide it.

Published in the Yorksire Post here

Slug path

asi-in-the-news/asi-in-the-news/yorkshire-post-in-these-hard-economic-times-we-need-unity-and-leadership

Joomla-id

2172

Old Teaser

The Times: Down wiv school: children are best educated at home

by James Bartholemew, Adam Smith Fellow in Welfare (September, 5 2008)

It is back-to-school this week. All over the country, stressed parents made last-minute dashes to the shops to force children to try on clumpy school shoes. Then they got up early, hurried their children into cars or on to buses, got stuck in jams, arrived later than intended and said a rushed goodbye. Then they found that the children had gone. Relief may have been mixed with melancholy, loss and a hope that the children were all right behind those high windows, told what to do by strangers.

The return to school is a well-established part of the journey of life. It seems normal, right and inevitable. But actually it is none of these things. Yes, it is normal in the early 21st century. But if modern civilisation started about 10,000 years ago, this way of treating children has been “normal" only for the last 2 per cent of the time. It is a new, artificial construct designed to provide education at low cost. It certainly was not created to provide a pleasant or socialising experience for children.

Schools are not clearly “right", either. People tend to think that what everyone does and what they themselves experienced must be right. But there is nothing obviously ideal about delivering your children to other people who do not love them as you do, and who are likely to teach them things with which you may disagree. And sending children to school is not inevitable. Under the law, children must be educated. But they do not have to be educated at a school. There is another way.

Home education is not for everyone - not even a large minority. It is a luxury in most cases. The parent who becomes a home teacher earns no money. There have to be savings, or partners, husbands or wives must be willing to pay the bills. But lots of well-educated wives do not work and could save money by home educating. For those who can find a way, home-educating is a glorious, liberating, empowering, profoundly fulfilling thing to do. Far more people should try it. At present it is estimated that about 50,000 children are taught this way. The number has jumped from a decade ago but is still very few compared with America.

I have just finished two years of teaching my younger daughter, Alex, now 11. We have become very close. Many fathers see their children at supper time and a bit more at weekends. Alex and I were with each other all day, every weekday, in all sorts of places and circumstances. We knew and shared thoughts, ideas and feelings. I believe the closeness that we developed will benefit our relationship for the rest of our lives.

We had enjoyable educational trips to France, Italy and China. Instead of learning about the eruptions of Mount Vesuvius from a text book, Alex and I climbed up to the rim and peered into the still-smoking crater. We visited Pompeii and Oplontis to see the parts of Roman civilisation that had been preserved by the most famous of its eruptions.

One of the beauties of home education is that you can teach children things that you want them to know - some of which are not taught in most schools. I wanted Alex to know something of the origin of the Universe, and astronomy. We studied far more history than schools do, including overviews of Rome, China and Britain. We looked at the Second World War, using DVDs of the superb Channel 4 series on it. We started learning Italian. But all parents would have different ideas of what they want their children to know. You can go for whatever you think important. This is freedom, thrilling freedom. You don't have to teach just what some civil servant in Whitehall has lighted upon and stuck in the national curriculum.

It is strange that children all over the country study the same bits of history - all knowing certain periods and hardly studying outside them. It verges on the totalitarian. With home education, there can be enormous diversity. At the same time, there is nothing to stop one's child taking the same GCSEs and Alevels that others are taking.

But some of the greatest gains from home education are not easily measured or tested. They come from the daily flow of conversation - the times when your child asks you a question and a conversation follows.

You may make an observation, or your child may see something and become interested in it. If that happens, you can encourage the interest. This is developing the ability to think and discuss. It is a big contrast with what happens at school where it is impossible in a class of 25 to chase the individual interests of everyone present or to enter separate conversations. It may even be the case that schools can damage a child's curiosity and enthusiasm for learning. I have seen children totally turned off education and making no attempt to hide how bored they are.

The widespread concern is that a home-educated child misses out on “socialisation". But I have never heard anyone offer any evidence for this. As far as I know, the evidence from America is rather the other way - home-educated children are better socialised. We know that young children left in inferior nurseries and not given much attention can get withdrawn or aggressive. It is possible, to put it no higher, that being left at school and not given much attention can, in some cases, have a similar, if milder, damaging effect on older children.

You don't have to educate a child for all his or her years of learning. It could be for just one or two. Several teachers have told me that they would love to take their children on a round-the-world journey, perhaps when their offspring are aged somewhere between 11 and 14. I would recommend it.

Home education, however you structure it, can bring you and your child closer together. You can both learn. You will have shared experiences that will enrich your relationship for ever. Yes, there will also be arguments and tears. But children and parents who never experience it are missing out badly.

Published in The Times here

Slug path

asi-in-the-news/asi-in-the-news/the-times-down-wiv-school-children-are-best-educated-at-home

Joomla-id

2078

Old Teaser

Telegraph.co.uk: Alex Salmond has the wrong answer on council tax

by Douglas Carswell (September, 4 2008)

Anything Alex Salmond says seems to trigger knee-jerk hostility from some. But personally, I think he is on to something.

Salmond seems to grasp what many in the political establishment - north and south of the border - would rather ignore: the council tax system is unsustainable.

As a way of raising money to pay for local services, it's unfair. Worse, it's extraordinarily undemocratic. How a community votes in local elections has almost zero bearing on what rates of council tax them pay - and what local services are provided. With £3 out of every £4 spent by local councils coming from central government, under the current system, town halls are satellites of Whitehall.

No wonder most people no longer part in local elections. They are not apathetic. Rather they have perceptively clocked the fact that there is no real local democracy worth participating in.

If Salmond understands the problem, he is less convincing in his solution. In what sense is an across-the-board 3p surcharge on income tax, a local tax? In the jargon, it'd merely be a locally hypothecated band on top of national income tax. In plain English, it ain't local. Moreover, there would be profound problems with accountability.

My own preferred option is for a local sales tax, not a local income tax. In a paper I wrote for the Adam Smith Institute, I showed how one might convert existing VAT into a local sales tax.

My idea has several advantages over the Salmond plan: it would convert an existing national tax into a local tax; it would allow local variability; and it would encourage tax competition.

Those who object to my idea for a local sales tax often suggest Britain is "too small" for separate tax jurisdiction. Like New Hampshire or Vermont or Maine, you mean? The fact that people might be able to shop around between different county and metropolitan tax jurisdictions is one of the advantages in the scheme - not a reason against it.

Others worry it would mean a greater burden on business. Not true. Having scrapped VAT, businesses would no longer be compelled to act as an unpaid army of tax assessors for central government. The local sales tax would only be levied at the point of retail, axing a forest of paper work in the process.

Others fret that replacing VAT with a local sales tax would be incompatible with our existing EU treaty obligations. Suits me.

Commentators often suggest that the internet will have a revolutionary impact on politics - without necessarily realising what these changes will actually mean. The internet will remove barriers to entry in politics, and allow more competition, just as in business and commerce.

But it'll also "aggregate". In non-techie speak, that means bring together lots of people with common interests. When a few dozen people refuse to pay their council tax, they have a problem. If tens of thousands together refused, the state would have a problem.

However wrong it would be, a web-based council tax strike is no longer quite so unthinkable - but we must not leave it up to Alex Salmond to think up the tax's alternatives.

Published by the Telegraph here

Slug path

asi-in-the-news/asi-in-the-news/telegraphcouk-alex-salmond-has-the-wrong-answer-on-council-tax

Joomla-id

2084

Old Teaser

Telegraph.co.uk: The BBC should not be publishing Lonely Planet guides

by Eamonn Butler (1 September 1 2008)

Disappointed at the last licence-fee settlement, BBC executives have been striving to boost the Corporation's commercial income instead. And in the process they have been annoying rather a lot of businesspeople.

Private-sector online content providers have been complaining at the unfair competition posed by the BBC's huge, tax-subsidized website. And now Tony Elliot, the founder of listings magazine Time Out and its associated travel guides, is livid at the Beeb's acquisition of rival travel guide publisher Lonely Planet through its commercial arm, BBC Worldwide.

When taxpayer-funded corporations start competing with private companies, the danger of unfair competition is obvious. Public funds are intended for public purposes. If private providers can do the same job - or better - the state should stick to its knitting and let them get on with it. We don't need a state-backed magazine publisher any more than we need state supermarkets.

BBC Worldwide wields a great brand, the BBC name seeming to guarantee both accuracy and quality. And perhaps because of that, it is booming, with profits last year of £118m on a turnover of £916m.

But it is properly a commercial enterprise and should be privatised. Of course, if the new owners wanted to keep the BBC brand - and overcome charges of living off something that rightly belongs to taxpayers - they would have to pay generously for it.

Let's start the bidding at £2bn, though it's probable that the final price would be a lot higher than that.

Published in telegraph.co.uk here

Slug path

asi-in-the-news/asi-in-the-news/telegraphcouk-the-bbc-should-not-be-publishing-lonely-planet-guides

Joomla-id

2041

Old Teaser