In a follow-up I’ll examine how the left can respond.

Unfortunately, unless it starts with “buy three newspapers and a TV channel” I fear it’ll be doomed to failure from the start. It’s about hearts and minds – specifically, repeating lies often enough and from enough different places that people can’t pick them out any more. And that takes money, organisation, and slavish discipline – and guess what the right have always had much more of than the left?

As someone who runs a (non-political) think-tank I should want to agree with you. The implication that think-tanks can set agendas by pumping out reports to a compliant media is tempting (and would help attract funding). There is certainly some truth in the accusation that journalists fail to treat think-tank reports with proper scepticism. They are often based on narrow and selective evidence which is treated as academic standard and objective research.
However, most think-tanks that you mention are very clear about their ideological bias. (Although Tax Payers Alliance oddly pretends to some kind of representative status – surely we are ALL taxpayers?) Many of them spent decades in the wilderness when their point of view was out of fashion and out of power. In the run up to 1979 there was a real sense that a few right-wing think-tanks had helped make a real and significant shift in Conservative thinking, but most of the recent reports you cite are hardly mould-breaking.
These days I suspect that political think-tanks are really just extensions of Party research departments. They provide a space to think aloud about ideas that are too awkward for civil servants or MPs researchers. This might be seen as a Good Thing rather than a conspiracy.
The task for the Left is to come up with think-tanks of its own that can produce ideas that achieve that impossible think-tank ideal: to be both relevant to the age, but innovative enough to promote change.
ippr and Demos have struggled to do that in recent years, partly because they might have got too close to those in power. Perhaps opposition is what they need?
cheers
Charlie Beckett
Director, Polis
LSE
http://www.polismedia.org

Look the right has 5 powerful tools.
1, The vast majority of the press and journalists (from Cohen to Moore).
2. Most broadcasters are right of centre but have to modify their views because of OFCOM. This will soon be finished,So get ready for most broadcasters to be fox news like.
3. They do have most of the middle classes, the opinion formers, behind them.
Therefore more likely to take up their ideas
4. They have money. The finance from bankers, Conrad black, Rupert murdoch and industrialists is more likely to set up or back right wing think tanks.
5. The vast majority of blogs are right of centre fro Martin Brights to Iain dales.
The left is dead.
The real battles will be between the secular and religious right. The paleo and neo conservatives. The wet and Thatcherites conservatives.
As for think tanks most are closed minded vehicles that have an objective and then get together dubious evidence to prove the point. I would have more sympathy if it was the other way round.
Also to work in a think tank is the profession of unemployable academics, politicos and media types.
Most of who would bottle it in industry or the real world

Thank you, that’s very encouraging.

But I just wanted to briefly correct this: “They have money. The finance from bankers, Conrad black, Rupert murdoch and industrialists is more likely to set up or back right wing think tanks.”

The left-wing think tanks are generally far better funded than their right-wing equivalents. See this survey, granted it is from the Telegraph but I don’t think anyone would dispute that these figures were roughly right:
http://www.telegraph.co.uk/news/newstopics/politics/1576447/The-top-twelve-think-tanks-in-Britain.html

While the gap may have shrunk since then, it will not have disappeared or reversed, and the same pattern exists in the United States (left-wing think tanks have more money). Media bias is a longstanding debate, and personally I think it is very hard to argue broadcasters are biased right, but think tank funding definitely doesn’t lean right.

Matthew: rubbish.
The Adam Smith Insititute is as big as several as these think tanks put together. The Torygraph decided to leave it off their list (to make the reality look less biassed than it is?).
Plus: most of the ‘left’ thinktanks on this list were just New Labour (i.e. govt-leaning) outfits, without any serious left or green credentials at all.

It seems clear to me that a central plank in the coalition’s ideology,”markets do it better” is driven purely by ideology rather than actual evidence, at least when it comes to the NHS?

Market driven solutions have become increasingly prevalent in health – starting with out-sourcing of ancillary services like cleaning, catering, and laundry before moving on to clinical services such as;
ISTCs;
http://www.hospitaldr.co.uk/features/istc-programme-at-a-cross-roads-over-damning-evidence

PFIs;
http://www.guardian.co.uk/commentisfree/2009/sep/23/pfi-construction-bid-rigging

Out-of-hours GP care;
http://www.guardian.co.uk/society/2010/feb/04/out-of-hours-care-overhaul

Yet not only have these initiatives proved MORE EXPENSIVE but have resulted in lower clinical standards than comparable services provided within traditional models of NHS health care.

The evidence highlighting these deficiencies is accumulating before our very eyes, yet right wing think tanks prefer to ignore it, perhaps because they remain blinded by their own ideology, one that seems to put the needs of shareholder before that of the patient?

In late 2009 the philosopher Slavo Zizek …….zzzzzzzz

and if, instead, the “ruling ideology” did place the blame on “global capitalism” instead of “secondary and contingent deviations”, what then? Because it sounds very profound and important, but actually it means fuck all. Let’s say it’s agreed: the financial crisis happened “because of capitalism”. What now? And actually, much mainstream analysis does more or less say “this kind of thing is inevitable under capitalism” and the focus is on adjusting the “secondary and contingent” in order to reduce the frequency and severity. Personally I find trying to figure out which “secondary and contingent” thing went awry and how to change them a rather more useful exercise than sitting back an announcing grandly that “global capitalism is to blame”.

The events of the last six months seem to suggest that this task has been accomplished

No … you mean the Conservatives haven’t come to power determined to overthrow global capitalism? I don’t see much connection between the deficit and cuts, and the financial crisis. One could blame “global capitalism” for the crisis, and still choose to cut government spending and try to shrink the deficit quickly, or one could shrug off the crisis as being caused by a few “secondary and contingent” details, and advocate stimulus and deficit spending. I really don’t know how you are connecting the events of the last six months (the cuts) to the “who’s to blame for the financial crisis” point in your last paragraph.

Actually, I think things are worse than you suggest. Rather than keep focused on those “secondary and contingent” factors (some of which could mean radical changes) politicians and the public seem to have gotten bored and forgotten about the whole shebang.

The parameters of political debate have been narrowed so dramatically that ‘dealing’ with the ‘fiscal crisis’ has become a near-unchallenged motif which is always reinforced by the central maxim of the neo-liberal era: there is no alternative.

How many central maxims does neo-liberalism have? I’d just like to keep track.

Look, we do have a fiscal crisis that does need dealing with. Having government spending too far in excess of government revenue is a problem for left wingers too you know, this is not some deception pulled off by the “ruling ideology”. And rather than accepting that there is no alternative to cutting like the ConDems are doing, everywhere I look I see people arguing the cuts are unnecessary and damaging.

Of course politicians try and portray things like the policies they have chosen are so much better than the alternatives that there is effectively no alternative. Especially when doing things like cutting. What do you f-ing expect, a message: we’re cutting your budget by 25%, “but there’s no real need to”? Please explain in plain language what all this grand theorizing of yours about ideology, motiffs etc. is adding.

And yes, the main parties, or the mainstream politicians all talking about having to cut the deficit. That’s mainly because a) we’ve got a sodding great deficit and b) that’s what polls well. Again, what’s your point?

[oh yes, also: right wing think tanks in acting like right wing think tanks shocker]

Government will have to do less; and what it does do it will have to do better and at a lower cost……….they have argued for a 27% reduction in Whitehall and QUANGO staff……….removing politicians entirely from whole swathes of public life……….Kenysianism as “a “crude and out of date view”………they have published a Town Hall Rich List naming and shaming highly paid public sector workers

What’s not to like?

Mark Carrigan is doing a part time PhD in Sociology at the University of Warwick

Ah. I see.

Rupert Read,

“The Adam Smith Insititute is as big as several as these think tanks put together. The Torygraph decided to leave it off their list (to make the reality look less biassed than it is?).
Plus: most of the ‘left’ thinktanks on this list were just New Labour (i.e. govt-leaning) outfits, without any serious left or green credentials at all.”

It appears you are just woefully misinformed. The ASI is one of the smaller right-wing think tanks.

But, of course, if you redefine “right” and “left” enough you can get any answer you want. I could just as easily say that Policy Exchange is “Cameroon (i.e. govt-leaning)” without any serious right-wing credentials at all. It gets pretty meaningless.

A&E @ 5

PFI’s and outsourcing are not examples of free markets at work- they are policies that come from the state or it’s beaurocracy when they want to defer or lower costs.

I entirely agree with you that they are wasteful and pernicious.

The use of free markets to improve the quality of the Health Service would follow a quite different model.

[9] but they ARE examples of private providers running NHS state service.

Why should this be?

I think there are two main reasons;
[1] as suggested above – there is a blind belief that non-state providers are bound to be cheaper and more efficient (despite all of the EVIDENCE to the contrary).
[2] lack of bottle amongst right wing tories to openly admit that they want to privatise the NHS, and indeed as many other public services as possible.

Needless to say no developed country has ever felt able to trust free markets (alone) to deliver meaningful health care.

It is my view that right-wing think tanks are unwilling to accept objective evidence but instead are seek to prop up their assertions because of a relatively fixed ideology – for this reason we must always take what they say with a sizable pinch of salt?

[9] but they ARE examples of private providers running NHS state service.

But that is not the same as a market being involved.

“The Adam Smith Insititute is as big as several as these think tanks put together. ”

Snigger…..I’m a Fellow there so perhaps I can point something out? The ASI is either four or five people (can’t remember, sorry) plus an intern or two. That’s it as far as full time staff are concerned. And no, I’m not one of those full timers. As a Fellow my income from the ASI is £0.

My income in total from the ASI varies depending upon how much writing work I’ve done for them. And the rates are rather lower than newspaper or standard freelance rates.

That we’re all over the newspapers and blogs is simply a judgement on the righteousness of our ideas and proposals of course…..you do like the London congestion charge, for example, something we supported for decades?

“argued for environmental policies driven by “economic efficiency”,”

And what on earth is wrong with this? You’d prefer environmental policies driven by economic inefficiency then?

Or is it simply that you don’t understand the meaning of the phrase?

http://en.wikipedia.org/wiki/Economic_efficiency

“Economic efficiency is used to refer to a number of related concepts. It is the using of resources in such a way as to maximize the production of goods and services.[1] One economic system is more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources. In absolute terms, a system can be called economically efficient if:

* No one can be made better off without making someone else worse off.
* More output cannot be obtained without increasing the amount of inputs.
* Production proceeds at the lowest possible per-unit cost.

These definitions of absolute efficiency are not equivalent, but they are all encompassed by the idea that nothing more can be achieved given the resources available.”

Seriously, you’re trying to argue against that?

That we should get the most from what is available, make everyone as well of as we possibly can given what we’ve got to hand?

Perhaps you might like to take a little time in that Ph D to understand the language that everyone else is using?

Matthew – the telegraph link you give doesn’t really establish that left wing think tanks are better funded than right wing ones. It seems to me that report illustrates that think tanks closer to the centre ground and political leaderships of new labour and Cameron are likely to have higher turnovers than ones that are not, rather than a specific bias towards the left. Furthermore the think tanks cited as “left wing” with high turnovers are actually new labour ones, or in the case of the social market foundation – centre right (Apparently John Major’s favourite one). As you no doubt know, new labour were not “left wing”. In order for you to subsantiate the claim about left wing think tanks being better funded than right wing ones, I think you’d need to cite high turnovers for think tanks associated with the Green Party, or the left of the labour party – the only one of which is the fabian society.

On the other hand your own turnover of 300k was far smaller than I suspected, so you deserve credit for punching above your weight so to speak. Particularly compared to the IPPR, who seem to be doing crap considering a 4 million turnover.

[11] “But that is not the same as a market being involved” – well, perhaps we are getting into semantics but it depends what you mean by market?

Back in the day when a youthful Cameron had just emerged from Oxford clutching his 1st class degree in Philosophy, Politics & Economics, Thatch, famous for promising to roll back the frontiers of the state had already laid foundations for the ‘NHS internal market’.

To begin with it was predicted that the internal market would drive up clinical standards – yet some claimed that competition actually costing lives
http://news.bbc.co.uk/1/hi/health/2701899.stm

The next logical step was to broaden the spectrum of those able to compete for NHS business – essentially this resulted in work, not to mention mouth watering chunks of money being awarded to private firms, although crucially treatment was still to remain free at the point of entry – for the time being at least.

The final and decisive step (which I suspect the coalition are already brooding over) is how best to manage the transition to full scale NHS privatisation, bearing in mind that the apparatus, and CULTURE are now in place to do so.

a&e # 10

[1] as suggested above – there is a blind belief that non-state providers are bound to be cheaper and more efficient (despite all of the EVIDENCE to the contrary).

what are you on about? There is no state construction company, things are always built by private firms, the question is whether to have the private firm act as a traditional contractor or as financier-owner-operators. And on that front, I am puzzled by your capitalized insistence of evidence, because all the evidence I’m familiar with is decidedly mixed, with some PFI projects performing better than their traditional public procurement counterparts, and others looking more expensive. If you like, I could link to a dozen pdf.s which I’m sure you won’t read because you could have googled for them if you were interested already.

evidence you seek? healthcare competition saves lives

here is healthcare/competition pdf.

How the left can respond? Suggesting a basic alternative would be a start.

the question is whether to have the private firm act as a traditional contractor or as financier-owner-operators.

Let’s face it Luis, PFI is just a ruse to have the state access expensive private finance and keep it off the public finance balance sheet.

The tender process is costly and wasteful for all concernedand the outsourcing of public sector functions to private sector providers has produced results that have been mostly toxic.

The key to improving the health service is not public/private partnerships, but getting spending power away from beaurocracies and into the hands of the consumer.

The Right is indeed hugely powerful. However, they have their Achilles’ Heel: their ideology only holds up if it can avoid any consideration of the realities that lie at the root of human existence. http://bit.ly/d2cXXy

Matthew – pointing that list doesn’t support your argument. ippr do a lot of outside work that doesn’t involve direct politics, which inflates their turnover. And Demos, after Catherine Fieschi, moved away from being left-wing to supporting the Libdems more strongly.

Compass and the Fabians are explicitly left-wing but just in terms of media mentions the TPA is ahead even when you combine their hits.

Luis @6 has nailed the idiocy of the original post.

I have to say I had no idea just how small *all* these outfits are.

@12: “[efficiency means that] No one can be made better off without making someone else worse off.”

The pedant in me wants to point out that this condition of efficiency does not necessarily mean that a system is operating as we’d like it to.

Presumably, a hypothetical system in which Bill Gates owned all property would be efficient in this sense (making anyone else better off would make Gates worse off), but would not be a great world for the rest of us.

So one could make the point that any ecological policy driven by “economic efficiency” may overlook some inefficient, but more effective, solution. I do not know if that is the case, but I don’t think the original quote is quite as silly as you’re making out.

It appears you are just woefully misinformed. The ASI is one of the smaller right-wing think tanks.

But, of course, if you redefine “right” and “left” enough you can get any answer you want. I could just as easily say that Policy Exchange is “Cameroon (i.e. govt-leaning)” without any serious right-wing credentials at all. It gets pretty meaningless.
The policy exchange is not right wing. Love it.
Ashcroft doesn’t put money into any think tanks eh.
I would Demos is right of centre. How does if differ from anything coming out of the mouth of Gove.
Anyway who believe anything from the Telegraph , the exactly same type of people running right wing think tanks.

Also more important with right wing think tanks is that thye have access to media outlets both the BBC and the press.
TerryC there is no alternative , the world belongs to you

http://blogs.ft.com/martin-wolf-exchange/2010/08/08/what-is-the-role-of-the-state/

Some of us are more inclined to pay attention to respected think-tanks with no partisan leanings, such as the Institute of Fiscal Studies (IFS), the National Institute of Economic and Social Research (NIESR), the OECD and Oxford Economics.

IMO they deserve a mention too in a balanced assessment of the waterfront.

HM Treasury produces a monthly survey of independent forecasts for the UK economy – the latest issue from July is here:
http://www.hm-treasury.gov.uk/d/201007forcomp.pdf

For historical perspectives on public spending and taxation by the IFS, try:

A survey of public spending in the UK
http://www.ifs.org.uk/publications/1791

A survey of the UK tax system
http://www.ifs.org.uk/publications/1711

Why read it then cjcjc, ?

As a counterpart to (the widely respected) Martin Wolf on the role of the state, try this news report about a study by André Sapir for the Bruegel think-tank and presented at the ECOFIN Informal Meeting in Manchester on 9 September 2005. This argued that there is not one European social model, but rather four – the Nordic, Anglo-Saxon, Mediterranean and the Continental:

• The Nordic model (welfare state, high level of social protection, high level of taxation, extensive intervention in the labour market, mostly in the form of job-seeking incentives)
• The Anglo-Saxon system (more limited collective provision of social protection merely to cushion the impact of events that would lead to poverty)
• The continental model (provision of social assistance through public insurance-based systems; limited role of the market in the provision of social assistance)
• The Mediterranean social welfare system (high legal employment protection; lower levels of unemployment benefits; spending concentrated on pensions)
http://www.euractiv.com/en/socialeurope/eu-debates-european-social-model/article-146338

Sapir’s paper in a PDF file is here:
http://www.ulb.ac.be/cours/delaet/econ076/docs/sapir.pdf

Btw recall what Adam Smith wrote about:

“The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain.”
The Wealth of Nations (1776), Book 5, Chapter 1, Part 3.

For curious reasons, that is often overlooked.

It is odd to focus on funding – think tanks are cheap, and Unions and NGOs are probably better funded just as influential (Joseph Rowntree. TUC). The $50m Soros has thrown at this lot probably swaps whatever pittance the TPA exists on.

swamps (not swaps)

To assess how burdensome the UK state is compared with other affluent countries, try this data from OECD on total tax revenues as a percentage of national GDP in 2007, before the recent international financial crisis broke:
http://lysander.sourceoecd.org/pdf/factbook2009/302009011e-10-04-01.pdf

“Btw recall what Adam Smith wrote about:”

Bob, those are what we now call public goods. No one at all overlooks them now.

“In absolute terms, a system can be called economically efficient if:

* No one can be made better off without making someone else worse off.”

I’ve yet to see a convincing argument as to why that is an ideal state of affairs. What about marginal utility, GINI coefficients, The Spirit Level, etc etc.

The problem is that, in capitalism, the only definition of “efficient” is “efficient at making money“.

“* No one can be made better off without making someone else worse off.”

I’ve yet to see a convincing argument as to why that is an ideal state of affairs.”

The proof is in this statement.

“We can make some people better off at the moment without making anyone worse off”.

Making those people better off without making anyone worse off is a gain, an increase in human utility, a free lunch.

Who wouldn’t make some people better off if it was a freebie? Thus what we’re aiming for is an economy in which we’ve already done all those free luches, no?

Sunny,

What kind of activity are the ippr pursuing that is non-political?

Surely Demos started to become Lib Dem friendly – like you did at one point unless I’m thinking of someone else – at some point before the coalition out of frustration over things like Iraq and civil liberties?

I certainly agree that we’re more active than many left and right-wing think tanks. I was just pointing out to the other commenter that the difference isn’t really about money. If it was the debate would be dominated by the ippr and Demos, with PX an honourable third.

Best,
Matt

@28 erm, I read the post before the comments (unfashionable I know!)

[16] thanks for the link – the paper you cite starts, “Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro?competitive policy reform to provide estimates of the impact of competition on hospital outcomes”.

Oh dear, they are not even speaking in English?

The end points measured in the study, hospital mortality and duration of stay, are both multi-factorial and caution is required before interpreting their significance.

From personal experience I can tell you that incentivising premature discharge is fraught with danger – so much so that Lansley and his chums are now planning to fine hospitals if readmission occurs within 30 days following discharge.
http://www.bbc.co.uk/news/10262344

I do not know if there is a cluster of failed discharges in the regions covered by Gaynor et als study but it wouldn’t surprise me if there was.

Other studies demonstrate (when like with like is compared – minus all of the variables associated with mortality and discharge, so in some respects a more reliable barometer) that competition resulted in worse outcomes for some
http://web.jbjs.org.uk/cgi/content/abstract/91-B/9/1154

#3 Matthew Sinclair: “The left-wing think tanks are generally far better funded than their right-wing equivalents.”

It is a little-know fact that the Other TaxPayers’ Alliance has an income eight times that of the TaxPayers’ Alliance.

nobody thinks Pareto efficiency (No one can be made better off without making someone else worse off) defines an ideal state of affairs. Of course we may wish to make some people worse off in order to make others better off. This is basic economics, 1st year undergrad should teach you that Pareto efficiency is a very different notion from desirable or optimal.

However, as Tim is saying, if there are opportunities to make some people better off without making anybody worse off, then there is a sense in which that situation is inefficient and efficiency (taking those opportunities to make people better off) is an unambiguously improvement from that position (because nobody is being made worse off). You may wish to make a bigger improvement by making some people worse off, however, to reach a different, preferred outcome.

“Other studies demonstrate (when like with like is compared – minus all of the variables associated with mortality and discharge, so in some respects a more reliable barometer) that competition resulted in worse outcomes for some”

You’re slightly missing the most important point.

Even die hard pro market fanatics like myself will admit that in a static analysis markets and competition can be less efficient than not markets.

But nothing is in fact a static system. Technology changes….and we’ve found (it’s all in another thread somewhere around here) that markets are able to get the best of these changes in a manner that planned systems are not. Productivity improves over time in market systems while it doesn’t seem to very much in planned systems.

So markets are best looked at as a process, a continual process of experimenting with the resources that we’ve got to get the most out of them.

@34: “The problem is that, in capitalism, the only definition of ‘efficient’ is ‘efficient at making money’.”

Try this interview in the FT of Prof Carmen Reinhart on recurring patterns over 800 years of financial crises:
http://video.ft.com/v/82349517001/May-3-800-years-of-financial-crises

She is co-author of a book with Kenneth Rogoff: This Time Is Different – 8oo years of financial crises (Princeton UP, 2009)
http://www.economics.harvard.edu/files/faculty/51_This_Time_Is_Different.pdf

Rogoff, now at Harvard, was previously chief economist at the IMF.

This recently published book on market failure has been well-reviewed in business media: John Cassidy: How Markets Fail – The Logic of Economic Calamities (Allen Lane, 2009)
http://www.businessweek.com/magazine/content/09_47/b4156079791251.htm

There’s a long mainstream history of the economic analysis of market failures – this was the state of the art 50 years ago:
Francis Bator: The Anatomy of Market Failure
http://instruct1.cit.cornell.edu/courses/econ335/out/bator_qje.pdf

A&E @38

well, it might not be everyday English, but it is meaningful.

What they are saying (my attempt at putting it in everyday English) is that most evidence cited on this question is non-experimental in the sense of not resembling a randomised control trial, so interpretation is difficult. Rather like as if in a drug trial, the drug was somehow given just to those patients most (or least) likely to recover anyway, with the remainder allocated to the control group. So, for example, if you were trying to study the effect of “outsourcing X to the private sector” on mortality rates, you’d have difficulties if you thought that only the best (or worst) hospitals chose to do that – you wouldn’t really have identified the effect of outsourcing.

They are (I think) claiming to exploit something like a natural experiment (a policy reform) that enables them to use before and after data to identify the effect of competition. So while mortality is “multi-factorial” that should be taken into account.

Martin Wolf has an interesting post on the subject of the role of the state.

http://blogs.ft.com/martin-wolf-exchange/2010/08/08/what-is-the-role-of-the-state/

It seems to me that the problem is ideology itself. The folks who think that the market is the solution to every problem are wrong. Although when pressed most of the high apostles of fundamentalism accept the existence of market failure and externalities. The type of people who inhabit think tanks tend to be the second order zealots who have no wish to emphasise when the ideology fails.

The left from their ideology are very good at writing critiques of market failure and pointing out the people who are being left behind and the disadvantage they face. However, they are utterly useless at offering credible solutions. Moreover, some of the solutions although well intentioned would actually make matters worse. Most things in society come down to economics and in recent decades the left in this country stopped studying economics as a subject. Therefore, the right trounce them and latch onto every economic fallacy that the left commit. There are plenty good arguments against the agenda that the ConDems are following but as far as I can see the left in this country are not very good at making them.

What are their solutions to the to the funding pressure on health and pensions that an ageing population places on central government? How do you internalise the costs to those who live long life’s away from the present model where taxpayers on modest incomes who live shorter life’s subsidise the wealthier who live longer life’s?

How do you get the left to understand that calling for higher taxes on business is the same thing as calling for lower pay for workers?

Why should it just be a right wing argument that workers should pay less tax on their labour? Is left wing attachment to the state so great that labour does not matter? Why can we not tax labour at zero and fund public finances through a less economically damaging method i.e. end all tax on capital and labour and finance through land value taxes, consumption taxes and Pigovian taxes?

The role of the state is never static but is constantly changing. I was reading yesterday an exchange in the House of Commons from the early 1970s and Labour MPs were arguing in favour of keeping Thomas Cook in public ownership. In 2010, it seems absurd that the state should own and run a travel agent. However, to some people in that era it seemed a proper role for the state.

Unless those on the left can present coherent arguments rather than just sniping from the sidelines the right will continue winning and define the future on their terms.

[41] “markets are able to get the best of these changes in a manner that planned systems are not” – that might be true when it comes to the latest i-pod, but I am skeptical that these principles can easily be applied in the sphere of health.

For example, I accept that the super rich in places like the USA may well find it easier of access to cutting edge technology, when compared to those at the opposite end of the social spectrum simply because of the power of the wallet – but there are many who would not wish to sacrifice universality for the sake of the privileged few (an almost inevitable consequence once shareholders are factored into the equation).

As a matter of interest can you point to a clinical example that exemplifies your hypothesis about markets and health outcomes?

@33: “Bob, those are what we now call public goods. No one at all overlooks them now.”

Agreed, that is one possible intepretation of Smith’s “third duty of the sovereign” but there are other plausible interpretations, such as “merit wants”, in Musgrave’s jargon, or even JS Mill’s justification for support of “infant industries”.

This Saturday’s The Economist has a feature brief on the revival of once-fashionable notions of “industrial policy”: Picking winners, saving losers:
http://www.economist.com/node/16741043?story_id=16741043

A further interpretation of Smith is the subsidies payable to increasing returns industries in optimal marginal-cost pricing regimes – following the Lerner-Lange literature.

However, political debates about government subsidies to business seldom take account of any of this mainstream economics. Even the concept of Public Goods, is very much an economists’ notion – I’ve hardly ever seen or heard non-economists refer to it.

46

Even the concept of Public Goods, is very much an economists’ notion – I’ve hardly ever seen or heard non-economists refer to it.

Normal folk do refer to “Public Goods” but they don’t use the cold static language of economists when they do. IMO.

@47: “Normal folk do refer to ‘Public Goods’ but they don’t use the cold static language of economists when they do. IMO.”

You’re strictly correct – but the popular use usually has absolutely nothing to do with what economists mean by “public goods”, which require a very specific set of conditions. Popular usage includes eg social housing, which is definitely not a “public good” in the particular sense by which economists use the term.

Public goods – for economists – are non-rivalrous in consumption (meaning my consumption/use does reduce the amount remaining for you to consume) and, CRUCIALLY, where it is not feasible to exclude non-paying consumers.

TV broadcasting was a public good UNTIL conditional access technology became available – viewers have to pay to receive Sky TV and non-payers are excluded.

Street lighting is a good example of the economists’ notion of a public good. Motorists and pedestrians can’t be charged for the particular amount of street lighting they each consume even though they benefit from it. My consumption of street lighting doesn’t diminish the amount remaining to benefit others.

There’s nothing intrinsically wrong with the popular use of the term but economists use it in a specific, technical sense.

Richard W

“the left in this country stopped studying economics as a subject.”

yes. a majority of the academic economists I know would call themselves left-wing, yet they have little in common with the public face of the left-wing (activists, ‘intellectuals’, journalists etc.) and are mostly invisible outside of academia. Many left-wing institutions (The Guardian, the TUC, NGOs etc.) prefer to hire people who merely sing the songs the like to hear. The Guardian, supposed vanguard of the intellectual left, prefers to commission cultural theorists to write about economics. Where is our Paul Krugman? Why can’t The Guardian find another Martin Wolf? Terry Eagleton and Richard Murphy. Saints preserve us.

The left has a vast unused resource of economically literate arguments, and after the recent financial crisis ought to be wiping the floor with free-marketeers. But for years it is has neglected to invest in economic competence, and just doesn’t have the firepower. Here’s one example of a theory that comes from the pinnacle of the economic profession (Daron Acemoglu) and is staunchly left wing (it explains why competition in healthcare and education may be inefficient). Where are the UK lefties capable of taking this stuff and using it? maybe problem is it is too nuanced – it’s pro-market is some spheres. (warning A&E, that one definitely isn’t written in English).

For insights, it’s worth reading John Kay on: Economics may be dismal, but it is not a science
http://www.ft.com/cms/s/0/19491372-472c-11df-b253-00144feab49a.html

He elsewhere observes that the numbers of undergraduates reading economics at university has declined on trend.

For all that, in the graduate salaries league table, economists do relatively well:
http://www.independent.co.uk/news/education/higher/table-what-do-graduates-earn-1675502.html

“I was just pointing out to the other commenter that the difference isn’t really about money”

Well to some extent – I doubt you’d do as well with just a PC, broadband connection and the time available to a hobbyist. You need enough income to finance a couple of staff at the least, and preferably have a decent website. On the other hand your own strategy is more about changing the perception of people towards state funded services via daily quotes in newspapers and releasing the kinds of stories newspapers will carry. Others have a different non-media orientated strategy, which requires more resources.

Correction:

Should read:

“Public goods – for economists – are non-rivalrous in consumption (meaning my consumption/use does NOT reduce the amount remaining for you to consume) and, CRUCIALLY, where it is not feasible to exclude non-paying consumers.

Apoligies.

“. Many left-wing institutions (The Guardian, the TUC, NGOs etc.) prefer to hire people who merely sing the songs the like to hear”

I think its more complex than that – somebody with a masters in economics can earn an extremely high salary in the city. Even senior policy and research posts in left wing institutions are around the 30-40k mark.

Plus changing the position of an established organisation is extremely difficult – a fresh faced economics grad is simply not going to be able to march into a board room and say to senior management who have been there for decades “you are doing it wrong, haven’t you lot ever read an economics textbook?”

“The left has a vast unused resource of economically literate arguments, and after the recent financial crisis ought to be wiping the floor with free-marketeers. ”

I agree aboslutely that there are huge numbers of “lefty” economic arguments, arguments which get closer to the declared aim of those on the left. But I reject the idea that they’re unused…they’re exactly the ones being used by the free marketeers.

How do you make people rich? Err, economic freedom?

Or in more detail, the suggested answers to cilmate change. Outside the nutters like nef the arguments are all about whether carbon taxes beat cap and trade or not. No one serious (and certainly no policy seriously put forward) is trying to offer a non-market solution. Everyone is arguing about the best way to tweak markets to achieve the desired goal.

Hell, I regard pretty much everything I advocate on economics as being “left wing”. Globalisation, freer markets, these are the ways to make the poor rich and to reduce global inequality…..as the decrease in global poverty and the decrease in global inequality during the last 30 years or so of “neo-liberalism” show quite well.

“How do you make people rich? Err, economic freedom? ”

Several affluent EU countries – such as Denmark, Sweden and France – have significantly heavier tax burdens than the UK.

France has long had a dirigiste tradition of managing the national economy, at least since the time of Louis XIV, Jean-Bapiste Colbert and the doctrines of Mercantilism:
http://en.wikipedia.org/wiki/Jean-Baptiste_Colbert

Those more familiar with French history than I am have remarked on the extraordinary continuity of the dirigiste traditions through successive presidencies and governments regardless of political colour:

“Edouard Balladur, the former French [Gaullist] prime minister [1993-5], memorably once asked: ‘What is the market? It is the law of the jungle, the law of nature. And what is civilisation? It is the struggle against nature.'”
http://www.wired.com/wired/archive/3.05/culture.html

How come nearly 80% of electricity generation in France is by nuclear power?

Dig a little and you’ll find that the early technical and commercial risks of the emerging semiconductor industry in America were underwritten by defence and NASA contracts.

“Globalisation, freer markets, these are the ways to make the poor rich and to reduce global inequality…..as the decrease in global poverty and the decrease in global inequality during the last 30 years or so of “neo-liberalism” show quite well.”

Nearly all of the fall in global poverty happened in China, where the Communist Party are in power, and which (inter alia) has tariffs on imports and restrictions on internal migration.

In the developing world outside of China, the number of people living in poverty stayed at 1.2 billion, and the absolute number of people living in poverty in subsaharan Africa nearly doubled between 1981 and 2005.

Since 1981, poverty fell in South America and rose in Eastern Europe. One of these regions adopted more neo-liberal policies during this period, while one elected mostly governments which were hostile to neo-liberalism. Can you guess which is which?

Don:

“The conventional wisdom that Africa is not reducing poverty is wrong. Using the
methodology of Pinkovskiy and Sala?i?Martin (2009), we estimate income distributions, poverty
rates, and inequality and welfare indices for African countries for the period 1970?2006. We
show that: (1) African poverty is falling and is falling rapidly. (2) If present trends continue, the
poverty Millennium Development Goal of halving the proportion of people with incomes less
than one dollar a day will be achieved on time. (3) The growth spurt that began in 1995
decreased African income inequality instead of increasing it. (4) African poverty reduction is
remarkably general: it cannot be explained by a large country, or even by a single set of
countries possessing some beneficial geographical or historical characteristic. All classes of
countries, including those with disadvantageous geography and history, experience reductions
in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for
mineral?rich as well as mineral?poor countries; for countries with favorable or with unfavorable
agriculture; for countries regardless of colonial origin; and for countries with below? or abovemedian
slave exports per capita during the African slave trade”

http://www.columbia.edu/~xs23/papers/pdfs/Africa_Paper_VX3.2.pdf

Sure looks like something’s working, eh?

Tim Worstall = Dr Pangloss.

I claim £5.

“To assess how burdensome the UK state is compared with other affluent countries, try this data from OECD on total tax revenues as a percentage of national GDP in 2007, before the recent international financial crisis broke:”

@ Bob B – it doesn’t really capture the level of “burden” because it shows the tax take but not the considerably higher spending level, (otherwise known as deferred taxation).

Tim is being cute. The are lots of economically literate arguments for things he doesn’t like and left wingers do, like large states, redistribution, Industrial Policy, regulation, capital controls etc. And for why free market competition might not work very well for the provision of goods like education, healthcare. These are the un-used resources I was thinking of.

At the same time, I agree with Tim that the left also has woefully little interest in looking at the positive aspects of markets and economic freedom etc. which are regarded as territory of the opposing side. The arguments I refer to above are grounded in a proper understanding of how markets can work well, and are probably best seen as correctives and supplements to markets. The are also nuanced. For example, rather than being pro- or anti-PFI, the question is when is PFI likely to do well, and when badly.

Don,

I don’t think you can cite China as an “anti” economic freedom case study, because China’s move toward prosperity has had a lot to do with having increased economic freedom. Likewise, while you can cite some countries in Africa as potential case studies against crude free market reforms in a context of a weak and corrupt state, there are also an equal number examples there of how state-led economic policy can be a disaster. I wouldn’t argue against the general idea that globalisation and freerer markets has worked in the interest of the world’s poor, but merely that that’s only half the story, and that active government has played a big role in the success stories too.

The left as an economic force is dying.
Tim your idea that free markets just have benefits is a little naive. Surely the whole point of free market economics is that you have winners and losers.
Without the competition and fear it is a pointless system
The winners usually have nice homes and the losers usually work in sweatshops with their kids.
The argument anyway is pointless, the right will be in power for a very long time, by then we will have a multi tiered private run education and health services, night watchman state, fox news type broadcasters and no state welfare, just handouts to the deserving very poor.
The real rows will between social conservatives and libertarian right wingers on issues such as abortion, legalized drugs and prostitution, defence and gay marriages
Also with the rows between isolationist and neo conservatives.
As for the carping on the sidelines, we have had 14 years of Richard W and others doing the same

“Surely the whole point of free market economics is that you have winners and losers.”

You’ve been reading too much Neal Lawson.

No.

Markets are based upon voluntary transactions. If it’s an involuntary transaction then it’s not a free market one.

OK< now, in a voluntary transaction each participant must at least believe that he's going to be better off by making the transaction than by not making it. Otherwise, if he thought he was going to be made worse off by it, he wouldn't make the transaction, would he?

So, by definition, free market exchange only makes people better off. There are no losers.

I agree, this still leaves some people with more than others….but everyone is better off than if there was no market. So it ain't the market that's creating the winners and losers….that creates only winners.

"“How do you make people rich? Err, economic freedom? ”

Several affluent EU countries – such as Denmark, Sweden and France – have significantly heavier tax burdens than the UK."

Tax isn't the be all and end all of economic freedom. Indeed, there are ten measures that are used (by one or another institute in the US). Using only 8 of them (ie, disregarding size of Govt in GDP and tax rates) by these Denmark is the most economically free nation in the world. Yes, more so than even Hong Kong.

What people really seem not to undertand about the Nordics is that underneath that high tax, high redistribution, they've very much got classically liberal, extremely free, economies bubbling away. It's how they manage to have both economic growth and the high tax/high redistribution.

by definition, free market exchange only makes people better off

It means you pick your best available option (hence you are better off that under the available alternatives) but it does not say anything about what determines the options are available to you. Lots of left wingers believe that the operations of the free market make people worse off by putting them in a position where their best available option is to work like a dog all day just for a crust of bread. I think that belief is largely without foundation, but still trying to argue that free markets don’t create losers because by definition blah blah isn’t going to convince anybody.

So the child who works 15 hours in a sweatshop for scraps is a winner. He has no workers rights and his employer can get rid of him at anytime and he then can starve to death on a rubbish dump while his 10 year old sister enters a voluntary contract to become a child prostitute.
No losers there then.

Personally I think the left should hibernate and carp from the sides.
Let the right tear each other apart.
For example TIm W’s view on immigration are completely different from other conservatives.
The only thing they have in common is a hate for lefties.
No lefties, they will turn on themselves.
Remember the tory party is a party that contains Michael Green and David Sullivan.
In fact Sunny close the site down.
Too many righties get their left hate fix from the site.

Rhys,

You seem a bit defeatist at the moment. But I should point out most sweatshops in the world are in countries with (traditionally, if not currently) highly controlled economies – India, China, Vietnam, Burma, Thailand etc. I don’t think you can blame them on ‘free markets’.

No such thing as a free market.

Sally,

“No such thing as a free market.”

I think you’re right. Both business and government mean it won’t happen (so maybe anarchists are the only proper free marketeers…). Still, nice to dream though (and actually, like most right-wingers, I do prefer some unfree market solutions such as social security).

You are wrong, Rhys. I really don’t recognise the linear left right political spectrum. A policy either makes things better or it makes them worse. To me being a liberal more ordoliberal than classical liberal is the only bulwark against authoritarianism. I don’t care whether that authoritarianism comes from those who claim to be on the left or the right, it is wrong no matter who is doing it.

Moreover, I fully support using the full resources of the state to raise the quality of life for the most disadvantaged. However, it must be done in a way that does not make things worse or create dependency. There are lots of things the last government did to help the most disadvantaged. Any sniping I would have done would have been because they did not do enough.

“but still trying to argue that free markets don’t create losers because by definition blah blah isn’t going to convince anybody.”

If facts and logic don’t work, well, so much the worse for lefties who won’t be convinced then.

“So the child who works 15 hours in a sweatshop for scraps is a winner. He has no workers rights and his employer can get rid of him at anytime and he then can starve to death on a rubbish dump while his 10 year old sister enters a voluntary contract to become a child prostitute.
No losers there then.”

Quite, the sweatshop is better than the alternative. He has indeed gained from the existence of the sweatshop and his voluntary decision to work in it.

Tim,

did you just not read the rest of my comment, or what?

“@ Bob B – it doesn’t really capture the level of “burden” because it shows the tax take but not the considerably higher spending level, (otherwise known as deferred taxation).”

I was focused on comparing tax burdens in the affluent OECD countries. On how much to blame Gordon Brown for the budget deficit, try this independent assessment by Martin Wolf in the FT:

“Can we not at least blame Mr Brown for the bloated public spending and grotesque fiscal deficits? Yes, but also only up to a point. Between 1999-2000 and 2007-08, the ratio of total managed spending to GDP did rise from 36.3 per cent to 41.1 per cent. But the latter was still modest, by the standards of the previous four decades. The jump to a ratio of 48.1 per cent, forecast for this year in the 2010 Budget, is due to the recession. Nominal spending is currently forecast at 3.5 per cent higher in 2010-11 than forecast in the 2008 Budget. But nominal GDP will be 10.3 per cent lower and tax revenues 16.4 per cent lower. Critics of his fiscal policies were right, but the error was far larger than anybody imagined. It is true, however, that Mr Brown must take a share of the blame for Labour’s failure to ensure the extra spending would be well managed.”
http://www.ft.com/cms/s/0/3074d7ba-5ec0-11df-af86-00144feab49a.html

@70

Defending child labour? I should be surprised, but somehow am not.

“Defending child labour? I should be surprised, but somehow am not.”

There is nothing the free market loons won’t defend.

If the result was to land all the wealth of the world in the hands of 1 man, Tim Rand and his mates would be on here supporting it.

“You seem a bit defeatist at the moment. But I should point out most sweatshops in the world are in countries with (traditionally, if not currently) highly controlled economies – India, China, Vietnam, Burma, Thailand etc. I don’t think you can blame them on ‘free markets’”

Child labour surely has a history with free markets, look at our own history and the mines.
The only reason we don’t have them in this country is because we have regulations that prevent a total free market.
The idea that their are no losers in total free market is a sham.

Also Watch man and Tim why did socialism become a powerful force. Maybe because of the fact that workers felt they were losers and wanted more equality. If everybody was having such a wonderful time in free market victoriana why did we get Dickens horror stories of human misery and the rise of radicalism.
Surely in Tim’s world they would have been as happy as pig in shit and given the lefties a wide berth. Perhaps most were but there was a sizeable minority who did feel like losers. Perhaps those in workhouses
“policy either makes things better or it makes them worse. To me being a liberal more ordoliberal than classical liberal is the only bulwark against authoritarianism. I don’t care whether that authoritarianism comes from those who claim to be on the left or the right, it is wrong no matter who is doing it.”
That is my point. The left because of economics is now a dead duck but right wing neo liberal economics is beloved by nearly all right wingers. It is an area you don’t have much debate amongst yourself. To get rid of the NHS, privatise education, slim down welfare to charity and a belief that the market solves all problems.
The areas you will argue is the legalisation of drugs and prostitution, religion, defence budgets, neoconservatism and intervention, crime (privatisation of the police) and terror laws (remember the current government have not got rid of those laws, they are also thinking about bringing back the authoritarian eighties stop and search)

“Moreover, I fully support using the full resources of the state to raise the quality of life for the most disadvantaged. However, it must be done in a way that does not make things worse or create dependency. There are lots of things the last government did to help the most disadvantaged. Any sniping I would have done would have been because they did not do enough.”
I apologize for using you but I cannot remember you ever making a comment before May that didn’t sound like a carp or a snipe

@75 Rhys

“Child labour surely has a history with free markets, look at our own history and the mines.”

And the factories of course – kids as young as five or six working 16 hours a day, some manufacturers and politicians defended it because they had little fingers that were good for changing thread, etc.

Also I forgot immigration.

It is funny all these so called free market liars defending China and Burma.

There is no difference between communist dictators and capitalist business men. They hate freedom for their workers., and they want total control. That is why so many dictators are propped up by the USA, Just as long as they allow lots of capitalist operations then there is no problem.

Defending child labour? I should be surprised, but somehow am not.

Well, what is the alternative for that child? Presumably there isn’t a better alternative or he’d be doing it; it is 5 bucks or starve, so yes the child is better off.

79

Too stupid to reply to.

@79

Maybe question the system that reduces the child to those pathetic “choices”? Just a thought.

[79] “Well, what is the alternative for that child?” – yes, a very uncomfortable and rather depressing question, yet one that we cannot easily disassociate ourselves from since child labour has been exploited to produce goods that are exported to Britain (as I understand it)
http://www.unicef.org.uk/publications/pdf/ECECHILD2_A4.pdf

[81] system change is the ideal but it won’t come soon enough for children working today, and if we are honest most that will continue to be exploited in the short to medium term?

Maybe question the system that reduces the child to those pathetic “choices”? Just a thought.

I wrote, “What is the alternative for the child“, not “how can we make it better for the child”, meaning think about it from the child’s point of view, not from ours. Is the child better off, from his point of view, with five bucks or without five bucks?

Paul Krugman who has pretty sound liberal credentials calls this obsession with wages in the developing world the ‘ cult of self-righteousness ‘. Look I am not going to defend child labour but the critics also need to suggest alternatives. Why do we in our hypocrisy consider children working for hours on end on marginal land to be ‘ traditional ‘. However, the same children working in a factory to be exploited?

Why is someone working for 12 hours in a factory to feed, clothe and provide shelter for themselves exploited by capitalism? Yet some of the same people would laud subsistence farmers spending the same amount of time as following a traditional way of life. The only difference is money and money has no meaning beyond what it can get for you.

http://www.slate.com/id/1918

“Child labour surely has a history with free markets,”

No. Child labour has a history with poverty. All poor societies have used child labour. We did when we were poor. Feudal, authoritarian, planned, guild societies used child labour as well as agrarian ones, capitalist ones. Currently poor socieities use child labour.

It’s only rich societies that don’t use child labour. Which brings us back to how do we create rich societies? Well, let’s be honest here, the only way we humans have found is some combination of (and there are different variants, yes) capitalism and freeish markets.

“The only reason we don’t have them in this country is because we have regulations that prevent a total free market.”

Nope, it’s because we’re a rich enough society that we don’t need every hand on deck in order to provide enough food for all to eat. We can put kids through 11 years of compulsory education, up to another 7 years of voluntary, precisely and exactly because we are rich.

“Also Watch man and Tim why did socialism become a powerful force. Maybe because of the fact that workers felt they were losers and wanted more equality.”

Sure. Some/many want more equality. And, so what? Some/many want to believe in the Grey Lizards too. Some/many want their children to be better off than they are.

“why did we get Dickens horror stories of human misery”

Because it was a poor fucking society? The GDP per capita in Dickens time, in real terms (ie, taking account of inflation and using 1840 as Dicken’s time) was £2,000 a year. Now it’s £20,000 a year. We’re ten times friggin’ richer, the average peep on the street. Think about it for a moment, wouldn’t you expect some stories of human misery if on average we all only had 10% of what we do now?

“The left because of economics is now a dead duck but right wing neo liberal economics is beloved by nearly all right wingers. It is an area you don’t have much debate amongst yourself. To get rid of the NHS, privatise education, slim down welfare to charity and a belief that the market solves all problems.”

Oh no, as the neo-liberal’s neo-liberal I’m sorry but you’ve really got us all wrong there. To change the NHS, sure, to make it work better (“work better” being defined as providing better health care treatment than it currently does) sure. “Privatise” education? No one is arguing that the State should not continue to ensure that all are educated. We’re only arguing that perhaps bureaucrats delivering education isn’t the best way of doing so.

Slim welfare? Sure….but not to reduce it to only charity. Sure the State has a role, an important one, in ensuring that basic needs are met for all.

And as the real laugh that the market solves all problems. Have you ever bothered to actually read anything that us “neo-liberals” have been putting out? Markets are great sure, but they don’t solve everything. Intervention into markets is needed, legisalation is needed, even, at times, abolition of markets is needed.

All we’re arguing about is “when” those things are true, not that they are true or untrue in logic.

For example:

“crime (privatisation of the police)”

That’s one that scares us absolutely shitless. Privatise the police? What? Make private sector the only people with a legitimate monopoly of just violence? No, absolutely not, no way.

You’ll do a lot better by trying to understand what we’re actually saying than you are currently by addressing the boogiemen in your mind.

“Child labour has a history with poverty. All poor societies have used child labour. We did when we were poor”

C’mon. In the 19th century, Parliament passed a long series of explicitly interventionist factory acts to stop the worst abuses in the employment of children and women:
http://en.wikipedia.org/wiki/Factory_Acts

Winston Churchill was a minister in a Liberal government when he took through Parliament the Trade Boards Act of 1909, this provided for administrative structures for determining legally enforceable minimum wages in particular industries. That was certainly inconsistent with laissez-faire but subsequent Conservative governments allowed the legislation to stand until the 1980s.
http://en.wikipedia.org/wiki/Trade_Boards_Act_1909

@83

I just reckon you (and economists) are asking the wrong questions. It shouldn’t be the case that a child has a “choice” between working 16+ hours a day in a sweatshop or being homeless and starving. The system is fucked and we should be suggesting or thinking of alternatives not sticking with the status quo – despite what Tim W says, everyone is most definitely not a winner.

BTW it ain’t just in poor countries – there was a case maybe a year or so back of a Primark contracter using illegal labour with poor working conditions in a factory in Manchester. If businesses can get away with it, they will. If they can’t, they’ll still damn try.

(source for Primark story)

Self-regulation of financial markets? C’mon. In the news today is an innovative way of policing US finance markets to ensure compliance with regulations which are otherwise challenging to enforce:

“A couple received a record pay-out from the US Securities and Exchange Commission last month. Karen Kaiser and her current husband were awarded $1m for information about Mrs Kaiser’s ex-husband that helped lead to hedge fund Pequot Capital Management paying $28m to settle an insider trading case.”
http://www.ft.com/cms/s/0/f271ebcc-a313-11df-8cf4-00144feabdc0.html

I just reckon you (and economists) are asking the wrong questions. It shouldn’t be the case that a child has a “choice” between working 16+ hours a day in a sweatshop or being homeless and starving.

right! … but wrong about economists not asking that question – of course they do.

Tim’s point that in a free market (i.e. if ‘transactions are voluntary’) then people (tend) only do things if they consider to make them better off, is important in its place, but it does not tell us that the ‘free market system’ does not create losers. because, as everybody else can see but Tim chooses to ignore, it does not tell us what determines the choices on offer in the first place. A more interesting question is what system can provide better choices.

For anybody interested in sweatshops and the ‘race to the bottom’ I heartily recommend The Travels of a T Shirt in a Global Economy

The only fashion in which it makes sense to ‘defend’ sweatshops is to point out that historically they have been part of the process via which poor countries become less poor, and that from the point of view of the workers they can consider themselves to be made better off by them, which surely matters. If people have two choices – work on the farm (A) or work in a sweatshop (B), and they choose B, it’s okay to ask why they don’t have a better choice C, but it doesnt make sense to be “anti” B without being more anti A. And it is reasonable to defend B for at least being better than A. We hear from anti-sweatshop campaigners more than we hear from anti-miserable life on the farm campaigners – it would make more sense if it were the other way round.

Tim, you come out with some absolute bollox sometimes.

From reading what you’re saying here, either you are truly delusional or just pricking it up, but with all the ‘everyone is a winner’ you have to have people on a equal footing to start with. Barter for the chicken using the milk.

You know that isn’t the case. Multi-millionaire has the upper-hand because he has the power of his wallet. Hen seller on 2 bob a week – nope, no economic freedom for that fella.

Your neo-liberal shit would work if we all were indentikit, we are not.

Personally, and I have said this before on here, I hope the whole shebang blows up in your face, you and the other neo-cons/neo-liberals. Because once it happens it may get through the Neanderthal skulls of those who keep voting for right-wing governments.

Sunny should allow a piece “Tim Worstall, Fellow of the ADI, supports the return of child Labour”.

Mr S Pill,

Luis makes my point for me – and more eloquently (probably because he is much more competent).

As for “winner”, I suspect Tim may use such language to get a rise out of people… it works, doesn’t it?

No-one, of course, no-argues against ‘economic efficiency’, in the same way no-one argues against preventing crime or child poverty or people being happy – it’s just that real-world facts tend to make it difficult to achieve perfection and you eventually find that people’s different interests rub up together and have to be sorted out through the state.

In the case of ‘economic efficiency’, it would be difficult to measure in any case, and you find that all economic activities have externalities and social costs. The ASI’s answer (and that of many other bodies) is snake oil based on adopting unquestioningly a dubious body of theory.

I think the word ‘think tank’ is inappropriate for most of the bodies referred to – they are really just PR outfits and pressure groups whose activities are trying to put a spin on reality that will make it appear to fit their own ideologies.

@90 Luis

OK, I get what you’re saying (still reckon most mainstream economics is v cold when it comes to human beings though) & cheers cos I’ve bookmarked that link to the t-shirt book will def give it a read when I’ve got some spare change.

@91 Will

Couldn’t agree more.

@92 ukliberty

Huh, fair enough. Though unfortunately I reckon Tim W actually believes the stuff he comes out with.

On the (supposedly unrestricted) freedom of consumers to choose what to buy subject only to personal budget constraints, two observations are crucial:

– The pevalence and persistence of asymmetric information:

“In economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry. Examples of this problem are adverse selection and moral hazard. Most commonly, information asymmetries are studied in the context of principal-agent problems.”
http://en.wikipedia.org/wiki/Asymmetric_information

– This challenging (hour long) Google lecture by Prof Barry Schwartz on: The Paradox of Choice – or why more means less:
http://www.youtube.com/watch?v=vMV4PIEIKY4

Other influences on consumer demand were noted long ago. Try Harvey Leibenstein on: Bandwagon, Snob and Veblen Effects in the Theory of Consumer Demand, in the QJE 1950
http://areadocenti.eco.unicas.it/mbianchi/LEIBENSTEIN.50.QJE.pdf

In case anyone here is looking for glaring examples of how asymmetric information can result in market failures, try this example involving Goldman Sachs:
http://wheredoesallmymoneygo.com/goldman-sachs-fined-550-million-for-cdo-debacle/

“Sunny should allow a piece “Tim Worstall, Fellow of the ADI, supports the return of child Labour”.”

Why bother? The piece has already been written by Paul Krugman, lefty Nobel Laureate, as linked to above.

http://www.slate.com/id/1918

“It shouldn’t be the case that a child has a “choice” between working 16+ hours a day in a sweatshop or being homeless and starving. The system is fucked and we should be suggesting or thinking of alternatives not sticking with the status quo”

Quite, the system is indede fucked up in places and I thoroughly agree that I too would prefer that a child wasn’t working in a sweat shop but was tucked up in a nice school with decent teachers and three squares and a teddy bear.

So, how do we get from here to there? There’s only one way we actually know of which is economic development. Places need to be rich (or at least substantially richer than they are) in order not to be using child labour. In order to be rich enough to provide that option.

So, what do we know about aiding places in becoming richer, in developing an economy?

Well, those places which have managed it, from ourselves through the other “western” nations, to the later arrivals such as Japan, the post 50s and 60s irruptions like Hong Kong, Malaysia, Singapore, well, make your own lists, have done so with some variant of this capitalism/markets mixture. That’s what the whole Washington Consensus thing was all about. No, not a list of what the IMF/World Bank was going to impose on people, rather, a list of what development peeps thought were the necessary preconditions for development.

And as that paper about poverty in Africa shows, it does seem to work, too.

To get rid of child labour we need economic growth. Here’s a set of policies which seem to encourage economic growth.

Good Oh.

So, what’s the problem?

So, by definition, free market exchange only makes people better off. There are no losers.

Here’s an example. Suppose Tim falls down a hole, and calls out for help. I come along, and say “yes I will help you out, if you pay me £5000, otherwise I will leave you to die down this hole”. So, reluctantly, he agrees.

A free-marketeer’s response to this situation is to hail the success of the transaction: behold we are both winners, Tim is out of his hole, and I am £5000 richer. A left-winger is more likely to be of the opinion that I have abused my power, and shamelessly exploited someone’s desperation for personal gain.

On their own terms, each judgement is correct. It just depends whether you’re a theoretical rational actor of neo-liberal imaganings, or a living breathing human being equipped with a moral conscience.

Of course what happens next is that I think “this is a damn good game”, and go around digging holes everywhere, and then helping people out of them at £5000 a shot. Each transaction produces a new winner, sort of, but the situation as a whole is such that everyone loses except me.

NB this is just an analogy. I know the law would prohibit this specific behaviour. But if Tim seeks to dismiss out of hand the suggestion that an unregulated ‘free market’ can never produce situations structurally similar to this, then he is just plain ignorant.

Slavoj Zizek quote in article: “the central task of the ruling ideology in the present crisis is to impose a narrative which will place the blame for the meltdown not on the global capitalist system as such, but on secondary and contingent deviations (overly lax legal regulations, the corruption of big financial institutions, and so on)”

The ruling ideology has done rather better than Zizek predicted! The hardcore right wing followers actually now seem to believe that their standard bogeymen – benefit claimants (i.e. chavs) and even ethnic minorities – caused the meltdown themselves, by scrounging off everyone’s taxes and greedily taking those offers of sub-prime mortgages. If it hadn’t been for our morally lax leftie indulgence of these lazy people, they say (hazily looking back into the mists of recent history) there would be no deficit!

By mainstreaming this idea, or at least generating public confusion using it, they not only let capitalism itself continue without changes – but also allow the big financial institutions (and the extravagant lifestyles funded by their activities) to continue exactly as they did before – except in a much more unequal society, since the rest of us will pick up the tab…

On the child labour thing, people really seem to believe that the period of Britain’s history when we had child labour (i.e. most of it) was a free market? That worries me – you do realise that in the nineteenth and early-twentieth century government controlled the cost of staples (e.g. bread – a partial cause of the potatoe famine as I recall), luxuries (i.e. sugar) and even wages. This was not a new development – one of the core underlying factors of the Peasant’s Revolt (1381 for those of you who are not up on your history) was the attempts of the government to impose lower wages on workers who seem to have taken advantage of the dearth of labour after the black death to seek better pay (this sort of reaction may explain the popularity of socialism in such contexts – if you have a controlling government, it should be for the benefit of the many, not the few). Any system where the government seeks to control prices and wages is not a free market.

Note also most free marketeers see the role of government as being to set law to ensure exploitation (unfree-market methods) is outlawed. Not to control the economy, but to combat those who seek to avoid free market processes (monopolies, criminals, abusers – those who use force rather than negotition). And as Sally perceptively pointed out a long way above, we do not have and cannot have a free market (at least until all information is instantly available when needed).

The strongest case for market capitalism is rather like the case Churchill made on behalf of democracy: It’s the worst possible economic system for allocating resources between competing uses – or form of government – apart from all the others.

There is no presumption that market systems will lead to efficient outcome unless a long series on stringent conditions are met – for starters, try @43 and @95.

Our 18th and 19th century ancestors in Parliament began with the notion that laissez-faire is the best policy for promoting economic prosperity but were increasingly obliged by circumstances to recognise the need for intervention, hence the factory acts to end the worst abuses of children and women in employment and the Education Act of 1870 to ensure universal primary schooling. Churchill took the Trade Boards Act of 1909 through Parliament to create boards for deciding legally enforceable minimum wages in particular industries.

On the evidence, Parliaments decided that the consequences of laissez-faire didn’t necessarily work out well downstream.

““Child labour surely has a history with free markets,”

No. Child labour has a history with poverty. All poor societies have used child labour. We did when we were poor. Feudal, authoritarian, planned, guild societies used child labour as well as agrarian ones, capitalist ones. Currently poor societies use child labour.

It’s only rich societies that don’t use child labour. Which brings us back to how do we create rich societies? Well, let’s be honest here, the only way we humans have found is some combination of (and there are different variants, yes) capitalism and freeish markets.”

You still have to regulate the free market if you don’t want child labour or prostitution
Unfortunately their is market for both
In true competition the rich will get richer and the poor poorer, the poor have the trickle down effect

“The only reason we don’t have them in this country is because we have regulations that prevent a total free market.”

“Nope, it’s because we’re a rich enough society that we don’t need every hand on deck in order to provide enough food for all to eat. We can put kids through 11 years of compulsory education, up to another 7 years of voluntary, precisely and exactly because we are rich.”

Oh don’t be silly, many industrialists and entrepeneurs, if they could would set up child sweatshops and brothels in Bradford or Glasgow if they should, some do illegally

“Also Watch man and Tim why did socialism become a powerful force. Maybe because of the fact that workers felt they were losers and wanted more equality.”

Sure. Some/many want more equality. And, so what? Some/many want to believe in the Grey Lizards too. Some/many want their children to be better off than they are.

Yes Time but if they felt like winners WHY would they.

“why did we get Dickens horror stories of human misery”

“Because it was a poor fucking society? The GDP per capita in Dickens time, in real terms (ie, taking account of inflation and using 1840 as Dicken’s time) was £2,000 a year. Now it’s £20,000 a year. We’re ten times friggin’ richer, the average peep on the street. Think about it for a moment, wouldn’t you expect some stories of human misery if on average we all only had 10% of what we do now? ”
The rich and middle classes were happy and with your idea of total free markets we would return to those days. Perhaps liberal social democracy in a small way did give us a better quality of life. Remember Churchill brought in National Insurance, even he knew the limits of the free market

“The left because of economics is now a dead duck but right wing neo liberal economics is beloved by nearly all right wingers. It is an area you don’t have much debate amongst yourself. To get rid of the NHS, privatise education, slim down welfare to charity and a belief that the market solves all problems.”

Oh no, as the neo-liberal’s neo-liberal I’m sorry but you’ve really got us all wrong there. To change the NHS, sure, to make it work better (“work better” being defined as providing better health care treatment than it currently does) sure. “Privatise” education? No one is arguing that the State should not continue to ensure that all are educated. We’re only arguing that perhaps bureaucrats delivering education isn’t the best way of doing so.

Tim you don’t read your own people. Read Delingpole and Hannan

Slim welfare? Sure….but not to reduce it to only charity. Sure the State has a role, an important one, in ensuring that basic needs are met for all.
My god you sound like a social democrat

And as the real laugh that the market solves all problems. Have you ever bothered to actually read anything that us “neo-liberals” have been putting out? Markets are great sure, but they don’t solve everything. Intervention into markets is needed, legislation is needed, even, at times, abolition of markets is needed.

All we’re arguing about is “when” those things are true, not that they are true or untrue in logic.

For example:

“crime (privatisation of the police)”

That’s one that scares us absolutely shitless. Privatise the police? What? Make private sector the only people with a legitimate monopoly of just violence? No, absolutely not, no way.
Why not, it is cost effective, growth of security firms is all time low. I remember Fry and Laurie did a wonderful sketch on the subject,

You’ll do a lot better by trying to understand what we’re actually saying than you are currently by addressing the boogiemen in your mind.
Now that is a little unfair. All I said was their were winners and losers in a free market system and you seem to agree with yoiur views on welfare.
Surely in a Randian or Night watchman society their is no role for the state except to fight wars, even this could be handed out to private contractors.
As for winners and losers
100 % losers : End of the world
100 – 80 losers – Revolution
80 – 50 losers – Revolution, autocracy or chaos
50 – 30 losers – Victorian times, late 1920’s and early 1930’s
30 – 10 losers – 1980’s
10 % losers – No one gives a shit

Larry #98

you’re right …. but I don’t think it’s so easy to find examples of “the free market” digging holes and putting people in them. That is to say, its easy to find examples of people who you might say are in a hole, but your analogy (when it moves to creating a situation with people in holes) involves taking people who weren’t in a hole in the first place, and putting them in one. I’m not claiming there aren’t examples, just that they may be hard to find and not terribly representative – exceptions rather than rules.

your analogy also highlights the importance of competition. Mainstream economics says that a monopolist will extract all the surplus (analogously, the person giving Tim a hand up out of his hole will take Tim for all he’s got) but if (in theory) there is competition the price will be competed down to the minimum required to break even – in your analogy, I might be willing to pull Tim out of a hole for 10p, if a competitor was offering to do it for 15p.

I agree with your paraphrasing of Churchill.
I was thinking of that myself when looking at the posts.
I would probably prefer living in Tim’s Utopia than Lenin’s.
As an democratic social democrat , who is to old to change, both fill me with trepidation

growth of security firms is all time low
Sorry I meant high

“Any system where the government seeks to control prices and wages is not a free market.”

True – but the 19th century Corn Laws (repealed in 1846) didn’t apply to working conditions in factories making textiles – Britain’s staple export through much of the 19th century – or to coal mining, industries where the abuse of children and women in employment was most prevalent.

” . . by the mid nineteenth century, [Britain] was exporting more than a third of its GDP – about three times as large a fraction as the US exports today. . . in a typical year in the late nineteenth century, Britain invested about 40 per cent of its savings overseas.” Paul Krugman: Peddling Prosperity (Norton, 1994) p.258/9

The Statute of Labourers 1351 was an attempt to control wages after the population ravages of the Black Death 1348/9 to prevent wage inflation at that time – concerns similar to the motives for the incomes policies introduced by Conservative and Labour governments in the 1970s:
http://en.wikipedia.org/wiki/Statute_of_Labourers_1351

Watchman
Surely the history of free marketeers is an immense dislike for any type of regulation.
The industrialists of the 19th C fought hand and nail to stop of the child labour laws.
Same with free trade slave owners who thought that freedom is about property rights not human rights
The Chinese brought in anti opium legislation, British free traders went to war about this legislation.,
What your proposing is more of wet Tory approach.

Bob,

True – but the 19th century Corn Laws (repealed in 1846) didn’t apply to working conditions in factories making textiles – Britain’s staple export through much of the 19th century – or to coal mining, industries where the abuse of children and women in employment was most prevalent.

No, although there were export limits and tariffs throughout our history. And there was pressure on government to control/liberalise wages. But the point is that the government there was run for the benefit of the rich at the expense of the poor (although socialism does not have such a good record outside of countries where measures are already in place to protect children). It was not run in the best interests of everyone, and therefore was a long way from a free market.

Markets work well most of the time.
Most people are aware that we are 10x better off than in Dickens’s time I think, and why.
But they are not “perfect”.
(WTF is?)

Option 1 – incremental reforms to help them work better.
Option 2 – NO, we must sweep away the WHOLE SHEBANG and replace it with….erm, we’ll come back to you on that.

I love it.

Typical cjcjc
Only plan A.
He is the Capello of blogging.

“The industrialists of the 19th C fought hand and nail to stop of the child labour laws.”

Well, actually, the 19th cent industrialists fought tooth and nail to have the British Factory Acts imposed upon the Indian textile industry (in, I think, 1888) which hadn the effect of entirely closing down the Indian industry and leaving the market all to the British manufacturers.

Something to think about in relation to the story we came in on, about the use of child labour in sweat shops in poor countries today.

If we insist upon the rules and regulations that we apply to ourselves (child labour, overtime, wages, holiday time etc) in a rich country where we can afford them being applied to poor people in a poor country where they cannot then the same thing will happen.

It won’t be better working conditions for those in sweatshops. It will be, just as happened last time in India, no working conditions for anyone in hte now non existent industries.

Back to hte fields and the brothels it will be then….

Most people are aware that we are 10x better off than in Dickens’s time I think, and why.

Could be many reasons, technology , democratic social democracy, trades unions, a more educated workforce, globalisation, television.
Do you know ?
I do know that to live the life of a middle class Victorian was a pleasant experience with a relatively long life. Not so nice for the poor.
CjCjC I bet you yearn for those days eh.
Kick a 11 year old chav down a mine.

“But the point is that the government there was run for the benefit of the rich at the expense of the poor ”

But how then how did Lord (Ashely) Shaftesbury persuade Parliament to pass the Factories Act of 1847?
http://en.wikipedia.org/wiki/Factories_Act_1847

Why did Parliament approve the 1870 Education Act?

We are apt to overlook that credit for starting a national welfare state must surely go to Count von Bismarck, first Chancellor of the German empire (1871-90), who launched not only state pensions for the aged but, in 1883, a social insurance scheme to cover personal healthcare costs:
http://en.wikipedia.org/wiki/Otto_von_Bismarck#Chancellor_of_the_German_Empire

Bismarck was not renown for his socialist inclinations.

The Elizabethan poor laws created local administrative structures to provide care for the poor and needy:
http://www.victorianweb.org/history/poorlaw/elizpl.html

So industrialists didn’t fight against the child factory acts Tim.

The rights for workers is that one of reasons why I support Globalisation. Why not only have world trade but also a trading of ideas such as workers rights, child labour laws, welfare for very poor and free education for all.

Also many forget the reasons why the liberals brought in social insurance was the Boer war.
Most of the working class soldiers were so ill educated and unhealthy,

What on earth are you talking about?

Indeed “Plan A” – which of course involved little formal “planning” – can be summed up as “technology” and “globalisation”.

@113

Because of working-class agitation and resistance. Chartists, etc.

PS I might be more amenable (who knows?) to Plan B if anyone would care to tell me WHAT IT WAS!

What on earth are you talking about?

Indeed “Plan A” – which of course involved little formal “planning” – can be summed up as “technology” and “globalisation”.

That sounds like the third reich.

Rhys,

Technology and globalisation sound like just about every movement other than nationalism (which might bring the third reich into question…) ever.

But that does not make them wrong. After all, wasn’t socialism based on technological progress and globalisation of the idea?

“Why not only have world trade but also a trading of ideas such as workers rights, child labour laws, welfare for very poor and free education for all.”

Trade in such ideas? Great, bring it on. But as above, trade is voluntary, not something which is imposed. So we don’t get to tell them what they must do…..we have to limit ourselves to advising them on what they could do….

Rhys,

Watchman
Surely the history of free marketeers is an immense dislike for any type of regulation.
The industrialists of the 19th C fought hand and nail to stop of the child labour laws.
Same with free trade slave owners who thought that freedom is about property rights not human rights
The Chinese brought in anti opium legislation, British free traders went to war about this legislation.,
What your proposing is more of wet Tory approach.

As I keep pointing out, your error is to equate free marketeers with nineteenth-century industralists, who might want free trade (for them) but were happy to allow government to control the market to their benefit.

It would help you in picking targets and me in getting understood if you realised that free marketeers are generally opposed to monopolistic corporations and explotive industry, as they are not part of a free market (the hint here would be monopoly and explotation – both of these are anathema to a proper market, and also to the comment of freedom). Free markets would produce constant competion, which is not what industrialists want. So by pointing out the behaviour of nineteenth-century industrialists you do not actually affect the arguments concerning free markets. This is actually akin to assuming that all modern socialists must agree with the Luddites. To put it plainly, the nineteenth-century industrialists were interested in their own profits, not a free market, and acted accordingly. To be fair, many of their modern equivalents are the same, but I will not defend their actions either.

I’m not so sure that the Factories Act and the Education Act were introduced to benefit the poor, or the welfare state @15 points out, around half of working-class males were deemed unfit for service during the Boar War, and the cold war, wasn’t an insignifant factor in convincing pro-marketeers such as Churchill that welfare was the way to go to produce healthy males as war fodder.
The Education Act directly led to thousands of poor children being abandoned by their parent (usually one was dead), as they could not contribute economically, this was the catalyst for the emergence of the Barnardo homes. The Factories Act significantly reduced the income of poor families and women and children were left with (mainly) domestic service, which was poorly paid by comparison. And, of course, the impetus of industrialization demanded a better educated workforce, in other words, the poor were educated for the benefit of the owners.

I meant to refer to @115

Tim Worstall: “So, how do we get from here to there? There’s only one way we actually know of which is economic development. Places need to be rich (or at least substantially richer than they are) in order not to be using child labour. In order to be rich enough to provide that option.”

You appear to be under the illusion that the USA – or at least its level of wealth – represents the logical conclusion of capitalism. It is, as we are always told, the most capitalist country in the world. Follow the free market mantras with sufficient fervour, and your country too will become as rich as the USA.

But why should capitalism make all countries wealthy? Wealth isn’t the goal of free markets; maximising profit is the goal, requiring maximum economic efficiency. Cheap labour is absolutely essential for economic efficiency. It is as much part of capitalism as western consumerism.

The reason extreme poverty largely vanished from Europe was not because the wonders of capitalism meant the rising tide of wealth lifted all boats, but because it was less efficient to keep the providers of cheap labour where they could be readily seen and sympathised with, resulting in bleeding-heart liberals reducing economic efficiency (and with it the prosperity of the economic elite) by insisting on things like minimum wages and unemployment benefits. So instead, we just shifted that part of our economy to other continents.

I’m not denying free market capitalism generates wealth and technological progress overall, but it requires huge inequality to do that. Poverty in the service of capitalism is what large parts of the world are developing toward, not what they’re developing out of, and child labour is part of that. If social democracy were somehow defeated in Europe, and the laws regulating labour repealed, I’m sure we’d soon see the cheap labour (and child labour) coming right back.

cjcjcjcjcjcjcjcjcjcjcjcjcjcjcjcjcjcjcj

“Most people are aware that we are 10x better off than in Dickens’s time I think, and why.”

Fucking priceless!!! cj argues against himself and the other Rand nutters.

And what did we have in Dickens time? Your so called deregulated free market. And now you claim we are better off than then. Right on man! And how did we get there?

In 1920 90% of the Uks wealth was in the hands of 10% of the population. So after 150-175 years of deregulated capitalism ,the vast majority of the country’s wealth was in the hands of a tiny minority. So called trickle down did not work. Move forward 50 years to the early 1970’s and 90% of the wealth was now in the hands of 50% of the population. How was that achieved? Well first off we had two world wars. In the case of the first world war it wiped out a generation of men. It allowed woman into the work force. Then we had the setting up of the welfare state and the NHS.

Trickle down sucks, and always has. It does not redistribute downwards it redistributes upwards to the rich elites. Which is why they pay money to morons like Tim Rand to write his bullshit in right leaning publications. Interesting to see him and the other Rand’s defending child labour because off course it has always been the backbone of capitalist policy. The British Empire was build on child Labour and slavery.

“So we don’t get to tell them what they must do…..we have to limit ourselves to advising them on what they could do”
I did say trade ideas not impose ideas but that is a two way sword.

“As I keep pointing out, your error is to equate free marketeers with nineteenth-century industrialists, who might want free trade (for them) but were happy to allow government to control the market to their benefit.”
I think most industrialists did believe in total free market, they adhered to the ideas of Smith.

“It would help you in picking targets and me in getting understood if you realised that free marketeers are generally opposed to monopolistic corporations and explotive industry, as they are not part of a free market (the hint here would be monopoly and explotation – both of these are anathema to a proper market, and also to the comment of freedom).”

Surely the point is you may be opposed to the above but in reality monopolistic corporations and exploitive industry are is the finished article with a deregulated free market system. Television is a prime example . You start with Reithian ideals and end up with Big Brother. Also take the idea of the share owning democracy and public utilities. What owns the public utilities now , monopolistic corporations. Big fish will always eat up the small fish

” Free markets would produce constant competion, which is not what industrialists want. So by pointing out the behaviour of nineteenth-century industrialists you do not actually affect the arguments concerning free markets.
I have read Ayn R and she defends this type of 19th industrialist century egoism”. She is quite modern, isn’t she and is quite influential amongst thinkers such as Friedman and Chicago school.
Although I agree with that there is plethora of ideas of how we should run our society and the free market.

” This is actually akin to assuming that all modern socialists must agree with the Luddites. To put it plainly, the nineteenth-century industrialists were interested in their own profits, not a free market, and acted accordingly. To be fair, many of their modern equivalents are the same, but I will not defend their actions either.”

Surely that is the whole purpose of a free market to look after number one, greed is good (aka Gordon Gekko), and crush your competitors.
For nice guy theorists like yourself it may seem very pleasant , the reality is that it is a dog eat dog world out there

““So, how do we get from here to there? There’s only one way we actually know of which is economic development. Places need to be rich (or at least substantially richer than they are) in order not to be using child labour. In order to be rich enough to provide that option.”

200 plus years of economics and the best the subject can come up with as a development strategy is child labour, sweatshops for a few decades until growth in gdp allows you to slowly develop an education system (privately of course).

Lets see what impact that has on international relations. Its 2020 and peace talks are secretly going on between NATO and the Taliban.

Taliban: Ok, so we put our guns down. What policies are you going to suggest we do to re-build the country?
NATO: Well we suggest you run your country according to the one way we know of which is economic development. You can have sweatshops, child labour and all your resources owned by foreign corporations, and then after 40 years of 5% growth every year you may be able to risk making it illegal to employ children.
Taliban: Ok, so we’re fucked, but our sacrifices in working 16 hour shifts to make jeans for fat americans may mean our grandchildren may be able to get an education?
NATO: well not really, you’ll have developed libertarianism by then and taxing your population to fund an education system will be deemed oppressive.

It’s a truly inspiring vision isn’t it?

Sally,

And what did we have in Dickens time? Your so called deregulated free market. And now you claim we are better off than then. Right on man! And how did we get there?

As I keep saying, this was not a free market. Government control of the economy was much tighter, both because it was politically acceptable and because it was much easier (a much smaller population, with a GDP per head a tenth of our own – that is a much smaller amount of transactions etc to control). Furthermore, indenture was still practised (long-term contracts binding people to work for one employer), and there were plenty of one-firm towns where the factory/mine effectively was the only employer – also not free market conditions. You need to set out why you think this was a free market, as I think we will be in agreement that the conditions represented would not be acceptable now.

As to how we got there, if GDP per head increased tenfold, then that is the answer. Identify where the increases in GDP are. I doubt you will find them in the state, since the state has created very little that was new – the nationalised industries already existed for example. My suggestion would be that liberalisation of the markets was a major player.

Using free trade and totally unregulated free markets interchangeably is not accurate because they are different things. Free trade is a progressive issue just as it was throughout the 19th century when its supporters opposed the monopolists, guilds, landowners and entrenched power. Unregulated free markets where the capital rich can exploit the capital poor is not progressive.

Of course there is no such thing as a free market. But the 19th century is held up by the free marketers and Rand nutters as the great panacea. The Conservatives split themselves in two over the corn laws, as the usual lazy tory farmer/landowners wanted protection, and an easy life for himself. Which was a bit rich since the same tory land owner had stolen a lot of his land through the Enclosure acts. Nothing changes as far as the farmers are concerned. They still want a fixed market, and no competition, while supporting govts that push so called free markets on other industries.

Anyway it is pointless argument.
The right and the market has won. I hate to say it but Tim W and his sweat shops and cjcjc and his plan A (the market 3rd Reich) are the only games in town
The right and the market is here to stay for a long time.
Until a fuckin asteroid hits us or a religious nut jobs attach Ebola virus DNA to the common cold to start the rapture
For lefties sit on the side lines and watch the the right fighting amongst themselves on various issues but not on economic lines.

Rhys,

“As I keep pointing out, your error is to equate free marketeers with nineteenth-century industrialists, who might want free trade (for them) but were happy to allow government to control the market to their benefit.”
I think most industrialists did believe in total free market, they adhered to the ideas of Smith.

Did Smith believe in a free market? He believed in a liberalised market, but I honestly don’t know if he was advocating what I would describe as a free market. And nineteenth-century industrialists were not generally following what Smith wrote to the letter, merely those bits that suited them (as with most people using ideologies).

“It would help you in picking targets and me in getting understood if you realised that free marketeers are generally opposed to monopolistic corporations and explotive industry, as they are not part of a free market (the hint here would be monopoly and explotation – both of these are anathema to a proper market, and also to the comment of freedom).”
Surely the point is you may be opposed to the above but in reality monopolistic corporations and exploitive industry are is the finished article with a deregulated free market system. Television is a prime example . You start with Reithian ideals and end up with Big Brother. Also take the idea of the share owning democracy and public utilities. What owns the public utilities now , monopolistic corporations. Big fish will always eat up the small fish

The public utilities are not a free market, because government controls access to the market (and effectively imposed a barrier by selling off existing concerns). Likewise television, which is hardly a free market (Sky is a monopoly in satellite terms, government control all broadcasting to some extent). The most free-market example I can think of, HBO, a subscription channel in the US, doesn’t produce Big Brother though, whereas Channel 4, a government-mandated and insured channel in the UK does. Although this leads to the question of why Riethian ideals are better than Big Brother – is that not for the viewer to decide?

You are correct about big fish eating small fish. But the setups you mention don’t allow more small fish to enter the pond due to barriers on entry, whereas a free market would do, so the big fish has to continually compete or be eaten in turn.

“Free markets would produce constant competion, which is not what industrialists want. So by pointing out the behaviour of nineteenth-century industrialists you do not actually affect the arguments concerning free markets.”
I have read Ayn R and she defends this type of 19th industrialist century egoism. She is quite modern, isn’t she and is quite influential amongst thinkers such as Friedman and Chicago school.
Although I agree with that there is plethora of ideas of how we should run our society and the free market.

Ayn Rand is neither here nor there, in that she is simply a writer, who I have not read (I don’t need to read a novelist to understand free markets). I’d also dispute modern – Atlas Shrugged is older than me, and I’m hardly young any more. She may think greed is good, or whatever, but why is that relevant to this discussion – you need to show that nineteenth-century industrialists’ behaviour is free-market driven, not that someone who has a fairly influential role in the philosophy of some free marketeers (I don’t remember Tim W citing Rand for example) thought nineteenth-century industrialists greed was good.

“This is actually akin to assuming that all modern socialists must agree with the Luddites. To put it plainly, the nineteenth-century industrialists were interested in their own profits, not a free market, and acted accordingly. To be fair, many of their modern equivalents are the same, but I will not defend their actions either.”
Surely that is the whole purpose of a free market to look after number one, greed is good (aka Gordon Gekko), and crush your competitors.
For nice guy theorists like yourself it may seem very pleasant , the reality is that it is a dog eat dog world out there

The purpose of a free market is to ensure that all consumers have all the information needed to make an informed judgement. The free market is not designed to benefit the seller – that would not be fully free, if the seller can constrain the market. The free market is opposed to monopolies and exploitation, as I keep stating, because these are distortians. So a free-market-supporting government legislates against these things.

So to put it simply, the free market benefits the consumer, which is to say everyone. The preconception that a free market means the producer/vendor can do as they like arises from a misconception of the reforms of the eighties (which were perhaps too much to the producer/vendor’s favour). Free marketeers do not want big entrenched interests enriching themselves at others’ (the free marketeers included) expense – a free market is designed to allow people to see that alternatives exist. Tescos is not a free market icon remember. I think that sometimes those in favour of state intervention think that free marketeers, who are allied with many businesses against this, therefore represent the interests of those businesses. This is not the case: a common cause does not make two ideologies identical, and we cannot boil everything down to left versus right, ignoring the huge differences within those labels and the similarities of views across them.

Sally,

Of course there is no such thing as a free market. But the 19th century is held up by the free marketers and Rand nutters as the great panacea. The Conservatives split themselves in two over the corn laws, as the usual lazy tory farmer/landowners wanted protection, and an easy life for himself. Which was a bit rich since the same tory land owner had stolen a lot of his land through the Enclosure acts. Nothing changes as far as the farmers are concerned. They still want a fixed market, and no competition, while supporting govts that push so called free markets on other industries.

Would it worry you that I agree with all of this (other than the implication all farmers are lazy tories, since I grew up around farmers who worked hard for no profit). As a free marketeer I oppose the idea of a fixed market with no competition (so in this case, predominantly the European Agricultural Policy), and I abhor governments pushing anything other than duties to care for workers on industries. I keep trying to push the point there is a lot of agreement between free marketeers and left-wing thinking, and that there is a common enemy in the form of vested interests who do not want competition.

Incidentally, doesn’t Ayn Rand refer to the United States in the nineteenth century, where there was something closer to a deregulated market compared to the United Kingdom? Still a long way from free though – how would information (the key commodity in any free market) travel quickly in the nineteenth century?

From my perspective, the important issue is not about a preference between liberal market capitalism and some unspecified leftist system of allocating resources but about what particular combination of laws, regulations and enforcement systems with liberal market capitalism is the best compromise solution between promoting economic prosperity along with protecting personal freedoms and property rights while achieving some measure of social justice.

As has been said here several times: the ain’t no such thing as FREE market capitalism, except perhaps in the middle of a tropical jungle, the Sahara desert or in failed states where expected laws protecting property right don’t prevail.

“Ayn Rand is neither here nor there, ”

I am not sure about that. Her influence, particularly in America on the Right of the Republican party is huge. And is growing more and more even though she was insane. It is almost required reading if you want to be considered seriously by the Right wing. And they have a huge say in how the world is governed.

One of the biggest myths of capitalism is that capitalists love competition. They don’t. But they would look very stupid if they admitted that in public. So they manoeuvre behind the scenes to acquire monopoly positions. This involves, Buying political favour, insider trading, bypassing planning laws, fixing prices, with competitors.

But you won’t here that form Digby Jones and his band of merry men.

Sally,

I think we could phrase a question ‘are capitalists free marketeers’?

To which the answer would probably be that some are, others aren’t and a lot might play lip service but aren’t really.

As to Rand, at the moment the American right are are recovering from a backward-looking illiberal phase, inspired ironically by big government under George W. Bush, so I suspect the interest in Rand is a reaction to this – seeking a new direction with explicitly less government, something of a return to a past position which was more popular and successful. It would be interesting to know if the required Rand knowledge was deep belief or merely a familiarity with the concepts Rand champions though – as this is politics, I’d guess the latter.

“One of the biggest myths of capitalism is that capitalists love competition. They don’t. But they would look very stupid if they admitted that in public. So they manoeuvre behind the scenes to acquire monopoly positions. This involves, Buying political favour, insider trading, bypassing planning laws, fixing prices, with competitors.

But you won’t here that form Digby Jones and his band of merry men.”

You’re absolutely right Sally. In fact, that’s the first thing I’ve seen of yours about which I could say that.

Which is why people like me, the Adam Smith Inst (and Smith himself) and just about every “right wing” economist I can think of (yes, including Milton Friedman….his Ph D thesis was on exactly how the American Medical Association conspires to gain a monopoly position) spend out time shouting about how we shouldn’t allow people or companies to “acquire monopoly positions. This involves, Buying political favour, insider trading, bypassing planning laws, fixing prices, with competitors.”

No, really, we do.

Watchman
How on earth do you get this idealised version of the market.
Bob is right your ideas will never become practice. like pure communism because you forget the basic instinct of man is greed and to be number one
Yes in theory but not in practice.
Also you talk about regulation and the market, isn’t that not to far from democratic Gait skill social democracy
As for Rand and others of her ilk, yes they defended the 19th C US industrialist (although I don’t think she made a distinction between any nation’s industrialists) but anyway their behaviour towards native and black Americans and the working classes wasn’t actually that pleasant. They were defended because of their egoism and they put self interest first. All of Tim and your ideas are just knocked off from the Friedmans Chicago school of thinking. They were certainly influenced by Rand and Hayek and this form of egoism

139

I think I need to go and have a lie down!

Tim
Are you not putting limitations on entrepeneurs.
A man buys one sweet shop, then buys another but he cannot buy the third.
You would be the first to moan that it was a restriction of trade.
In the debate about council housing your lot moaned about planning restrictions now you say it is essential for the market

I do find your position full of logical fallacies.

Although this leads to the question of why Riethian ideals are better than Big Brother – is that not for the viewer to decide?
Exploitive of people who have SEN who feel their only way to succeed is to indulge in base acts for the public.
The viewers would like to see snuff movies but you have moral obligations

Rhys,

It’s not a logical fallacy, but it is an example of why the state is needed to ensure that markets operate in a beneficial fashion (and it’s absolute mainstream economics). It’s only logically inconsistent if you interpret “free markets” to mean some weird anarchic non-existent ideal, free of all state interference. Such a definition isn’t very useful (it doesn’t refer to anything that exists).

More useful is to define the term “free markets” to refer to markets like, say, that for personal computers. That exists with a setting of lots of laws and standards, and yet where companies are (more or less) free to enter, free to choose what to sell, at what price, how much to pay their workers, and free of other significant interference, like state subsidies. This definition is more grey than black and white, and a matter of degree not of type.

Rhys,

Watchman
How on earth do you get this idealised version of the market.
Bob is right your ideas will never become practice. like pure communism because you forget the basic instinct of man is greed and to be number one
Yes in theory but not in practice

It may not surprise you to discover I consider myself a communist in the sense of pure communism (more Engels’ than Marx’s version though). However, I do not believe either communism or the free market (and I think that the latter leads to the former) is unattainable, although they rely on technological advances continuing – I suggest reading Iain M Banks culture novels, which are a far better guide to an aspirational future (even if once he created it he focuses on the disfunctional edges) than Rand’s writings can ever be. My ideas are deliberately idealised, but I see no reason to say they are totally impossible, just not currently achievable. And working towards them is still a benefit to all (apart from monopolists…).

Also you talk about regulation and the market, isn’t that not to far from democratic Gait skill social democracy

Probably not too far. As I have stated around here a few times there was a need for socialism and its measures once, and many of these and the underlying ideas still have their place. The free market does not mean that government needs to have no functions – minimal functions (ideally where possible contracted rather than run by government) would include healthcare, social security etc as well as ensuring no-one in the market was exploiting others.

As for Rand and others of her ilk, yes they defended the 19th C US industrialist (although I don’t think she made a distinction between any nation’s industrialists) but anyway their behaviour towards native and black Americans and the working classes wasn’t actually that pleasant. They were defended because of their egoism and they put self interest first. All of Tim and your ideas are just knocked off from the Friedmans Chicago school of thinking. They were certainly influenced by Rand and Hayek and this form of egoism

Tim may be a Friedmannite, but I don’t have the level of knowledge to say for sure whether I am or not. Anyway, if I chose to take the egoism out of the free market (if the quest for profit is sustainable without this, which I would argue it is) is that not a significantly different position from the one you are criticising, and which I seem to be against also? There is no tenable position of criticising my support for a free market on the basis that some of my ideas have been drawn from writers who interpret certain facts in a very different way from me. I am happy to draw a distinction here (not that I’ve read Rand or very much Hayek anyway).

Luis 144, all very true, but that rather flies in the face of Tim’s insistence that all voluntary transactions are wonderful and, by definition, make everyone better off. Any reason that doesn’t apply in a monopolistic situation? It’s still a voluntary transaction, isn’t it?

Rather, the fact that all but the most extreme of anarcho-capitalists accept the need for antitrust law and the rest shows that almost no-one actually believes the simplistic definitional reasoning Tim offered above.

Larry,

Sure … see my reply to you at 103. I agree Tim’s truisms (ought to) convince no one.

Ah Rhys, you should have been aware I’d be ready for this:

Although this leads to the question of why Riethian ideals are better than Big Brother – is that not for the viewer to decide?
Exploitive of people who have SEN who feel their only way to succeed is to indulge in base acts for the public.
The viewers would like to see snuff movies but you have moral obligations

Ignoring the clear moral judgement on your part about Big Brother contestants (I doubt many have any disabilities or learning difficulties, since Endemol/Channel 4 would have a duty of care), I think you are missing two key points.

Firstly, unless there has been some rather horrifying surveys of late, I doubt there is any evidence that viewers would like to see snuff movies, which strike me as rather an extreme taste. Although there are plenty of movies available in which stimulated snuff takes place (Hostel for example), and I have more sense than to google snuff movie because I suspect what I find would be horrible (and hard to explain to the wife…).

Secondly, and more importantly, my point of view is liberal. So the pseudo-Millsian commandment of ‘do no harm’ applies. Clearly snuff movies involve harm, so should not be allowed, since to do otherwise puts a market value on human life, which is one commodity I do not think anyone wants to see traded. But Big Brother does not do harm to anyone – it is their own actions on which contestatnts are judged.

I fear your post, and concern with Reithian values, suggest a rather conservative mindset, a desire to stem the tide and stop change. And this is also what I sometimes think sits at the base of much opposition to free markets – a fear of change, a desire to hold on to what is familiar as long as possible. Understandable enough, but a point of view that becomes reactionary very quickly. If you think that people making a judgement to debase themselves on television is morally wrong, are you not declaring yourself their superior simply on the basis of your own beliefs? In holding this sense of rightness, you do not consider that people are capable of making their own choices – that they do not need to fit the neat categories of appropriate behaviour others have made for them, that they see a market opportunity for themselves, that they simply don’t care. In the end, why should you be able to force someone to care, when you would oppose a business forcing someone to work? What gives you the moral superiority over a capitalist who also seeks to control others through force (moral pressure and legislation are non-negotiable, so constitute force)?

Sally @133: “One of the biggest myths of capitalism is that capitalists love competition.”

Adam Smith knew better:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”
From Adam Smith: The Wealth of Nations; (1776), Book 1, Chapter 10, Part 2

This is why, in Britain, we have the Office of Fair Trading:
http://www.oft.gov.uk/

And the Competition Commission:
http://www.competition-commission.org.uk/

In the EU, jurisdiction on competition law is shared between the EU and member states:
http://en.wikipedia.org/wiki/European_Union_competition_law

134. Watchman

‘ Incidentally, doesn’t Ayn Rand refer to the United States in the nineteenth century, where there was something closer to a deregulated market compared to the United Kingdom? Still a long way from free though – how would information (the key commodity in any free market) travel quickly in the nineteenth century? ‘

You’ve got to be joking, Watchman. The US in the nineteenth century were a bunch of mercantillist protectionists. Britain has a much better record in being consistently freeish traders. Moreover, the US are still far more protectionist than Britain.

I don’t see what a nihilist like Ayn Rand has to do with the debate, but I would agree with others that she was a fruitcake. She was an elitist who had a personality disorder with a weird warped mind. A deeply disturbed individual who hero worshiped a child serial killer because he was expressing his individuality. It is ironic to see the cult growing on the religious far right of the Republican party when she despised religion and its adherents. Moreover, she despised democracy itself even more than religion. As with any cult the zealots who follow are often more weird than the original.

“Which is why people like me … spend out time shouting about how we shouldn’t allow people or companies to “acquire monopoly positions. This involves, Buying political favour, insider trading, bypassing planning laws, fixing prices, with competitors.”

That’s true. Most libertarians don’t like monopolies, and the conventional economic orthodoxy these days is indeed more of a kind of corporatist/libertarian hybrid.

But the free market frequently seems to lead to monopolies, and libertarianism offers no practical method of preventing them. Spending the whole time shouting about how bad they are is unlikely to achieve anything, unless practical measures follow. But under libertarianism all practical solutions are barred – state agencies interfering with the natural functioning of the market are complete anathema. Property rights are sacrosanct – and the monopolist holds those.

Besides, as we are continually told by free marketeers, objecting to Tesco holding a local monopoly is stupid luddism: it got there because the people chose it in the free market. The fact of the existence of the monopoly proves that it is the perfect outcome for all (except crazy leftists who turn their nose up at the people’s choice)…

“But the free market frequently seems to lead to monopolies, and libertarianism offers no practical method of preventing them.”

This is one of the fundamental differences between libertarianism and classical liberalism. The latter are more willing to agree that markets aren’t perfect, that sometimes they fail and even that at times government intervetion is a decent, just and righteous method of correcting that failure.

Which is why I’m a classical liberal, not a libertarian.

We are still, of course, extremely cynical about what government, the State, will actually do….to hte point that we think that often.most of the time/nearly always, the interventions make things worse, but we are at least open to hte idea that things can be made better.

For example, us Adam Smith Inst types. Entirely in favour of the congestion charge (we supported it for some decades actually), just fine with carbon taxes (we argue about whether cap and trade is better or not, not about whether we should do something about CO2 emissions) and so on.

Just absolutely frumptious about the national grid, a natural monopoly, being a regulated monopoly while generators, not a natural monopoly, are forced into a market.

If what you say is true Tim Rand may I suggest you and your Adam Smith types come out more in attacking monopolys and capitalists who hate competition, and stop attacking govt all the time.

Or could it be that would mean attacking the hand that feeds you, and the people who fund your groups?

Watchman
I think you are right I am slightly conservative with a small c.
I would not ban big brother but I do feel that a dumbing down is not good for the well being of the general population.
I take Stephen Frys view of the programme
I come from that now defunct tradition of wanting to go night school to better one self and that should be continuous.
But as you boys say if there is market
Also change for the sake of change is not necessarily a good thing.
Society need negative Nora’s as well as Positive Pams.
How many mistakes have we had from the left and right purely because someone didn’t say “That might not work”
But the right has won economically.
As I said Tim W, cjcjc and yourself’s view will be the prevalant ideology for the next 20 years
A market solution for every problem.
So as I said early the left should hibernate for the next 20 years.
Pointless debating.
All the best.

As I said Tim W, cjcjc and yourself’s view will be the prevalant ideology for the next 20 years

I do hope not. I’d hope we’d get to a new set of debates within a generation or so, or I’ll be so terribly bored.

Actually, you may be right in that some of our views are winning arguments, in the same way as some of the left-wing views of the mid-twentieth century are now uncontroversial and accepted (NHS, welfare state). But once the key points are in place to develop, it would be wrong to sit back on our ideologies and relax – this is what kills movements, trying to defend their radical changes makes them conservative. If free(r) markets win through to stand alongside government support for the needy, then fair enough, but something else will come along to be the focus of argument, and the current champions of the market will likely be so busy defending markets they miss the fact that that is no longer the argument.

Hibernation would be a bad idea for the left though – they have to develop their own new ideologies over time, as the old one won’t be any less inapplicable in twenty years than it is now. Which is not to say the roots of socialist and social democratic thought might not spring up something new and attractive (I continue to hope – I really worry about the current lack of direction within Labour).

Watchman
Rhys might be right about Murdoch.
You mention HBO as an example of independent free market broadcasting.
I have just read it is to be brought by Murdoch.

One of those reports on Reform was written by one Vincent Cable last year. Admittedly the Lib Dem site does state it isn’t official policy but still: http://bit.ly/dm6yCh