Tuesday, November 11, 2008

On libertarianism and public goods

I have noticed an article in Tristan Mills' shared links defending libertarianism from the objection that the free market would undersupply public goods.

If that's all Greek to you, some explanation. 

Shared links - a bloggers tool for sharing articles read elsewhere that might be interesting. My most recent shared links are listed on the right under the imperative read this too. A bit like libdig for one.

Libertarianism - an ideology that holds that a) property is more important than liberty, and b) that everything the state does is evil. At least those seem to be the priorities. If you are interested in libertarianism, I strongly recommend reading this, detailing one liberterian's escape after seeing the flaws in the ideology. In fact it is a more worthwhile read than the rest of this blog post. You can skip the stuff about the minimum wage. You may ask why I show so much interest in such a fringe ideology: it is partly based on that article that I believe libertarians are usually redeemable. (And while the arguments are specifically about the Ayn Rand flavour of libertarianism, most are applicable to saner flavours.)

Public goods  - (wikipedia) goods that we benefit from, like air, science and free software, that we don't use up by enjoying, nor can we be effectively prevented from using.

OK, so what does this article say? There's a certain amount of reference to prior arguments, so pay attention.  I should add that the author, ka1igu1a, appears to be one of the better kinds of libertarian, so I may be making some unfair assumptions.

[quoting] Underproduction of public goods is inevitable in the presence of 1) the ability to free-ride (i.e. non-excludable goods) and 2) rational self-interest.[end quote]

Knapp attacked this position by claiming "underproduction" to be subjective measure, a measure typically proclaimed by fiat by the central planner. Holtz's rejoinder to Knapp was that Knapp didn't understand "higher mathematics" and that economists have in their toolbox mathematical measures of optimality, including such measures of Pareto or Kaldor-Hicks Efficiency.

However, ... In Public Choice theory, the "Redistribution Problem" is recast as "Government Failure." Government Failure more or less holds that public goods will be systematically over-produced. It should be noted that "over-production" violates any algorithmic standard of optimality just as under-production does; and,in fact, the violations can be much worse.

I have used the ellipsis to cut out what is presumably a carefully constructed argument, which I will take for granted. Ka1igu1a's retort boils down to this. Free markets may underproduce public goods (although I'm not necessarily accepting this), but governments overproduce them. This is of course no contradiction. I think it is probably true that markets underproduce public goods and governments overproduce them. This is hardly a compelling argument for the abolition of governments, but it is one for not letting them get too big.

The classic example of a public good supposedly is "national defense." Of course, it's difficult to justify why the US needs to spend roughly a trillion dollars a year on national defense. National Defense is Exhibit A of "government failure." The government failure is not in providing the public good of "defense," but that the overproduction of this public good is orders of magnitude more inefficient than any "market failure" could ever possibly be.

A good example. I agree that the US defence budget is too large. On the other hand I'm not sure that all defence budgets around the world are always too large. There are times, aren't there, when rearmament is a necessary evil? The 30s come to mind.

If you seriously believe that the US military industrial complex, with all it's stockpiles of WMD, is somehow a legitimate consequence of meeting a "public good,"

A US focus is fair enough on a US blog - but how does this argument apply elsewhere in the world? 

Holtz seems unaware that human instrumental rationality, point (2), has been debunked by experimental economics, sociology, and game Theory for some time now.

No no no. If the problem is that it is irrational to produce public goods, it misses the point to assert that people aren't particularly rational anyway. Any rationality will lead to underproduction of public goods and any irrationality will lead to, well it could lead to anything, but there is no way you can predict it would lead to a systematic balancing overproduction of public goods. This is a very sloppy argument.

I should point out that Freedom Democrats utilizes Drupal Open Source Software. According to Holtz, I really shouldn't be even posting on this site, because Open Source Software should have long ago been killed by the non-excludable, free-rider problem. Yes, Open Source Software satisfies the definition of a "public good," however no one seriously would even dare to make a Pareto-optimality argument against it's under-production.  Holtz's "inevitably argument" is empirically debunked.

If only Holtz had said that no public goods would be freely produced, ka1igu1a would have a point, but he didn't and he doesn't. My guess is that production of more, better open source software would be closer to Pareto optimal. Not that I think the state can do much to help.

OK, so where does this leave us. Public goods will be underproduced by free markets. There is a real dearth, I suspect, of very useful information. Trivial information you can put in a magazine or something and sell, but anything really important people will hear about, and you can't copyright the truth. In some respects governments do OK here - they pay for scientific research for example. But I guess if they did the same with software, it would be a disaster.

But drawing to a conlcusion, there seems to be a desperation among libertarians to come to the right conclusions however sloppy the arguments used to get there. To me this suggests that we are not dealing with the real reasons somebody has for supporting libertarianism. It suggests an approach which claims to know the answer before the question has been asked. This is not principled or rational, but arbitrary and dogmatic.

Monday, November 10, 2008

Tax: Labour to copy the Lib Dems; Tories to lose the plot

We hear that Gordon Brown (not Alasdair Darling - what is his job, again?) is thinking about tax cuts as part of a fiscal stimulus package. This is something that the Lib Dems have been advocating for some time, particularly that taxes on people on lower and middle incomes are particularly good candidates for lowering to stimulate the economy. Such people are most likely to spend the extra money, and, if they are homeowners, to keep their homes as a result. This sort of stimulus also has the advantage over extra public spending in that it benefits the private sector directly, not just indirectly. More from Nick Clegg and myself on this here.

Some will doubtless feel offended at Labour stealing our policies, but I rather like it. They are admitting to the world that we were right all along, again, and that if you want the right policies on the economy without months or years of dithering first, then vote Lib Dem.

The Tories on the other hand, well, what can I say. 

The Tories unveil their own plans, aimed at dealing specifically with unemployment, on Tuesday.

They say they would fund tax cuts through existing spending and not - as they suspect the government would do - through borrowing. 

The Today programme was suggesting this means tax cuts targetted at people "likely to lose their jobs." Huh? What? How can you measure who is likely to lose their jobs, in a systematic enough way to include this concept in tax law? Or perhaps they just mean tax cuts for bankers. That could be it. But incorporating this kind of nebulous concept in tax law is even worse, and will lead to far more pointless complication of the tax system, than even Gordon Brown's insufferable tinkering. Whatever happened to a simpler tax system?

Bizarre as this is however, it is not the worst of it. They would fund these cuts "through existing spending" [cuts], not through borrowing. So this is not going to be a fiscal stimulus at all. The Tory response to the economic climate is to do nothing. Whoopee.

Tuesday, November 04, 2008

The Nick Clegg interview

I've been well scooped on this by Charlotte, but I don't mind at all. Sharp and lithe, she said I was and I still can't decide which is the more gratifying. Charlotte was smoking like a chimney - with carbon capture and storage - throughout on her e-cig, and none of us noticed. Ditto in the cafe afterwards, until she 'fessed up. It looks like technology has thoroughly solved the problem of nuisance smoke. But I digress.

So, given the chance to grill Nick Clegg, what I wanted to do was deal with some of the recent criticism, not all from enemies, that our policy of tax cuts for people on low and middle incomes doesn't stand up to scrutiny so well after the latest phase of the financial crisis - or at least that it is no longer so clear exactly what we are proposing. I was hoping to steer the conversation towards how we might restore the discomfort our policy had been causing the Tories, but it didn't turn out like that.

So here it is, and I'm working more or less from Charlotte's transcript, so thanks for that. Nick is in italics.

If you go back to before the latest tranche of the financial crisis, our policy of tax cuts for the poor was causing all sorts of discomfort for the conservatives and their policy of the cupboard was bare was looking a bit foolish. I don't think that's working quite so well now. A lot of people are saying you can't offer tax cuts to people at the moment, and the osbourne attitude to business appears to be picking up a bit. is that fair? is it harder for us now to capitalise on teh position we had?

I think it's exactly the reverse. The one thing people instinctively know you can't do as you head into a recession is jack taxes up. If you look at the number of now serious commentators in the press, who are now saying that if you want to stimulate growth, which is something you desperately need to do if you're heading into a very serious recession, one of the ways, not the only way, but one of the ways is by cutting taxes. in a way - and this is the crucial caveat - in a way which can stimulate spending. Every economist will tell you that if you provide top down tax cuts to people at the top as the tories have done with their only tax proposal on inheritance tax, it doesn't help the real economy because they just salt away the difference. bottom up tax cuts do, they're socially just, they're clear and so helps stimulate spending on the hight street because people on low incomes can have the money to spend it, so the economic logic has got greater. Meanwhile people like [?] saying that tax cuts are now necessary, that puts us on the right side of the argument. 

Look at the Tory position:I think the Tories have backed themselves into a disastrous cul-de-sac. There's no evidence that the Osbourne thing is filtering though. They've plummeted in the polls in terms of economic competence - hardly evidence of a message getting through to the public. What they're doing, which I think is a fascinating but from their point of view a disasterous strategic decision,is they have basically said to themselves, clearly, that their only purpose is to blame it all on Gordon, and that to do that they need to constantly go and on about how's he's spent too much in the past, therefore that allows us no flexibility to do anything now. I think it is a disasterous solution - firstly it's economically illiterate, because they're going on about government debt when the real issue in the British eoncomy is astronically high levels of private debt. I'm not pretending it's easy to make that distinction in public debate, but if you want to get down to the economic fundamentals - and you can argue it's a couple of percentage points to high or too low, but comparitarively speaking it's approximately 40%, it'll probably shoot up to 60% because of the automatic stabilisers and because of the bank bailout thing. Italian debt, if you want an extreme example is above 100%, French and German debt is about 20% higher and it's much, much lower than American debt. It's only, as any columnist will tell you - Government debt is - a compariative science. How are you compared in your Government debt to other government debts is often the crucial thing, because that's what leads to runs on currencies. So I think they're wrong economically, they're picking the wrong target, they're fighting over the wrong bone - government debt. The real problem is private debt. People have got themselves into terrible, terrible trouble. One of the ways you help people get out of debt is putting money back in their pockets.

Why this has been such a strategic disaster, is because their strategy is one of blame and inaction. They have no proactive menu to give the british people. they've got nothing to say on tax cuts, they've got nothing to say on interest rates. They say piffling stuff on small business, council tax - it's all smoke and mirrors and not serious. so i think they've got themselves into serious trouble. They can't do that for the next two years. "It's all your fault and there's nothing we can do" That council of despair is not going to work with the voters.

This is breathtakingly good stuff, and I am somewhat thrown off course by it all. Go back and read it again.

On a specific aspect of this, they're saying you shouldn't loosen fiscal policy at this sort of time...

They're not even saying that! Osbourne's remark was that he accepted borrowing going up.

The Keynesian line is that you do loosen fiscal policy because it keeps things going. I can see why they're trying to [oppose] that [loosening], because they're trying to reclaim a reputation for being sensible on the economy, which they'd lost to Labour.

I'm not sure about the transcript here, but what I am getting at is this. Osborne seems to be saying (I caught the first 5 minutes of one of his recent speeches), that you shouldn't loosen fiscal policy beyond the automatic stabilisers, because this does more harm than good to eventual recovery. So I am looking for our response to this specific point.

My feeling is that Osborne's point is over-simplified. There is a danger that if you expand the state to make up a shortfall in economic activity during a recession, then there will be no slack for the private sector to expand into, and so the recession will grind on. But to say that there should be no intentional expansion of state activity makes sense only if you do - as Osborne seems to - regard all state activity only as a deadweight drain on the productive economy; whereas if the state also has, through infrastructure, education and security for example, a positive effect on the private sector economy, then some expansion here, during a recession, seems much more reasonable. 

Of course, as Nick has said, tax cuts for the poor are also an effective fiscal stimulus, and one that boosts the private not the public sector.

Anyway, onwards...

Of course you need to be fiscally responsible. But you do that over the cycle. As we're heading into what might be the worst recession in a generation, it is recipe for masochism and greater recession if you spend all the time fighting over actually miniscule differences in government debt. You've got to get growth going. If you don't, there's no revenue there, [...]. That is a priority now. I think what's interesting about the Tories is that they don't understand the enormity of what we're up against. They certianly don't understand the enormity of the knock to the legitimacy of their own prejudices in favour of deregulated financial services and so on, and the don't undrstand the risks of their 'do nothing' strategy - which is what they are, in effect, advocating.

I change tack at this point

Well, Labour on the other hand have already spent all of our £20 billion, therefore we had a policy that was agreed before the latest crisis. To carry on, seemingly unchanged, seems like we're not accepting what's happened, that in two years we're going to have to start again.

First of all, you don't rewrite every pound and pence of your public spending plans in the middle of a vertical decline in the national econonmy. Clearly That's something you resolve, finally, when you go the country before the general election. Whether you like it or not it's a moving target - it's part of the art of politics. what you can do, and what we're rightly doing, is saying at precisely the time when how you spend pulbic money is more important than ever before, because in addition to value for money, and accountability to the taxpayer, you've also got to work out how the money you spend on behalf of the public is helping to stimulate the economy or not.i think we are quite right in saying that in those circumstances, the arguments we've always levelled against certain forms of public spending, 5 billon on id cards, 13 on nhs it system which doesn't work, 2 billion on a whitehall inspection regieme, 12 billion on a new it survilance scheme, that is not intelligence use of money. we object to those allocations of money on reasons of principle and policy, but they are especially daft at at time when you are hoping public is going to stimulate the economy, and so should be spent in different ways. 

I think this is a very important point. Some people who didn't particularly like Make it Happen (pdf),  were saying that it should be thrown out as soon as economic circumstances seemed to change. But the same arguments would apply to any spending policy they did like.

And I think this is a good answer to some of the complaints that we are not clear enough. Any package will have to be adjusted to point in the economic cycle we find ourselves in at election time - not the point we find ourselves in today - but that by making our views on fiscal policy clear, we can indicate today what kinds of adjustments those will be in a recession - largely that the spending/tax cut side will be maintained, but that revenue side will not be expected to fully deliver yet.

Nick senses what I have been groping for 

There's a slightly wider argument lurking behind your question - is public spending the right way to stimulate the economy? It is one way to stimulate demand, but it's not the only way, and crucially it's a delayed way of doing it. It has a chronology to it. The idea that brown should be become a latter day Anglo-Saxon version of Francois Mitterand , creating huge public projects around the country and this'll put us on the economic straight and narrow is a nonsense. Clearly public spending plays a role, borrowing goes up as the automatic stabilisers kick in, tax revenues go down, benefit payments go up.. i think what we need to do is maintain, as I tried to encapsulate in this week's prime minister's questions, that at precisely the times when millions of British families are tightening their belts, how government spends our money should be subject to even more scrunity than before. They need to be spending it on the right kinds of things. That seems to me more valid now than before. 

Oh, so I was just asking the usual Keynsian v Austrian kinda question. Bit of a wasted opportunity perhaps. In the back of my mind there was a particular political angle to this, some way to pin down what the Tories actually stand for on something. Is Osborne a hardline Austrian, and would this be politically damaging? But Nick, in full flow, is a force of nature, and we didn't get there. Perhaps just as well as I was sitting next to a renowned libertarian who is probably sympathetic to the Austrian school.

Jonathan, Charlotte, Alex, Mat and Millennium Dome himself went on to ask their questions. I needed a rest.

Thursday, October 23, 2008

Credit crunch: atheism to blame?

Featured on Liberal Democrat Voice
I wouldn't normally bother with the vomitings of Mad Mel Phillips, but this one has been noticed for her quite touching explanation of the current financial turmoil. Touching, that is, in an everything-is-about-my-pet-hates kinda way.

She writes:

I see this financial breakdown, moreover, as being not merely a moral crisis but the monetary expression of the broader degradation of our values – the erosion of duty and responsibility to others in favour of instant gratification, unlimited demands repackaged as ‘rights’ and the loss of self-discipline. And the root cause of that erosion is ‘militant atheism’ which, in junking religion, has destroyed our sense of anything beyond our material selves and the here and now and, through such hyper-individualism, paved the way for the onslaught on bedrock moral values expressed through such things as family breakdown and mass fatherlessness, educational collapse, widespread incivility, unprecedented levels of near psychopathic violent crime, epidemic drunkenness and drug abuse, the repudiation of all authority, the moral inversion of victim culture, the destruction of truth and objectivity and a corresponding rise in credulousness in the face of lies and propaganda -- and intimidation and bullying to drive this agenda into public policy.

Wow. Clearly, according to Mel, atheism is, more or less, a rejection of all values and virtues. I would defy anybody to see that in the work of, to pluck one out of the air, Robert Ingersoll

And Mel is wrong about unprecedented levels of violent crime. The past was much much more violent than today. See Pinker (text or video). I'm not sure what she means by the 'moral inversion of victim culture', presumably it is something to do with her desire to blame the victims of any injustices perpetrated by her in-group. The rest of the rant seems to be a complaint that people don't agree with her bile so much any more. Diddums.

Alonzo Fyfe likens this hate-speech against atheists to the hate-speech against Jews that was common in the 1930s, in the wake of another crash.

People seeking political power for themselves named Jews as the culprit, either through the corruption of their influence and their values on (otherwise) 'good' Christians, or as a part of a conspiracy to take over the world – or, at least, the global economy.

That vilification of the Jews had some very ugly consequences.

Today, blaming the Jews for economic bad news is not as popular as it used to be. Consequently, bigots need to find a new target group – one that can be effectively blamed where the people might actually believe the hate-mongering that the writers engage in.

I guess here in the UK we don't get quite as upset as this, but maybe we ought to. There is something compelling in the idea that if you have special access to knowledge of truth, beauty, and goodness, then those who disagree with you are on the side of lies, ugliness and evil. It is not just unthinking bigotry, but something that seeks to make bigotry a virtue, and the virtuous,  bigots. Yet, you can find the best and the worst of humanity in virtually every faith-related or other identity group. Liberals included. Remember this if you are tempted. Conservatives and socialists alike seek a tyranny of the good, and differ only in their notions of the good. Liberals recognise that this is an intellectual trap - that we should focus not on the virtue of a would-be tyrant, but on the tyranny.

Which brings me to the real point of this post. Some of Mel's themes are not entirely unfamiliar closer to home.  How's this:

Thus the inevitable decline in church attendance and religious belief, indicating the continued secularisation of British society, marches on. Religion, whilst clearly not the panacea for all the world's ills, at least has pretensions to a code by which it's devotees are to live and behave.

or this

such is the emerging animus towards religion, and such is the underlying utilitarianism of our political culture - that any statements about belief that are not utilitarian, including what we believe about right and wrong, are being similarly sidelined. This has brought with it something of a crisis of values inside the forces of liberalism.

These are quotes from Reinventing the State, the chapters by Lynne Featherstone and David Boyle  respectively.

Luckily what Lynne and David are doing is arguing an ideological point. Mel, on the other hand attacks an entire faith-identity group (atheists), indifferent to the actual, diverse values and practises of the members of this group. It is easy to miss the distinction. Indeed for writing this post, I went back to Reinventing the State, and failed to find the juicier, more prejudiced quotes I thought I had remembered reading.

There is still a danger - that many will not distinguish between disagreeing with secularists and attacking atheists, just as it is often hard to distinguish between disagreements with islam and attacks on muslims. But we have to live with this danger because the debate must be had.

Mad Mel, meanwhile, isn't interested in the debate. She regards people like myself, much like many regarded the Jews of the 1930s. We have corrupted society, because we apparently have no values. What is to be done about us?

Thursday, October 16, 2008

How not to destroy socialism

Charlotte Gore has kindly offered to destroy socialism for us, explaining that it is wrong for the state to force us to do things that it think are good for us. Who could disagree with that? The question becomes a little muddier when it is not force but taxation, and not what is good for us, but what is good for other people.

When libertarians equate taxation with force, it seems to be because they have a good presumption against the initiation of force, and want to use it again. And they are not their brothers' keepers.

The comments have thrown up something that I tend to take for granted when evaluating or justifying policies.

I asked Charlotte this: Do you object to socialism because it is justified in terms of the greater good? Or do you object to the idea of the greater good, because it is used to justify socialism?

and she replied

I think the point is that you can use 'The Greater Good' as a moral justification to commit almost any act. Socialism - both terrible ends and terrible means - is justified in the same way. 

So yes, I am against both the act and the moral justification that 'permits' the act. I am not against things just because they're justified by 'the Greater Good' - I just see it as a warning flag.

Now that you're asking, I think debating with people about whether or not Socialism would serve the Greater Good would, in effect, be to accept the premise of their argument - that the Greater Good can be a legitimate moral justification.

There's something in this I agree with. It is probably true that appeals to the greater good usually merit a reaction of horror.

And yet, I think a liberal society is a good one, in a way that a socialist or conservative society is not. Am I committing the same crime? So I responded along these lines:

I would agree that the "greater good" is a dangerously nebulous concept. So let's forget about the "greater". You are arguing, aren't you, that a smaller state is better than a bigger state? Some people will argue the opposite.

I say "X is good" and you disagree, do you say 

"No, X is bad"


"No, 'X is good' is not a legitimate moral justification."

Adding that I find it hard enough to work out sometimes what is good and what is bad, never mind what makes a "legitimate" moral justification.

The trouble for arch libertarians, as I see it is that they are saying that it is wrong to use certain kinds of argument as moral justifications for political action. This is itself a moral claim very much of the kind that it itself condemns.

It seems to me that libertarianism, like Marxism, is full of the kind of implicit moral claims that are also condemned. Respect property. Don't initiate force. Anything the government does is evil. If these are not moral claims, then what are they?

So what alternative do I offer?

It seems to me there are two phases to the evaluation of a policy. 1, a prediction of the policy's effects, and 2, evaluation of those effects according to our values, that is whether it has good consequences.

This does seem inescapably to rely on a notion of the good. Frankly, no other standard makes any sense to me, than that a policy should have good consequences. What else might I possibly want to care about? Good intentions? Purleeeze. The road to hell, etc. 

So it is a struggle to understand Charlotte's perspective that certain kinds of argument are dangerous and therfore cannot be used. Of course it is true they are dangerous. Prediction is never perfect (and so policy should be risk-averse) and some people have pretty warped values, and so some very bad policies could seem good after a process of prediction and evaluation.

But what is the alternative? To say that we don't care about the consequences? Yet even libertarians don't fail to claim that the libertarian society will be freer, happier, richer, and better in all sorts of ways. Do they say this just because they think it matters to us, when it really doesn't matter to them?

No. There are bad policies because there are bad predictions and bad evaluations, not because we shouldn't be trying to do either. And it is interesting how a confusion of prediction and evaluation is behind so many bad policies. Socialists are bad at prediction because of Marx. They liked his evaluation - although he couched it, like libertarians do, in apparently amoral rational terms - and so didn't subject his philosophy to the rigour that has blown it away. Greens are trying to reinvent economics - because they don't like the predictions it gives about their well-intentioned policies - by trying to add "moral" values to it, rendering it a hopeless tool of prediction.

We hone our tools for prediction with scientific skepticism, free debate and a respect for evidence over tradition. This is liberal of course, but what really defines the liberal are the values. That you know what is best for you, better than I do, and therefore I should respect your freedom. That I have no way of knowing whether my hopes and dreams are better or more important than yours are, and in this sense we are equal. That despite and because of our differences we have to get along. Liberty, equality and community. Not really fundamental values, but abstractions reflecting as best as possible the diverse inarticulable fundamental values in each of our heads.


Ok, a final thought and a slight digression if you have not had enough already. I very much liked oranjepan's comment:

If we stop thinking of liberalism as an ideology and start thinking of it as a tendency which incorporates differing ideologies in different contexts then all the problems and inconsistencies dissolve away into compatibility.

All ideologies are great if you are rich and can control the circumstances in which you apply them, but if you're not rich it's a different matter. If you're not rich ideology becomes a way to explain the world which provides excuses for your lack of material success and prevents you from taking the opportunities to rise out of your situation.

Its much better not to dispute the truth or applicability of any ideology but to dispute the universality of its truths and define the limits of its application.

It provoked the retort

I think what you've said there sums up modern politics - especially our party. A pragmatic, managerial approach to politics

The response is that skepticism with regard to ideologies is pragmatic and therefore unprincipled. (Unprincipled? Is that like lacking an appreciation for the greater good? What a thing to suggest!)

Pragmatism is considering what works - it is calculating the actual effects of a policy. So it is consistent with - indeed essential to - a sound values-based judgement of those effects and therefore of the policy.

But I read in oranjepan's comment skepticism more than pragmatism. Don't get carried away with your ideologies. That is the sort of thing that leads to atrocities.

Wednesday, October 08, 2008

Greening the sprouts

Charlotte and Steph have been telling us about the greenness of their school education. Now when I was at school, while I would bore my fellow students and any teachers who would listen, senseless, with the wisdom of EF Schumacher, I certainly never got any encouragement in return. My physics teachers were pro-nuclear of course, although one also signed me up to Amnesty International. 

It never occurred to me that we might learn about something quite so intensely political as the environment, at school. Rather, I took it as my mission to bring this wisdom to my peers, along with that of any other hard-left causes I came across as a member of a poor middle class minority in a working class area.

Clearly all that changed, more or less as soon as I left school. I was shocked to see my daughter's Y3 school play about the rainforest, complete with evil loggers, noble savages and talking animals. Not that it was entirely, or even largely, wrong. Simplistic, black and white, saccharine, yes, of course it was all of those, what do you expect. But it seems that environmental values - not just environmental science - is now on the syallabus.

What should we make of this? Despite the special claims of faith schools, all schools are beacons of values, they all teach good behaviour, reponsibility, self-respect and so forth. So it makes sense to add environmental consciousness to the list. Yet there are legitimate political debating points that are necessarily brushed aside by this clarity of moral purpose.

And the more specific we get, the more problematic it becomes. Environmentalism is replete with received wisdom of variable quality, largely defined by the mass media, and therefore not a few contradictions. We wouldn't teach physics from articles in the Sunday papers, so why environmentalism? Surely the question of whether expanding nuclear power is an appropriate response to the threat of global warming, shouldn't be taught. Investigated, yes, debated, yes, but taught?!

Environmentalism also bears some of the scars of its years in the wilderness: a focus on the personal above the political, even when the personal is utterly symbolic; a tendency to blame corporations or profit for everything; a normal human tendency to evaluate evidence on the basis of where it comes from, and whether it fits the answers you are already proposing.

Still, clearly a whole generation of people has decided to teach the next the importance of doing something it wouldn't do itself. The only axe-grinders I remember teaching me were an anarchist, a Conservative and a Christian. Yet unlike those three, we have something nearing a consensus that environmentalism is the way forward. And when did that happen? Somehow, without my noticing, my views went from cranky to mainstream, without changing much.

All we need now is to do something about it. So what could be better than teaching our kids how to save the planet? (Other that doing it ourselves of course) Well how about teaching them how to crtically evaluate evidence and arguments? Include in that examining values and evaluating ethical arguments. Yet how many schools study philosophy and ethics? We need to learn to ask the right questions, not just be given what others think are the right answers.

Wednesday, October 01, 2008

David Cameron blames spelling reform for social breakdown

In the context of talking about social breakdown, violence on our streets, and so on, Cameron offered three planks of policy to begin to tackle the problem: Families, Schools and Welfare.

Under schools there was the usual complaint about standards, and then this:
Listen to this. It's the President of the Spelling Society. He said, and I quote, "people should be able to use whichever spelling they prefer." 

Isn't that shocking, that the Spelling Society doesn't stand up for correct spelling? Well no. The Spelling Society is a campaign for the simplification of English Spelling. They have slogans like 

Why don't 



Why do



The point being that illogical spelling makes it harder for children to learn to read, leads to lower educational achievement, and contributes, presumably, in the long run, to, er, social breakdown.

This is not a campaign of trendy educationalists to take over our schools, but a campaign aimed at us, and in particular publishers, to spell words in a sensible way.

You might not agree of course, you might find the ossified spellings of a some particular previous century - I forget which - "quaint". Fine, but by putting that first you are the agent of social breakdown, not its opponent.

Cameron has taken the opposite view - saying that only by failing to reform English spelling are we going to staunch the tide of social breakdown. Or something like that. The full speech is parodied here, at Dave, nice but knave. (Which is me, really. Plug plug)

But perhaps I am reading too much into what Dave said. Perhaps it was just a pathetic retreat into a Tory comfort zone when faced with a difficult problem.

Tuesday, September 30, 2008

With apologies to William Mcgonagall

Profuse apologies to the world's best worst poet.

Twas in the year of 2008 in the month of September
Which the bankers of the world will long remember
For they did not act, as one would to a brother
In refusing to extend credit, one to another

For fail it did, the Bradford and Bingley
And we began to fear the banks would not go singlely
And collapse like a great house of cards
Or shatter like a mirror into millions of shards

Citigroup bought out the failing Wachovia
But that was not the last emergency takeover
The Halifax Bank of Scotland it had to be rescued
And the passage of the bailout plan by the US congress badly miscued

The Germans paid 35 billion Euros to Hypos Real Estate
And Glitnir was nationalised by the Icelandic State
Fortis of Benelux met, partially, with the same fate
All with little time for debate

This should never have happened according to some
Taxpayers will be paying for years to come
We must better regulate the banks, if only we are able
And next time we must listen to Vince Cable

Monday, September 29, 2008

Conservatives U turn on decentralisation

The Tories are calling for a centrally-imposed freeze in council tax, as part of their commitment to localism.

I thought I might refer to their previous announcement on the subject of localism, and found that the page had been removed.

Luckily google cache comes to the rescue

All fine-sounding stuff of the type tories say when they are behind in the polls. 
And google gives us the date:
It is a snapshot of the page as it appeared on 21 Sep 2008 05:51:27 GMT.

That's 8 days ago. This page seems to have been "lost" suspiciously close to the date of the announcement of this new policy.

The old Dave said:

So I hope that in 2008 the Liberal Democrats and the Green Party will join us in putting pressure on the Government to decentralise power, and that together we can create a new progressive alliance to decentralise British politics.

And the Conservatives, Dave, don't forget the Conservatives.

Sunday, September 28, 2008

Moral hazard in banking

Banking as we know it is an industry largely made possible by regulation and deposit protection. There are unregulated savings schemes around, like FairPak, and unregulated borrowing, like from loan sharks. But with or without such protection, there is always a danger in having somebody else look after your money. Bankers and bank shareholders can profit from risk taking, but their losses are limited to their own stakes in the bank. This is moral hazard. The hazard is minimized if shareholders are left with nothing after a bailout, as they should be, but it is still there.

So the regulatory framework we have would seem to reflect the view that the sort of banking industry we have is worth having, that confidence in banks is worth protecting, and that depositors should be largely protected from the bad luck of a bank failure.

Clearly not everybody agrees. Some view banking as parasitical on the real economy, that without debt and credit we would all be better off. Banking, in this view should be essentially nationalised, so that the profits from credit creation goes to the public purse and so that investment favours public goods.

Others argue that the problem here is that the banking system is effectively already too much like a nationalised industry, with private banks merely agents of a state-controlled currency. Thus lighter regulation, private currencies, and banks being allowed to fail, are the answers. If depositors had more cause to care about the soundness of their banks, they would seek out and reward truly sound banks.

Both these camps are cheering the present crisis and pointing out how this proves that they were right all along. And in some small ways they are right.

Banking is parasitical in the sense that it does need to be bailed out from time to time. In the long run, it is therefore a subsidised industry, and seen in this light, public anger at overpaid failing bankers is entirely justified. Insisting that none of the bailout money goes on dividends or bonuses rather misses the point - the bailout money is socialising the loss. The profits mostly occur in another part of the cycle. I would favour an insurance pool paid into by the banks to fund the next bailout whenever that might occur. It would be in the banks interest that this fund is not called upon, and this might hopefully encourage them to engage constructively with regulators to help minimise systemic risks.

The other camp is right that interdependence of the banks and the central banks does give the system the characteristic of a monolithic monpolistic bank to which there is no alternative. Some risks are pooled rather than avoided, so instead of frequent bank failures hurting only a few, we have rare systemic threats that affect us all. But I, for one, would have even less confidence in an unregulated bank or a private currency, and I suspect only the real enthusiasts for those things would disagree. The moral hazard, of being able to profit from risks taken with the money of others, is just as great, or greater, in an unregulated bank as in a regulated one.

It may be dull, and we have overdone it lately, but credit is important. It makes all sorts of choices possible, and only some of them are unwise. And the banking system does a decent job of offering credit, better, certainly, than many state banks around the world have done - they tend to end up bullied by politicians into propping up failing state industries, and failing themselves. Better certainly than loan sharks, who we would be more beholden to if legal credit was greatly restricted. Better than LETS schemes, which are generally failures for reasons too many to go into here. The best alternative is perhaps the Building Society, and yet when many of them converted into banks, it hardly made much difference to their customers, except that they could suddenly get current accounts.

So it is important to maintain a banking system not unlike the one we have. The challenge is to do that while minimising moral hazard and the risks of failure, bailouts, and what amounts in the long run to a public subsidy to overpaid failures. Less regulation won't do this. More regulation won't necessarily do it either, and can increase risks. We need smarter regulation. Perhaps we need to revisit the reserve requirements abolished by Thatcher. But the details of this smarter regulation are beyond my competence. 

I have one last possibly unworkable suggestion: that bank bonuses and dividends in future should be staged over, say, 10 years, the balance being held in a fund. If a bank fails, then it has a fund of effectively 5 years worth of bonuses and dividends which can be used to meet its obligations, those responsible for that failure paying a greater price than they would otherwise do. But banks could still pay as much as they like for success. Ideally banks would do this voluntarily, to show that they have the right incentives in place to be more reponsible with other people's money.

Thursday, September 25, 2008

The moral difference between liberals, conservatives, socialists, etc.

There's a good talk by Jonathan Haidt examining the differences in moral thinking between liberals and conservatives. This is American usage of course, but particularly focussing on social rather than economic issues, so it is not too inaccurate.

Haidt identifies what he calls the 5 foundations of morality by which he means 5 traits in evolutionary psychology (touched on here), connected with questions of moral behaviour. These are:

1. Harm/Care. We are disposed to bond with others and care for them, and have strong feelings about those who cause harm.

2. Fairness/reciprocity. This is associated with the golden rule ("Do unto others as you would be done by.") Also, I dare say, there is a fairness/reciprocity basis to both support for a social safety net, and for free trade. Both are reciprocal, but are often associated with opposing ideologies.

3. Ingroup/loyalty. We have a powerful instinct for forming tribes, mostly to oppose other tribes. More on this shortly.

4. Authority/respect. The anarchists' lament. Stop taking orders, they might say. Just listen to me and stop taking orders!

5. Purity/sanctity. Not just sex, but also attitudes to food for example.

So while we have the brain wiring to be guided by all of these consideration, there are differences of opinion as to which are moral. According to the video, conservatives tend to recognise all 5 as moral, and liberals just the first 2. In contrast to ingroup/loyalty we celebrate diversity; in contrast to deference to authority, we question it; in contrast to purity, we celebrate the freedom to be impure. 

Haidt makes some sweet bipartisan point about the conservatives having a point, using all the tools in the toolbox to maintain order (yuk! stability, perhaps, please?) and that libs and cons therefore exist in some wonderful symbiotic dynamic harmony like yin and yang. But I will move swiftly on from there by looking more closely at the 5 foundations and British politics.


Disagreements here a generally over what constitutes harm, and the extent of our duty to care for our neighbour. Mill, in On Liberty, argues, for example, that there are duties of care - to throw a line to somebody drowning for example. I see little disagreement on this except from libertarians. Am I right?

But while I disagree with libertarians who say that the state should not seek to do good, I agree that it should not try to (and can't) make us good. Socialists on the other hand don't seem to see a problem with that. (Do other liberals agree with me?) Conservatives can be found in both camps, I guess.

Greens generally apply harm/care thinking to the natural world, which, it can be argued, means a failure to apply it properly to human beings.


Socialists believe that the poor deserve more, conservatives that the rich deserve more. Greens believe that everybody deserves less. I, frankly, don't know who deserves what, but I bet it isn't a function of class identity. Fairness in the sense of equal rights is still opposed by many Conservatives, but otherwise is largely agreed.

Both free trade/freedom of contract, and the social safety net and public services can be seen in terms of reciprocity. Socialists and greens are against half, and conservatives and libertarians against the other half; liberals support both halves.


I agree that liberals are not greatly moved by this (except obviously as political partisans, like everybody else). Socialists and conservatives represent ingroups based on social class.

Socialists have struggled politically from the numerical decline of the unionised working class. Labour, therefore has had to expand its ingroup suffering much pain in the process. 

This has left the working class feeling justifiably aggrieved that nobody represents them, creating opportunities for the BNP. The BNP being of course the epitome of the evil of ingroup/outgroup thinking.

Having your ingroup taken away, or being betrayed by it, can be an utterly crushing experience. Politics would perhaps be much healthier if there were an old-fashioned working-class socialist party. As long as it never won any power. We may have the best policies for millions of poor people, but we don't represent their interests against those of the middle classes.


Clearly this issue separates liberals and libertarians from conservatives and fascists. Socialists appear in both camps and in the middle ground. 

I think Greens have a complex relationship with this one. I know many would post them firmly in the authoritarian camp, but they also have a strong anarchist influence. In any case this is not so much about whether strong authority is necessary, or even helpful, in saving the planet - a question we will all have to face; but whether an attitude of deference to authority is a good thing, on which point I think they are largely with liberals.


This is not so clear as in the US with its big religious right, although the same trend is apparent.

However I think the biggest on purity/sanctity are the Greens. Organics, GM, alt meds, being close to nature. Support for such "natural" things, often out of proportion to the benefits (if any), seems to be a purity thing. 

In Haidt's surveys everybody recognised Harm/Care and Fairness/Reciprocity as moral instincts, but conservatives did tend to rate them lower than liberals. Understandable: these different factors must be weighed against each other. And yet libertarians also seek to diminish the scope of considerations of harm/care and fairness, reducing them to "no initiation of force" and free trade. I think this explains why they are seen as right wing, with some justice, even though they don't agree with conservatives on foundations 3 to 5.

So this just illustrates yet again the error of lumping any of these ideologies with any other. A five dimensional compass would not sort these babies out. It is no good lumping greens with fascists or communists, or lumping libertarians with conservatives, as if this could end the debate. Both must be opposed for what they actually say, unless, of course, on occasion, they are right.

Tuesday, September 23, 2008

Lynas and Lucas on nuclear power

Environmnental writer Mark Lynas and Green Party leader(!) Caroline Lucas debated nuclear power on the today programme this morning. It brought what I thought was the most astute question I've heard for a while on Today:

[Is there something] almost dogmatic in the theological sense about where the Green movement stands on this question, in that people are perhaps looking at the facts through lenses tinted by the historic opposition of the green movement to nuclear power?

Lucas didn't entirely disagree, but argued her point nonetheless in the usual way:

  •  "Nuclear would lock us into a centralised energy system...." which is largely cod. They are all good ideas that come under the "decentralised energy" agenda, but the agenda itself is simply a way of packaging all carbon-saving technologies except for nuclear for the purposes of promoting them. By all means do that if you have already decided that nuclear would be a mistake, but it doesn't work as an argument against nuclear.
  •  "Nuclear is not necessary..." - perhaps not. Arguably wind is not necessary either, or coal or gas or even energy efficiency. What is necessary is the generation of enough low-carbon energy, and we cannot afford to let dogma get in the way of this.
  •  "Nuclear delivers too little too late." - that all depends on how much of it we build and how quickly. As Lynas pointed out, Germany built more coal fired power stations after the Greens had their nuclear plant shut down. That is an undeniable harm to the climate.

On their own these arguments might sway some but seen together they are horribly weak. We don't oppose wind farms because they deliver very little as a percentage of our total energy needs. We don't dismantle the interconnector to France's nuclear electric riches on the grounds that that is too "centralised", nor should we. We maintain spare generating capacity so that no single plant is "necessary". Lucas' objections are paper thin when stood against the need for large amounts of low-carbon energy.

Now maybe nuclear is just too expensive. Perhaps filling a percent of a percent or two of the Sahara with CSP, and linking to it with HVDC would be a better investment. But my guess is that we should do both - that we are a long way from being in a position to turn down feasible low-carbon energy sources. It is madness to frame the debate as nuclear v renewables and efficiency, when we are still building coal-fired plant.

And in any case the unknown factor in the cost of nuclear is the underwriting of the decommissioning cost, which is some time away. This would represent off-books liability that puts PFI to shame. No other low-carbon energy source can defer its costs like this. I don't think that our descendents whose climate will have been saved will mind that much the decommissioning cost. It is not as if they would be better off suffering climate change.

So with that in mind, it seems that nuclear capacity is almost certainly probably worth building, and probably probably worth building in sufficient quantity to replace all our coal-fired plant. (Gas, on the other hand, complements wind well.) I realise that my party, the Lib Dems, is opposed. I guess this is due to a desire to do the right thing for the environment, but with too much deference to the environmental movement. But environmentalists should heed Lynas:

We are no longer living in the 1970s. Today, the world is more threatened even than it was during the Cold War. Only this time nuclear power – instead of being part of the problem – can be part of the solution.

Wednesday, September 17, 2008

In defence of trickle-up economics

Today saw a great speech from Nick Clegg at the Lib Dem conference, arguing for tax cuts for low and middle income earners to help meet rising food and fuel costs. The left don't like this because it doesn't involve veneration of the state, and the right don't because they focus their occasional tax cutting efforts at the better off - which is not to suggest that they cut taxes overall in the long run.

The left shouldn't object of course, because they should recognise that fuel and particularly food are even more basic and important than public services like ID cards and wars. But now I want to address why the right shouldn't object either, because this policy will benefit the rich too in the long run.

According to trickle-up economics, what happens when the low and middle income earners have more money in their pockets is that they go out and buy more of the things they need, so that money eventually gets recycled into executive bonuses, dividends, and so forth. So tax cuts for the poor benefit us all in the long run.

Now it should be said that not everybody agrees with trickle-up theory. Some argue that it is just spin for the doctrine that what is good for the poor is good for the country, a doctrine that should be resisted because, er, they aren't poor, or something. 

But seriously, "supply siders" argue for cuts in taxation on profits to encourage investment. But as post-tax profits drive investment, these can also be boosted by boosting pre-tax profits, by leaving ordinary people with more in their pockets to spend. The difference is who gets the direct benefit and who merely gets trickled on, er, or trickled under.

Friday, September 12, 2008

The perils of genetics

Laurence Boyce at Lib Dem Voice offers us a good argument that genetics is not irrelevant to the way we turn out, but that this raises fears, particularly on the left.
So why all the discomfort? Pinker sets out four “fears” that might make us hesitate in the face of what the science is increasingly telling us. These are the fear of inequality, imperfectibility, determinism, and nihilism. I can’t possibly do justice to all of these – you’ll have to read the book – but the fear of inequality is probably the one which most offends left-wing sensibilities.
There is a great deal of heat over the suggestion that genetic differences between groups would justify discrimination on the basis of group membership. It is clear to me that political equality is a moral principle, not a consequence of us being "born equal" in any sense. Clearly we are not born equal - genetic variation within groups is not disputed. Don't base a good princple on a false premise unless you are trying to oppose it.

But it is vital, one opponent of discrimination would argue, that we oppose the idea that groups may differ genetically one from another, because this would justify prejudice.

So far, so wrong. It is frankly stupid to judge any individual based on group memberships (sex, race, class, shoe size, which group do you choose?) whether there are group differences or not, because all group differences are swamped by individual variation within groups.

However, beneath this, there is some substance in the warning. If there is a genetic difference on average between two groups, this may explain different outcomes on average. This explanation may even be - or seem - sufficient to account for the whole difference of outcome, suggesting that there is no discrimination at work.

So what theories of genetic difference between groups threaten is not the moral principle that people should be treated equitably and on their own merits; rather it is the evidence that disadvantaged groups are indeed discriminated against.

How do we respond to this? Well I would argue that this evidence was never terribly good in the first place. It doesn't, for instance, deal with the likelihood that people with different group identities may make different choices on average. Buddhists may choose to become monks with no possessions and this does not mean that the economic system discriminates against Buddhists.

Much better evidence comes from blind controlled trials; from differences in hiring and marking rates where the name and picture of the candidate are not available. Unfortunately this is not always possible. Still, it is not as if it is any secret. I have heard an employer admit that he won't hire women because they might get pregnant. Others have said that they won't hire disabled people because they might get sued for some technical breach of a complex accessibility law. Is there really such a lack of evidence for discrimination that we must die in a ditch over the weakest of it? No.

Inequality of outcomes between groups is a red flag, it warns us that discrimination is likely to be afoot. We should then find that discrimination and try to stop it. In every case it is a crime against some individual - and if we begin to see it more like this and less as a crime against some group identity, so much the better. Ultimately, groups identities are artificial, and group outcomes don't matter, so long as all individuals are respected and not discriminated against.

Friday, August 22, 2008


There is a little fuss brewing over at Lefty Conspiracy about the America in the World blog. Frankly the sound of repeated comfort-zone positions is pretty deafening, with neither side addressing the arguments of the other much.

So the conspiring lefties complain with some justification about being lumped in with the Taleban, when all they are doing is criticising a government. America in the World complains also with some justification that the USA is misunderstood, that it is good for the world, in a world where so many forces and powers are pretty heinous and do not attract the same condemnation.

Of course everybody knows that the USA, even when under the Democrats is a terribly conservative country, and this does seem to be a large part of what is behind why AitW's Conservative founder thinks it is so great, and the lefties think it is so awful. This seems to me to be a very narrow perspective. Compared to most of the rest of the world, there is little difference between the values of the USA, EU, and the rest of the democratic world. When, for example, one country is left holding out against action on global warming, that country will be Russia.

But actually what is so great about the USA is not its conservatism but its liberalism, if only they knew what the word meant. The USA is still a beacon of freedom and democracy. It's prosperity benefits the rest of the world through trade. Its contributions to science are enormous. And even its military and intelligence services have played some positive roles alongside their various crimes.

It is too easy to forget all this in the face of a few disagreements over policy. Among political people, political disagreements tend to loom large. So it is a shame that this vital cause of opposing anti-Americanism has been conducted in such a partisan way. It is foolish to big up the USA, as AitW does, with snide remarks about the EU. The USA and EU are on the same side, and will have to stand together in the future.

It is utterly bonkers, as AitW does, to offend those who most need to be reached by this message - those with the greatest political disagreements with American people and governments - by lumping them with racists.

Yet the anti-anti-anti-Americans on Liberal Conspiracy should not get a free ride. It is too easy to focus on the comfortable and justifiable: our right to disagree with a government. Beneath the cheap attack on the left and liberals, that few Conservatives could resist, AitW is largely correct about the USA and its other detractors. And we should say so.

Saturday, August 02, 2008

Still alive

...and back from the beaches of north Wales. I will resume putting the world to rights as soon as I get round to it, etc.

Actually I did pop in to the David Lloyd George museum in Llanystumdwy. I learned that Lloyd George was the greatest statesman of the 20th century; the man from whom Churchill learned everything he knew (except, presumably, disastrous naval tactics); a man without flaws, at least none worth mentioning.

It impressed me how much he did for ordinary working people - pensions and national insurance and more, and yet he and the party were brought down effectively by the rise of the Labour Party. How does that event look today? What is the Labour Party for? A class war movement winning power has to either represent this new elite, and invent new class enemies, or become a cipher, or a bit of both, as it happened. We have been out of power for 100 years for this? What a stinker.

Wednesday, June 04, 2008

Green taxes' place in the big picture of climate change

I hope you've all read Charlotte Gore's avalanche of posts against green taxes. I have defended the idea a little in the comments section, finally reaching the point that green taxes need to be seen as an effective part of a bigger picture of how we combat climate change. So here goes.

The insignificance of the individual

Does it matter what I do, whether I drive or fly or explore outer space? Does it matter what or when this or that minister or MEP drives or flies? Honestly? No, not really. My carbon emissions are a drop in the ocean. If everybody did the same as me it would matter enormously what I do, but they don't and it doesn't. Immanual Kant suggested that we should do only what we would have as a universal law, or something like that, which was a jolly good idea at the time, a leap forward in our understanding of ethics as being more than about what might make baby Jesus cry. But the ethics of example-setting is perhaps of limited use in a free and diverse society. But what, I hear you ask, if everybody had my attitude, wouldn't it be awful? Yes, I suppose it would. It is so much better only 95% of us being like this.

Let me be clear - people who go out of their way to minimise their impact on the environment are doing good. They should be applauded and not sneered at. But this 5% will only do about 5% of what is needed. The other 95% will have to come from political action, by which I mean measures like international agreements, green taxes, and promoting investment in renewable energy, rather than lecturing. Governments should not be telling individuals that what they choose to do really matters in the big scheme, because it doesn't. See above.

The environmental movmement believes in individual responsibility, largely I think because it was politically out in the cold during all its formative years. It gave us the chance to feel we were at least achieving something. Today politics has woken up and we should have some political ambitions.

The insignificance of the UK

The next reason for doing nothing is that whatever the UK does will be lost the tide of rising emissions from that villain du jour China. And this is quite true - if we were trying to stop global warming on our own, we might as well forget it. In a world population of a few dozen significant countries, the Kantian argument is a little better than it is among individuals. Most countries are doing something, and very few are doing a lot. China is not the worst and the UK is not the best and so that choice of contrast is more than a little snotty. However the feeling we ought to do our bit, the effects on national pride, and so on are still nowhere near strong enough, and will not deliver the measures needed.

What we need are international agreements to cut carbon emissions and make various land use reforms. This is more or less the bottom line. But to make such agreements possible we need a number of things. We need more precise predictions of the effects of global warming. Fortunately, these are getting better all the time, and it is getting harder for people who prefer to believe it will all be fine to cling on to that.

We need ever better ways of generating energy. Fortunately, these exist and they are becoming more economic all the time. Uptake may be driven as much by increasing fossil fuel prices, and energy security considerations, as much as anything else and this is more good news. As Stern commented, energy counts for a tiny fraction of our costs, and so if we have to pay much more for it, while this will hurt, it is not pain on any kind of revolutionary scale.

Finally we need to show that we can do without some of the more marginally useful energy uses without becoming significantly worse off. A large part of this is improving energy efficiency, but we might also make different choices, if the full environmental costs of each choice were included in the price. Again, technology is key here to improving efficiency and giving us more choices.

So green taxes....

Charlotte asked me if there wasn't a better way to combat global warming, and the sort of thing you hear suggested is technology or international agreements. But I am convinced that this is completely the wrong way of thinking about it. Technology and international agreements are not alternatives, they are complementary, because the agreements won't be reached until it can be shown that they will not hurt too much (and that it will hurt a great deal not to make them). Similarly green taxes and technology are not alternatives, they are complementary. Green taxes blend into market signals (and market signals work) to buyers and innovators to make better products and better choices.

If green tax revenue is used to cut income tax, then - within reasonable limits - this shouldn't harm the economy and may even benefit it. It is much like the case for Land Value Tax: taxing things that are intrinsically limited in supply (land, carbon) in preference to those where more can be produced (labour, goods) will reduce the drag and distortion to the economy. The intrinsic limits are of different kinds for land and carbon, but I don't see why the argument shouldn't apply, and doubtless someone will tell me that carbon emissions are a kind of land anyway.

I think Charlotte is right about the political difficulty with green taxes. People are feeling got at and there is a backlash. The other parties may dump green policies altogether. I think there are two reasons for this that we need to challenge. First that there is despair in the face of China, etc, because green taxes are not seen as part of the bigger picture I have painted here. Second is that we are pretty sick of being told what to do all the time and it seems that green taxes are another kind of lecturing and another kind of punishment. We need to convince people that this is not the case - that green taxes are a necessary evil, just like other taxes, albeit one with an extra silver lining. And we need to convince them that we are not trying to tell them what to do, rather that it is after all their job as voters to tell us as politicians what to do. With green taxes in place there is less need to worry about the environmental consequences of a choice, not more. So maybe we can all relax a bit, and backlash against something else this week.

Wednesday, May 07, 2008

Reinventing the State Chapter 22: Communicating Social Liberalism

The "at least three brains" team of Steve Webb and Jo Holland has made a noble attempt to bring together this disparate collection of essays. As much as I would like to go with the flow I found much of the language and argument grating.
"Relying exclusively on unfettered market mechanisms to deliver a liberal and democratic society is doomed to failure."

This looks like a straw man to me. Markets do not deliver a society, they deliver goods and services. Relying on markets to deliver a cutthroat dog eat dog society would be doomed to failure because it is a society and not a product. Of course I know what Steve and Jo are getting at, that laissez faire is freedom only for the few. But then this is hardly a shocking statement or a distinctive position - even the Tories won't disagree with this, publicly at least.

"There are many areas in society - such as educational or health outcomes - where such inequalities [as arise from unfettered markets] would be totally unacceptable'"

And what about the inequalities we have already? How unacceptable are they? Personally it is not the inequalities I have a problem with. Health and education are good things and nobody deserves less of them, however much they have already. What is unacceptable is how little some people have of each. We all agree that we want more access to health and education, particularly for those who have the least access at the moment. But I am bemused by this emphasis on what seems to be an straw man position: instead we should look at where the country is and consider what direction to move it in.

Anyroad, this is the first part of Steve and Jo's argument: "the failures of unfettered markets".

Markets fail due to a lack of competition. Tim Farron's example of milk suppliers is referred to - although how agriculture can count as unfettered while subject to trade barriers and the CAP, is a mystery.

In part 2 of the argument, markets fail when the price of something does not reflect its true cost. This failure can be corrected by Pigouvian taxes and subsidies "in some cases". Now I am a big fan of Pigouvian taxes, particularly green taxes, yet I find myself disagreeing with the conclusion.

"Whether we are dealing with social costs or social benefits, both need to be fully reflected in market prices if the market is to deliver socially optimal outcomes, and only the state can ensure that this happens."

No... Social benefits are largely unmeasurable. You want to keep post offices open because they have a real social benefit, subsidise them, call it a Pigouvian subsidy if you like because that benefit is real. But it is a political judgement what that benefit is worth, not a matter of number crunching. And it should be a simple formula, not a "full reflection" of the value of a pensioner's opportunity to gossip while buying stamps.

In part 3 of the argument, markets fail because of inequalities in income and wealth. Markets, you see, are only geared up to providing things to people who can pay for them. At least that's how I would have put it, and it might be what the authors are getting at with that stuff about horse races and redistributive taxation, I'm not sure.

Again it is so uncontroversial as to be hardly worth saying that we would rather have a national health service than leave the sick dying in the streets. Why is the point so laboured? I don't know. A real dilemma is almost addressed at one point:

"However, the King's Fund recently found that the middle classes were likely to choose the best hospitals, while those who were less well-educated tended simply to go to the local hospital."

They are right that there is a danger of widening inequality here, but, at the same time, isn't it good that more people use better hospitals? Patients choosing a better hospital are increasing the size of the pie, not taking a larger slice of the same pie. This should be commended not bemoaned.

"While Liberals are instinctively in favour of 'choice' ... these examples clearly demonstrate that unfettered markets can simply lead to a beggar-my-neighbour form of choice, akin to the biggest and strongest barging past other people in the queue."

Er, no they don't. For one health and education are not examples of unfettered markets, they are examples of near state monopoly. There are beggar-my-neighbour forces at work in public services - selection of pupils by schools is one (it should be the other way round) - but this has nothing to do with markets.

"Unfettered markets" here seems to be used to mean so-called "market based reforms" of public services. By all means make that case, and I would probably agree with most of it, but do try to call things by recognisable names. "Unfettered markets" would probably also fail, I guess, but we don't seem to have been talking about that.

Moving on, Steve and Jo make a case for intervention when markets fail. This is the natural follow up to the previous section - anti-trust laws, pigouvian taxes and so on - but noting that such intervention should not be knee jerk: some failures are not as bad as the intervention that would be necessary to correct them. So far so good.

They refer to Duncan Brack's argument on inequality as persuasive. (Er, no).

"...that inequality of outcome in and of itself can undermine society to the detriment of all. This would seem to imply a greater amount of redistribution than we have sometimes advocated."

No, That implication is not sound. It may well be that more redistribution is justified, but saying "X is bad for society" only works as an argument in an all-else-being-equal kind of way, yet putting up taxes makes all else very unequal. Brack's argument would be equally applicable to a society with half as much or twice as much inequality as ours, and this is a sign that it is failing to address the nub of the issue.

Inequality may be bad, but I am pretty sure that poverty is worse. Perhaps I benefit from living in the north and not having swaggering bankers on my doorstep. Or perhaps I have taken the stoicism of Featherstone and Boyle to heart to the point of not being so bothered by other people's status - in which case why didn't I agree with them?

At this point Steve and Jo admit that the foregoing arguments "could also be espoused, to a greater or lesser extent, by a socialist." Or a Social Democrat I suppose. And they are right - socialists love attacking markets, especially straw man positions on markets.

The difference is that the state should do as little as possible, as locally as possible and as accountably as possible. While I agree that this is a difference I don't think it is quite good enough. Many socialists will support localism and democracy quite sincerely. Socialism may naturally tend to paternalism and centralism, often in ways I fear this anti-market so-called social liberalism may also do so. If social liberalism is just localist social democracy, why not call it localist social democracy and we can all understand each other better. I don't take the view that something must be called liberalism to be worth supporting, rather I will listen to arguments for any -ism, and be suspicious of anybody trying to shift the meaning of an existing -ism to include what they don't want to bother arguing for.

This is a little unfair of me because Steve and Jo do say that the state should only what needs to be done and no more, although that is the one point of the three they don't expand on. Personally, I support a few things the state does that don't strictly need to be done, so perhaps I am not so extreme a classical liberal as they are. Yet even this principle is empty if it is not proved by example: the state should stop doing this, or that.

Localism too, while I agree we could do with a great deal more of it, is an argument with problems. The same abstract arguments would apply in a country ten times as decentralised already which again suggests that the arguments are missing the nub of the issue. State intervention must be "as local as possible", we are told. But why? This is just dogma. It would be possible, but pointless, to set VAT rates street by street. Surely what we should be saying is that the optimal level for much if not most state activity is more local than the present level.

The chapter and book concludes with a section on communicating this idea of social liberalism. Having not really got the idea myself I have little to say on how to communicate it. But I will have a go at explaining what I mean by social liberalism and how I might communicate it in a later post.

Looking back on the whole book (or rather the Brack-Featherstone-Holmes-Farron-Webb-Holland thread within it) perhaps it works better as a vehicle for communicating liberalism to socialists and social democrats; for saying to them: we share your concerns, come admire our values. A noble project worth a few cheap pot shots at markets. Clearly it is an attempted response to the Orange Book, although it has many of the same authors. I might draw together some of this if I can remember how it started - I started this review in September.

Still, it has been fun. Buy the book, and read the chapters I have said are good. Or better still pass off my views on it as your own to seem better read than you are. Better again, continue the argument. We may yet reinvent the state.