On the Record | To Hell and Back: Brexit Undaunted by Europe’s Jibes

Please see my latest wire as Brexit diarist for The New York Sun, ‘To Hell and Back: Brexit Undaunted by Europe’s Jibes’:

The United Kingdom’s efforts to exit the European Union are going to hell. “In a handbasket,” Napoleon would doubtless mutter, he the French autocrat who disparaged his British conqueror as nothing but “a nation of shopkeepers.” The president of the European Council, Donald Tusk, probably agrees. Neither Britons nor shopkeepers — free enterprisers of any sort — earn any respect from Brussels mandarins.

Like Napoleon, Mr. Tusk and his camarilla have plans for European hegemony and putting Britain in its place. “I’ve been wondering what that special place in hell looks like,” he mused on Twitter, “for those who promoted Brexit, without even a sketch of a plan how to carry it out safely.”

“Well, I doubt Lucifer would welcome them,” piped up the EU’s Brexit coordinator, Guy Verhofstadt. His beef was that after what those who promoted Brexit in Britain, they would even manage to divide hell.

Witty.

But like the Church Militant, Brexiteers are hitting back. Jacob Rees-Mogg replied that Mr. Tusk’s slur “shows exactly why the British people rejected the EU in the first place.”

Read more . . .

Remarks are welcome on DMI’s Facebook page.

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My thanks to editor Seth Lipsky of The New York Sun.

Year in Review

The year now passing began with sickness for yours truly — which more-or-less set the tone for the ensuing twelve months. Good grief!

Research and writing therefore proceeded haltingly and with many interruptions but, with the onset of winter, there was some resolution in selecting ideas to explore in the weeks ahead:

1. Free markets, capital formation, entrepreneurship, and legal rules, as essential components of economic growth;
2. American politics and fidelity to the U.S. Constitution, culminating with the presidential election in November;
3. British conservatism, in theory and practice, especially from the historical perspective of Benjamin Disraeli and Margaret Thatcher; and
4. Mediæval culture, particularly in relation to the Enlightenment, and the rise of capitalist economics and the pursuit of liberty. (My conceit is that a conservative appeal to the Middle Ages, rightly applied, can provide all the better aspects of the eighteenth century, without those ‘atomising’ elements eschewed by Tories.)

So, before sending 2015 on its way and welcoming with hopeful anticipation the new year, here is a round-up of essays posted throughout the year:

• New year, old politics, for the Republican-led Congress — on the Washington establishment’s penchant for spending, regardless of political party in power. This essay was published courtesy of the Centre for Policy Studies;
• The genius of America’s founding culture sustains her still — on the lessons of America’s republican founding (by way of an excellent analysis by Myron Magnet), in which the path to prosperity was marked by individual effort and responsibility, with government limited to enforcing the rule of law and safeguarding the polity from threat: two modest objectives most states fail to realise, as illustrated by Public Choice Theory. This essay also published courtesy of CPS;
• Only the market can give life to the Living Wage — on the reason why government-imposed minimum wage regulations only shrink the labour force, and why only the market can provide real wage increases;
• What Role Does Charity Have in the Workplace? — on charity as best conceived as a voluntary act with negative consequences when applied to the marketplace, whether by government fiat or misplaced good intentions. This essay published courtesy of the Intercollegiate Studies Institute; and
• Unleash prosperity by giving full rein to capital accumulation — to mark the launch of the Committee to Unleash Prosperity, an essay on the true source of economic growth, capital accumulation, which increases production and employment, and benefits consumers with lowers costs and more purchasing power.

If any of these essays catch your fancy, please share them with your friends and colleagues. DMI needs encouragement to flourish and seek out new research and publishing opportunities!

As a special treat, the Institute was mentioned in a New York Sun column on America’s ‘Constitution Day’. Many thanks to the editor, Seth Lipsky.

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It only remains to remind you to follow DMI on Twitter and on Facebook, and to wish all my readers good health and good fortune in 2016!

Year-End Update

Before sending 2014 on its way and welcoming with hopeful anticipation the new year, here is a round-up of some essays posted in recent months:

• Will America follow Canada’s economic fight against impertinent obstructions? — on the lessons Canada (and other Commonwealth countries) can teach the United States on the inverse relationship between economic growth and state interventions, whether in the form of taxation policy, regulations, or government debt;
• Market independence or business as usual? — following Republican gains in the November U.S. mid-term elections, will the GOP adhere to constitutionally limited government of enumerated powers or will Washington politics be ‘business as usual’, pursuing bureaucratic aggrandisement, crony capitalism, and fiat money policies? This essay was published courtesy of the Institute of Economic Affairs;
• Ethan Frome’s winter of discontent — on the role of winter in Edith Wharton’s novella, infusing the family of one Massachusetts community with physical and spiritual bleakness; and
• Scrooge: a Christmas capitalist-icon — why the skinflint is the hero of Charles Dickens’s A Christmas Carol, illustrating the sources of wealth for community well-being and the distinctions between public welfare and private charity.

If any of these essays catch your fancy, please share them with your friends and colleagues. DMI needs encouragement to flourish and seek out new research and publishing opportunities!

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#DMI_Reads Update — Reading has been sporadic since the last update; but apart from dipping into the works of William Graham Sumner (Yale sociologist from the early 1900s, who wrote on politics and economics), and the fictional works of Edith Wharton and Charles Dickens (mentioned above), I began the autumn with a Downeast classic and ushered in the winter months with three fine works in political economy:

• Sarah Orne Jewett’s The Country of the Pointed Firs (Boston and New York: Houghton Mifflin, 1896) — a lovely summer sojourn in a Maine coastal community. Curiously, Edith Wharton found Jewett’s perspective unrealistically pleasant and an incentive to write Ethan Frome;

• Roger Koppl’s From Crisis to Confidence: Macroeconomics after the Crash (London: Institute of Economic Affairs, 2014) — an analysis of why Western growth continues to lag, despite many countries’ recovery from recessionary woes;

• Dwight Lee and Richard McKenzie’s Failure and Progress: The Bright Side of the Dismal Science (Washington, DC: Cato Institute, 1993) — a contemporary classic in public choice economics and capitalist theory, important for its examination of the role of present failure for future success and of the dynamic nature of the marketplace, influenced by market competition and political competition; and
• Christopher Snowdon’s Selfishness, Greed and Capitalism: Debunking Myths about the Free Market (London: Institute of Economic Affairs, 2014) — a marvellous debunking of progressive liberal myths concerning self-interest, ‘perfect knowledge’, GDP, and levels of poverty.

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It only remains to remind you to follow DMI on Twitter and on Facebook, and to wish all my readers good health and good fortune in 2015!

Public Choice and the Free Press

Although freedom of the press does not usually occupy a central theme in introductory Public Choice Theory texts, it is an essential part of keeping government, politicians, and the bureaucracy honest. Without constant scrutiny and accountability, the political class is apt to become careless and equate their private interests with the public good — one of the key warnings elaborated in the Public Choice philosophy.

This independent oversight is threatened, therefore, when the State believes it has the right to oversee the modus operandi of the press (beyond the general legal norms which are prescribed for all citizens). Will the Fourth Estate be punished with legal coercion for publishing information that uncovers official malfeasance? Or will it tailor its reporting to satisfy its political masters, enabling future acts of impropriety?

Students of Public Choice, then, believe a free press is a necessary safeguard to individual liberty.

My full argument for the Institute of Economic Affairs is here.

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#DMI_Reads Update — Two volumes are in the reading queue this month:  A Humane Economy (Regnery, 1960) by Wilhelm Röpke and Economic Sophisms—First Series (Ludwig von Mises Institute, 2011) by Frédéric Bastiat.

DMI 2013 Round-Up

While there have been no official DMI updates in a very long time, research has continued apace — although very slowly due to various computer malfunctions and interruptions. Nevertheless, here is a round-up of essays published this year:

• ‘If elections have consequences, then so does economics’ — A look at the Laffer Curve, when high marginal tax rates result in lower revenues, not more.


• ‘Depardieu bids French statists “Adieu!”’ — More on the Laffer Curve, when high marginal tax rates entice wealth creators to flee to more amenable tax jurisdictions.


• ‘March out the vote!’ — Does the State have the right to force individuals to vote, or does such action confuse which demands deference and precedence, citizens or their government?


• ‘The inexorable lessons of currency debasement’ — On the evils of inflating the money supply.


• ‘Median voter theorem: why mainstream parties adopt similar policies’ — Why do opposing political parties so often cling to the centre and present similar policies to the electorate? What does this mean for principled ‘ginger’ groups embedded within such larger organisations?

Several projects-in-hand will continue in the new year: One example is the paradox interwoven in F.A. Hayek’s economics and politics; another involves the phenomenon of ‘liberal Toryism’ — the dynamism between classical liberal laisser-faire economics and the traditional Tory belief in ‘limited paternalism through the State’, ideas which have overtones in the work of Adam Smith and Edmund Burke, and find continuing expression in the 21-st century through various British and American theorists — more to come!

Another experiment in the coming months will be #DMI_Reads, where I will ‘tweet’ my current reading lists and ask for feedback and complementary book recommendations.

As always, remember to follow DMI on Twitter, on Facebook, and (here) on its dedicated page.

All best wishes for 2014!

DMI Omnibus Update on Disraeli’s Birthday

Earl of Beaconsfield

While research and writing at DMI continue unabated, I have been remiss at sending out update notices for several published columns over the last several months. And so without further delay — and in honour of Benjamin Disraeli’s 208th birthday! — here are links to recent postings at the Institute of Economic Affairs and the Adam Smith Institute to get you caught up:

• ‘The organic roots of oaks and free markets’ takes a tongue-in-cheek Telegraph column and illustrates why the Conservative party’s modern icon of an oak tree is an excellent exemplar of the organic dynamism of free markets, and why a return to the ‘Thatcher torch’ — representing the light of liberty — is a bad omen if taken to mean more robust government intervention in the economy.


• ‘Tax Freedom for the Poor!’ is an appeal to raise the threshold at which the low-paid begin to pay income tax — allowing them to keep more of what they earn will build their self-respect and act as a work incentive, while at the same time curbing the extent of government redistribution. (A second theme of this posting is that while the poor who earn less than the threshold will necessarily be removed from the income tax register, they nevertheless still do pay any number of ancillary taxes, which may itself be considered a good thing: An esprit de corps is fostered with their fellow citizens while making them conscious of the true costs of government.)


• ‘Without capitalism, can there be culture?’ argues that we owe much of our cultural attainment because of the free market and the division of labour which it encourages — not despite of them. (I will admit that other factors contribute to culture, too.) This avenue of defence will be familiar to students of Adam Smith and to admirers of Josef Pieper’s small classic Leisure: The Basis of Culture.


• ‘America’s Chief Magistrate and the Spirit of ’76’ looks at American politics from the perspective of the Founders’ vision of individual liberty and limited government. Intended to be a rather minor position, the Presidency has assumed powers never intended either for the Chief Executive or the Washington establishment. Intrusions into the actions of individuals and the marketplace are hallmarks of ‘government failure’ that only a spirited return to constitutionalism can avert.


• ‘Can Americans afford compromise on the fiscal cliff?’ demonstrates that, à la Laffer Curve analysis, if higher tax revenues are the object, then raising the marginal tax rate on the wealthy is not the answer; though Aristotle taught that compromise as a mean between deficiency and excess is oftentimes the route to realising the common good, when the options are between right and wrong there is only one option. (Cross-posted at Public Finance International.)

Well, that’s a wrap. A reminder, too, to join the discussion on DMI’s Facebook page (please sign-up if you are not already a member) and tell your friends and neighbours about us.

Wishing you a very Merry Christmas, Season’s Greetings, and all best wishes for 2013!

The Diamond Jubilee: A Cheer for Constitutional Monarchy’s Restraint on Government

Queen Elizabeth II’s Diamond Jubilee has encouraged me to reflect on one of the key tenets of public choice theory: The principle that politicians and bureaucrats are the same self-interested individuals in their public capacities as in their private lives. One virtue of constitutional monarchy is that it serves as a brake — however imperfectly — upon political aggrandisement.

From a quick survey, the reasons are twofold. First, politicians are jealous of their political powers to aggrandise all within their ambit, so embellishing the royal Head of State (unlike the practice of the American presidency) benefits neither them nor their masters, the electorate. Second, the Westminster parliamentary system itself forbids the prime minister is assume de jure (if not always de facto) all of the appurtenances that pertain to the Head of State.

On a more theoretical basis, Austrian economist Hans-Hermann Hoppe has examined the effectiveness of both monarchies and democracies to restrain the growth of government and, of the two, he credits the former with a better relative record for preserving individual liberties and fostering an atmosphere of economic prudence.

All of which leads me to wonder why classical liberals are so often enamoured of the republican ideal. One can understand their inability to appreciate a Tory reverence for tradition and continuity, yet why do they so cavalierly dismiss the public choice arguments which demonstrate that limited government in the age of the Welfare State is held hostage to democratic fortune?

To all who see in politics the culmination of human effort and the end of all earthly activity, this essay is written in tribute to the Roman slave who, while accompanying the conquering general in his chariot, held a wreath of laurel over the commander’s head while whispering into his ear, ‘Remember, you are only a man...’

Public choice theory reminds us to-day that in the absence of mindful supervision, the State and its servants are liable to aggrandise themselves while encroaching on our liberty.

Click here for my full argument at the Adam Smith Institute.


Commemorating the death of Sir John A. Macdonald (1891)

From Doctrine to Detail: Why Conservatism Is Doomed

In this week’s essay, I examine some of the implications for British Toryism arising from recent local elections — extrapolating from a Telegraph column by Ed West, ‘Conservatism is doomed. Head for the hills’.

West looks at three factors affecting the decline of the Conservative party: its loss of identity, the voting pattern of its supporters, and the relationship between its MPs and the electorate. These are key ingredients of study for public choice theory, and I argue that one step in the right direction is for Toryism to return to first principles. Paraphrasing Sir Ernest Benn, a Conservative renaissance must begin with a return from detail to doctrine.

Click here for my full argument at the Institute of Economic Affairs.

Electoral High-Jinks Mar Canadian Politics

A national controversy that first reared up in late February continues to simmer in Canadian politics: Revelations that, during the federal electoral campaign in May 2011, numerous constituents across the Dominion were subjected to harassing telephone calls in the late of night and directed to non-existent polling stations on election day.

These are disconcerting developments, regardless of the political parties involved and the final outcome of the ballot results. Nevertheless, for students of public choice economics, such shenanigans are unsurprising; the gains from winning high office are great, and never more so in the age of the all-encompassing Welfare State. When the possibilities for self-enrichment and aggrandising one’s friends are so tempting, is it any wonder that our political class behaves so badly?

Click here for my full argument at the Institute of Economic Affairs.

The Global Economics of Corporate Tax Cuts

With the burgeoning of the modern welfare state, taxes on corporations are widely accepted as one of the least offensive ways to raise funds to pay for them. But is this true?

Corporations — and, more accurately, their fiduciary officers — are self-interested organisations, which pass along tax burdens in the form of increased prices to consumers; where competition limits such price flexibility, costs are borne by employees or by reductions in capital accumulation.

As students of the Laffer curve theory know, too, raising taxes does not necessarily mean increased tax revenues; as the wit says, oftentimes less is more.

Moreover, in to-day’s globalised economy, nations seeking to attract businesses must compete with other countries by offering levels of taxation that are conducive for enterprises to set up shop within their borders — and to remain as satisfied tax-payers, untempted by the allure of foreign tax incentives.

Recent Canadian economic news — both in relation to arguments for higher corporation taxes and the revenue generated through lower taxes — is instructive.

Click here for my full argument at the Adam Smith Institute.

Canada Sidesteps the Bureaucrats

Students of public choice theory will recognise the rationale behind the Canadian government’s recent effort to cut waste.

In response to an access-to-information request, the Treasury Board released a ‘Statement of Work’ announcing that a private consulting firm was hired to recommend ways to eliminate the federal deficit by 2014-15 (currently between CAN $32-36 billion); specifically to ‘advise the government on the Strategic and Operating Review ... that will eventually trim $4 billion from $80 billion in annual program spending.’

In a contract that began 15 August and will run to the end of March, the firm will be paid $19.8 million — on average $90,000 a day.

Replying in the House of Commons, Jim Flaherty, Minister of Finance, said that ‘there actually is some waste in government. Governments can actually reduce their expenses. We should not do it ourselves solely. We should get advice and expertise from the private sector. For every $1 of spending on experts, we expect $200 of savings, which is a pretty good deal.’

Criticism has taken two recognisable forms. First among them are the Keynesian defenders of public spending — and for government economic intervention regardless — especially at a time of chronic unemployment.

The second tranche of critics, however, has clear implications for public choice: Why, it is argued, with a cache of experienced and knowledgeable civil servants, is the government hiring a private firm to advise it?

‘If bureaucrats are ordinary men, they will make most of (not all) their decisions in terms of what benefits them, not society as a whole,’ was Gordon Tullock’s response in the public choice classic, The Vote Motive. ‘As a general rule, a bureaucrat will find that his possibilities for promotion increase, his power, influence, and public respect improve, and even the physical conditions of his office improve, if the bureaucracy in which he works expands.’

Relying on the public sector alone may not suit a government committed to reduction, but does it have the right to sidestep the civil service? It does, for as Ludwig von Mises argued in Bureaucracy, ‘It is not for the personnel of the administration and for the judges to inquire what should be done for the public welfare and how the public funds should be spent. This is the task of the sovereign, the people, and their representatives.’

But von Mises’s endorsement comes with a caveat: While the objectives of profit management are easy to calculate — ‘profit’, the criterion for which the consultants were ostensibly hired — those of bureaucratic management are far less so.

They sometimes turn out to be the result of special political and institutional conditions or of an attempt to come to an arrangement with a problem for which a more satisfactory solution could not be found. A detailed scrutiny of all the difficulties involved may convince an honest investigator that, given the general state of political forces, he himself would not have known how to deal with the matter in a less objectionable way.

They must conform to laws and regulations — in particular, they must adapt to political considerations which require a high degree of skill to master. (In Canada, for example, the governing ministry must balance regional and linguistic concerns, nowhere more so than with respect to Québec.)

The ideal outcome is a compromise, consisting of public servants, private consultants, and elected officials, all working together to realise best practices that eliminate government waste, while safeguarding government programmes that are demonstrably in the public interest.

In The Vote Motive, for instance, Tullock promotes competition ‘within bureaus’ and ‘between bureaus’ for cost-saving measures, while a columnist for the National Post presents a helpful suggestion:

Make the fee a percentage of the savings found and open the process to everyone — consultants, academics, members of the public, even civil servants. [...] Many bureaucrats, too, know how to make their departments more efficient, but are stymied by institutional inertia or internal politics. But if the budget-cutting process is opened up to all comers and if everyone proposing a useful solution is awarded 10% or even 5% of the savings their ideas generate, then sit back and watch the good ideas come from inside the public service itself.

Are civil servants up to the challenge and willing to call public choice theory’s bluff?


UPDATE: There have been developments since this essay was written in late September (and not posted until now due to ancillary difficulties): The Government of Canada has decided to incentivise the public service by linking bonuses to programme cuts. According to CBC News, Treasury Board president Tony Clement announced ‘that 40 per cent of “at risk” pay for senior managers would be tied to their ability to find the $4 billion in permanent savings the government is looking for in the next budget.’

Public Choice Theory and Lords Reform

While preparing my partial study, Reform of the Senate of Canada: A Progressive Conservative Perspective, it struck me how amenable public choice theory is for Anglo-Canadian proponents of appointed upper chambers. This appeared to be an unexplored avenue well-worth following up, and the result is House of Lords reform: lessons from public choice theory.

Public choice — the application of economics to politics — has two main principles:

First, it argues that we are all motivated primarily by self-interest, whether in our private or public personas. An elected upper chamber, therefore, will not automatically be more selflessly devoted to the commonweal than an appointed chamber — indeed, on this point, who can fault the existing body? — and, given the incentives to solicit votes by offering electoral inducements, may be an even worse example of institutional democracy.

Second, in acknowledging the fact that markets are imperfect, public choice teaches that the answer is not necessarily to be found in the State: that ‘government failure’ is a more intractable problem than its market counterpart. Elected upper chambers, therefore, are no panacea for what ails us politically. In fact, they are probably a far worse option than the appointed chambers in the Westminster parliamentary tradition, especially for those who favour limited government and fear ever-more State intrusion into personal liberty.

(It puzzles me why libertarians disproportionately advocate for an elected upper chamber, unless, as anarcho-capitalists, they mischievously wish to undermine the political process through a ‘scorched-earth-policy’ approach, where the legislative work in both lower and upper houses grinds to a halt through deadlock.

Significant, too, is the tension between utilitarian, majoritarian democracy versus deontological questions of natural rights, to which more government will contribute and which libertarians — theoretically at least — should oppose in the name of freedom.)

I apply these public choice principles to the composition of the House of Lords, in my blog column for the British think-tank Institute of Economic Affairs. My thanks to Richard Wellings and Philip Booth for their assistance. An in-depth analysis will be published in Economic Affairs this autumn.

Click here for my full argument.