The Wisdom of Milton Friedman

Here, he is commenting on JFK's famous statement: "ask not what your country can do for you - ask what you can do for your country."

"It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. The paternalistic "what your government can do for you" implies that the government is the patron, the citizen the ward, a view that is at odds with the free man's belief in his own destiny. The organismic, "what you can do for your country" implies that government is the master or the deity, the citizen, the servant or the votary. To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshiped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive."

Hat tip to David Henderson.

Quotation of the Day

Is from David Henderson, blogging at EconLog:

"I would love to have politicians who are effective at protecting and increasing our freedom. But sometimes the best we can do is get politicians who are ineffective at reducing our freedom."

Quotation of the Day

Is from Kevin Grier:

"Neither the Fed nor the President “runs” the economy. There is no stable, exploitable Phillips Curve / sous vide machine that lets us cook at a certain temperature."

Hat tip to Alex Tabarrok for this one.

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II,  'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"Amidst the turbulence and disorder of faction, a certain spirit of system is apt to mix itself with that public spirit which is founded upon the love of humanity, upon a real fellow-feeling with the inconveniencies and distresses to which some of our fellow-citizens may be exposed. This spirit of system commonly takes the direction of that more gentle public spirit; always animates it, and often inflames it even to the madness of fanaticism. The leaders of the discontented party seldom fail to hold out some plausible plan of reformation which, they pretend, will not only remove the inconveniencies and relieve the distresses immediately complained of, but will prevent, in all time coming, any return of the like inconveniencies and distresses. They often propose, upon this account, to new-model the constitution, and to alter, in some of its most essential parts, that system of government under which the subjects of a great empire have enjoyed, perhaps, peace, security, and even glory, during the course of several centuries together. The great body of the party are commonly intoxicated with the imaginary beauty of this ideal system, of which they have no experience, but which has been represented to them in all the most dazzling colours in which the eloquence of their leaders could paint it. Those leaders themselves, though they originally may have meant nothing but their own aggrandisement, become many of them in time the dupes of their own sophistry, and are as eager for this great reformation as the weakest and foolishest of their followers. Even though the leaders should have preserved their own heads, as indeed they commonly do, free from this fanaticism, yet they dare not always disappoint the expectation of their followers; but are often obliged, though contrary to their principle and their conscience, to act as if they were under the common delusion. The violence of the party, refusing all palliatives, all temperaments, all reasonable accommodations, by requiring too much frequently obtains nothing; and those inconveniencies and distresses which, with a little moderation, might in a great measure have been removed and relieved, are left altogether without the hope of a remedy."

Quotation of the Day

Something to keep in mind if you're heading to the polls tomorrow:

"For between the state, which is hugely generous with impossible promises, and the general public, which has conceived unattainable hopes, have come two classes of men, those with ambition and those with utopian dreams.  Their role is clearly laid out by the situation.  It is enough for these courtiers of popularity to shout into the people’s ears: “The authorities are misleading you; if we were in their place, we would shower you with benefits and relieve you of taxes.”

And the people believe this, and the people hope…."

That is from page 100 of of Volume 2 (“The Law,” “The State,” and Other Political Writings, 2012) of Liberty Fund’s The Collected Works of Frederic Bastiat; specifically, it’s a passage from Bastiat’s September 1848 essay “The State”.

Hat tip to Don Boudreaux.

Alex Salmond doesn't understand the legitimate role of government or the point of a constitution

In the lead-up to the Scottish Independence referendum Alex Salmond was interviewed on Reporting Scotland on the 13th August 2014, where he stated that he desires to protect the NHS and maintain health services "free" at the point of use.  Whilst I don't necessarily agree with that (which I realise is a very uncommon and unpopular point of view in the UK) it is a position that many reasonable people hold.  I fully understand that where people sit on this issue, and others like it, is largely the result of subjective value judgements.  However...

Salmond then went on to state his desire for a written constitution (fine - this is a goal that I can completely get on board with) and that he would work to ensure that in an independent Scotland "health services free at the point of use" were constitutionally protected as a right.

I have to be very careful here, because I don't want to understate the significance of this:

THIS IS AN ABSOLUTELY INSANE, CRAZY, WACKY, RECKLESS, OUTRAGEOUS AND DOWNRIGHT TERRIBLE IDEA!!!

Regardless of your subjective values and your opinion on whether or not you think healthcare should be provided by the state, or by private providers, or some combination of the two, the notion to protect this as a "right" is a total nonsense.

You cannot have a "right" to healthcare that's free at the point of delivery just as you cannot have a "right" to housing or watermelons or education or yachts or mortgage advice or courier services that are free at the point of delivery.  What all of these things have in common is that they cost money to provide - in order to receive them they first must by produced (at some cost) by someone else.  You can't have a "right" to them because that would put an obligation on someone else to provide them at their own cost.

A "right" to free healthcare for you is an obligation to provide free healthcare on your Doctor.  You don't expect to go to work and get paid nothing for your labour so why should your Doctor?

Thoughts on the Scottish Independence Debate

Warning: This post is very long and somewhat wonky.

I realise that I'm quite a bit behind here, but I only had the time to watch the debate last weekend and then had to find the time to write all this down during the last week.


General thoughts:
I found Alex Salmond to be relatively weak, particularly on the issue of a formal currency union with the rest of the UK.  He was evasive of questions that obviously made him uncomfortable.  He quoted Darling out of context and several times referred to obscure documents rather than answer questions directly.  I find the case for independence to be lacking, particularly of any really good, practical reasons for why we should want to be independent.

Alistair Darling's performance was perhaps slightly stronger, although he missed a few tricks.  His best moments were when he quipped to Alex Salmond that "I didn't vote for you." and with his observation that a formal currency union between Scotland and the rest of the UK would require agreement on both sides.  I think Darling was needlessly evasive when questioned by Salmond on whether he thought that Scotland could be a successful independent country, probably out of fear of how it would look of how he might be later quoted out of context (judging by this debate, most likely by Salmond himself).


Opening Statements:

Alex Salmond opened by citing figures of 49 out of 71 Commonwealth countries and 12 out of the 28 EU countries are the same size or smaller than Scotland [pop. 5.3 million]; presumably by way of example that there are plenty of successful small countries and that therefore Scotland could be as well.  The 49 out of 71 Commonwealth countries figure is disingenuous, since not all 71 of these 'countries' are independent states - for example England, Scotland, Wales, Northern Ireland, Gibraltar, the Falkland Islands, St. Helena. and the Cayman Islands to name but a few which are not.  There are 53 independent states in the Commonwealth, 31 of which are smaller than Scotland, one - Singapore [pop: 5.4 million] is about the same size and another one - Sierra Leone [pop: 5.8 million] is not much bigger.  I'm absolutely baffled as to why Salmond would present these figures like this, since the reality doesn't weaken the point he was making anyway.  The 12 out of 28 EU countries figure is perfectly reasonable; there are 9 EU countries smaller than Scotland and 3 of roughly the same size: Slovakia, Finland and Denmark.

He mentions the large number of food banks in Glasgow and rhetorically asks how there can be people reliant on them in this prosperous country [Scotland].  The implication presumably that it is due to failings on the part of the UK government in Westminster.

He then alludes to the Trident nuclear weapons at Faslane and states that £100,000 million (i.e. £100 billion) is planned to be spent on them "over the next generation", of which £8 billion is "Scotland's money" (by which he means is the equivalent paid in tax by the people of Scotland in order to cover this expense).  This is a drop in the ocean compared to other government expenditure, something I've already covered in another post here.

He mentions that for more than half of his life Scotland has been governed by parties that "we" didn't elect at Westminster and that these parties have given us the "Poll Tax" and the "Bedroom Tax" (which of course is not a tax).

Salmond ends his opening statement by stating that: "No-one, absolutely no-one will do a better job of running Scotland than the people who live and work in Scotland." this is a very reasonable point taken in isolation, but it strikes me as somewhat ideologically inconsistent to support Scottish independence on this basis whilst simultaneously expressing a desire for an independent Scotland to remain within the EU.  He's essentially taken polar opposite positions regarding the UK and the EU.

Alistair Darling's opening statement contained exactly what you would have expected it to, he stated that he was proud of Scotland and wants it to prosper, but doesn't believe independence is the best thing to do and cited the strength of the UK.  He advocated a "best of both Worlds" approach.


Economic Prosperity & Social Justice:
The debate began with the themes of economic prosperity and social justice, which were bizarrely lumped together.  Economic prosperity is self-explanatory enough, but the definition of "social justice" is more difficult to nail down and I suspect many people understand it to encompass various different things.  The reason I find it odd that these two things are lumped together is that certain things which some people would consider part of the definition of "social justice" I view as being at odds with economic prosperity.

Darling claimed that as part of the UK, Scotland enjoys unimpeded access to a much bigger market.  This would be a good point were it not for the existence of the EU, which provides the same benefit across all 28 member states.  He also observed that Scotland enjoys additional security as part of a bigger country.

Alex Salmond stated he had a "vision for Scotland" which includes a prosperous country/economy and a 'just' society; at no point did he define what he meant by 'just'.  He referenced over 30,000 children in Scotland in poverty due to social security changes (he wasn't specific on what social security changes specifically).  He also mentioned the "bedroom tax" (a misnomer since IT IS NOT A TAX!) affecting 80,000 families in Scotland.  He didn't offer any discussion on how these issues would be any better/worse in an independent Scotland.

Salmond went on to cite a "risk assessment" by a "major accountancy company" completed "last week" which ranked Scottish independence as the 6th risk behind the UK leaving the Euro amongst other things.*  The whole point was rather incoherent - how do you compare such a diverse wide array of potential risks that may or may not affect a nation and rank them.  Even if you can do so, the 6th biggest risk is really high up the list of all possible risks (which is an infinitely long list).

Asked about the risk that the Union will keep pensioners poor Alistair Darling noted that being part of a bigger, stronger economy spreads the risk.

On Salmond's point that an independent Scotland would always get the government "it" voted for Darling quipped that he didn't vote for Alex Salmond.  As I mentioned here this was more than just a joke, it highlights an important fundamental truth about democracy.

Right at the end of the first part of the debate a gentleman in the audience asked Alex Salmond how ending peoples reliance on food banks is to be achieved in an independent Scotland, whether it is by encouraging people who are able to make a contribution or whether by raising taxes and paying out more in benefits.  Unfortunately ITV cut back to their "spin room" immediately after this excellent question was asked and they never returned to it for the rest of the debate, so Salmond got away without having to detail any specifics of his proposed means to this end.


Cross-Examinations:
Darling pointed out that a formal currency union between Scotland and the rest of the UK would require agreement on both sides.  Darling was very persistent in trying to get an answer out of Salmond on what is his plan B if an independent Scotland is unable to negotiate a formal currency union with the rest of the UK?  I found Salmond's response to be very weak, he repeatedly avoided the question stating only that a currency union was in Scotland's best interests and that he would therefore push for that.  When pressed on the issue he refused to give any clarity on any alternative arrangements.  A casual observer could easily take this as an admission of not having a plan B.

Salmond referenced the Fiscal Commission Working Group Report, which you can read in full online here.  Salmond referred to page 4 of the report, but that's just part of a Foreword, the actual bit we're interested in here is Chapter 7 (pp. 121) and the "Technical Annex - Assessment of Key Currency Options"

In a nutshell, the report sets out 5 potential options for currency in an independent Scotland:

1. Formal monetary union with the UK
2. Informal monetary union with the UK (sterlingisation)
3. Join Euro
4. Set-up new Scottish currency (floating exchange rate)
5. Set-up new Scottish currency (fixed exchange rate)

Salmond quoted Darling speaking on Newsnight Scotland describing a currency union between an independent Scotland and the rest of the UK as "logical" and "desirable" for both countries.  This is selective quoting by Salmond who has cherry-picked these words specifically to make it look like Darling has either backtracked (Gasp! Someone changing their mind? - How awful!) or is being disingenuous now.  In fact, if you watch the clip you'll see Darling has been remarkably consistent in his views on a potential currency union - he states that it makes sense within the context of political union (and points out that this is what we have now!).  Watch the clip here and get the full context of his comments for yourselves.

Salmond then quoted David Cameron saying that Scotland could be a successful independent country and pressed Alistair Darling on whether he agreed with this statement.   I think Darling was needlessly evasive of this question.  I think Salmond was probably correct when he stated that Darling probably does agree with the statement, but just doesn't want to say so for fear of how it will look (or possibly for fear of how it will later be quoted out of context by Salmond).  I think this was a waste of an opportunity for Darling, he could have said something along the lines of:

"Yes, I do, but I think that Scotland can be even more successful as part of the UK."

Or, he could have asked Salmond to clarify exactly what he meant by "successful"?  There are all sorts of different criteria by which we could reasonably measure success.


Audience Questions:
Alistair Darling pointed out that public spending per head in Scotland is higher than in the rest of the UK - something that he supports.  I disagree that this is necessarily something to be supported in and of itself.**  That being said, I think Darling's answer touched on two important points: firstly, that Scotland is financially better off as part of the UK; secondly, and more importantly, even if Scotland would be financially better off if it were independent from the rest of the UK, using this as a justification for independence is on shaky moral grounds.  An analogy: the 10% of richest people in the country could be financially better off were they independent from the other 90% as they then wouldn't have to subsidise or support poorer members of society - does anyone seriously think that's a good justification for the richest 10% to secede from the rest of the UK and declare themselves independent?

It's interesting that there's a general narrative amongst the nationalists that the Scottish people would be better off financially if Scotland were independent from the rest of the UK (since they wouldn't be subsidising others in other parts of the UK on average), but at the same time they pursue statist policies, including taxpayer funded higher education, taxpayer funded medical prescriptions, etc. and that they don't seem to see a contradiction in these positions.  The whole nationalist narrative is full of contradictions and seems to be based around a general xenophobia or misplaced feelings of oppression rather than based on any fundamental principles as such.

Darling references this IFS report and suggests that in the event of Scottish independence, in the early years of independence circa £6 billion of cuts would be required.  I'm assuming Darling has estimated this from the figure of £6.4 billion reported in Table 1 (pp. 19) as the budget deficit of Scotland in tax year 2010-2011 (the most recent year covered in the IFS report) based on a geographical share of North Sea oil & gas revenue (the most realistic, but also the most optimistic case).

Darling described "free" (read: taxpayer funded) higher education as a "theoretical right" in reference to cuts of 130,000 college places.  I don't like this - basically because it is an outright nonsense.  "Free" higher education cannot possibly be a right for anyone because it costs resources to provide.  This is the distinction between negative rights and positive "rights".  If there were a right to receive education without paying for it directly that would put an obligation on someone else to pay for that education - who is that someone else and why should they be paying rather that the person receiving (the vast majority of) the benefit of the education?  This blog post is already far too long to get into a detailed discussion of such concepts, so I'll save any further comment for another day.

Alex Salmond answering questions on the issue of pensions referred to Scotland's declining working age population.  He referred also to 37,000 young people leaving Scotland each year and spoke about retaining these skilled people within Scotland and ensuring they are allowed to stay here.  He gave no details about how he planned to achieve this or how it would be any easier/better within an independent Scotland.

Darling attempted to emphasise the additional economic opportunity that comes with being a part of the UK.


Closing Statements:
Darling's closing statement was a narrative of not introducing any new borders or boundaries to increasing wealth and opportunities and the additional security that comes from being part of a larger country such as the UK.

Salmond's closing statement was a reiteration of the points he made in his opening statement.  He emphasised that Westminster governments have often not reflected the votes of the Scottish population, that Scotland is a wealthy nation with abundant natural resources and that this can be used as a basis for a more 'just' society and that no-one will govern Scotland better than the people who live and work here.


* It would have been helpful if he'd mentioned the name of the company that carried out this "risk assessment" - the cynic in me suspects that no such document exists and it's all rhetoric.
** I'm in favour of public spending being as low as possible - after all, the goal is not to spend as much money as possible, it's to get the best and most cost-effective results possible.  Put another way - we want to get as many public goods/services as possible for the lowest possible cost.  One is also reminded of the law of diminishing returns as well as the fact that one will never spend others money so carefully as they would spend their own.

An Open Letter to Alex Salmond: Democracy & the "Will" of the People

Mr Salmond,

During the recent Scottish Independence Debate between yourself and Alistair Darling,you made the statement that for more than half of your life Scotland has been governed by parties that "we" (by which you mean the people of Scotland) didn't elect at Westminster and that these parties have given us the "Poll Tax" and the "Bedroom Tax" (by which you are referring to the under-occupancy penalty, which of course, you know as well as I do, is not a tax).

I would like to point out, that for my entire life I have been governed by parties that I didn't elect at either Westminster or Holyrood.  This is part of the nature of democracy - sometimes you get stuck with some politician or some party that you didn't vote for (most of the time if you happen to be a libertarian or a true liberal).  Your adversary Mr Darling observed as much when he quipped about not having voted for you.  This was more than a joke, he clearly understands this important truth concerning the nature of democracy.

Indeed, by your standards the UK has been governed by parties that "we" (by which I mean all of the people of the UK) didn't elect at Westminster for my, and indeed your, entire life.  Not for eighty-three years, since the 1931 UK General Election, has any single party won an absolute majority of votes.  That is to say, for every single one of the 19 UK General Elections held since 1931, the majority of voters in the UK have voted against whomever was in power at Westminster.

Furthermore, implicit in your statement that "we" the Scottish people didn't elect those parties in Westminster is the idea, to borrow Don Boudreaux's words, that a "multitudinous and extraordinarily complex and diverse group of individuals" (i.e. "the Scottish people") can have "anything reasonably called "a representative" or an agent or agency that carries out its 'will'."  I completely reject such a notion - "[g]roups of people have no 'will'.  It is mistaken anthropomorphism to imagine otherwise."

The distinction which you implicitly draw between "we" the Scottish people and "we" the British (and Northern Irish) people is completely arbitrary.  When politicians move political boundaries to their own advantage we call it gerrymandering.  This argument which you put forward during the debate is nothing more than an argument for gerrymandering on a national scale.

I assure you that I feel more kinship and national identity in common with my English wife and with many English friends, colleagues and acquaintances I have known throughout my life than with you or any of your nationalist party colleagues.

Sincerely,
Ally

Keeping Tabs on Politicians

A recent post over on Left Foot Forward got me thinking a bit on how we, the general public, ensure that our politicians are serving our interests. Of course, we have elections once every few years where we can vote out the corrupt and incompetent, but that will only happen when a politician is obviously corrupt or incompetent, expenses scandal aside it may not often be that apparent.

Websites do exist to help us keep tabs on our representatives in Parliament: www.publicwhip.org.uk and www.theyworkforyou.com allow you to see when each MP attended Parliament, what debates they participated in, what they said and how they voted. You can also read all of the acts and bills passed (and rejected) by Parliament online, if you have the inclination for deciphering the lawyer-speak they’re written in.

However, there is one noticeable shortcoming in this process – we cannot tell from this information alone why a politician has voted a certain way, we do not know the intent behind any politician’s actions. Sadiq Khan’s post illustrates this when he says “The Liberal Democrats voted against our original proposals and have diluted the provisions of this Act (as did the Conservatives).” in relation to the Racial and Religious Hatred Bill.

His depiction here is of Labour struggling to pass a piece of benign legislation, which would only benefit the British public, in the face of unjustified opposition from the Conservatives and Liberal Democrats. There can be many reasons for voting against a piece of legislation: bear in mind that these bills can be of considerable length and that the specific wording of the bill is what matters, not the intent behind it; because it is what the bill says, not what it intends, that becomes law. In the right circumstances then, a politician can be entirely justified in voting against a piece of legislation due to disagreement with the precise wording of just a single clause or sub-clause.

Khan does not provide us with any clues as to which parts of the bill have been ‘diluted’, or what the original wording of the bill was and whether there is any substantive difference between what was first proposed and what is now enshrined in law. Without these details voters are unable to decide for themselves how to side on the Government’s original proposals.

But then again, Khan's intention is not merely to furnish voters with information; he is after all a Labour MP, standing for re-election this week. The purpose of his article is to convince wavering voters (in this specific case - Muslim voters) that Labour is their best option at the forthcoming general election. This may or may not be true - from the limited information provided it's impossible to tell.