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Eamonn Butler: The Rotten Police State of Britain

Dr Eamonn Butler is director of the Adam Smith Institute and author of The Rotten State of Britain, which is published on Tuesday by Gibson Square Books. The book offers a damning account of what the successive Labour Governments have done to Britain over the last twelve years and here he looks in particular at the perils of the state having accrued increasingly draconian powers.

How did we get into such a state? We’re spied on by the world’s biggest array of CCTV cameras. We’re bullied by the world’s most expensive police force, who are quite willing to arrest us for dropping an apple core. We seize the assets of our best friend in Europe – Iceland – under anti-terrorism law. Nannying officials say we can’t feed our dogs grapes or give our kids a sip of wine. The average worker has to save 60 years to get the same pension that an MP clocks up in just 13. The government’s total liabilities are three times the national income. The IMF says we’re the country least well placed to survive the downturn, not the best, as Gordon Brown insists.

Strikes, stagflation, even snow – it’s like the 1970s all over again. It took Mrs Thatcher to pull us out of that mire. Unfortunately, Gordon Brown seems to have bought us a return ticket.

We can’t blame the international economy, or terrorism, for the state we’re in. As I explain in my new book, The Rotten State of Britain, it’s rooted deep in the psychology of New Labour.

Traditionally, governments accepted that they were only temporary custodians of power. And that their power was circumscribed – by Parliament, the civil service, the courts, local governments, and even the media. They tried to work within those constraints. Mrs Thatcher got extremely annoyed when these institutions stood in her way. Not always, but for the most part, even the Iron Lady accepted their constitutional right to do so.

Eamonn Butler: Alan Walters provided an intellectual underpinning for Margaret Thatcher's economic policies

Sir Alan Walters, economic adviser to Margaret Thatcher and leading monetarist, has died at the age of 82.  Eamonn Butler, Director of the Adam Smith Institute - a pro-freedom policy think-tank based in London, pays tribute to him below.

Walters was a testament to Thatcherite self-help. His education was disrupted by army service, but he pressed on and obtained an external degree from the University of London. He became Professor of Econometrics and Statistics at the University of Birmingham, and then Cassel Professor of Economics at the London School of Economics. He was economic adviser to the World Bank in Washington DC, and a Professor of Economics at Johns Hopkins University, before being recalled by Margaret Thatcher in 1981 to serve as her economic adviser.

At Birmingham in the 1960s, Walters emerged as a strong proponent of monetarism – the view that the money supply must be strictly controlled if inflation was to be held in check. It was a decidedly unfashionable view. The postwar ‘Keynesian Consensus’ thought monetary policy was a weak tool, and boosting output more important than inflation. But as government spending expanded, inflation grew alarmingly. Then unemployment began to rise too – creating ‘stagflation’, something the Keynesians found hard to explain.

Like the American monetarist Milton Friedman, Walters knew there was no trade-off between inflation and unemployment. Inflation makes it impossible to see what prices are really doing – the ‘signal’ of real price movements gets lost in the ‘noise’ of general price rises. So people can’t make rational plans, resources are wasted, and unemployment rises.

Through papers for the Institute of Economic Affairs and others, Walters insisted that money was actually a hugely powerful instrument. There had to be strict limits on how much money governments created. You could not just spend your way out of a recession.

Eamonn Butler: Markets are human

Dr Eamonn Butler, Director of the Adam Smith Institute, offers a synopsis of his forthcoming book The Best Book in the Market.

‘Market’ was the sixth word I ever learnt – after ‘This little piggy goes to…’ But I learnt first hand about the market as I watched my father serving customers at his car repair shop. And yet more as my mother added up the countless rows of pounds, shillings and pence in the business’s ledgers.

So when I studied economics – even at the relatively enlightened University of St.Andrews – I knew something wasn’t right. The textbook writers were trying to make their subject a science, like mechanics. They treated people like robots, not human beings. By stripping out every trace of human psychology – irrationality, generosity, habit, ignorance – they stripped out everything that makes markets actually work. And the trouble is that almost the whole of public policy is based on these daft ideas. Ideas have consequences, they say: but unfortunately daft ideas have daft consequences, which is why we’re in the public policy pickle we are today.

So it was a great pleasure for me to be invited to write The Best Book on the Market, and to explain to people how markets really work and why they’re actually a pretty good thing. I wanted something that everyone – even politicians – could understand, so I’ve cut out the jargon and show how markets really work through my own story, and the stories of countless others of people in real-world markets.