Ryan Bourne is Head of Economic Research at the Centre for Policy Studies, which hosted the event ‘Friedman at 100’ on July 3rd. The full transcript from the event can be foundhere, and the videos of it are available at our YouTube channel.
Today would have been the great economist Milton Friedman’s 100th birthday — he was the most significant and effective proponent of free market economics we’ve ever seen. Though he died in November 2006, his ideas have had a lasting effect on the great fight for economic and personal freedom.
Earlier this month, the Centre for Policy Studies hosted a high-profile event to discuss the legacy of his work. It’s easy to forget just how much he achieved. A Nobel prize winner in Economics, Friedman’s work advanced the subject in many areas. His work on individuals’ consumption patterns remain a cornerstone of almost all applied economics. He advocated floating exchange rates following the collapse of the Bretton-Woods system. He debunked the idea of the Phillips curve — that Governments could manage policy in the long-run by trading off inflation and unemployment — and was subsequently vindicated during the stagflation of the 1970s.
Ed Miliband might be suffering from low personal ratings, but he’ll take immense satisfaction from the recent direction of the public discourse. You’d think with unemployment at 2.64m and the original deficit reduction plan abandoned, Conservative MPs would be all guns blazing for supply-side reforms such as tax cuts and deregulation. Instead, over the past week they’ve been clambering over themselves for a good old bit of populist high pay bashing – on both executive pay and the 50p tax rate. So evident has this jump to the populist view been, Miliband himself has now had to jump to the idea of worker representation on remuneration committees and another increase in the bank tax to satisfy his own supporters.
Tory MPs have been keen to invoke the legacy of the ‘Iron Lady’. Apparently ‘she would not have stood for rewards for failure’ seen at boardroom level. Margaret Thatcher certainly believed in the power of the free-market and competitive pressure. In one sense, therefore, those of us that believe in free-market economics should welcome strengthening of shareholder power over executive pay and improvements in transparency – these things make the market work more effectively.
At the Conservative Party conference last week, George Osborne said: “I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances.”
That makes two of us. But the way in which Osborne outlined his argument was to suggest that the Government could not fund tax cuts now. The reality is different. Even putting aside the beneficial dynamic effects of targeted tax cuts, they could be funded now if the Government changed its political priorities, as indicated in Andrew Tyrie’s critique of government policy for the CPS last week.
Back in June, the mightily-named "Global Commission on Drugs Policy" released its report into the effectiveness of the "War on Drugs". The 19-member panel, which brought together the likes of Kofi Annan, Sir Richard Branson, the beleaguered Greek Prime Minister George Papendreou and former US Federal Reserve Chief Paul Volcker, unanimously concluded that the "War on Drugs" had failed. They advocated various degrees of decriminalisation and "fundamental reforms" on national and global drug control policies.
The report was, perhaps inevitably, seized upon by the liberal luvvy media, who waxed lyrical about its conclusions. The Independent took the lead, claiming that the work was "A report that dares to tell the truth to power." The great former US President Jimmy Carter immediately demanded that "the American government should support and enact the reforms laid out." And not to be outdone by Eddie Izzard’s expert views on the future of our electoral system, those well-known members of the Royal Statistical Society, Dame Judi Dench, Sting and Kevin & Perry star Kathy Burke, waded in with a celebrity endorsed letter critiquing current government drugs policy.
In September 2009, Centre for Policy Studies chairman Maurice Saatchi made a speech to the London School of Economics, entitled “If banks make billions in profits, I’d like my share.” The message was simple and clear. Those who ran the risk of bailing out the banks should be those who benefit from their future performance. The banks were bailed out by the taxpayer.
Inspired by Saatchi’s words, Portman Capital has developed an innovative proposal, which seeks to allow the public to share in the future performance of the banks whilst recouping the full initial government investment. This, as reported today in a Centre for Policy Studies Pointmaker, entails distributing the shares of RBS and Lloyds to every taxpayer free (on a non-transferable basis), with a fixed amount returning to the government after every sale. Over time the policy allows the government to re-coup its £66 billion investment with any capital gain accruing to the individual taxpayer.
The usual response to this idea is: why not just a conventional privatisation, as advocated by the CPS through its history?
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