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How the Institute of Economic Affairs has influenced Coalition policy

Following on from the pieces about the government policies inspired by the Centre for Policy Studies, Policy Exchange, the TaxPayers' Alliance and Direct Democracy, here is the response from the Institute of Economic Affairs as to how it has influenced Coalition policy.

Picture 8 The main objective of the IEA is to change the climate of opinion not to change policy in the short term, but here are some examples of areas where our publications have led to new thinking in key areas.

Establishment of a Public Sector Pensions Commission

The IEA was one of the first groups to highlight the desperate situation of public sector pensions. We have produced several publications focusing on how this issue can be resolved. We initiated the setting up of a Public Sector Pensions Commission, and got several other organisations involved with this.

See: A Bankruptcy Foretold 2010: Post-Financial-Crisis Update, Nick Silver (2010); Public Sector Pensions Commission report (2010); A Bankruptcy Foretold: The UK’s Implicit Pension Debt, Nick Silver (2008); Sir Humphrey’s Legacy: An Update. UK Public Sector Unfunded Occupational Pensions, Neil Record (2008); Sir Humphrey's Legacy: facing up to the cost of public sector pensions, Neil Record (2007); The trouble with final salary pension schemes, Nick Silver (2006)

Establishment of a comprehensive spending review and Star Chamber

The IEA has long advocated the need for a wide-ranging department by department review of what functions the government should and shouldn’t be providing. This is an area we have focused on reiterating in the context of the current national debt.

See: Cutting public spending by £167bn: a modest but necessary aim, Philip Booth (2010); Living with Leviathan: Public Spending, Taxes and Economic Performance, David B. Smith (2007)

End of fiscal stimulus, prioritisation of cutting government spending and paying off the deficit as the means to growth – rejection of traditional Keynesian aggregate demand arguments

Since the 1950s we have campaigned against the idea that government spending drives growth, through numerous journal publications, blog and opinion articles and research reports.

For example: Money Still Matters, David B. Smith (2010); How should Britain’s government spending and tax burden be measured?, David B. Smith (2009); Were 364 Economists All Wrong?, Philip Booth (2009); A Tiger by the Tail: The Keynesian Legacy of Inflation, F.A. Hayek (1972, 2009); Living with Leviathan: Public Spending, Taxes and Economic Performance, David B. Smith (2007); The Counter-Revolution in Monetary Theory in Money, Inflation and the Constitutional Position of Central Bank, Milton Friedman (1970, 2003)

Big Society

The importance of civil society organisations has been a focus of the IEA’s work for decades. Recently there have been two especially influential publications. The proposals in these publications do differ from the coalition’s proposals, however, in terms of the degree of state facilitation of civil society.

See: Rescuing Social Capital from Social Democracy, John Meadowcroft and Mark Pennington (2007); Catholic Social Teaching and the Market Economy, Philip Booth (2007)
Tax simplification

We have argued for a long time for simplification of the tax system, along with a broader reduction in red tape, most recently in Taxation and Red Tape: The Cost to British Business of Complying with the UK Tax System, Francis Chittenden, Hilary Foster and Brian Sloan (2010)
Further education – abolition of educational quangos, the decision to give university college status to BPP

See: An Adult Approach to Further Education, Alison Wolf (2009); Buckingham at 25: Freeing the Universities from State Control, James Tooley (2001)
Moving bank regulation from the FSA to the Bank of England

See: Central Banking in a Free Society, Tim Congdon (2009)

Aid and development – focus on good governance, bottom up aid and property rights (although this has not led to the abandonment of the 0.7% target, development policy has moved in this direction)

See: Paths to Property: Approaches to Institutional Change in International Development, Karol Boudreaux and Paul Dragos Aligica (2007); Africa Left Behind (Economic Affairs, Volume 26.4) (2007)
The apparent abandonment of the pusuit of “well-being” as a national goal

See: Happiness, Economics and Public Policy, Helen Johns and Paul Ormerod (2007)

Privatisation of the post office

See: Liberating the Letter: A Proposal to Privatise the Post Office Research Monograph 38 (1983); 'Liberating the Letter' in Privatisation and Competition: A Market Prospectus Hobart Paperback 28 (1989); The Postal Service - Questions the Monopolies Commission Avoided'  Economic Affairs 5/1 (1984); 'Britain: Privatisation of the Post Office' Economic Affairs 13/4 (1993); It's not too Late to Privatise Royal Mail' Economic Affairs 24/3 (2004); The Future of Postal Services Research Monograph 47 (1991)


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