Philip Booth: Socialists may be clever but they’re certainly not humble

Professor Philip Booth is Editorial Director at the Institute of Economic Affairs.

Guido Fawkes reported recently that Polly Toynbee told the Edinburgh Book Show that left-wing people were both more intelligent and generally better people than others. Presumably by this she meant that they were more intelligent and better people than economic liberals and conservatives. I have not been able to find confirmation of this statement, but let us take it on face value. I am aware from other things that Polly Toynbee has said that it is perfectly plausible that she would make a statement like this and, in any case, it is worth investigating as a hypothesis.

To take the first half of her statement, I am happy to admit immediately that it is likely that left-wing people are more intelligent than liberals and conservatives – though the causality is in the other direction. In his final book – The Fatal Conceit (of which, more later) – Hayek said: "One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realises that, of course, intelligent people overvalue intelligence, and suppose that we must owe all the advantages and opportunities that our civilisation offers to deliberate [human] design…". As far as I am concerned there is little more to be said about the subject. Polly Toynbee is right. People who are intelligent are much more likely to believe that they can use their intelligence to design and perfect society. As Adam Smith reminded us, central planners treat the individuals who make up society – who all have a motion, a will and a brain of their own – as if they were pieces on a chess board. Socialists believe that organising and perfecting society is rather like organising a family outing to the zoo – it just requires a little more brain power and, of course, intellectual socialists believe that they have brain power in abundance!

Philip Booth: Rowan Williams sowed confusion last week when he raised the distinction between the "deserving" and "undeserving" poor

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

In his recent New Statesman editorial, Archbishop Rowan Williams criticised the re-emergence of the seductive language of the deserving and underserving poor. The job of a Bishop is to teach and clarify. I have often thought that this particular Archbishop has a mission that is the opposite to that of the Institute of Economic Affairs (and in a different field). The IEA is supposed to take good complex free-market economics and expound it more clearly to a wider audience. The Archbishop often seems to take clear concepts and make them more complicated so it is extremely difficult to work out what he means.

There is an important debate to be had about the deserving and undeserving poor. Iain Duncan Smith ducked that debate in his response to the Archbishop by saying that he never used the words. I suppose it is quite reasonable for him not to use the words - politicians can choose their own terms for debate.

However, an Archbishop's job is to clarify and not to confuse and it is worth making some clarification here because all he did in his editorial was sow confusion. Indeed, this sort of clarification is one of the more useful contributions to political debate that Bishops can make. The obvious question raised by distinction between the deserving and undeserving poor is "deserving of what?" If that question is asked then clearly there is a distinction between deserving and undeserving for the Christian depending on what the "what" is? To trivialise, are the poor deserving of a Rolls Royce? Clearly not.

Philip Booth: Why contracting out of the state pension should remain

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

The recently published Green Paper on pensions was widely welcomed. Indeed, it contained some reasonable ideas. However, it also contained a proposal to abolish contracting out of state pensions. This could lead to possibly the biggest tax increase in history as well as the reversal of one of the most important post-war privatisations.

The three reasonable proposals were identical to those in a paper published by the IEA: Sharing the burden - How the older generation should suffer its share of the cuts.

These proposals were:

1. To move to a position where there is only one state pension.
2. To retain the contributory principle. There are serious dangers in undermining the contributory principle yet further so this is welcome.
3. To link the pension age to improvements in life expectancy with the government appointing an independent commission to make recommendations relating to pension age.

This third proposal is important.

Philip Booth: Pensioners should suffer their share of the cuts

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

The Comprehensive Spending Review (CSR) was not particularly comprehensive. It will reduce spending as a proportion of national income to the levels we had in 2007 – hardly ambitious. By 2015, the state will still be spending 45% of national income (about 40% using the government’s preferred measure which overstates the national income denominator).

One reason why the CSR was relatively lame was because two areas were effectively excluded – the NHS and overseas aid. But another large interest group also escaped scrutiny: older people.

This may not be surprising. In both the 2005 and 2010 elections, the main parties were doing anything they could not to upset older voters – indeed the Conservatives’ 2005 manifesto went to extraordinary lengths in proposing distortions of the tax system to help old people. One of the problems when the government becomes the main provider of income to older people is that, as the electorate ages, it becomes more difficult to rein spending in – there is a vicious circle rather than self-correcting mechanisms at play. The median age of active voters (i.e. those who actually vote) is already over 50 and is rising rapidly. The young do not have much chance at the ballot box these days.

So, the CSR was pretty tough on the young – student grants will go; we will have the cliff-edge removal of child benefit for those earning around £40,000; and VAT and other taxes are increasing. Meanwhile, the sacred cows that most benefit the elderly – the NHS, benefits in cash and kind, and the basic state pension are either being protected or enhanced. Furthermore, benefits to pensioners are always increased to compensate for VAT increases whereas those who are working suffer reductions in real wages.

Philip Booth: The Big Society will only come into being when the Government stops trying to create it and instead unleashes a tide of philanthropy

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

The Government reportedly feels that its Big Society programme has stalled. It is not surprising. The coalition’s idea of the Big Society often seems to involve no more than getting a few people round a table to discuss how the Government can design the Big Society. Philip Blond comes up with some interesting and radical ideas, but he is too suspicious of the free economy which is a necessary (but not sufficient) condition for a Big Society.

The Big Society section of Number 10’s website talks about the importance of transferring power from Whitehall to individuals but the concrete action points send a different message. Key programmes involve the government establishing a “Big Society Bank”, a “National Citizens’ Service”, and government funding for relevant initiatives. The Big Society will only come into being when the government stops trying to create it and starts to roll back the state. The Big Society in welfare flourished when the state was not responsible for welfare. The Big Society in finance – mutualism and so on – thrived when the government did not guarantee and regulate the financial system. Unfortunately, Blond, Hilton and so on lack the sense of history that is necessary for them to appreciate this.

There seems to be a fear that if the Government leaves things entirely to the people not enough will be done. On the contrary, it is the case that if the Government insists on trying to manage the creation of the Big Society, nothing will happen. Whilst I do not expect the Government to liberalise the financial sector or roll back the welfare state any time soon, it can do one thing. It can create the conditions in which philanthropy can thrive. The Government should resist the calls to fund the Big Society by giving more grants to charities – this will just make charities clients of the state, but it should strip away the regulations that surround charities and encourage charitable giving.

Philip Booth: Scrapping the "default retirement age" is another nail in the coffin of freedom of contract

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Another nail was hammered in the coffin of freedom of contract today when the Government confirmed that it was scrapping what it calls the "default retirement age". The "default retirement age" allowed employers and employees to freely agree a retirement age as long as that age was not below 65.

The idea that employers and employees should be allowed to sign contracts of employment with agreed retirement ages written into them is regarded by the coalition as a relic of the days when contracts of employment were free agreements between employers and employees. The late twentieth century saw contracts of employment being written by governments, with jobs having some kind of property right entitlement to those who are lucky enough to have them.

The concept of the freely-agreed retirement age has been undermined over the last few years and will now be scrapped. Once you have hired somebody, you are stuck with them for life unless you go through complex procedures of dismissal (by showing the employee is no longer capable) or redundancy. Any dismissal on grounds of incapability will be very vulnerable to tribunal challenge on grounds of age discrimination. Firms with large HR bureaucracies might be able to manage these processes – though at the expense of such bureaucracies becoming still larger and more powerful – but smaller firms, as ever, will bear a greater proportionate burden. It will be a nice earner for employment lawyers too.

Philip Booth: The UK should be on “inflation watch”

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

The most recent growth figures surprised many people and this led to sterling rising and speculation about whether a decision to raise interest rates would be made at this week’s MPC meeting. So, what are the prospects for inflation and interest rates?

It is possible to have a rise in growth without any implications for inflation. Dramatic improvements to the supply side of the economy could raise our growth rate significantly. Despite the Prime Minister’s recent speech on growth to the CBI, those improvements to the supply side are not likely to happen any time soon. David Cameron did not focus on reducing the regulatory and tax burdens on business but on how government could spend more and on how bureaucrats could help business more. He is barking up the wrong tree.

Indeed, recent announcements do not bode well for supply-side led growth. The full rate of the minimum wage has been extended to younger people; we have the EU maternity leave directive; new EU regulations on investment markets; the imposition of a new Equality Act; and a pledge by the Chancellor to extract the “maximum sustainable tax revenues” from the financial services industry. All this happened in three weeks.

Despite this, there is now a justified belief that we may have reached the high watermark with regard to attacks on the supply side of the economy. The relentless increase in taxes and tax complexity - as well as increases in business regulation - under Gordon Brown are likely to slow dramatically over the coming years. Changes in perceptions can translate rapidly into changes in business investment plans and economic growth and this may be happening.

Philip Booth: John Hutton's report on public sector pensions is a step in the right direction - but he needs to go much further

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs and vice-chairman of the Public Sector Pensions Commission.

Yesterday we had the widely-trailed report on reforming public sector pensions. It has been put to me, including on Radio 5 Live, that now is not the time to reform these schemes. This is true. As the old proverb goes, the best time to plant a tree was 20 years ago. Nevertheless, the second best time to reform public sector pension schemes is definitely now.

It is interesting how quickly the climate of opinion has turned on this issue. It is just four years since the IEA first made waves by publishing Sir Humphrey’s Legacy. The IEA’s role is to change the climate of opinion by trying to make a big difference over a generation rather than a small difference to policy today. However, in this case, ideas turned rapidly into government action. Neil Record’s argument was so convincing that other think tanks – and also trade bodies - that are closer to the practical policy scene followed it with their own excellent analysis and proposals. Policy Exchange, the CBI and the Institute of Directors have all made important contributions to keep this subject on the map. Then, over the summer, an independent Public Sector Pensions Commission published its findings to some acclaim.

In the end, even politicians could not resist the tide of opinion – though it was the Liberal Democrats who responded to the intellectual arguments before the Conservative Party.

The figures are well known. Total public sector pension liabilities are bigger than the official national debt. The true cost of a policewoman’s pension is 70% of salary. About half the cost of public sector pensions accrual is brushed under the carpet.

This issue should be a huge worry for the next generation, but it also creates a crazy situation for public sector employers and employees. It is likely to be the case that if employers and employees between them really had to bear the full cost of their pensions, they themselves would want different salary and benefits packages.

Philip Booth: Vince Cable risks promoting another financial crisis

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Vince Cable suggested on Sunday that the payment of bank bonuses and dividends should be linked to whether or not they lent more to businesses. It is not clear exactly what he meant and there was no substantive mention of this idea in the Green Paper that has now been published. He seems to be all at sea and one wonders whether his ambition is to promote another financial crisis.

A few years ago, the IEA published a very good book, Fifty Economic Fallacies Exposed. I am beginning to wonder if Vince Cable should be the subject of the next edition. At the current rate, his fallacies could fill a whole book within the year.

There are many underlying causes of the financial crash and credit crunch. But, for the benefit of creating consensus, let's park, for the moment, the debate about whether there should have been more regulation, less regulation or a different type of regulation of banks' activities. Setting these issues aside, I think that all who monitor this subject seriously must be agreed that the following must all have contributed to the crash and also to the specific pattern that the crash took:

1. The requirement and arm twisting in the US for banks to lend to poor risks.
2. Weak personal bankruptcy law in the US.
3. The scandal of the mass government underwriting of mortgages through the securitisation process in the US.
4. The encouragement through the tax code for banks to finance themselves through equity and not debt and the regulatory encouragement for insurance companies and pension funds to invest in debt instruments – a further spur to securitisation.
5. The successive bailing out of financial institutions in the US.

Dealing with all these would be win-win fixes and most of them need fixing in the US - the source of the crisis - to a greater extent than in the UK.

The census and government collation of national statistics only serve to perpetuate the illusion that central planning is possible

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

It is very welcome news that the government is planning to scrap the census from 2021 (reported in the Daily Telegraph last week). Indeed, you might have first seen this suggestion on the IEA blog last February.

It has been suggested that the census will be replaced by the use of other data, survey evidence and so on. If we must collect data about the population as a whole, our sexual habits, the number of rooms in our houses and so on, then this is certainly a better way to collect it than a nationwide census. The last census seemed to be a complete shambles with incomplete data, a high level of non-returns, and so on, on a huge scale. At £0.5 billion, this shambles does not come cheaply.

So, given that abolishing the census will save a huge sum of money, the government should reconsider whether it can still call a halt to the 2011 census which it is still planning to undertake. However, more important than all this is that the central planning mentality that lies behind the census - and the collection of other official statistics - goes too. Perhaps a huge axe should be taken to the collection of government statistics more generally. Perhaps the government should not be collecting the survey data that will replace the census.

The ridiculous nature of the central planning process using official statistics was revealed in an Office for National Statistics news release earlier this year. It declared that the census provides key data so that, for example, the mobile phone industry can see whether there is an ageing population and adapt the functionality of their phones appropriately. Also, it was declared, the census underpinned the planning of billions of pounds of government spending in areas such as education, healthcare, and so on.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Philip Booth: Why I have reservations about the "Nudge" philosophy

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

I have various reservations about the Nudge philosophy that has been embraced by David Cameron. It is clearly attractive to the Conservatives because it seems novel without appearing to smack of market fundamentalism - and the Conservatives seem unable or unwilling to make the case for liberating the market economy directly.

One reservation that I have about “Nudge” is not about the basic underlying idea, but about the likely flaws in implementation. The authors of "Nudge" clearly intend that their proposals should be an alternative to state regulation, but it is difficult to see them being implemented that way in practice. For example, in the pensions field, auto-enrolment into personal accounts is going to be used in addition to all the current government interference in the provision of pensions: we will still have a government-provided state pension, a “second state pension”, continued regulation and tax relief. In addition to all this, people will be auto-enrolled into saving through personal accounts.

A second problem is that of who decides the direction in which to nudge people. The political elite, for example, wish to nudge the young to take out pensions but this risks making pension mis-selling compulsory. Young people will be saving in a pension whilst paying off a mortgage or even paying off credit card bills: saving and borrowing with two different financial institutions at the same time is an expensive business. Of course, the people who will lose out most are those who are not sufficiently sophisticated to shoulder barge the nudger and do their own thing.

The best way is to allow paternalism to evolve naturally in society without the interference of government. That is genuine “libertarian-paternalism” to use the phrase that Nudge’s authors use. People generally know when they are not the best judges of their own interests and they often choose to devolve decisions to others.

Again, we can use an example from the area of pension provision. Until 1988, employers were allowed to require their employees to join their pension schemes as part of their terms and conditions of employment. It satisfied both parties. A Conservative government then tore up freely negotiated contracts of employment which contained “libertarian-paternalistic” clauses so the employees were free to leave the schemes. The consequence of this intervention was the £12billion pension mis-selling scandal. Now the Conservative Party is accepting (and will not reverse) government proposals to do exactly what it has prevented employers and employees freely agreeing to - auto-enrolment into pension schemes. Government will be doing what society used to do – that is not the way round that David Cameron is supposed to want things.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Philip Booth: The Conservatives must give their proposed Swedish-style "free schools" a lot more freedom

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

The Conservatives’ plans for “free schools” are, arguably, their flagship policy. It is vital that there is no compromise when they are implemented. Schools are a good place to start a free-market agenda. Education reform is politically quite easy – unlike NHS reform – and left wing governments in the rest of the EU accept the premise that the “parent should be sovereign”. In Sweden, left wingers even accept profit-making schools.

Competition will raise standards and the efficiency with which resources are used across the sector, but the potential benefits of education reform to the less well off are perhaps the most important gain. We know from the US – where the data are especially good and well researched – that voucher systems benefit the poor and those with special needs more than any other groups.

Our current system, on the other hand, particularly benefits the middle classes who can use their resourcefulness to get the best out of the system: if Freddie’s school is not doing well then Freddie can be helped at home, the parents can articulate their needs to the school or, in the extreme, Freddie can move house and change school. But, if the parents are not articulate, Freddie sinks.

In a competitive school system, two things change. Firstly, even if Freddie’s parents were completely unable to distinguish good schools from the rest, choosing a school at random will lead to a far better outcome than the current dismal state-school offerings in many areas of the country. Secondly, most parents do, in fact, recognise a good school if they see one. They are able to choose schools effectively. Choosing a good school is a far easier way for a family to improve their child’s education than exercising “voice” or moving house as is necessary in the current model.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Philip Booth: Phillip Blond has many sound and original policies. Unfortunately the original ones are not sound and the sound ones are not original.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

I have blogged before on Phillip Blond - I am not just jumping on the bandwagon after the launch of ResPublica. But it is interesting that his philosophy seems to have the approval of David Cameron. I hope that DC thinks about it a little more deeply.

Blond's roots go back to the distributist movement that has some adherents amongst Catholics in the UK. It emphasises widespread ownership, the inevitability of a free market degenerating, the importance of guilds and so on. Indeed, Blond claims the support of Pope Benedict's encyclical Caritas in veritate for many of his views.

I have written about that encyclical in four articles at least, but I am afraid it offers no comfort for Phillip Blond's overall strategy (though neither could I claim it for the free market case). The Pope repeats what has been said many times in the last forty years in official Catholic Church documents that the Catholic Church has no economic models to offer - only a critique of certain issues in the context of our times and in the context of the theology and morality of the Catholic faith. If Cameron really does embrace Blond then the headline "Cameron embraces Catholic economics that the Pope himself rejects" would not be inappropriate.

Blond’s ideas take a lot of unpicking. I only have a few hundred words. As such let me make four points that, I believe, hole "Blondism" beneath the waterline - not necessarily as a political philosophy but as a political philosophy that should be embraced by a broadly free market party:

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs.

Philip Booth: The case for privatising the Bank of England

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs, which is today publishing Central Banking in a Free Society, a pamphlet in which Tim Congdon argues that the Bank of England should be privatised. Professor Booth makes that case here.

Earlier in the week, David Cameron signalled that he believed that banking regulation should be returned to the Bank of England. However, there is a danger in thinking piecemeal about this problem. As is proposed by Tim Congdon, in Central Banking in a Free Society, it is vital that the Bank of England is privatised, has its capital significantly increased to around £15billion, and is allowed to use freely its lender of last resort function to support banks that are illiquid but solvent.

The emasculation of the Bank of England by Gordon Brown in 1997 is substantially responsible for the current mess. A system of maintaining banking stability that had been copied all round the world was destroyed and the Bank of England turned into a monetary policy research institute. When Northern Rock hit problems, the Bank did not know how to act. It had lost its day-to-day experience of the banking sector and there was uncertainty as to the roles of the FSA, the Bank of England and the Treasury. Instead of the Bank of England using its lender of last resort function generously and quickly, Northern Rock collapsed and confidence evaporated.

But, simply to transfer banking regulation back to the Bank of England, without privatising the Bank, will lead to the establishment of the FSA’s bureaucratic mentality at the Bank of England. The institutional understanding of the banking sector that existed at the Bank of England before 1997 has been destroyed and cannot easily be recreated whilst it remains nationalised.