The moral of the Department of Economic Affairs
Remarks at Treasury Seminar 22/10/07
This talk is part of a series, designed to throw some light on the modern history of the Treasury, its ethos and functions. The Department of Economic Affairs was of course a separate department, seen by some Treasury hands as a rival or, at best, a wasteful nuisance. But its evolution and eventual demise in the 1960s throw a good deal of light on how the Treasury was seen, not only by politicians but by many officials in other departments and by critics in the academic world and Whitehall. The subject is of more than antiquarian interest, as it uncovers some problems which are still very much with us...more |
Hard and soft paternalism
Speech at Top Management Programme 29/03/07
It is the absurd nature of so many government initiatives and interventions that can and do discredit them, rather than any amount of political or economic theory. If people become sceptical of the nanny-state because it turns out to be a very bad nanny they may in time come to see the deeper reasons for erecting a barrier of non agenda beyond which the government will think many times before it penetrates. The fact that I am speaking to you shows that we have not yet travelled very far on the road to serfdom, but vigilance will always be required against those whose favourite pastime is telling others how to live...more |
Friedman & Keynes
Friedman Panel, IEA 13/12/06
At this distance of time the similarities between the two men are beginning to outweigh the differences. Both believed that capitalism needed to be saved rather than subverted. Both believed that there were financial policies that could support a reasonable rate of growth without inflation and that physical controls were either harmful or at best a diversion from this effort...more |
Anachronistic views of key figures
Speech at John Smith Institute 11/07/06
In the early 19th Century, when Oxford and Cambridge undergraduates were not allowed to debate current politics, they tried to get round the prohibition by reading contemporary controversies into historical debates, such as the rights and wrongs of the 17th century Civil War. I am sorry to see people doing the same today with far less excuse...more |
Mill and Liberty anniversaries
Speech at Routledge Gathering 25/05/06
Anniversaries of people’s deaths or births are artificial affairs. There is no more reason to play the music of Mozart 250 years after he was born than there was after 249 years or will be after 251 years. But given the media fixation on such anniversaries, we might as well take advantage of them to call attention to ideas which may be otherwise overlooked. The 200th anniversary of the birth of John Stuart Mill, which we celebrated on May 20, is a good occasion to discuss the doctrines of his most famous book On Liberty which appeared in 1859 but is as controversial today as it was then...more |
The case against a dollar policy
Paper for CATO Institute Conference 03/11/05
The natural way for me to begin preparation for this talk was to reread Milton Friedman's classic "The Case for Flexible Exchange Rates" which was published in 1953 but which dates back in its inception to 1950 when the author was a consultant to the US Economic Co-Operation Administration which was responsible for implementing the Marshall Plan. When he was writing it was taken for granted that the Western nations were committed "to a system of international payments based on exchange rates between their national currencies fixed by governments and maintained rigid except for occasional changes to new levels"...more |
The limits of democracy
Speech at International Society for Individual Freedom Gummersdorf 16/07/05
The motive for this talk is the way in which Western leaders have debased "democracy" by using it as a slogan to cover all desirable objectives. This is a common failing of both those who call themselves neo-conservatives and those who slightly more reluctantly call themselves liberal imperialists. Both schools are interventionists on an enormous scale. The main difference seems to me that the neo-conservatives are happy to use as their weapon the military might of the United States, whereas the liberal imperialists put more trust in the UN and other international organisations...more |
Another slant on "The Lisbon Agenda"
Speech at All-Irish Trades Union Congress Seminar Belfast 21/06/05
The Lisbon agenda has become a mantra. I did once try very hard to read the Lisbon summit communique of the year 2000 from beginning to end. It was hard work. It was full of uplift and unexceptional exhortations without any suggestion that there could ever be any conflict between desirable policy goals. It had the characteristically inflated headline objective of making the European Union "the most dynamic and competitive knowledge based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion†by 2010. It is perhaps not an accident that the Lisbon communique was issued during the heyday of the international influence of the British prime minister Tony Blair, who warmly welcomed this agenda and claimed it as a British triumph. The basis of his Third Way is to embrace every possible objective replacing "either/or" with "both/and"...more |
The "Lisbon Agenda"
Remarks at Conference of Luxembourg Inst. for European and International Studies and Lux. Ministry of Economy 13/04/05
But the main contribution of the Brussels institutions is unfortunately negative. While the trade policy, competition and single market directorates are valiantly trying to promote competitive markets, other directorates concerned with so called social policy and, to some extent, tax policy are doing the opposite: helping to price people out of work in the name of worthy social objectives. If economists working at a European level want to make a contribution to a better functioning of the union it should be by turning their analysis towards those aspects of union policy which do not have the words economic in front of them, which are graced by names such as social or technology...more |
Why do market liberals in continental Europe and Britain tend to take contrasting attitudes towards the European Union?
Fulvio Guerrini Lecture, Turin 23/03/05
There is a slightly cynical aspect to the euroscepticism of some British economic liberals. Free market economics has never been a popular cause even in the country of Adam Smith. People do not go to football matches with copies of The Wealth of Nations tucked in their coat pockets. The free market school has however been quite successful in harnessing dislike of European federalism and foreign control to the free market cause...more |
Migration and the economy
Smith Institute 16/03/05
Not enough is said about emigration. Some highly qualified professionals are indeed leaving this country. But judging from the anecdotal evidence of what they say it is not because of the changing UK ethnic composition, but because of complaints about taxes and over regulation, which may be partially justified. If the "Daily Mail" wishes to attack the government it should shift from the anti-immigrant part of its agenda to the anti-government intervention part - admittedly requiring a slight move towards sophistication. But miracles occasionally happen...more |
Doomsters ride again
City Debate - Speech against the motion 24/01/05
The very long term future may indeed be bleak. According to the Astronomer Royal, Sir Martin Rees, the earth will “face doom in another six billion years when the Sun in its death throes, swells up into a red giant and vaporises everything remaining on our planet’s surface.†Even over the next 100 years, he gives “our present civilisation“ no better than a 50-50 chance of survival. (Our Final Century, Heinemann, 2003). But he is thinking of things such as nuclear proliferation, terrorists or fanatics with advanced weapons, technological catastrophes, environmental degradation, and so on. It is most unlikely to be because of events in the securities and derivatives markets with which many people in this room deal...more
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Are inflation targets "The End of History"?
Political Economy Club 12/01/05
The instrument used for current inflation targets is monetary policy. Some believe that the automatic fiscal stabilisers can play a supplementary role. But pay and price controls no longer come into the picture. The operational independence of the Bank of England granted by the Labour government strengthened confidence in this regime, but did not change its nature. A side effect may have been to foster a belief in the mystical power of central banks over all manner of matters, which is only embarrassing to central bankers themselves...more |
Free trade versus "fair trade"
Remarks at Foreign Policy Centre meeting with Hilary Benn 10/01/05
Today when I see a supermarket product branded as "fair trade", I wonder whether it merely means that the company producing it is law abiding and observing general accepted conventions. Or whether it means it refuses to trade with businesses using cheap labour in emerging countries. Here is an all too frequent example of those who shout loudest about helping the poor actually harming them. No one likes cheap labour, least of all well fed journalists or policy analysts. But it is nevertheless the main advantage that some poor countries have to offer on the world market and is a stepping stone to better living standards...more
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The search for the Holy Grail - if there is one
Speech at Queen Mary College 06/12/04
Over the last half century the most impressive feature is how stable the underlying productivity trend has been and how little affected by the huffing and puffing of governments. From 1870 until 1950 the best estimate is that UK output per hour grew by one per cent per annum...The obvious conclusion is that economic policy makes less difference than those who discuss it like to think. Productivity growth, and growth in general, are like happiness. They will be achieved best if you do not think about them and concentrate on specific tasks...more
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Defence is indeed different
22/09/04
Behind most absurd pieces of policy, economic or otherwise, there is almost always some pressure group or interest group. This is pretty obvious when it comes to the farmers and agricultural policy or heavy industry and the pressure for government support, for instance, for dubious dam projects in Third World countries...more
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Statement to House of Lords Economic Affairs Committee
23/03/04
It is highly likely that [the Chancellor] can get through until the next election without tax rate increases. The controversial question is: what happens afterwards? Can he deliver his public expenditure undertakings for later financial years in the next Parliament without having to increase tax rates or introduce new taxes? The widespread cynical view is that he has simply postponed such increases until after the election. But pure cynicism is usually much too simple. I suspect that his advisers, in their heart of hearts, believe that there is a sporting chance that they will get away with it. So why talk about tax increases which, with a bit of luck, might not be needed?..more
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Anti-Capitalism once again
Remarks on Civil Society, by Michael Edwards 30/01/04
Running through this book
and so many others of this kind is a deep distrust of market relationships
based mainly on general assertions which continental sociologists comfort
each other and which they do not bother to check against available data,
let alone the writings of serious scholars of varying political persuasions
who try to study how modern globalised functions actually function...more |
Bring me your huddled masses
Social Market Foundation Talk 18/11/03
Britain should have no immigration controls at all for an experimental period. The main argument against is that put forward at much greater length in a study made for the European Commission. This is that we should concentrate instead on "reducing the causes of immigration". It makes a wonderful sound bite, like tackling the causes of crime, or the causes of drug taking. But imagine what would have happened if during the great nineteenth century migrations to the USA, American legislators had said: "We must deal with the causes of migration...more |
Imperialism not required
Against the Motion "The American Empire is a force for good" 30/10/03
My main case is that quasi-imperialist efforts to reform the world, whether from Washington or London or even by some coalition of western countries, or the UN itself, are likely to do more harm than good. The primary responsibility of any government is the welfare of the inhabitants of the area of which it is in charge. This does not mean being indifferent to the abuse of human rights elsewhere. But just as the primary responsibility of parents is for their own children, the primary responsibility of governments is for their own citizens...more |
The UK economy in a world context
Talk in City of London 29/10/03
The controversial proposition I want to start from is that most of this growth takes place automatically without special policies, ministerial exhortation and all the other phenomena about which commentators and journalists become so excited. There is no great mystery about how this happens. In the face of gradually rising productivity, either prices will fall slowly, thus automatically increasing domestic purchasing power, or wages will gradually rise, increasing it in another way. It is now unfashionable to favour the falling prices route, although that was quite a frequent phenomenon in the 19th century. Government policy -- to be more precise monetary policy -- can indeed affect whether we go for the falling prices or the rising wage route...more
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The USA and Europe: Two, three or more economic cultures?
Gulbenkian Foundation Conference, Lisbon 21/10/03
There are of course different attitudes to capitalism throughout the West, but they cut across continental divisions. If global capitalism is characterised by American values it is mainly because the US is certainly the largest and probably the most successful world economy. Some of the most strident attacks on capitalism, globalisation and international corporations which come across my desk come are the work of American authors. The differences are partly a matter of temperament. The English writer Dr Samuel Johnson once said that "a man is never more innocently employed than when making money." Even Lord Keynes, regarded as a hero by some of the critics of the American model, remarked that it was better that a rich man should tyrannise over his bank balance than over his fellow men. But there will always be those who instinctively recoil from the world of moneymaking, especially when the money is made by those whom they dislike...more |
"Maybe I need an economist to tell me that"
Remarks to St Andrews Liberty Club 13/10/03
Academic economics, which includes much of the economics produced and consumed by finance ministries and central banks, has not had a good press in recent years. It is sometimes accused of being too left wing or being too right wing or for being just wrong in the predictions its practitioners are tempted into making. It is also accused of being excessively mathematical or not scientific enough. But I have always been bothered by a much more basic criticism which was made to me in no uncertain terms by a veteran Labour Party leader of years gone by, one Emmanuel Shinwell...He asked me what subject I was reading and snorted when I told him. He very soon launched into a series of questions about current problems, responding to each answer with "I did not need an economist to tell me that"...more
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When morality is cheap: The delusion of arms promotion
Mid-Atlantic Club 18/09/03
The case of the arms lobby cannot survive an understanding of how a
competitive market system works: which is of course different from the
ersatz understanding displayed by many politicians who claim to espouse it.
Indeed official support for the arms trade is the last redoubt of the
discredited industrial policy of picking "national champions" of which we
heard so much from Old Labour and corporatist Tories in the 1970s...more
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"Seek not to peer into men's souls"
Talk at John Smith Institute 30/04/03
The happiness brigade are entirely right to query the emphasis on growth and productivity at all costs as the goal of national policy. But I am afraid I cannot accept their preferred alternative. Maximising the number of people who tell opinion pollsters that they are happy, satisfied with their lives or some such wording, is just as ridiculous an aim. To begin with, it reflects a fundamental conceptual error...more |
Shareholders not stakeholders
Contribution to RSA and Economist Debate 06/02/03
Competitive market capitalism has many faults. But as Churchill said about democracy, all the other systems that have been tried are far worse. Let me deal with the bad news at the beginning. First, anybody whose faith in market capitalism was based on the US stock market bubble of the late 1990s deserved to have his faith destroyed. All market systems have been subject to boom and bust since records began. Secondly there has been a crisis in the running of large corporations (I hate that horrible word governance). Events such as the Enron fiasco cannot be dismissed as being due to the few bad apples found everywhere...more
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Global economic trends
Chairman's remarks OKB conference, Vienna 12/12/02
Looking ahead: there are two obvious danger points. One is
a setback in consumer spending which has been the main motor
of the limited recovery we have seen. The other is the
dangers arising from the prospect of war in Iraq and other
terrorist outrages in the aftermath of the Twin Towers. Economists have no right to shrug their shoulders and say
that these are exogenous shocks which are outside their subject...more
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Currency competition: the UK debate
The Cato Institute, NY 17/10/02
Retrogression is always possible. The anti-globalisation movements and hysteria about boom and bust and corporate misgovernment could easily lead to the partial resumption of exchange control or limits on capital movements by some of the countries which abandoned them towards the end of the 20th century. Rather than squabble about the exact form that monetary freedom might take in future, it would be much better to concentrate on the defensive task of protecting the freedom we already have...more |
Black or White Wednesday
Institute of Econ. Affairs 16/09/02
The UK departure from the European Exchange Rate Mechanism
10 years ago was called Black Wednesday because of its
effect on the fortunes of the Major Government which had
staked so much on membership. It was called White Wednesday
by those who hated an exchange rate objective and were
delighted to break free. I wish I could be sure that that was
the only reason and that their delight had nothing to with the
word European in front of ERM..."more |
"Happiness" is not enough
Templeton Lecture Inst. of Economic Affairs 22/11/01
The title of this talk is "Happiness" is not Enough. It is
important to emphasise that the word happiness is in quotation
marks. These are not an ideal device to show what I mean, but I
cannot think of anything better. The reason for the quotation marks
is that I have no wish to put forward some puritanical, self-denying
or ascetic alternative...more |
Public Private Partnerships
Winchester 13/11/01
Nothing is more natural than human affairs than to seek a third way. None of us likes having to make a difficult choice. This especially applies to politicians who know that choosing one or the other might lose millions of votes. The instinctive response when asked to choose between A and B is to say: A and B; or neither A nor B, but C: in other words a third way...more
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Europe is not working
Chatham House 01/11/01
The golden age of European Union was the
Monnet period in the late 1940s and early 1950s. There was a silver age in
the 1980s during the early period of the Delors presidency. The EU is now
passing through a brass or leaden age; and we should look elsewhere for
achievement and progress...more |
The political
economy of globalisation
Frankfurt 14/05/01
One way of approaching the subject of globalisation is to
see it as an excuse. On the left it is used as an excuse by governments
that have not tried to abolish capitalism or introduce socialism.
“What can we do?†the cry is: “We will be swept away by the world
capital markets if we try anything really radical.†On the right
globalisation is used as a threat. Instead of arguing against excessive
levels of government spending on the merits of the case, people
are frightened by being told that they will be attacked by currency
speculators or that their economies will become uncompetitive...more |
Economic
aspects of the arms trade
Cambridge Lecture 05/04/01
Every sensible market economist should accept that the market must
operate within a framework of law and moral convention. Investment
bankers are not permitted to finance firms that sell poison to children
(or even adults) and there are strong constraints for example on
the emission of lead into rivers or on pollutants into the chain
of foodstuffs. My contention simply is that exports of arms to dubious
regimes should come within the sphere of what is out of bounds...more |
The Euro-Atlantic relationship
Venice 09/03/01
In one way the Bush Administration may be easier to deal with. For
it is less sensitive to trade union pressure about so called unfair
competition from other countries eroding American jobs. On the other
hand, as in defence and foreign policy, the Bush administration
is likely to be less patient with Europe dragging its feet. And
to tell you the truth I do not blame it...more |
What they did not teach you
Oxford 13/12/00
It is amazing how few books there are on how economic systems
actually work. On the one hand there are strictly academic books which
concentrate on quantitative techniques and mathematical relationships
on which students can be examined, but which do not answer very directly
the questions that practioners of history or government have about the
economy. On the other there are numerous voices from other disciplines,
or no discipline at all, which make strident assertions such “the rich
getting richer and the poor getting poorer†picked up from a few media
headlines...more
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The
Euro and the Irish boom
Paper in Dublin 01/12/00
Your conference programme asks: how much of Ireland’s recent rapid
growth can be attributed to the low interest rates and weak exchange
rates that EMU membership has entailed? The short answer is: almost
none of it. The growth rate of Irish GDP started to turn up in 1988
and accelerated after 1993. It has lately risen yet again. It exceeded
10 pc in 1997; and after a very slight dip looks like doing so again
in 2000. But the acceleration of the last few years is the froth on
the top of the boom, which Ireland would be better off without...more
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The
future of the UK Treasury
Paper at London Seminar, October
13, 2000
The departmental Treasury needs to be more powerful rather than
less. It is the only department that stands for the interests of
the taxpayer, the consumer and the general citizen against all the
sectional interests and pressures which bear on any government all
the time. Even in this more rarified atmosphere there is no harm
in recalling a whole series of projects ranging from Concorde to
the Pergau Dam which would not have taken place had the Treasury
more power...more
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Some
useful economic ideas
Speech to the British Association 11/09/2000
One cannot help noticing that economics is not seen even by the educated public as a particularly exciting growth area. You only have to go into any half-serious bookshop to see the boom in books on popular science, some of them meretricious, but some of them at a very high level. Nothing of this kind exists in economics where you only see textbooks, business guides and the occasional polemic against capitalism and all its works....more Refers to What's wrong with economics? Chapter 21 of Economic Consequences of Democracy
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Central bankers victims of current fashions
Remarks at Banque de France: Bicentennial Symposium, May 30
A former British Treasury Minister, Harold Lever, once
remarked that bankers should be satisfied that they are doing
an important job; and they are not badly paid for it either.
They should not expect to be loved as well...more
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The demonisation of market
liberalism
Contribution to EU Seminar on Europe in
21st Century, Florence 14/04/00
The hard collectivism of
Communism has disintegrated, so has the vision of a planned
democratic socialist society. But we are still threatened by softer
and more seductive forms of collectivism. These have in common with
their predecessors the delusion that the group is more important
than the individuals of which it is composed....more
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Why the EU looks so
unimpressive
Speech to LSE European Society,
7/3/00
My theme might give the impression that I have joined
the eurosceptics. I have not. As anything that can be misunderstood
will be misunderstood, may I add that, although I do not either
expect or favour an early referendum, nevertheless if there were one
I should vote in favour of the UK joining the euro. This would be
mainly out of political instinct. Which is quite reasonable when
most of the economic and other rational arguments cancel each other
out....more
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Ethics, religion and
humbug
Speech to
Oxford Univ. Jewish Society 03/03/00
The orthodox Judaism of
the kind in which I grew up required very little theological
commitment. A person could be a good Jew who doubted the afterlife.
(No one ever came back to talk about it my father would say.) A
devout Jew could be a logical positivist - it just showed that he
was reading philosophical books. But if he did not carry out a bare
minimum of observances he was beyond the pale....more
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Time to end the export
drive
Speech to
Oxford Univ. Ecs. Soc. 03/03/00
I want to devote most of
my time to one fallacy - the whole concept of national export
drives: the Export Credit Guarantee Department (ECGD), official
exhibitions to promote British goods in embassies abroad, Royal
visits to dubious regimes, receptions for unpleasant dictators at
Buckingham Palace, the Queens Award for Exports. The lot....more
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An ethical foreign
policy?
Hinton
Lecture 24/11/99
The subject of "Morality and Foreign Policy"
is one which has preoccupied me for a very long time. Indeed, it was
the topic of my own first extended essay after I had ceased to be an
undergraduate. It was written in the aftermath of the Suez crisis of
1956 in which the Eden government and its French allies colluded
with the Israelis to find a pretext for invading Egypt in the
unfulfilled hope of overthrowing the government of Colonel Nasser
which had seized the Suez canal....more
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Stakeholders and
arms
IPR City
Group 30/11/99
I want to talk about two examples of bogus
economics (although I have great many more examples available). One
is the vogue for stakeholding. The other, that enrages me most, is
that Western countries need to sell lethal arms to odious
dictatorships to pay their way or to provide jobs....more
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Is There A New Anglo-US
Economy?
Giersch
Foundation, November 1999
The Anglo-US economic model was
probably invented by polemicists - and was coupled with the names of
Thatcher and Reagan - as an awful warning of what to avoid. But
then, like so many other originally pejorative terms, it was taken
up by others a term of praise: in Britain by Eurosceptics, but also
by European political economists who would like their countries to
follow a more liberal course....more
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Indexation
revisited
Giersch
Foundation, May 1999
The striking feature of Prof. Herbert
Giersch's comments on indexation over a 25-year period is how well
his arguments have survived the test of time. The 1974 paper can be
read today with hardly any amendments. This is not surprising. For
Prof. Giersch has long cherished a vision of an entrepreneurial
market economy. In such an economy the role of money would be
neutral - or better - transparent. It would facilitate transactions
but play as small an independent role as possible....more
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Will Emu lead to a
super-state?
Bristol University, April 1999
I
sometimes alarm audiences by saying that I do not much care about
the unit of political decision so long as it is effective. I do
worry about the kind of political entity in which we are and the
quality of political decisions. Like most people, I care about
prosperity; I care even more about personal freedom and the humane
treatment of individuals...more
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Some reflections on the third
way
Canterbury,
November 1998
In his embrace of business leaders, Tony Blair
has actually gone too far. To regard businessmen as the authorities
on economic policy is like asking chauffeurs to design motor cars.
Their virtue lies in their ability to operate the vehicles rather
than to design them...more
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A backward glance at the
1960s
Lecture to
the Institute of Contemporary British history, April
1997
If there is one word
which summarises everything that the reformers of the 1960s were
opposing it is "fuddy duddyism". To my mind it was associated with
the Bank of England as an institution, and with the setting up of
the sterling areas and the sterling exchange rate as totem poles
which could not be rationally discussed but to which all else should
be sacrificed...more
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