Tuesday, 11 October 2005

Why They Get It Wrong

I am going to make reference to a specific set of policies and then make a broader point.

There used to be a type of pension called a "defined benefit" scheme. These paid out according to how long you had worked, not how much you had saved.

The crypto-marxists in the Labour government decided that this was too important to be left to individual companies to organise. So they regulated....

  1. Any deficit in the fund must appear on the company's balance sheet.
  2. If there is a deficit in the fund, then dividend payments and aquisitions can only be made with the approval of the Pension fund trustees (sometimes Union trots rather than sensible Human Beings).

This is not just bad legislation, it typifies the law of unintended consequences. It represents all that is wrong with this government. Companies which try to do the right thing by their employees will be punished by a massively higher cost of capital, and a hugely constrained freedom of action. The result, according to one pension consultant is that "any company continuing to run a defined benefit scheme is risking Corporate Suicide". A couple of years ago, when pension funds were in their worst shape, I remember describing British Airways as "an insolvent Pension fund with a troubled subsidiary concerned with passenger air transport". This was a direct result of a piece of legislation designed to force companies to put more money into funds. It has backfired horribly (and predictably) on those who it was supposed to help.

So why does the Labour Party continue to regulate without thought to the consequences? They believe, as all socialist believe, that they are well motivated. They believe that they can do good. They believe they can make the world better. Worse, they believe they know how to do this.

The Conservative on the other hand knows that he doesn't have the answers (known unknowns?!). He knows that legislation should be a last resort. He understands the market represents the sum of all knowledge and therefore will be better informed than any controlling intelligence will ever be.

The Lefty world view represents a vast range of opinions from the Union Hack through the Islington polenta eater to the anarcho-syndicalist green-hair G8 rock chucker, has one central concept. That there is an ideal to be achieved. Be it European intergration, world peace, socialist utopia, anyone who does not share the vision needs to be "educated".

The Conservative, on the other hand sees the world in terms of "problems to be solved". He has no destination in mind (though I accept he often has a hankering for lost certainties). Because he has no ideal in mind, there is no suggestion in the conservative mind that the end ever justifies the means.

That is not to say the conservative is not capable of principle. He is, and it is usually the cause of freedom on which the conservative stands, somthing the left, in general, only supports when it suits them. Hitler was most resolutely opposed by an arch conservative and appeased (and at times supported) from the left. The Communist party of GB was chalking "End this imperialist war" on roads just days before Barbarossa, and "Second Front Now" just days after. Hardly a principled position.

So in the absence of these great issues today, what now for the conservative viewpoint?

We believe that economic freedom, the freedom for individuals and companies to invest and spend the fruits of their labours as they see fit with minimum interference from the state, is a cornerstone of liberty. We believe that Government intervention is counterproductive more often than not. We believe that the ancient liberties of the Englishman (and the freedoms of the Welsh and Scots which have different, but equally venerable roots) which have been a fundamental part of the constitution since the coronation oath of the kings of Wessex in the 7th century, should not be swept aside lightly.

We believe that Legislation like that governing Pensions discussed above, like that tying people to the munificence of the state via a byzantine benefits system, like the fox-hunting ban, like the Incitement to Religious hatred bill, like ID cards, like the Handgun ban, the Dangerous Dogs act (Tory I know!), like the Human Rights act and countless others, all actually serve to limit freedom and have no place on our statute books. None of them have sucessfully adressed the issue they were brought into deal with.

We need a government who respects the right of people and businesses to make decisions, even if they get it wrong. There is no freedom at all if there is no freedom to fail. We need a government who respects tradition as representing accumulated wisdom, not ancient flummery. We need a goverment with the courage to say "that is not government business" when confronted by calls to "do something".

In short, this country desperately needs a Tory* administration.

*In an update on my opinions on the Conservative leadership... I am swinging round to David Cameron. Though David Davis concurs with my views more accurately, DC will present the conservative viewpoint more palatably to an electorate who are not ready to be told the truth bluntly.


Momentary Academic said...

"The Conservative on the other hand knows that he doesn't have the answers (known unknowns?!). He knows that legislation should be a last resort. He understands the market represents the sum of all knowledge and therefore will be better informed than any controlling intelligence will ever be."

I can see why you might make this argument, but why can't a socialist (or at least a liberal (in my case)) make the same argument? I know that I don't know all of the answers to any of life's vicissitudes, and I think that in the case of solving any of social problems (with the exception of education) government should be a last resort; however, when there are problems that are insitutional or social that no one else seems to want to take care of, it should be the government's responsibility to step in in order to make things better( or dare I say more fair?) for others. It would be great if this could happen without overspending or adversely affecting your hard earned wages, Mr. Stockbroker (I say this in an attempt to make things lighter), but not everyone understands the fickle market and its fickle investors in the same way that you do. I know that I wish I did.

Thanks for being around; you certainly make me think. Too bad I'm not living in England. I could be your Labour friend/arch nemesis.

Jackart said...

"The market" does not mean the financial markets, though these represent supply and demand instantly, they also get spooked unreasonably from time to time.

By "the market" I mean a mechanism for distributing scarce resources. State involvement in the provision of anything (including health and education) distorts this efficient mechanism for the distribution of scarce resources. That is not to suggest the state, through taxation, cannot fund health and education, it is just that next to a Market, anything controlled by the state is inefficient, and more often than not, corrupt. It is much better if the private or not-for-profit sectors provided and the state bought.

The state can and does step in and takes care of social problems. That is good, but it does too much. A family earning £50,000 ($80,000) is in reciept of some state benefits in the UK. That's stupid.

The state should only step in where others won't. My point is that Government intervention usually creates as many problems as it solves. The socialist belief that "something should be done" doesn't nessesarily mean that it should be the state to do it.

(and I'm just starting out as a stockbroker, it isn't all porsches and cocaine. I'm below the minimum wage at the moment! though hopefully not for long!)

Momentary Academic said...

Oh. That market(*she says smilingly*)!

"it isn't all porsches and cocaine"

Aweseome. That sentence just made my morning! And yes, I get your point, and we might be closer to agreement than I had thought.

Are you sure that you're not American? Sure there would be things that would upset you were you to live here, but at least here one doesn't get any government services (in terms of health care or direct financial help) here if you make over 6,000(pounds)or up to 13,000(but you have to have like 4 kids).

Once you make enough money for hookers, porsches and blow (cocaine) you'll have to take a trip here and see what this country is really all about. And since you'll be rich, I'll gladly accept a dinner invitation to a fancy restaurant in advance.

Jackart said...

Atually it's a 1978 Aston Martin V8 Vantage in British Racing Green! Once I have that, and a nose like a wind sock... I shall love to come over the pond and take you out for dinner!

There was an error in this gadget