The Filter^

Orange Analysis

Just to remind people that there's more to the Lib Dems than alcoholics and rent-boy scandals - there's actually some incoherent/inconsistent policy issues that The Orange Book tried to clear up. Analysis from Joe Otten and Jonathan Calder.

Vince Cable is Orange

kAs someone often portrayed as the party's high priest of economic liberalism, I have no inhibitions about arguing for competitive markets and an open, free-trading economy, and for maximising the contribution of wealth-creating private entrepreneurs.

Indeed, this is part of a long liberal tradition and it stands in contrast both to socialism and to big-government conservatism and protectionist economics of the kind practised by Gaullists in Europe and the Bush Administration in America.

Economic liberalism is not, however, the same as a "free for all". It fits well with a strong commitment to environmental values.

Big changes in consumer behaviour and production technology can be achieved in a free society only through the use of market instruments such as traded permits and environmental taxes; not by government direction and controls.

From a highly recommended article in the Telegraph via Tim Worstall. My main quibble with the Orange Book (see Matthew's comments here as well) is that it overestimates the role of government as a provider of doing good. It seems to (rightly) accept that government overestimates it's ability to deliver socialist policy, but that it is capable fo delivering liberalism. This is what i'd call a post-Chamberlain view of "state as liberator", where government is seen as a neutral tool for whatever policy input is decided. This view neglects the Public Choice criticism that governments have a natural tendency to grow - regardless of intention - and even "positive" policy can have unintended conseqeunces. I'd never expect a politician to genuinely campaign for a skepticism toward government (it's rare to make an argument that reduces the scope of your profession) but Cable comes as close as I think we can rightfully hope for.

If Mr Cable can import Mr Buchanan into his political philosophy, he'll find an intellectually robust  - and socially just - system of government.

The Rise and Decline of Nations

This summer Faith and I went on a beach holiday in France with my mother and father; my brother and sister-in-law (and their daughter); and my sister and her boyfriend.

I noticed that the younger the couple, the nicer their towels were, even though the older the couple, the wealthier they were.

How can the wealthiest couple, have the scankiest towels?

Towels are fairly durable goods, and I presume that most people won't replace them anually. Indeed we've been using the same ones for years, but there's a certain time at which it makes sense for the children to all buy their own. The youngest will buy theirs later, and so they will have the newer towels.

One of the greatest books in the field of Public Choice - or Political Science itself - is The Rise and Decline of Nations, by Mancur Olson. The book is a grand narrative,  and covers a history of the c20th century through the lens of his interest group theory. The basic idea is that over time special interests obstruct the functioning of an economy , and become embedded within the system. He claims that Germany and Japan enjoyed post WWII growth because their sclerotic institutions had been wiped out, and they could start from scratch.

In other words, there's more to politics than what is immediately visible. Underneath the surface of a mature democracy will lie a complex web of lobby groups and hindrence. This is important, because it tells us why revolutions are almost always exaggerated. Single moments can produce monumental alterations in the direction of government, but we overestimate the lethargy of the system within. One year after the Orange Revolution, there is frustration. It is to be expected.

There are two types of policy: quantitative, or structural. The former will take the existing system as given, and manipulates economic variables toward a specific target. The latter sees the economy as a complex ecosystem, and try to alter the dynamics of the underlying institutions. Mainstream macroeconomics is typically the former.

Notice how the Flat Tax debate in the UK is usually grounded in projections of taxation incidence, based on current income levels. In Estonia, it was seen as a part of a broader alteration of the relationship between citizen and state. This is because if policy is to stick, it must be compatable with the foundational institutions.

Olson offers us hope that a country can have a fresh start, but it's easy to simplistically assume that a new President is all that's required.  A revolution may start with a flash, but it's ultimate success rests in the gradual and arduous task of structural policy.

Unethical Wristbands

It appears that some of the silicone used to create the white “Make Poverty History” wristbands have been made (in their own words) unethically. (This Is London). I find the Church-led campaigns to end poverty as being wrong-headed and potentially counter productive, but I shall try to resist the temptation to smugly gloat.
Instead, I shall make a point that explains just why I’m not surprised by this revelation. This episode highlights the difficulty in a command and control system of economic allocation.
The officials at CAFOD, Christian Aid, Oxfam, etc will now travel out to the implicated factories and engage in a collaborative effort to raise the working conditions. Needless to say their attention to sorting out this issue will neglect potential problems that emerge elsewhere – you can’t control all aspects of a complex production process. If these charities are serious about changing working conditions, surely a far bigger incentive for Chinese factory managers is the threat of cancellation? Without having to step foot onto the factory floor, Oxfam can simply tear up their contract and find a new supplier – and that would have a far more powerful effect at ensuring “ethical standards” than simply a pat on the back and a “must try harder”.

It is important to note that a free market system does not hold a monopoly over sweatshop conditions. As this wristband case has demonstrated, they can arise even when their elimination is the central objective of the charity! Consequently the solution is not better monitoring, better management and more central control by the UK parties. Rather, a system that swiftly eliminates bad firms, and one that rewards good ones. Only then will the incentives of those pursuing prosperity, be aligned to those pursuing ethical fairness.

An alternative to managed trade is Free Trade – allowing the human rights of individuals to cross national borders. To support the more economically literate approach to development, buy an Orange wristband from the Orange Path Shop.

Three Orange Books

• Liberals: A History of the Liberal and Liberal Democrat Parties

Roy Douglas
March 2005
Hambledon & London (1852853530)
amazon.co.uk

• Against the Flow

Samuel Brittan
January 2005
Atlantic Books (184354377X)
amazon.co.uk
Samuel Brittan's columns
The Economist review

• Liberal Lion: Jo Grimond - A Political Life

Peter Barbaris
January 2005
I.B. Tauris (1850436274)
amazon.co.uk

The Citric Victory

Here's an article called "The Orange Revolution", from the New York Review of Books. Funnily enough, it fails to explain the origins of how the colour orange has become synonymous with liberal democracy, a history documented in my essay The Orange Path: Charting Liberalism.

Razom nas bagato!

Ukraine hosts this years Eurovision, and have chosen the hip-hop anthem of the Orange Revolution as their song.

"No to falsifications!... No to lies! Yushchenko - yes! Yushchenko - yes! This is our president - yes, yes!"

"We aren't cattle!... We are Ukraine's daughters and sons! Now or never! Enough with the wait! Together we are many! We cannot be defeated,"

--from the BBC
--listen to an audio clip here

I know who i'll be supporting this year!