Regulating the press
Libertarian regulation theory shows us how state power, apparently used for benign purposes, ultimately results in the exploitation of consumers and the misallocation of resources. Of the two great threats to our economic progress and liberty - state spending and regulation - I would argue that it is regulation that is the greater threat.
State spending is often contested and its results are at least clear to see (although the fact that state spending in the UK is vast and growing should not be forgotten). Regulation, on the other hand, is a far more subtle threat and seems to gain approval across the political and public spectrum. The corporatist pseudo-markets created by regulation in banking, energy, rail and so on are decried as evidence of the failure of capitalism when they are anything but.
As we have a current example of new regulation, it is interesting to apply the theory and see what might be the result. Regulation* is often introduced when there is assumed to be a case of 'market failure'. Broadly, the impact of regulation is to create barriers to entry which protects existing market players and tends to promote consolidation within the industry. Small and more innovative firms, which would otherwise enter a market where large profits are to be made, are thus excluded. Existing players are thus able to dominate the market and drive up prices or prevent innovation. 'Government failure' is thus ignored but it is the consumer and the society at large which suffers.
In the case of Press regulation, many of these features may occur. We cannot call the print media a 'free market' but it is freer than, say, the broadcast media which is dominated by the BBC and bound by tight regulation on objectivity. An instance of perceived 'market failure' in the form of phone hacking was used to justify regulation, ignoring the fact that phone hacking was illegal under existing laws. We can already see how regulation might drive out small players who are currently undermining the profits and market share of the established Press.
The position of small internet bloggers and innovative media news outlets is jeopardised - will the Pin Factory blog be forced to sign up to the press regulator? What influence would we have there? What if the new regulator imposed punitive fines on us?
In many markets, it is the large occupants who welcome regulation and - in fact - connive at its introduction. While they have to sacrifice some control to regulators, they are guaranteed a protected market share and healthy profits whilst avoiding the trouble of innovating against and out-competing small rivals. Further, large firms often have a 'revolving door' to regulators and are able to undertake expensive lobbying to further protect their positions.
Some portions of the Press are opposed to the new regulation, a condition which probably stems from an ideological position unique to this industry. However, it is clear that, under the system of state regulation, it is the large, extant players who would dominate the regulator and be in a position to use this power against potential rivals. In many industries, the emergence of corporatism would be unfortunate. In the case of the Press it threatens to be fatal to liberty.
*We must take care to distinguish 'regulation' from 'law'. Regulation is intervention designed to control the size and shape of a market, prices and quality. Law is (or ought to be) solely concerned with property rights.
Just when you've beaten back one set of nonsense along comes another ignorant
Long term readers will recall that for some years now I've been saying that we've not really got a gender pay gap. We've a motherhood pay gap, that we do, but not a gender one. In this I am supported by all sorts of interesting evidence. Like this from the Telegraph, this from this here blog, and even this quite delightful piece. Where the Statistics Authority chief rapped Harriet Harman over the knuckles for misleading people with bad statistics. You know, the crime of being a politician.
Now, the proof that we do not have a gender pay gap comes in the details of the (correct) statistics. Single no children women in their 40s earn more than their male age cohort. Women in their 20s on average make more than men in their 20s. There is indeed a pay gap though: one that opens up in the average pay for women as they enter their prime child rearing years. And we can even see that it really is child bearing years as well. A generation ago average age at first birth was in the low 20s. And that's where the pay gap started. Today it's around 30 years old and that's where the pay gap starts now.
And between all of us we've managed to get this basic fact across to the political classes. Shared parental leave might not be everyone's cup of tea but it is indeed an admission that since it is childcare that causes the pay gap then perhaps parents might want to share that pain? All of which is lovely. Then enters Viviane Reding:
16.2%: that’s the size of the gender pay gap, or the average difference between women and men’s hourly earnings across the EU, according to the latest figures released today by the European Commission. The news comes ahead of the 2013 European Equal Pay Day on 28 February. The EU-wide event marks the extra number of days that women would need to work to match the amount earned by men: currently 59 days, meaning this year the day falls on 28 February.
Sigh. As we know domestically in Britain the pay gap is not a gender pay gap. It's a motherhood/child rearing one. Which, even assuming that you wanted to solve it means rather different policies to do so, no?
To make matters worse they also peg the UK pay gap as being at 19.6%. Which as we know from the Statistics Authority chief isn't actually the correct number at all.
This is the problem with multiple levels of government. You beat back ignorance and idiocy at one level and it just reappears at another.
Internet freedoms are under threat – politicians must act
Today the Adam Smith Institute is calling on the government to commit to a ‘Digital Freedom Charter’ ahead of the Communications Bill. The charter should set out principles to protect competition, innovation and growth in and around digital communications and the Internet.
The Internet is currently under threat from an increasing regulatory burden. Only if politicians in power and opposition commit themselves to Digital Freedom Charter can we ensure that the Internet remains a place where people can conduct business, engage with others and communicate freely. The charter should include the following principles:
· Freedom from EU/EC regulation: UK based businesses should not be impacted by regulation from the European Commission. EU regulation, such as the Privacy and Communications Bill and General Data Protection Regulation, increase compliance costs. This means money and time is taken away from businesses and invested in compliance. Businesses should not be forced to comply with onerous regulations – instead the UK should enforce existing competition and anti-trust laws.
· Freedom to Contract: Websites should be free to form contracts with their users. The government should not seek to get involved with the relationship between a user and website. If a user has agreed to terms on a website, but feels that this contract has been violated, this should be dealt with by laws that already exist for breaches of contract. The EU is wrong to push for the regulating of user terms on social media sites like Facebook. Users are not coerced to join social media sites, which make their money out of targeted advertising, and therefore need access to user data. There is a danger that the privacy regulation called for by a vocal minority will end up punishing all users by killing the dominant and popular free-to-use social media business model.
· Freedom to Finance: Individuals and firms need to be responsible for how they spend and invest their money, in order to allow market discovery processes to take place. Government investment in content creation, broadcasting, and communications infrastructure are distortionary, crowding out the private sector and using up resources in an inefficient way.
· Autonomy for families and individuals: Family and individual autonomy is of the utmost importance. There is a growing fashion for government to decide what should and should not be viewed online. Such website blocking would put the UK in the same place as Russia, China and other authoritarian states. Website blocking doesn’t work. The government should leave the decisions to individuals and families rather than having a government committee decide what we view online.
Dominique Lazanski, author of the report, adds, “The internet has brought countless benefits to our society, but is under threat from piecemeal regulation. Although well intentioned, it is fundamentally misguided and leads to the increasing erosion of Internet freedom.
“We need this Digital Freedom Charter to ensure the Internet remains a free and innovative market place. The state must roll back its involvement in the growing digital industry and stop state funded content, state mandated website blocking, and the state sanctioning of businesses.”
The broken Withywindle fallacy
Over on the Guerrilla Economist blog, Ust Oldfield discusses the economic consequences of the dragon Smaug on Tolkien's fictional universe, Middle Earth. He argues that the net effect on Middle Earth's economy may well have been positive. Both Dwarves and dragons hoarded the gold, so there would have been no monetary shock from the rapid withdrawal of so much precious metal from the economy. The Dwarves were then forced to offer their labour and skills to the outside world as refugees, contributing to the economy at large.
Perhaps. But there is something wrong with this picture. Ust neglects to mention that much of the Dwarven kingdom of Erebor and nearby Dale were utterly destroyed. Thousands of years' worth of accumulated physical, human (or should that be Dwarven?) and social capital incinerated. In order to have a net positive effect on the economy of Middle Earth, the Dwarves' integration with the wider economy must outweigh this massive destruction of wealth. This is unlikely, to say the least. For a start, the human city of Dale existed because of its trade with Erebor. Therefore the Dwarves were already engaging in peaceful and mutually beneficial exchange with the rest of Middle Earth. The Dwarves' actions as refugees can only have created less value if their highest-value, voluntary choices were forcibly eliminated.
The second problem is an epistemological and moral one. Sure, this is fiction, but Ust should not be so quick to defend forcible actions to create the most value for the most people. In his analysis, the values of a minority are subjugated to that of the population at large in a zero-sum manner. Creating a Dwarven diaspora constitutes the loss of the economic, social and cultural institutions that best satisfy their demands. Dwarves lose, Middle Earth supposedly gains. And yet, in a peaceful world without the destructive interventions of Smaug, both parties gain through voluntary exchange according to what they themselves value most.
Ust, like many other Keynesians, loses sight of what actually matters in economics: economic growth and production are only important because they satisfy peoples' demands and values. Forcibly removing their best avenues for peacefully satisfying demands can only be a net loss to all.
Remembering George Orwell
George Orwell died on January 21st 1950, only 47 years old. Short though his life was, his achievements earned him a place in history. His Homage to Catalonia, describing his experiences as a volunteer in the Spanish Civil War, brought him fame, but with it the enmity of the hard, pro-Soviet left because of his indictment of the duplicity of the Communist forces in Spain.
Orwell's passionate concern for the underdog and the poor shines through his writings, as does his fervent opposition to the lies and distortions used by some to advance political ideologies. Some of his essays on the use and abuse of the English language earned the status of enduring classics.
Although on the left himself, two of his works, Animal Farm and Nineteen Eighty-Four constitute the most effective exposures of the fraudulent brutality that underlay Soviet Communism. Indeed, the latter work, completed just before his death, bequeathed us the vocabulary that describes totalitarianism, with phrases such as "Big Brother," "thought police" and "doublethink."
Orwell genuinely loved liberty and had a deep affection for the British people and their way of life. His ability to project his honesty into his writing has earned him a place among the top British authors of his century. In the fight for freedom he played a significant role, and is rightly remembered and appreciated.
Don't let newspapers become the lapdogs of the political class
My old friend John Whittingdale MP, Chairman of the House of Commons Media Committee, says that if the press become regulated in the same way that the broadcast media are, our newspapers will turn out just as bland and boring. Mind you, it is interesting no note that even all the regulation that we do have on broadcast media does not stop it messing up big time – I cite the Newsnight Savile and McAlpine fiascos in evidence.
Three sorts of people in particular would like to see press regulation in Britain. The first is innocent members of the public who have been humiliated or distressed by press stories. They include people who have had their phones hacked. And people who may have a (greater or lesser) public persona but still believe their personal affairs should remain private.
The second group who would like to see press regulation are the Left. That is because most print newspapers take a right-of-centre stance. Some are indeed owned by people of overtly right-of-centre views and make no bones about promoting such views. Inconveniencing these papers and their owners would make certain folk on the Left quiver with delight.
The third group is of course the politicians of all parties. What you have to remember is that politicians think themselves honourable people with good ideas that will improve the way we live (even though these ideas conflict with the ideas of other politicians). The last thing they want is that beneficial process thwarted by self-opinionated journalists who can say what they like without having to face an election every five years. Or to have their authority undermined by campaigns such as exposing just what they claim on expenses, pursued by journalists who are not worthy to lick the shoes of them and their honourable colleagues.
Regarding the first group, I'm not sure if phone hacking is actually against the law, but there is a simple remedy, which is to make it so explicitly. And the limits on press intrusion into people's privacy, while it is always going to be debatable, is something that we already have rules on, that work tolerably well.
On the second, is it acceptable that rich folks can buy newspapers and use them to promote whatever views they want? Well yes, pretty much. We are supposed to believe in free speech, and if we don't agree with what our newspapers are trying to push on us, we don't have to buy them. I resent much more the BBC, which (if you want to own a TV at all), you have to pay for even if you hate it.
As for the third group, I wouldn't let them touch the press with mint surgical tweezers. Editors have been telling us what an impossible position they will be in if they have to check with some quango before they can print a story. But that is not how it works. Everybody knows that a statutory regulator has the power to close a paper down with fines, inquiries and judgements. Gradually, over the years, editors will get used to reining themselves in here or there, to stay on the regulator's good side. And over the years, the regulator's staff will find more and more jobs for themselves to do, and intrude themselves more and more into the affairs of the papers. We have seen the same thing in other industries. Soon, the papers will become mere lapdogs of the political class. And we have seen from other countries where that leads to.
Six reasons to reject minimum alcohol pricing
The government will announce today the launch of its public consultation into minimum pricing. These consultations tend to be something of a charade—the Home Office has already said “We will introduce a minimum unit price for alcohol”—but in case you should wish to respond, here is a non-exhaustive list of reasons why minimum pricing is a terrible idea.
It is regressive
All indirect taxation is regressive, but minimum pricing is carefully calibrated to be as regressive as possible by targeting drinks that are disproportionately consumed by people on low incomes. Doctors on six figure salaries can rest assured that the champagne at the British Medical Association Christmas dinner will not be affected and the House of Commons bar will continue to be subsidised. Cheers!
Evidence is non-existent
As we reported on Monday, the excitable predictions about how many lives will be ‘saved’ by minimum pricing are based on a single computer model which uses dubious methods and false assumptions to come to a preordained conclusion. The truth is that nobody has any idea whether the policy will reduce alcohol-related harm. The only certainty is the majority of ordinary people will be out of pocket.
It’s just the start
Even minimum pricing’s most optimistic proponents admit that ratcheting up the price of drink is not a ‘silver bullet’. What they mean is that minimum pricing will merely be the start of a sustained temperance campaign in the mould of the anti-smoking crusade. If the medical lobby is allowed to get its hands on one of the key levers of competition (price), we can expect endless demands for the minimum unit price to move upwards. David Cameron has proposed a 40p unit price but the British Medical Association are already demanding 50p. Others want it to be 60p. Whether alcohol consumption goes up or down, you can be sure that the ‘next logical step’ will be to have a minimum price escalator. Think of the children!
And why not? The same dodgy evidence can always be used to justify higher prices. The Sheffield computer model predicts that a 40p unit price will reduce the number of alcohol-related deaths by 10 per cent. At 70p, it claims the number of alcohol-related deaths will fall by more than 60 per cent! The model doesn’t go beyond 70p, alas, but presumably once it gets to 90p all alcohol harm is abolished and at 95p the dead begin to rise from the grave. What are we waiting for?
The moral panic is bogus
Since 2004, Britain has seen the sharpest and most sustained decline in alcohol consumption since the Second World War. The statistics are striking—less than half of 16-24 year olds have had even one drink each week; the proportion of young men who ‘binge-drink’ has fallen by more than 50 per cent; overall alcohol consumption is only slightly higher than it was in 1980. These facts are rather inconvenient for nanny-staters and so they have ignored them and pressed on with a narrative of ‘booze Britain’ that makes for better headlines. Trebles all round!
It is illegal
It’s rare to find the words ‘good news’ and ‘European Union’ in the same sentence, but the good news is that minimum pricing is illegal under European Union law. Previous attempts to limit the free market in this way have been rejected by the European Courts, such as in this judgement from 1978. Referring specifically to proposals to introduce minimum pricing in the UK, the European Commission has said that they “have a problem with the compatibility of the minimum pricing plans under Community law” and that it “causes problems with the compatibility with the EU Treaty”. Several wine-growing countries have already complained that minimum pricing is anti-competitive and, although David Cameron has vowed to fight the European Commission for his right to pick our pockets, if the EU does not stand for free trade between member states it stands for nothing at all.
It won’t help pubs
Winston Churchill said that "an appeaser is one who feeds the crocodile hoping it will eat him last." A few of the pub chains have formed an unlikely, unseemly and unholy alliance with the forces of temperance in the hope that higher off trade prices will drag in some of the punters that the smoking ban drove out. This is a desperate gambit. Minimum pricing will not make beer any cheaper in pubs. It will merely make everybody a little bit poorer so they have less money to spend in pubs. On this occasion, Wetherspoons’ boss Tim Martin has called it right, saying that minimum pricing is “utter bollocks, basically.”
What does the BBC need?
Over at his personal website, Madsen discusses why people like the BBC, and says that it has radically departed from the impartiality that once made many people value it:
In fact traditional support for the BBC is more likely to have arisen from its role as an unbiased reporter of events, rather than as a campaigning organization doing investigative work. People valued the BBC’s level take on national and world events, and trusted it to be accurate.
That reputation was undermined not by the incompetence of its investigative teams, but by the way it allowed what some call the left-wing mindset of its culture to bias its reporting. Its enthusiastic endorsement of all things pro-EU, its hostility to business and enterprise, its refusal to use the word ‘terrorist’ to describe those who murder civilians in causes it approves of, and its selection of news to highlight on the basis of a pro-state intervention agenda, have systematically alienated those who used to trust it and support it as the embodiment of all things British.
The problem of BBC bias
The Chairman of the BBC Trust, Chris Patten, has launched an enquiry into impartiality in BBC news reporting. It should be noted that the BBC controls 60% of the broadcast news audience in the UK, which makes a mockery over any fears that Sky might pose a threat to competition in the market. The BBC is required by its statutes to adhere to impartiality in its reportage. This position is reinforced by the requirement that all broadcasters in the UK present impartial views on news. Clearly this presents some serious issues for freedom of speech; it allows politicians and bureaucrats to have general oversight over the content of news broadcasts as they are in a position to arbitrate what constitutes impartiality.
Most on the 'right' accuse the BBC of a 'liberal' bias - that is socially liberal and economically interventionist. In this article, Prof. David Miller suggests that the BBC is not necessarily liberal but instead takes 'establishment' views. According to this viewpoint, the BBC's reporting holds views on immigration or Islam which are markedly illiberal. We Classical Liberals will laugh at this absurdity - this simply means that none of the BBC's views are worthy of the name Liberal at all, but this is unsurprising from what is essentially an organ of the state (although not any particular government). What would be more remarkable would be if the BBC were biased towards free enterprise and economic laissez faire, however, this would make the BBC no more acceptable to Classical Liberals.
Miller argues for an independent enquiry - although one doubts that this would make any substantial difference as it would, of course, be led by a member of the establishment. On the other hand, it strikes one as slightly absurd to think of there being 'an establishment' which has one homogeneous set of views - Prof. Miller is guilty of reification, as indeed am I by referring to the BBC as having a view. The Archbishop of Canterbury and a member of the Conservative Party Free Enterprise Group are both members of the 'establishment' but they have very different views. That said, I do agree that there is a prevailing set of étatist views which dominate most opinion in the UK and the bulk of BBC output is certainly in line with that.
I would suggest that it is the function of these enquiries to find that the BBC is somewhat biased towards certain positions and to offer some mild programmes for how to ensure impartiality. I would be pretty surprised if it found that the BBC was wholeheartedly neutral, not only because it is not, but because that would lessen the apparent impartiality of the enquiry itself! On the other hand, it would be surprising to hear that the BBC's news broadcasting is rotten to the core, as this would suggest that the organisation is in breach of its statutory duties. It would be a brave enquiry, internal or external, which took such a position.
To my mind, the whole impartiality debate is entirely misleading and that, of course, is the point. I would argue that it is impossible for news reporting to be impartial and it is impossible for any enquiry to assess impartiality. No amount of study or research could possibly discern the motivations and detect the subtle sins of commission and omission which such assessment would require. Moreover, such researchers would necessarily have their own bias . Rather more abstractly, it is impossible for any human being to be impartial in a field so complex, diverse and unfalsifiable as human social activity i.e. 'the news' - only an omniscient god could make such a claim of knowledge.
This realisation should not lead us into some postmodernist nihilism; it simply means that we require pluralism and freedom in our media so that we can select that position we believe to be most accurate, not have it selected for us (as mentioned above and here it is clear that the BBC also presents a threat to media plurality and undermines competition). This does not mean that organisations should not strive for impartiality, but that they will not achieve it. The problem, therefore, is not that the BBC might be biased but that we cannot tell whether it is biased or not. Or, rather more simply, the BBC must ipso facto be biased.
Naturally, every news outlet must be biased, even one which claims impartiality. In a free market, this presents no problem as there is plurality; one pays one's money, one takes one's choice, as with newspapers or internet media where competition thrives. We all know that the Telegraph tends to the right, the New Statesman to the left and the ASI Blog to logical and sound positions. The BBC is different as it is funded by a forced public levy (find out what happens if you don't pay) - but as a publically funded organisation it cannot be allowed to be partial. But hold on, I hear you cry, have we not just observed that it is impossible for any human being or organisation to be impartial? Well then, the only logical and sound position is that a publically funded organisation should not broadcast news.
