We must resist Lord Bew's moves to curb free speech and innovation

Sam Dumitriu, research economist at the Adam Smith Institute, reacts to Lord Bew's recommendations that would see social media platforms become liable for content posted by their users. 

"Punishing Twitter and Facebook for what their users post will reduce competition, deter innovation, and threaten the free flow of ideas online. The risk of being fined or prosecuted will lead to even more over-enforcement and have a chilling effect on free speech. Accounts with politically unpopular opinions could end up being incorrectly reported for abuse and banned by risk averse social media companies afraid of being fined."

"This move would entrench major tech companies and stifle competition by burdening innovative start-ups with massive entry costs. It is hard to imagine the next Facebook, Twitter, or YouTube receiving early stage investment when the potential liability from letting users freely exchange information online is astronomical."

"Lord Bew's proposal is illegal under EU law. If Britain is to succeed outside the European Union, it needs to preserve an innovation-friendly regulatory environment. Imposing even more regulation than the EU will make it unlikely the next big tech firm will be founded in the UK."

To arrange an interview with a member of the institute or further comment please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (office: 02072224995 and mobile: 07584778207).

100 Years on from revolution: new book reveals poverty of Soviet diet

Detailed academic study of Soviet economy and society details how poorly Soviets ate and the gruelling difficulty of everyday life in the postwar USSR:

  • Soviet citizens only ate a sixth as much meat and a third as much fish as Americans, and the meat was much lower quality
  • The Soviet diet relied heavily on bread and potatoes, even in the 1960s and 70s when famines were a thing of the past
  • Soviet citizens also ate six times less fruit and vegetables, as well as a drastically more limited range due to trade restrictions
  • Waste and inefficiency far higher under communism

While most now agree the Soviet Union was a failed experiment, with horrifying economic, social and human circumstances, many believed that they at least kept their citizens fed in the post-Stalinist era. This common view is wrong, according to a reevaluation of the data released by the Adam Smith Institute, part of a major new study into the economic history of the Soviet Union.

Previous assessments, relying too heavily on credulous acceptance of official data, held that the Soviet plate was actually more generous than the American equivalent, the study shows. But CIA data consistently overestimated the living standards that communism provided. Of course, Soviet citizens actually needed more than Americans, because many more worked on farms or in factories, and it is much colder.

Soviet diets were not only relatively meagre, compared to what most people could afford in the West, they were narrow and lacking in eggs, cheese, fish, meat, fruit and vegetables, the study shows. What’s more, the Soviets didn’t even achieve equality—after the 1970s the poorer sections of society had rapidly declining meat consumption.

And contrary to claims of capitalist waste, the paper shows, the Soviet Union actually wasted far more food than the US. The USSR was the world’s biggest milk producer, and yet only 60%  made it to the kitchen table—compared to 90% of milk produced in the USA. Internal Soviet estimates showed that meat production would have been 15% higher, and fruit and veg production 40% higher, without spoilage during production and storage.

One hundred years since the fall of the Tsars, there are still some advocates for communist solutions to social problems, and many apologists arguing that the USSR was successful after the death of Stalin. But the new study shows this is untrue on every major measure.

The paper also reveals that:

  • In 1976 only two thirds of Soviet families had a refrigerator—the USA hit two thirds in the early 1930s. Soviet families had to wait years to get one, and when they finally got a postcard giving notice they could buy one, they had a fixed one hour slot during which they could pick it up. They lost their chance if they did not arrive in time
  • In the same period, the USA had nearly 100m passenger cars. The USSR? Five million. People typically had to wait four to six years, and often as long as ten, to get one.
  • There was 30x as much typhoid, 20x as much measles, and cancer detection rates were half as good as in the United States
  • Life expectancy actually fell in the Soviet Union during the 1960s and 1970s
  • The USSR had the highest physician-patient ratio in the world, triple the UK rate, but many medical school graduates could not perform basic tasks like reading an electrocardiogram
  • 15% of the population lived in areas with pollution 10x normal levels
  • By the US poverty measure, well over half of the Soviet population were poor
  • Around a quarter could not afford a winter hat or coat, which cost an entire month’s wages on average (the equivalent of £1700 in UK terms)

After a century defined by the communist experiment, it is fading out of the mind of new generations—author Jose L Ricon’s book reminds us why we ought to keep it in our imaginations.

Sam Bowman, Executive Director of the Adam Smith Institute, said:

“One hundred years on since the November Revolution many people still do not really know what life was like in the Soviet Union for ordinary people. This is a work of scholarship that shows, for the first time, a comprehensive picture of just what a misery communism was for the people forced to endure it – not “just” poverty, not “just” slow economic growth, not ‘just” political repression and the gulags, but a failure to provide people’s basic needs on almost every level.”


Ben Southwood, Head of Research at the Adam Smith Institute, said:

“We all know about purges, famines, gulags, and democides committed by Lenin and Stalin, but the sheer bland drudgery of regular Soviet life is shocking in a different way. Communism did not just fail in the big ways, it failed in the small ways too.

“And it’s not as if communism traded off poor living standards for perfect equality, environmental stewardship, and a focus on the important things in life. 

“They frittered away billions on unproductive military research, destroyed the fourth largest lake in the world, had the worst ever nuclear disaster, polluted their air to an incredible degree, and despite all of this, only achieved a distribution of income and status that was somewhat more equal than the rest.”

Read the full report here!


Notes to editors:
For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07584 778207.

Grayling steams ahead in our estimations

With the news that the Government is to try a visionary new combined model of track and train provision, the Adam Smith Institute releases a welcoming comment from Head of Research Ben Southwood. 

This proposal is remarkably similar to one that Ben Southwood has examined before. You can read his words on this subject here.

In response to today's announcement he says:

"The government’s plan to try out a new combined model of track and train provision is visionary. 

“The franchising system has been an effective part of privatisation, which led to huge improvements in the UK rail system, but it has key problems in the bidding process, and it requires continual government investment injections. We are now ready for the next step.

“Britain’s railways were built privately under the track and train model, and it was government that mothballed half the lines. Now we can again build a globally renowned network by a return to unified private control. This is not pie-in-the-sky thinking. In fact this exact system is what powers Japan’s famously advanced system.

“However, we’ll only get a network that operates well if every moving part works. Ticket prices on new lines must not be over-regulated, planning rules on expansion must be light, and new lines should not require government approval at every juncture. If we do this correctly, we will see private capital flow into the infrastructure we so badly need, not just between Oxford, Cambridge, and Milton Keynes, but right across the UK’s nations and regions.”

To arrange an interview, or further comment, please contact Matt Kilcoyne (matt@adamsmith.org, 07584778207).

ASI in the press after the Budget

The Adam Smith Institute had a bumper set of coverage to our policy suggestion before and reactions to the Budget.

In the run-up to the big day Sam Bowman's Telegraph piece explored how housing reform could be the silver bullet that would solve the productivity puzzle for the Chancellor. In a joint letter, with the Institute for Economic Affairs and the Taxpayers Alliance, to the Telegraph we called on the Chancellor to scrap stamp duty for everyone (something that Guido Fawkes picked up on); we also featured in the paper's day before build-up.

Elsewhere we were quoted on the BBC News website, the Express, City AM, and even the New Statesman has come round to our way of thinking on housing. 

Ben's comments on the Budget featured in The SunThe Herald, as well as in coverage on The Times, the Independent, and ConservativeHome websites. This morning he was on LBC with Nick Ferrari discussing the imperative of scrapping Stamp Duty for everyone, not just first time buyers. Sam Dumitriu was quoted by ITV online, while Sam Bowman gave his thoughts in The Times Red Box, he spoke to Jeremy Vine on Radio 2 just ahead of the budget, and today joined the post-budget #SkyDebate on Sky News.

To arrange any further comment, or an interview of a member of the institute, please contact Matt Kilcoyne (matt@adamsmith.org, 07584778207).

Adam Smith Institute reacts to Budget 2017

Responding to Philip Hammond's Budget today the Adam Smith Institute welcomes the fact that the Chancellor appears to be identifying the issues that Britain faces. 

Ben Southwood, Head of Research at the Adam Smith Institute, says:

"Philip Hammond’s budget today was unambitious, but it showed that a grown-up is in charge of the country’s finances. With Jeremy Corbyn and John McDonnell across the chamber, uncertainty about the Brexit deal, scandals plaguing every level of government, as well as very bad productivity and growth forecasts, it’s nice to see a budget avoid all major potential policy mis-steps and properly diagnose Britain’s most serious problems.

"The Chancellor showed that he understands that the UK’s housing shortage is because of planning controls stopping development in the places people want to live and showed welcome restraint on empty homes, land banking and council housing, despite huge pressure for bad, kneejerk crackdowns that would make the housing market even more dysfunctional. His focus on densifying areas around existing train stations and investigating the regulatory barriers to longer leases in the private rental market, in particular, echo policies that the Adam Smith Institute has been proposing for years.

"A stamp duty cut is welcome but should be across the board, not just first-time buyers. The big problem with stamp duty is that it stops older people from downsizing and freeing up larger homes for new families, and often these will not be first time buyers. We hope that next year’s budget sees this cut broadened to apply to the whole market, as a move towards total abolition of this destructive tax. Similarly, the announcements today will not be nearly enough to boost housing construction in the most in-demand parts of the country, like London’s underdeveloped outskirts and the Oxford-Milton Keynes-Cambridge corridor. We need major planning liberalisation and a review of the green belt to tackle these problems. But in general, Hammond has shown that being sensible and dull can be a very welcome thing in turbulent times."

To arrange an interview with a member of the institute or further comment please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (office: 02072224995 and mobile: 07584778207).
 

Time to update employment law

On the news that Uber have lost their employment tribunal appeal and that Uber drivers will be classified as workers and entitled to sick pay, holiday pay and the minimum wage, Sam Dumitriu, Research Economist at the Adam Smith Institute said:

“Uber drivers choose to use the app because they want the freedom to pick when they work and which trips to take. Granting drivers worker status may force Uber to schedule shifts and cut pay at peak times, leading to less choice for drivers and longer wait-times for consumers."

"It may also discourage rivals to Uber, like Lyft and Taxify, from coming to the UK hurting competition."

"Today's ruling reveals the problem of relying on employment legislation written before the word 'app' even existed. Minicab drivers have been traditionally classified as self-employed, but drivers who are able to choose their own hours, trips and simultaneously use a rival app are now classified as workers. We should update the law to take into account the added flexibility that gig economy platforms like Uber bring."

For further comments or to arrange an interview contact samd@adamsmith.org or call 020 7222 4995

Open Britain's doors to the world's innovators

Dr. Madsen Pirie calls on UK government to revolutionise its approach to innovation

  • Britain must be at forefront of world innovation to secure future economic growth.
  • Doubling number of visas available for those of exceptional talent will show UK is open to global talent.
  • An Innovations Database that allows innovators to safely publicise instead of going through a lengthy and expensive patent process.
  • UK should give more prominent awards to inventors and business people to boost profile of innovators.

Britain should double the number of visas on offer to innovators, streamline patent registration and give more prominent national honours to inventors, says a new report from the think tank the Adam Smith Institute that raises proposals to make Britain more open to innovation and entrepreneurship. 

The paper argues that Britain needs to expand the current Tier 1 visa that allows people of exceptional talent from outside the European Economic Area to come to the country. The present scheme allows 500 innovators to apply for a visa in the spring and autumn of each year. By increasing the number by a further 1000 visas the United Kingdom would enhance its reputation as a country that is open to youth and talent.

Dr. Pirie, founder of the free market Adam Smith Institute, suggests that the UK should emphasise its openness to global talent with this expansion and promote the places at universities, companies and embassies across the world. This, he suggests, would help show Britain ‘welcomes and rewards innovators’ that want to move to the country and make it easier to employers to access global talent.

Elsewhere the paper suggests giving further national recognition to innovators, combining innovation awards with the annual honours system to give prominence to inventors. This would help build a national recognition of entrepreneurship and encourage more people to enter the fields where Britain is at the cutting edge of research and business. 

A register of new innovations that gave limited protections to innovators’ ownership of their ideas before going through the patent application process would allow innovators to publicize their idea without fear of it being stolen and avoiding the lengthy and costly patent process. This would, Dr. Pirie argues, greatly speed up the development and cross-fertilisation of new ideas and help Britain tackle its productivity crisis.

By opening the door to the innovators of the world, and seeing that their contributions are recorded and rewarded, the United Kingdom can encourage a ‘race to the top’ and ensure that ‘innovators feel their contributions are valued and they themselves are honoured’, the paper says.

Notes to editors:
 
For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07584 778207.

The report Advancing Innovation?’’ will be live on the Adam Smith Institute website from 00:01 FRIDAY 3RD NOVEMBER 2017 and is available here in advance.

Putting our stamp on the Budget

It was our duty and our pleasure to release a report on the damaging effects of Britain's Stamp Duty Land Tax. Ahead of the budget on the 22nd November Ben Southwood, Head of Research at the Adam Smith Institute, called on the Chancellor to drop the 'worst tax we've got'.

This cry for tax sanity was picked up by media organisations across the UK with coverage in the Sun (where it also featured in their budget recommendations), the Daily Mail, the Telegraph, the Daily Express, the Times, the i Newspaper and Independent, the Mirror, City AM (which also carried an opinion piece by Ben) and Metro. It was covered on Business Insider, PoliticsHome, ConservativeHomeYahoo UK, and Ben wrote comment pieces on CapX and the New Statesman's City Metric. It also featured in Industry titles Property 118, Property Industry Eye, Property WireEstate Agent Today and in the morning briefing of Inside Housing

Go on, read Beyond the Call of Duty today!

To arrange further comment or an opinion piece from a member of the Adam Smith Institute please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07584778207). 

 

Scrap stamp duty to get Britain moving and generate £10bn of economic growth

New report sets out why the UK should abolish Stamp Duty Land Tax

  • Taxing transactions of Britain’s £7.5tn stock of property is keeping people in homes of incorrect sizes and too far from jobs
  • Stamp Duty Land Tax is four times more harmful to economic efficiency than income tax, eight times more harmful than VAT
  • SDLT could be costing the UK economy £10bn on top of the £12bn hit to house sellers
  • Britain should abolish SDLT to boost economic productivity, growth and employment

Stamp duty on property sales is gumming up the housing market, stopping people from moving to the jobs they need, and keeping people in houses that are too large for their needs, a new report released by the Adam Smith Institute this morning says. The report suggests that stamp duty is the most damaging tax Britain has, and scrapping it should be top of the Chancellor’s agenda in the run-up to the Budget this month.

The paper argues that SDLT is deeply damaging to the UK housing market. Economists in Australia found that a similar tax to SDLT there was costing 75p for every £1 raised, making SDLT around four times more damaging than income tax and nearly eight times more harmful than VAT per pound raised. With SDLT costing British people £12bn a year, this means the tax may cause as much as £10bn worth of deadweight losses.

This happens because SDLT gums up the housing market  by penalising people from moving house. While the lack of supply of new houses is still the biggest cause of the housing crisis, it is exacerbated by SDLT stopping the existing housing stock from being used efficiently. By penalising older people for downsizing after their children have left home, for example, stamp duty stops larger homes from being sold to new families, making the effective supply of family-sized homes even tighter. Since stamp duty creates a built-in cost to moving it also creates a roadblock to people moving from one part of the country to another to find work, trapping people in low pay and preventing them from advancing. 

The UK is home to around £7.5tn of property, with homeowners taxed regressively against values last updated in 1991, and charged SDLT at rapidly escalating rates. The report proposes instead to abolish SDLT altogether, covering the cost by raising council tax bills on the most expensive properties in the country.  

Three weeks ahead of the Budget this policy is probably the most effective tax cut the Chancellor could go for, boosting growth and improving the fundamentals of the housing market at a stroke. Although the increased economic activity would likely offset some of the losses in the long-run, the paper suggests revaluing council tax and creating a new band for the most expensive homes as a way of making the move revenue neutral if necessary. The paper argues Britain can boost housing and labour mobility, as well as economic growth and productivity, by focusing on the smaller taxes that cause the most damage to the economy. That all starts with abolishing SDLT.

Ben Southwood, Head of Research at the Adam Smith Institute and author of the report, said:
 
“One of the best things about Philip Hammond as chancellor is a resistance to eye-catching schemes that sound good but don’t make good economic sense. But stamp duty is so bad that scrapping it would be both eye-catching and good economic sense.

"Almost any way of clawing back the money will do less damage than stamp duty does: it’s worse than council tax, income tax, VAT, and even corporation tax. Caution is a virtue—but complacency is not—stamp duty has had its day and should be consigned to the dustbin of history!”
 
Sam Bowman, Executive Director of the Adam Smith Institute, said:

“Stamp duty is the worst tax we’ve got, almost as bad as setting fire to the money instead of raising it in tax. The reason is that Britain’s productivity problem is in large part a mobility problem. People cannot move to where the best jobs for them are because the houses aren’t being built, and that’s made even worse by stamp duty keeping older people in family homes that are too large for them. Stamp duty is gumming up the housing market and keeping people trapped in the jobs that aren’t best for them, and scrapping it should be a no-brainer for a government looking for a bold, affordable way to take back control of the agenda in British politics.” 


Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, matt@adamsmith.org | 07584 778207.

The report ‘Beyond the Call of Duty’ is available here.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Subsidies and regulations on childcare are costing us all

This morning the TUC released a report showing that childcare costs are rising faster than wages and called for further public subsidy of childcare by the government. Matthew Kilcoyne, Head of Communications at the Adam Smith Institute, agrees that the cost of childcare is a pressing issue but is one that is best fixed by a free market approach, he says:

"The way to bring British childcare costs down isn't, as suggested by the TUC, to spend ever larger amount on subsidising nurseries but to remove the regulatory barriers that make childcare unaffordable. 

"By far and away the largest costs for childcare providers is the cost of labour. Currently in the UK one adult carer is required for every three babies, four toddlers, or eight children over the age of three. By contrast, in Norway the maximum ratio of carers to children is much higher for the very youngest, at nine children to one carer. Evidence from the USA suggests that adding one child per carer more cuts costs by between 9% and 20%. If we relaxed our rules on childcare to Norwegian or French levels we could end up halving childcare costs.

"High staff to child ratios aren't just expensive, they can harm the quality of care too. Studies show that looser mandated child to carer ratios encourage higher qualified staff to enter the industry at higher wages. 

"The Conservative government should embrace the free-market option, increase the quality of care and come on side with young parents who want the freedom to work and start a family."

For further comment or to arrange an interview please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (07584778207).