For the last four years, the Institute of Economic Affairs (IEA) has held a conference targeted at students under the banner THINK. Despite my age and my not being in formal education, I attended the first in 2015. I felt a bit out of place but enjoyed it thoroughly. In particular, I have been thinking, talking and writing ever since about a speech by the IEA's Director of Education, Dr Stephen Davis about medical advances to extend human life, driverless cars and vertical horticulture.
When I saw that Dambisa Moyo, author of Dead Aid, would speak at this year's event, I signed up to go again. Yesterday morning I went to the Royal Geographical Society in London and, despite the bright sunshine (thank goodness the hall was air conditioned) spent an enjoyable Saturday. Quite apart from the content, I loved being in the company of so many earnest and intelligent young people interested in the key ideas of economic liberty. In my circle of contemporaries, discussion can sometimes be a Pessimism Olympiad driven by an economically-illiterate media and a governing elite whose hostility to liberty is played upon by parasitical, rent-seeking toadies. It was refreshing to be among youngsters full of hope and ambition. Even their naivety is not a bug, but a feature. It will lead them into areas of research that the cynical would dismiss too soon.
The full programme can be seen here. After introductions by the organiser Christiana Stewart-Lockhart (coincidentally a school friend of Miss Paine the Elder, whom I have known since she was a teenager) there was an amusing welcome speech by Mark Littlewood, Director General of the IEA. He referenced the late, great Hans Rosling's Ignorance Survey, which demonstrated that chimpanzees out-perform humans on multiple choice questions about key facts, because (as Rosling said) "Chimps don't watch the evening news". Fake news is not a new phenomenon. Mark quoted Gladstone as saying
Men are apt to mistake the strength of their feeling for the strength of their argument. The heated mind resents the chill touch and relentless scrutiny of logic.
Anyone who has ever attended a political debate in a calm state of mind will recognise the truth of that.
The next presentation was by Tim Harford. His book, Fifty Things That Made the Modern Economy, was in the goody bag and I will review it here when I get around to reading it. Given all the other books I picked up yesterday, that might be a while!
He made an interesting point about why the economic future is so hard to predict. As Galbraith said
the only function of economic forecasting is to make astrology look respectable
Tim put up a still from the original Bladerunner movie of Rachael, the "replicant" with whom the hero falls in love. He then showed the pay videophone in a bar on which the hero calls her to ask for a date and we all laughed. We often fail to understand that new technologies will not just slot into the familiar world but will change it and us. We also often think the dramatic, expensive innovation is the most important, whereas often it's the simplest and cheapest. While we all think of the invention of the printing press as the disruptive technology that gave us the modern world, he argued the invention of paper was more important. The Chinese circulated many scribe-written books on paper centuries before printing. Had all Gutenberg Bibles been printed on animal hides (as some were) a modest print run of 3,000 copies would have required the slaughter of half a million beasts! It wasn't the press that made mass literacy possible, but a cheap medium on which to print.
He gave several examples of new technologies that had no marked effect on productivity when first introduced. Decades later, when people worked out their possibilities, the real change came. Replacing the huge steam engine that drove a 19th Century factory with an electric one had only marginal effects at first in the US. Many industrialists that retained their old steamers probably thought themselves wise not to waste capital. It was only when the government cut off the supply of cheap labour by restricting immigration that manufacturers realised they could put small engines on every workbench to maximise productivity. Tim suggested we may see similar effects with the "IKEA-isation of solar power", for example, as the technology becomes "cheap enough to change the world."
Roger Bootle then gave us his "positive view of Post-Brexit Britain". As I am always trying to explain to friends who oppose it, Brexit doesn't guarantee anything good or bad. It only brings the levers of policy-making back onshore. If Corbyn's Labour wins the next election, our post-Brexit future will be dire. If future governments decide to regulate commerce in the same way as the EU or worse, then it will also be dire. The positive is merely that we now have the option to aim for freer trade, less discriminatory immigration that allows talent from anywhere in the world to come to our shores and more economic and social liberty. He believes, as do I, that this is more likely outside the EU, but we can – and may – screw up our own future. There are no guarantees. After all, we have often screwed things up for ourselves in the past.
As evidence of the EU's propensity to screw up, he cited "the greatest self-inflicted wound in all of economic history", the Euro. Since its introduction, the UK's economy has grown 40%, versus results in the Eurozone ranging from 30% growth in Germany (in whose interests it was designed) through economic decline in Italy to catastrophe in Greece. By allowing Germany to run huge trade surpluses without its currency rising in value, it has disturbed the balance of international trade and inflicted pain on every other EU state. The Euro is one of the main reasons for the "populism" that has given us not just Brexit but Trump, Orban, PiS in Poland etc. The gains of globalisation are now under threat because of a piece of political idiocy from France and Germany.
He urged his audience to push back against the myth that the EU promotes freer trade. It is in fact a protectionist customs union, with over 1000 tariffs; 12 for coffee alone. I have long argued that it is a racist institution because, as he said, the tariffs are structured to reduce competition from the Third World. For example they penalise coffee-producers who try to add value by processing their beans instead of just selling them as good little peasant farmers to the First World. The massive corporate lobbying business in Brussels (of which the pan-European law firm in which I used to be a partner was part) is there to ensure the interests of European corporations (and rich white Europeans like the French and German partners in my old firm with hobby farms to exploit the CAP) are protected, while Asian and African farmers stay dirt poor.
Dr Linda Yueh spoke about her new book The Great Economists: How Their Ideas Can Help us Today. I downloaded a copy as she spoke and will review it when I finish reading it. After lunch the IEA's current media star, Kate Andrews debunked the Gender Pay Gap and told us how delighted she was to walk past the new statue of Millicent Fawcett in Parliament Square. Much has been made by militant feminists of the fact that she is the first woman to be honoured in this way, but they are too ignorant to realise that she was a free-marketeer economist and an individualist. She is by far closer to my own economic and political views than any of the men represented there. She would have been contemptuous of their distortion of statistics in a rent-seeking frenzy to keep alive a movement that has served its purpose.
The most difficult part of the day for me was a discussion between Chris Snowdon, Head of Lifestyle Economics at the IEA for whom I have a lot of time and Raj Chande of the Cabinet Office Behavioural Insight Team (aka the Nudge Unit) for whom I have none. Behavioural Psychology is fascinating and useful stuff. I learned a bit about it acting for retailers when I practised law. They use lighting, music, architecture and interior design to play with our minds and encourage us to spend more. In my case, they were never a match for my mother's frugal teachings, but I have smiled when walking around shops to recognise the games they play. I am using it on myself to change my habits for healthier ones and reached my target of losing 40 kg this year yesterday morning. It's all good stuff but both those examples are voluntary transactions. I don't need to go to a supermarket or shopping mall. I didn't (for 60 years) play mind games on myself to control my appetites. It's very different when government – funded by force with our money – uses it on us, its masters. There are now over 150 people in the Nudge Unit and it is exporting its programme of manipulation to the US and Singapore.
Mr Chande talked of the government respecting our liberties, while nudging us to behave "better" (as defined by it) and Chris Snowdon seemed prepared to accept that this was at least better than authoritarian regulation. I beg to differ. Law is the removal of liberty (for good cause one hopes). In our Common Law tradition the legislature is required to justify every new law precisely because it doesn't grant rights, but removes them. The state has become so huge and out of control that the debate each time has become perfunctory and too many laws are made, but at least there is a theoretical possibility of opposing them. There's no such democratic accountability for "nudges". They're tools of policy and wonderfully deniable if they go wrong. They are part of a trend for an over-mighty apparatus to become impatient with democracy and find ways to by-pass it. Over a thousand local electors in my London Borough have submitted protests over a new parking scheme for example, but the Council tried to sneak it through without any discussion at all. Only vigilant citizen journalists using local social media brought it to the attention of that thousand voters and made the bloody Council discuss it. They are clearly peeved at having to do so.
The bouncy, impertinent arrogant Mr Chande reeks of this attitude of contempt by the governors and their rent-seeking hangers-on like him for the people they are meant to serve. He told us that he was "a libertarian until I went into government". Power corrupted him and he's happy about it. I am very much not and for me he can stick his condescension where the sun don't shine.
The most disappointing part of the day was that Dambisa Moyo couldn't make it in person. She spoke to us over a dodgy Skype link from NYC and all credit to her for getting up so early to honour her commitment to speak. After the game-changing radicalism of Dead Aid, I was rather disappointed with just how orthodox her thinking is in other respects. She cited the fake Oxfam statistic of 8 billionaires owning more wealth than half the world's population (debunked later, see below). She expressed concerns over income inequality as a problem in its own right. She spoke of her concerns for the future of democracy because 138 people contributed half the money spent by candidates in the US Presidential Election, without noting that they mostly gave to Clinton and might be repenting the money wasted. She spoke of "populism" and declining turn-outs for elections in the West. In the typical style of the global elite, she seemed to think that was a failing on our part, as electors. We are not reading the right books or listening to the right experts, apparently. I asked her if she couldn't see that, as voters were not being offered real choices, their disillusionment and disengagement might be rational? I said
I have voted religiously all my life but will face a choice at the next election between two parties, both of whom want to steal more of my and my childrens' money and indebt still further my grandchildren yet unborn. Why is it wrong if I reject both?
This was the only question of the day to raise a cheer and a round of applause. She sympathised politely with my concerns but essentially restated her opinion unchanged. I am afraid she is not the ally friends of Liberty might have hoped for.
Tom Standage of The Economist (which has also lurched to the authoritarian left of late, leading me to cancel my subscription of 15+ years) spoke enthusiastically and knowledgeably about self-driving cars (or Autonomous Vehicles - AV's, as they have become known). Moving on from the naive enthusiasm for them expressed at the first Think conference I attended, he has given a lot of thought to their possible social and economic effects. As Galbraith's quote above makes clear, this is a thankless exercise in forecasting. As Tim Harford's talk illustrated such a technology will probably have more effects we don't expect than those we do. He told us that he expects the first driverless zones to be entire city centres like Seattle or entire cities like Singapore. The cars will probably be owned by the cities themselves and therefore integrated into public transport systems. Otherwise robotaxis are likely to continue the trend begun by Uber in taking as many people off buses and trains as they do out of private cars.
He waxed lyrical about the "opportunities" for governments to raise revenue from them. The technology requires them always to know – and signal – exactly where they are, so congestion charges can become far more localised and sophisticated. Surge pricing on the Uber model can control peoples decisions to use them so as to keep traffic flowing smoothly. A "zombie" tax on empty vehicles will stop operators keeping them on the road to avoid parking costs. He went on, chillingly, to outline some of the uses totalitarian governments might make of the technology. Ultimately it will allow government to control who goes where. China is currently engaged in herding a particular ethnic minority into an area which is "effectively an enormous concentration camp", he said and he can visualise a future in which AV cars, buses and trains simply refuse to take them anywhere else. In freer societies, he said it was as likely that AVs would generate "exurbs" (burbs beyond the burbs) by making transport very cheap ($0.70 a mile vs $1.50 for a private car and $2.50 for an Uber) as that they would lead to people living more densely in traffic-free cities. All would depend, as he had the audience repeatedly call out, "on pricing". To be more precise, on the pricing of such externalities through taxation.
In an afternoon session, Dr Vernon Smith – winner of the Nobel Prize for Economics and long associated with the IEA – was interviewed by Professor Philip Booth and fielded questions from the enthusiastic young audience. He was scornful about the very idea of using economics to predict the future and, as you would expect, enthusiastic about the approach that won him his prize; constructing practical experiments to test economic theories. I was very envious of the silver Western-Style bolo tie he wore; a gift from an academic friend when he won his Nobel, which featured the profile of Adam Smith.
The most elevating speech of the day was from Dr Jamie Whyte on "The Economics of Oxfam and Inequality". He thoroughly debunked the Oxfam statistic uncritically quoted by Dambisa Moyo. Yes, 8 billionaires have as much money as 3.5 billion people because those people have nothing. Divide the 8 billionaires' money amongst them and they would get a one-off $118 – hardly world-changing. A more valuable measure, never mentioned by Oxfam and their ilk is that in 1980, 40% of the world's population lived in absolute poverty defined (in today's numbers) as living on less than $2 per day. Only 8% still do. That's arguably the best progress in human history and it is ongoing.
Oxfam's numbers are systematically rigged to produce the most socialism-inducing envy. For example, a graduate of Harvard Law with a debt of $250,000 will feature in that bottom half of the world alleged to be victims of economic injustice, despite possessing a qualification guaranteed to make him rich. He or she is not a member of an impoverished class. He's just at a different stage of his life and will end in the top half or higher. The stats also ignore non-private income and benefits. "If I earn £200 per year and you earn £100, then I am only twice as rich as you if you ignore the value we both receive from the NHS, the state education system etc." Oxfam and other purveyors of fake statistics are in favour of redistribution, but never account for it in their figures.
He argued persuasively that if you look at individual welfare (in the broadest sense) you would be celebrating the achievements of capitalism in raising the living standards of us all. Equality of welfare matters, not equality of income or of wealth. He also gave a name to the phenomenon that led me to quit work at 54 - the diminishing marginal utility of income. I could earn more, but it wouldn't make my life appreciably better, so I stopped. More dramatically (I assure you) if Jeff Bezos lost half his wealth, or if his income halved, tomorrow his life would not be appreciably worse. The money in the hands of billionaires can't buy them more happiness and most of it is deployed in investments to try to make the world a better place for all of us. Do you pity George Soros for his massive income disparity with Jeff Bezos? No you don't because in practice it makes no difference to their welfare as human beings either way. A young questioner suggested that envy about income inequality was natural and that it caused real discomfort. Dr Whyte was too polite to tell him that was a choice. I was too polite to shout out that the problem would go away when his expensive degrees earned him some money.
The conference ended with a closing keynote from Dr Steve Davies of the IEA under the title "Dissecting Corbynomics" but he was in no way partisan. He was equally scathing about Theresa May's weak grasp of economics and said the next election would be (as I expressed it to Dambisa Moyo in my question) a contest between two economic idiocies. That was not particularly uplifting but it did ease me back into my usual world of the Pessimism Olympics.
If you have the chance to go next year, I recommend it. It's a great event, with serious speakers and listening to the young audience talking among themselves during the breaks will kill your pessimism about the future. That's good value for £100.