IEA Unveils New Star Signings

Guido can reveal two big new hires for the Institute of Economic Affairs. Congratulations to rising star Darren Grimes, the Brexit hero who set up the successful BeLeave campaign before writing for BrexitCentral. Darren was in much demand, is one of the most effective right-leaning millennials on Twitter and is a very astute hire for the IEA as their new Digital Manager.

The IEA has also appointed Jon Moynihan to its board. The venture capitalist was another important Brexit figure, who chaired the Vote Leave Finance Committee and was the first chair of its Campaign Committee. Carole Cadwalladr could get a whole flowchart out of these two…

Stella v Kate Andrews on Gender Pay

This Sky debate between Stella Creasy and the IEA’s Kate Andrews, and the ensuing Twitter spat, is quite something. Kate noted that conflating equal pay with the gender pay gap is problematic, and criticised the attempt to piggyback on the #MeToo campaign. Stella did not take it well, wrongly demanding Kate apologise for “misquoting” the ONS:

Kate responded, proving her own claims and debunking Stella’s:

With no meaningful comeback, Stella instead blocked Kate, going on to tweet that she had been “brainwashed” and, bizarrely, that Kate had mocked her disability (she hadn’t). As anyone who has ever interacted with Stella on Twitter knows, she really doesn’t like being proved wrong…

Shanker Shocker as Legatum’s Brexit Team Transfers to IEA

Shanker Singham has resigned from the Legatum Institute as Director of Economic Policy and is taking his three-strong team with him from Mayfair to Westminster to join the Institute of Economic Affairs (IEA). This is the wonk-land equivalent of Manchester City signing Manchester United’s top strikers…

Guido sources say Shanker resigned on Wednesday and the board of the IEA agreed to take him and his team pretty swiftly. The IEA is creating a new International Trade and Competition Unit for Shanker’s team, bringing with him lawyer Victoria Hewson; economist Catherine McBride; and research analyst Dr Radomir Tylecote. The three – who have a wealth of experience from the legal, technology, business and think tank worlds – will take up their roles later this month. Shanker’s team are widely recognised as the top Brexit wonks outside government.

The IEA’s Mark Littlewood tells Guido:

“I have huge admiration for the work Shanker and his team have done at the Legatum Institute. Under Philippa Stroud’s leadership, Legatum have gone from strength to strength, becoming thought leaders in crucial policy areas of which trade is only one. I look forward to continuing our strong relationship with them, and to Shanker and his team continuing their work at the IEA.”

Shanker Singham says: “We look forward to being a resource to all who need us in the trade, competition and regulatory policy space.” It is fair to say that the philanthropists who back Legatum were extremely uncomfortable with the critical political attention that the polarising Brexit work was bringing them and that this was distracting from their greater philanthropic endeavours on other issues.  At the IEA Shanker will be at liberty to engage with the Westminster debate and key players more directly…

IEA’s Kate Andrews Schools Alan Johnson and Anna Soubry on Swiss Health System

As Alan Johnson and Anna Soubry blindly defended the NHS despite being confronted with dire statistics on its health outcomes, Kate Andrews of the Institute of Economic Affairs made a compelling case for reform on This Week. Soubs and Johnson showing politicians see the NHS as a religion as they treated Kate’s sensible suggestions as heresy… 

Tories “Have No Idea… Burying Their Heads in the Sand”

Adam Smith Institute

Executive Director Sam Bowman said:

“It’s tempting to laugh at today’s speech but really it was quite sad. The Tories seem to have no idea what to do about housing, because they’re so afraid of alienating their base that they won’t do any substantive policy that could properly boost the supply of new homes. Again and again this week people asked how to connect with younger voters – the simple answer is to give them somewhere to live… Planning is the huge bottleneck here that is stopping millions of new houses from being built privately and affordably, and if the Conservatives are going to bury their heads in the sand about that then eventually voters will punish them for it.”

Institute of Directors:

Stephen Martin, Director General, said:

“You have a Conservative Party which talks about the importance of markets, but then tinkers around with help to buy and energy price caps. What are business leaders meant to make of it all? At this pivotal moment in this country’s history, far too little time has been spent explaining the plan for how we leave the European Union, or debating how we tackle the long-term challenges that face our economy. We have had positive messages on the importance of skills, and more funding for transport in the North, but we need to see serious proposals at the Budget to boost what is now wavering confidence in the wider economy.”

TaxPayers’ Alliance

John O’Connell, Chief Executive said:

“Despite claiming to be the ‘party of low taxes’, the current government plans to increase the tax burden to levels unseen since the 1960s. If the government is serious about solving the housing crisis then it needs to take on vested interests and NIMBYs, but sadly there’s little sign that that they have the courage to do so. The Prime Minister is right that families are struggling to cope with the rise in energy bills, and this is due to green taxes and subsidies. Instead of intervening in the market, the Government should stand up to the green lobby and slash unnecessary taxes and subsidies that artificially inflate the cost of energy for families.”

Institute of Economic Affairs:

Mark Littlewood, Director General, said:

“The Prime Minister’s encouraging rhetoric was followed up with the wrong policies… we have heard from leading Conservatives this week how free market capitalism is so beneficial. But we haven’t heard a single coherent policy that would make the UK a more free market economy. Rather we’ve had a string of announcements about how the Tories wish to place greater power in the hands of the state. May’s comments about being a supporter of free markets should at best be taken with a pinch of salt, but at worse look to be untrue.” 

The coughing and prankster arguably a welcome distraction from the Ed Miliband-lite policies…

Idea of Unilateral Free Trade Sent Commentariat into Spasms

You would have thought the pundits with a pretence to economic authority* would be a bit more modest after joining in with Project Fear and predicting all manner of calamities the day after the Brexit vote. Remember 70% of economists predicting the UK would be in recession by last Christmas?

The usual suspects have gone apoplectic at the idea of unilaterally introducing zero tariffs. The EU’s Common External Tariff comprises 12,651 different taxes and quotas imposed on goods from the rest of the world. This is what the Customs Union amounts to in reality, a protectionist barrier to free trade with the 162 countries outside the EU. Don’t fall for the hype that it reduces trade barriers. 

The surprise is that some self-identified free traders have had a spasm about the IEA’s call for, err, free trade. Alan Beattie in the FT says it pains him as a free trader to say it, but…

The theory is fine as far as it goes, which is to say a wonderland, or two wonderlands, of competitive markets where technology is fixed and it is quick and cheap to move capital and labour from one sector to another. In the real world where the goods sold across borders become ever more sophisticated — and where services take a growing share of world trade — regulations are generally more important than tariffs. 

We live in wondrous times, has it ever been easier to move capital quicker and more cheaply? Labour is also in plentiful supply and sourceable globally too. This is to be fair not his main argument, regulatory barriers are he says the real problem in that unharmonised regulations are the main barrier to trade:

It’s an unpleasant thing for a free-trader to accept, but these days, to trade is to regulate — or, for most countries, to accept regulation. When the UK is exporting to behemoths like the EU and the US, it will need either a bureaucratic process to show it is meeting the rules of the destination economy or to sign a deal trying to get its own standards recognised instead. The idea of pursuing unilateral free trade is not absurd. As it happens, it has delivered some of the biggest advances in liberalisation in emerging markets over the past few decades. But pushing it as a reason for the UK to eschew future trade deals after Brexit in an increasingly sophisticated and regulated economy shows a serious dislocation from reality.

British exporters manage to trade with most of the world already without state negotiated trade deals. That is the existing position with most of the world, Brexit or no Brexit. Trade happens without international agreements or harmonised regulations. That won’t change on the day Britain Brexits…

For example the UK has no trade deal with the USA. Yet they buy British made Jaguars and Rolls Royces as eagerly as Brits buy Teslas, despite some important product differences, like where to put the steering wheel. Products are sold all over the world in different local packages with instructions in different languages running on different power supplies. Computers have different keyboards everywhere. Manufacturers cope. Traders localise their products without regulatory prompting if they want to make a profit. Regulatory barriers don’t halt trade, they just complicate it. Have some faith that exporters can cope. Consumers will love the lower price competition…

*Yes, Guido is aware of the irony, however he was right about those economists, and put his money where his mouth was...

IEA: Brexit Britain Should Commit to Unilateral Free Trade

Guido hears today’s new Institute of Economics Affairs report on trade policy has been well-received by ministers. It argues that no deal with the EU on trade would not be a disaster for the UK, recommending Britain commits to a policy of unilateral free trade with the rest of the world, eliminating all barriers to imports regardless of whether other countries impose tariffs on their imports from the UK. It would then be up to the EU if it wanted to impose tariffs, which would hurt EU consumers by raising prices. In such a scenario, the IEA report concludes the UK would likely be given tariff free access to the single market:

“There are many myths being perpetuated about trade policy – and more specifically about the UK’s relationship with the EU – that must be debunked. Many people believe that disaster will befall us if we do not forge a deal with the EU. In fact, we could unilaterally eliminate all import tariffs, which would give us most of the benefits of trade, and export to the EU under the umbrella of the WTO rules. Then we can seek free trade deals with all major trading partners, including the EU.”

If a bad deal is offered by the EU, the UK should say thanks but no thanks, walk away and unilaterally set tariffs at zero…

Smoking Is Good For Us

Today we learn that smokers are a net benefit to the UK economy to the tune of £14.7 billion per year. A report into ‘sin taxes’ by the Institute of Economic Affairs examines the net effect of smoking on the taxpayer. It finds:

“In the absence of smoking, the government would spend an extra £9.8 billion annually in pension, healthcare and other benefit payments (less taxes forgone). Duty paid on tobacco products is £9.5 billion a year. In total, the gross financial benefit to the government from smoking therefore amounts to £19.3 billion. Subtracting the £4.6 billion of costs produces an overall net benefit of £14.7 billion per annum.”

Tell that to the next healthy living campaigner who piously tells you smokers are a drain on the NHS…

The report is one in a series looking at Britain’s ‘sin taxes’. The studies conclude:

“Taken together, Britain’s public finances would be £22.8 billion worse off if there were no drinking, smoking or obesity.”

The public cost argument is often used to justify government meddling in people’s lifestyle choices. In fact, as this study shows, blaming smokers, drinkers and fast-food-lovers for spiralling healthcare costs is just a moral fable employed in an effort to control behaviour rather than to actually save money. Freedom of choice is not only right morally, it makes fiscal sense…

Owen Jones Gets Owned Over Venezuela

Kate Andrews schooled Chavista Cheerleader-in-Chief Owen Jones last night on Sky. He came close to losing his rag – again…

Incidentally Owen did not tell the truth about the other socialst Latin American regimes; Uruguay, Bolivia and Ecuador have had falling GDP per capita for the last 2 years, they’re all getting poorer under socialism. Ow-end…

Good Friday Caption Contest

Come up with a witty caption in the comments and win a book. Handy reading if Jeremy gets anywhere near power, the IEA’s edition of Friedrich Hayek’s Road to Serfdom: With the Intellectuals and Socialism“.

win-this-book

Wonks Slam Hammond’s White Van Man Bashing Budget

Philip Hammond’s brutal Budget attack on Britain’s army of hardworking self-employed is going down like a cup of cold sick in the wonk world.

Centre for Policy Studies:

“Changes around national insurance and the tax-free dividend allowance will have an impact on UK competitiveness.”

Institute of Economic Affairs:

“It is right that the self-employed and employed should pay similar National Insurance Contributions – the Government should not set tax rates that artificially favour one form of employment over another. However, it would have been better to level the playing field by cutting NICs for the employed rather than raising those for self-employed. NICs are a tax on jobs and wages and reducing their burden would help many lower-income households.”

Taxpayers’ Alliance:

This should be done by cutting rates rather than hiking taxes on entrepreneurs.”

The Association of Independent Professionals and the Self-Employed:

“If you are one of the hardworking self-employed people who face a significant increase on your tax bill, you might feel that the Chancellor has it in for you. When you look at the additional support offered for business rates it appears as if the Chancellor is supporting SMEs by hitting entrepreneurs and the smallest of businesses.

“Adding in the reduction in Dividend Tax allowance, whether you work as a sole trader or through limited company you will be facing higher bills. The Chancellor shouldn’t forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own.”

Centre for Economics and Business Research:

“People who work for themselves and who set up and run companies should be encouraged. Instead the Chancellor has singled this group out for a £1,425m tax hike on the misleading ground that they pay less tax, ignoring the risks they take. Disdain to this group is a typical Treasury attitude. Many of the self employed are IT consultants and are especially critical to the economy.”

Institute of Directors:

“The ‘nothing to see here’ approach adopted by the Chancellor will only fly for so long. The Chancellor’s jokes may have been funnier than anybody expected, but it’ll be business leaders’ resilience that’ll be needed to ensure we’re still smiling in November.”

And just wait until you see tomorrow’s papers…

IEA Wonk Could Be Trump’s EU Ambassador

Institute of Economic Affairs advisory council member Dr Ted Malloch is being interviewed by Donald Trump this week for the role of his EU ambassador. Theodore Roosevelt Malloch, to give his full name, is a distant relative of President Roosevelt who Maggie Thatcher once dubbed a “global sherpa” thanks to his decades of work at various economic conferences and institutions. It’s good news for Britain if Anglophile Malloch gets the job, he tells City AM:

“In the UK, Brexiteers can take heart from the victory of another anti-establishment figure. His political sympathies for Brexit could lead him to prioritise a trade agreement with the UK once the country leaves the EU. It will also ensure a stronger US-UK Special Relationship.”

And his views on Brussels are sound too. He told Brexit Central last year:

“The elite that dominates EU decision-making is managerial, bureaucratic and socialist,” he says, “with a view to higher taxation and redistribution of wealth — all qualities the EU elite tout proudly, despite growing populist sentiment among an increasingly economically pressed middle class in virtually every EU-participating country. The US and the UK have cast their lot in the same direction and the Anglosphere will not only survive but thrive…

Would they want the United States to join anything like the EU — a federal superstate that curtails sovereignty? Of course the answer is NO! We wouldn’t want that in any way, shape or form. And the British already decided not to become part of the flawed euro currency and the European Central Bank. So here’s an interesting and novel alternative no pundit is yet suggesting, and I say it only half facetiously: why not hook up our horses together?”

Make the special relationship great again…

Minister Slammed Letting Fees Ban Just 8 Weeks Ago

The big Autumn statement announcement pre-briefed to today’s papers is that the government is banning letting fees. This is yet another u-turn by Theresa May – just 8 weeks ago her housing minister Gavin Barwell publicly dismissed the proposal as a “bad idea”. Such a bad idea that May herself voted against it in 2014, and the Tories voted the same policy down again in 2013. Kate Andrews from the Institute for Economic Affairs says:

“The Chancellor can come in and not have to commit any of his own spending to do something that seems like it’s trying to help those who are just managing. But of course this is him skirting around the issue of the housing crisis altogether… Politicians will implement the dumbest policies to avoid actually addressing the issue.”

As the National Landlords Association explains, tenants will still foot the bill:

“Philip Hammond lacks any understanding of how the sector works. Agents will have no other option than to shift the fees on to landlords, but adding to landlords’ costs will only push more towards increasing rents.”

Yet another Miliband policy gimmick pinched from Labour’s 2015 manifesto. The politics make sense, the papers have written it up kindly, but even the minister knows the policy is a dud.

UPDATE: Barwell speaks:

“It is the nature of the job that you have to defend current policy even when you’re working to change it.”

IEA LAUNCHES £50,000 PRIZE

The Institute of Economic Affairs has just launched the Richard Koch Breakthrough Prize.

First prize of £50,000 will be awarded to the best and most innovative entry outlining a ‘Free-Market Breakthrough’ policy to tackle poverty in the UK.

There will be runner up prizes of £7,500 each, and a student prize of £2,500. Judging panel includes former Liberal Democrat MP Jeremy Browne (chair) and the Rt Hon Iain Duncan Smith.

The deadline for entries is Monday, 9 January 2017.

To learn more about the Richard Koch Breakthrough Prize and the entry requirements, click here – and watch the video below!

The “Crack Cocaine of Gambling” Myth

fobt

Author Christopher Snowdon is at it again, firing back at “Britain’s nanny state” which wants to ruin our fun.

Today the Institute of Economic Affairs has published his new paper, Fixed-odds betting terminals: A briefing, which challenges the myth that gambling addiction is on the rise and that Fixed Odds Betting Terminals (FOBTs) – the so-called ‘crack cocaine of gambling’ – are to blame.

Read his report here

IEA: Osborne’s Living Wage Hits Poor, Young, Minorities, Consumers, Taxpayers

go

George Osborne’s Living Wage is likely to see those it is supposed to help lose out, according to a new report from the Institute of Economic Affairs. The IEA finds that modest minimum wage increases may not cause higher unemployment, but large increases will. Who are the losers? The young, unskilled, minorities and those in the regions:

“Minimum wage increases are always potentially a trade-off, between raising pay for those fortunate enough to keep their jobs and hours against the potential reduction in labour demand. Any significant reduction in demand will hit young and unskilled workers, particularly those from minority groups, hardest. It is also likely to have a bigger impact in some parts of the country than others… the ‘bite’ of the National Minimum Wage has been considerably deeper in Northern Ireland and the East Midlands than in London.”

Higher unemployment is a long-term consequence:

“the longer-run impact of the minimum wage might be to generate larger reductions in employment”

And low-paid earners don’t actually benefit as they lose out in other ways:

“firms such as B&Q and Waitrose have been accused of lowering premium pay for weekends and other ‘unsocial hours’, while Caffe Nero staff seem to have lost the perk of free paninis – showing that minimum wage increases are no ‘free lunch’. Those gaining from pay increases therefore lose out in other ways than jobs or hours lost”

The report concludes that someone ultimately has to pay for any sharp minimum wage increase:

“the cost can only be borne by consumers paying more, shareholders getting reduced dividends, or taxpayers paying more”

The Living Wage might make political sense – it leaves Labour with nowhere to go – but the evidence is it hinders those it is supposed to help…

Nanny Osborne’s Tax On The Poor

Nanny George Osborne

George Osborne’s sugar tax extends the reach of the nanny state, it is a punitive, regressive tax that will hit the poorest hardest. The Chancellor told the House: “We understand that tax effects behaviour. So let’s tax the things we want to reduce”. This is a naked attempt to coerce individuals into behaving how the state desires, making them pay if they don’t conform.

Extensive research from the Institute of Economic Affairs shows that sugar taxes are a highly regressive tax on the poor. They take a considerably greater share of income from the poor than the rich. Lower income consumers are also less responsive to price changes than the rich. This massively exacerbates the regressive impact.

Research also shows that rather than encouraging consumers to cut sugary drinks out of their diets, sugar taxes force them into buying cheaper, inferior products, sometimes switching to higher calorie drinks in the process. Sugar taxes have been tried in various US states, France, Hungary, Finland, Mexico and Denmark. No impact on obesity or health has ever been found as a result of a sugar tax.

Another point: a pint of cider can contain 20 grams of sugar, yet Osborne is freezing cider duty. Will he then be slapping cider drinkers with a stealth sugar tax instead? Millionaire Jamie Oliver won’t notice the sugar tax hit him in the pocket, the families to whom he preaches on telly will…

Brexit Debate Live Streaming

Tonight’s debate at the Institute of Economic Affairs (above) is an example of the civil war on the right – two IEA wonks Ryan Bourne and Diego Zuluaga are on opposite sides of the argument, Douglas Carswell and former Tory MEP John Stevens are bolstering the wonks. Such is the demand that they have already had to turn 200 ticket applicants away…

UPDATE: You can rewind the live stream to watch the debate.

Sinister Nexus of ‘Eurosceptic’ Think Tank Staff (Who Actually Back Remain)

iea indy 2

“Exposed”, screamed the Indy’s front page last Thursday, dramatically claiming the Institute for Economic Affairs is part of a sinister axis of think tanks conspiring to help the Vote Leave campaign. The spirited piece told of a revolving door culture and an ominous-sounding nexus of right-of-centre organisations whose staff, board members and even offices are linked”, with the IEA at the centre. All good fun, but does it ring true?

In response, the IEA polled their staff to find out if they are indeed a conspiratorial bunch of secret Eurosceptics. It transpires that 37.5% of IEA employees actually support Remain, and another 12.5% are undecided. The IEA confirm they have

“no corporate position on whether Britain should stay in the European Union and a wide range of views are held by the Institute’s staff, trustees and wider supporters”

Hope the Indy’s track-record of rigorous investigative journalism continues in its online offering…

BSE Apologise: “Work of Fiction” Claim is… Work of Fiction

Yesterday Britain Stronger in Europe sent out a press release describing a new Institute of Economic Affairs report on the EU as a “work of fiction”. Quite a hostage to fortune…

The BSE briefing claimed: “Matthew Elliott CEO of Vote Leave is a former Director of the IEA”.[…] Read the rest

+ READ MORE +



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