Freedom is the miracle medicine
January 4, 2000
by Irwin Stelzer
SUNDAY TIMES (LONDON)
January 2, 2000
Irwin Stelzer, who resigned from a Tory economic panel, gives the party some much-needed advice …
Newspapers say I am angry about the Tories' efforts to read into my willingness to serve on one of their advisory committees a warming to their cause by Rupert Murdoch. Hardly. "Sad" would be a more apt description: sad that what is a much-needed intellectual exercise has been subverted by spin doctors into a hunt for a few favourable lines in the press; sad that I shall miss an opportunity to sit with intelligent people discussing economic policy.
The panel does not appear to be as originally advertised. It was supposed to be non-partisan; in the event, it proved to be a device to hint that Murdoch has figured out what the Tories stand for and is moving in their direction. It was supposed to address important questions; in the event, we are now told, it is to demonstrate that the tax plans of Francis Maude, the shadow chancellor, are sensible, something that is not clear to most observers.
More's the pity. Every democracy needs a strong and vibrant opposition party. American experience shows that control of the House of Representatives by the Democrats for 40 years resulted in piling one bad policy on another until the welfare system became so bloated, and the military so starved, that both became unable to perform their roles.
It was only when the Republicans gained control of Congress that a Democratic president felt constrained to reform welfare and restore sanity to federal finances. So we now have millions off the welfare rolls and in work, and a budget surplus.
Britain, too, needs a strong opposition capable of doing battle with new Labour on the field of ideas. Instead it has an opposition party that does not know whether it is for or against an independent central bank; that cannot decide how the tax burden should be distributed among income groups and industries; that has not done the hard thinking that Tony Blair and Gordon Brown have done on what is needed to create an entrepreneurial meritocracy (which does not mean that they have got it entirely right); and that is torn between a desire to get tough on welfare malingerers and a desire to project a softer, kinder image.
It ill behoves an American to suggest a path that might lead the Tories back to power. But I am emboldened to do so by the fact that Maude at one point thought the views of an American economist might prove useful and by the fact that we conservatives have been through this process in America.
Start with Europe. Like the abortion issue that bedevils American conservatives, the question of Britain and the euro cannot be solved by some ingenious compromise. Either you believe that abortion is murder and should be banned, or that a woman has a right to terminate a pregnancy. Either you believe it is in Britain's interest to retain control over its monetary policy and tax system, in which case no amount of "convergence" can persuade you to surrender the pound; or you believe that Britain can prosper only by yielding to Frankfurt and Brussels, in which case no economic argument about one-size-fits-all interest rates can persuade you to stay out of the single currency.
American conservatives, or at least most of them, have solved the abortion question by agreeing to disagree, treating abortion as one of many issues rather than as some sort of litmus test, and emphasizing those issues on which they find themselves in accord. The Tories might consider treating their disagreement over Europe in the same way. Agree to disagree and get on with life.
With the euro-brawl out of the way, the Tories might then consider the principles that brought Ronald Reagan to power: individual freedom and national strength. Labor has two solutions to most problems: spend money and centralize control. It thinks it can reform the education system by tighter supervision from the center; that more frequent inspections of hospitals by bureaucrats will produce a better healthcare system; that more regulations will produce more efficient product and labor markets.
It is wrong. The education system will get better when poor parents have the same freedom as well-off ones to engineer their children's escape from bad schools. The healthcare system will get better when patients are free to choose the hospital most likely to cure them. Markets will work better - produce more wealth at lower cost - when bureaucrats stop trying to set the details of employer-employee relations and allow consumers to choose which pub has just the right amount of foam on its beer.
It is also wrong to think that throwing good money after bad is a sensible policy. Surely the Tories, if they adopt individual freedom as their guiding principle, can develop tax policies that leave people freer to dispose of their own incomes. Welfare re-form that imposes an obligation to work should certainly include the freedom to spend the fruits of that labor as the individual chooses, rather than as the state prefers.
The Tories could craft a host of policies around this concept of freedom, one with which they should be more comfortable than even the newest of new Labour politicians, most of whom have grown up in the state sector and - with the important exception of Brown - know the words entrepreneurialism and venture capital as abstractions, something of relevance in America but not in Britain.
The second rallying point might be national strength. Reagan and Margaret Thatcher understood two things: national independence and freedom cannot be preserved on the cheap, and the special relationship between America and Britain enhanced the ability of both countries to draw a line in the sand when faced with aggression.
Every indication is that Labour is willing to scuttle the special relationship with America in order to curry favor with France (will the combined armies be allowed to eat British beef when deployed in some far-off land?). Surely it would not be unreasonable for the Tories to make national defense and its key ingredient, the special relationship with America, a point around which to build a coherent foreign policy.
I still hope Maude's panel will consider these principles on which the Tories might stand - out of the reach of spin doctors who seek the fleeting advantage of a line in a newspaper that will be used to wrapchips within 24 hours. American Account.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.