Either / Or
by Quinn
There have been some interesting posts over at The Filter^ recently. This one, on the subject of drinking, harks back to an earlier post on the same subject, and follows the author’s usual line that government action will invariably make matters worse, that there are free market solutions to our problems. As usual, Anthony makes some insightful points, most of which I agree with, but I think he seems to just take things a bit too far and reveals what I feel are some of his prejudices.
My attitude to the recent relaxation in the licensing laws is that it is a good thing. Just because some people will overdo it with 24 hour drinking doesn’t mean I should be prevented from having a beer after eleven. The idea that every town centre is a war-zone at the weekend is a myth; I regularly go into Stockport on a Friday (and to a dreaded Wetherspoons to boot) and I cannot think of the last time I saw any trouble there. However, I also work for one of the emergency services, and I know that there is plenty of violence and disorder every night that is entirely drink related. I suppose my attitude is that we should let the free market do what the free market does, but accept that there will likely be externalities as a result, and that we may have to accept an increased role for the public sector, not in opposition to the private sector, but as a consequence of it.
I think that is pretty much my opinion in general; that the free market is the best way of organising things, that is should certainly be given the first go at providing our goods and services, but that we shouldn’t get bogged down in an ideology that the market always knows best. It makes sense to me to accept that the pursuit of profit does not necessarily provide the perfect desired outcome, and that when it fails we shouldn’t begrudge the fact that a public sector solution may be required, and should be valued for what it provides. At the same time, we must be aware that public sector involvement may very well make a situation worse than it was in the first place; we shouldn’t place all of out faith in either sector.
Returning to The Filter^ then; it was this part of Anthony’s original post that got me thinking. Considering an archetypal weekend night he says
The emergency services can complain all they want about how expensive it is to look after us all on a Saturday night, but this merely hints at the underlying problem. If you wish to nanny, expect children. With no financial penalty for drunkenness and irresponsibility – if the public purse picks up the bill, then of course people will make unwise decisions. For those who advocate socialised services that erode personal responsibility, funding A&E is a fair cost.
It is a well written paragraph, and but it seems to start from the point that government and all its agents are to blame and deserve no sympathy for their predicament; but aren’t they really just dealing with the consequences of standard human nature and behaviour? Is there any reason to believe that the welfare state’s nannying has influenced disorder at the weekend? Is it not just down to drunks getting lairy (on drinks bought from private sector providers!)? It sounds as if Anthony believes that the emergency services almost deserve their fate; as if because they are government employees they are complicit in the dependency culture that spawns disorder (when in fact we are far too jaundiced to have a benevolent attitude towards welfarism).
Anthony’s answer is of course that the free market can sort out our problems. It is licensing restrictions and local government red tape that mean only large companies can get planning permission for large bars; cut red tape and a thousand pleasant cafés will bloom (perhaps). But there has been a relaxation of just such regulations in recent years, and with it we have seen an increase in violent disorder and alcohol related crime; I am not suggesting there is a definite cause and effect here, but the facts seem plain. In his response to my comments on his most recent post Anthony suggests that scrapping the NHS and getting people to take out private health insurance will mean people may be hit in the pocket if they kick off and so are more likely to behave; but there already is a financial disincentive in the form of fines and possible imprisonment if you are drunk and disorderly or commit a public order offence, and how many people who get into scrapes will think about the financial implications of responding to a drunken taunt in a pub? How many even bother to go to A&E as it is for their split lip or bust eye? Anthony also suggests the police shouldn’t take drunken brawls between people who like a battle too seriously, and I am sure they would agree; but the police (unlike private sector companies) cannot, and arguably shouldn’t, pick and choose what they deal with. Surely they shouldn’t judge but should just uphold the law and deal with any transgressions they see? I don’t really see how else they should operate.
Anthony is a staunch advocate of the free market, and rightly so; but I think if he has an Achilles heel it is because he doesn’t realise that I am too. He seems to resent almost any action the state may engage in, and to see any argument in favour of public sector action, or any criticism of free market realities, as betraying a statist “government knows best” attitude.
But I have worked in the public sector long enough to know that I don’t fancy any casual extension of the government’s powers, I don’t want the state running more than it has to. The problem is that I have also worked in the private sector long enough to know that they seem little better, and that they share many of the problems and frustrations you find working for the state. To criticise one needn’t mean you have unquestioning faith in the other
Is it impossible to marvel at and embrace the market economy, to be grateful for what it provides us both on its own terms and certainly when compared to the alternatives; and yet to also acknowledge that there is a limit to what it can achieve, that it isn’t perfect, that there are times when the only solution may be government action, and that we can welcome and value that just as highly? It needn’t be a case of either/or, but both, working in partnership to create and protect the wealth and liberties that surely we all value?
I’m flattered that you’ve given so much time and thought to my post, and you are quite right to take me to task on a few of the things that i’ve said. Another point you can make is that I claim that increasing the cost of violent behaviour will cut it (i.e. people respond to incentives) but as you know I’m against paternal taxation and would therefore advocate a lowering of tax on alcohol. Since I accept that alcohol can and does fuel violence, my policy prescription as a whole won’t work: the increase due to cheaper beer may well offset any gains from internalizing the cost of healthcare. As I mentioned in my piece on “productive drinking” I am an advocate of our right to get plastered, but accept that others abuse this right. If it’s a choice between both types of drunkeness (people like me telling my mates that I love them, and people not like me kicking off with each other in a chippy), versus prohibition, then I’d opt for the drinking. The question is can we think of a subtle way by which we reduce the latter type (or at least make them bare the cost of their actions) without affecting the former.I think we treat them as two seperate phenomena, hence “productive” drunk. I do think that private healthcare will have an impact in the same way that private car insurance means people drive more carefully than if we all paid the same amount to the same company. It’s true that when you’re in a state of drunkeness you’d be unlikely to perform cost benefit analysis, but there’s various ways to prevent yourself getting into situations like that. If nothing else, private health insurance will increase the number of female friends shouting “leave it Darryl, it’s not worth it”, and to some extent they have an effect.All this glosses over your main point – my instinctive anti-statism – which deserves to be addressed. I don’t want to sound as if i’m “public bad, private good”, and there’s a simple tradeoff in which we should be on the right. The key to my ideal forms of organization is whether or not it’s voluntary – in other words how much coercion vs persuasion is involved. This does broadly fit into the typical public/private split but the justification is an economic argument more than a political one. I agree with you that a private bureaucracy can be just as bad as a public one, but the key difference is whether that bureaucracy rose out of market conditions, and is therefore constrained by them.I think that all provision is market based to the extent that the laws of economics apply. In the USSR despite what they intended they did not eradicate competition they merely converted it from being based on economics to being political. The USSR had a massive black market proving that entrepreneurship exists everywhere, we just require the right institutions to direct it to become productive.So markets are inescapable, the question is which type of market, and as an economist i’d advocate ones that individuals can voluntarily choose. If this means a socialised health service, fine (any insurance will be socialist) but let people opt out.Free markets will never produce a utopia. The reason I think they’re a better means to exchange resources than central command is because there will always be inefficiency, error, and unmet needs. The more flexible the market, the easier it is to start a new firm, or free up the assets of an old one, the more likely it is to respond to these problems. I don’t think free markets create problems. I think problems exist, and are constantly arising, but free markets are the best means to overcome them. The same incentives just don’t exist for public officials.If a government wants to provide something, it usually justifies it for two reasons: 1. market failure (productive state) and 2. fairness (redistributive state). If it’s geniunely meant as the first, then it should allow private firms to compete. The vast majority of arguments that claim market failure do not even try to work out if a private firm could produce the same good. Chances are if it was profitable, they would. So most market failure arguments are actually redistribution ones – people deciding that they don’t like what the free market throws up, and want’s a different distribution of resources. The justificiation of the NHS is the latter, despite what people say. As an economist, I get angry when politicians claim “the market won’t provide this, so the government must”. It’s bullshit. They should be honest and say “this isn’t profitable, but we want it anyway”.I admit that my reasons for being against redistribution are more ideological – basically I think that government redistribution is inherently nationalistic. For the British government to spend my money on domestic charity and simultaneously make it illegal for me to buy a tomato off an African (i don’t mean this literally)… is abhorrent.When I was coaching in Liverpool the kids came from *the* poorest constituency in the UK, but they were far wealthier (and far more capable of generating wealth) than middle class people I know in Russia. I am completely opposed to government activity that values British people above foreigners, and I honestly think that any redistribution – which is the vast majority of government activity – is therefore wrong.If the government is wanting to step into the realm of a free society (where people can freely exchange things, can freely assemble, can freely speak etc) then it shouldn’t rely on it’s coercive powers. That’s why the typical public/private split is misleading, because the government is two things: referee and participant. I welcome political entrepreneurs, governance, parliamentary democracy, local public goods but only if they leave their guns at home.I agree with you, but I don’t think that you’re accurately portraying the real world. Government has an important role to play, but should play by the same rules as everyone else. As long as it does, i haven’t got a problem. But in practice, I’ve yet to find a case where that happens, so live under the rule that “free market is better than government”. It’s a rule, based on experience, rather than a belief.I know i haven’t addressed all your points, but i’ll think about it furtherHave a wonderful Christmas with your little one,Anthony
Thanks for your comments Anthony; I have much to respond to (your comment I think is longer than my initial post) but it is almost midnight and after 4 pints of beer and half a bottle of red I can just barely type. Furthermore, tomorrow I pop away for a pre-Xmas break so I can’t compose a response before Saturday at the earliest.However, I am happy you took my post in the positive, constructive way I intended, and I will reply just as soon as I can.
I have finally found the time to respond to your comment; it won’t be an exhaustive critique, just picking up on some of the things you have mentioned, before I try to get my Christmas cards to the post box so they arrive on December 28th.First, you state that “private car insurance means people drive more carefully than if we all paid the same amount to the same company”; an interesting idea but one I doubt. Have you any evidence to support this? The only thing that has influenced my driving is the speeding ticket I once received. However, I do not believe in an NHS-only solution to healthcare, I am quite happy to entertain the idea of private insurance provision as long as the proposals I see look to be workable. I have waited patiently for the Tories to make a decent suggestion on this subject, but they have failed to do so. Also, as for girls shouting “Darryl, it’s not worth it”, that only seems more likely to happen if a) they do the budgetting for the household, and b) it isn’t them saying “are you going to let him get away with calling me a slag” that started the fracas in the first place. On market failure, I agree that that we should see if the private sector can provide the service first, as I state in my post; I disagree with the idea of nationalising (or re-nationalising) the railways, for example, where clearly the private sector was/is providing the service in the first place. But as you say, privatre firms will provide the service “it it’s profitable”; my concern is exactly what happens when it isn’t profitable. In fact your line that “this isn’t profitable, but we want it anyway” is actually pretty close to what I think, as long as what we want is education, health care and housing for the poor, rather than the ubiquitous lesbian outreach workers.On fairness and redistribution, I don’t personally think these are the same thing; I am in favour of the former, but not especially the latter. I believe in progressive taxation (or possibly a flat tax with a large personal allowance) because I think it is fair that the rich pay more than the poor, not because I want to give the poor some of the rich’s wealth; just like I am happy to pay more when I go to the pub when out with my mate who is currently unemployed; I buy more rounds because I can afford to. If that is redistributive then it is as a consequence of what I perceive as fairness. I confess I don’t really understand your point about government action as being nationalistic. National government is inevitably primarily about running things at a national level; local government at a local level. If Stockport council invests more money in education that neighbouring Tameside, is that because they value Stopfordians over others, are are they just dealing with their own remit and sphere of influence. Perhaps I have misunderstood your point. Anyway I certainly disagree with subsidising our farmers and then slapping tarrifs on African tomatoes if that is what you mean, but I don’t think the fact that people are starving in Malawi means we shouldn’t invest in public libraries. If people are starving in Malawi perhaps we should be looking at more aid and cancelling our debt.Finally, I am a little confused by your statements that government “shouldn’t rely on it’s coercive powers” and “should play by the same rules as everyone else”; what exactly do you mean, and do you have any examples? I am not sure I have quite followed your train of thought there.I haven’t touched on many of your points because I largely agree with you; I think our disagrements are more at the margins. I think we probably come from different starting points but meet roughly in the middle. For myself, I have never considered myself a socialist, I have always thought free market capitalism to be the best system out there, and that to go with the free market but to encumber it with endless state regulations hampering economic efficiency is to some extent the worst of both worlds. However, I think maybe I am more cynical and critical of many of its outcomes, and that I feel is as much a part of my own prejudices. When you are a 22 year old graduate in 1992 after 13 years of a government that has constantly preached the free market, yet you are one of the 15% unemployed, in an economy with 9% inflation and 15% interest rates, I think a scepticism about capitalisms benefits is natural. I hope my scepticism is a healthy one, but I don’t think it always has been.Anyway, that’s that, a longer response than I expected. I won’t expect a quick reply, or even any sort of reply as I suspect you are as busy as me at this time of year. Keep up the good work; your posts, whether I agree with them or not, certainly get me to think about things and hopefully I am more open minded as a result. Oh, and merry Christmas to you and yours.
I’ve left this longer than i intended, but since we’re broadly agreeing there’s not much to add.”you state that “private car insurance means people drive more carefully than if we all paid the same amount to the same company”; an interesting idea but one I doubt. Have you any evidence to support this? The only thing that has influenced my driving is the speeding ticket I once received”The reason I make this prediction is based on theory – insurers having an incentive to seperate good/bad drivers, and drivers themselves responding to incentives and changing behaviour. Anecdotally, I know that my Dad has been on several driving courses that have lowered his insurance premiums. As for substantive empirical support – I have none. But surely a no-claims bonus is an important factor in private car insurance markets, that doesn’t exist in the NHS? I know plenty of people who are vary weary of getting into an accident and losing their no claims. All i’m saying is that without a no claims bonus, people would tend to drive with more adandon.”I confess I don’t really understand your point about government action as being nationalistic.”I guess i’m saying that you should be free to buy your unemployed mate a pint down the pub, but since I don’t know the lad I don’t want to be forced to do that purely because he’s English. I’m all for Stockport council getting more autonomy over their own budget, for spending on health, education, etc. If the people of Stockport want a lavish hospital funded through council tax, fine. It’s just the national scale I object to because the costs of leaving are so much higher.”I don’t think the fact that people are starving in Malawi means we shouldn’t invest in public libraries.”Yeah, I can see that it’s wrong for me to imply that it’s either money going to public libraries or Malawi. But at the end of the day resources are scarce – and political attention is scarce – therefore i’d rather see a British government that spent more time on international development issues than domestic public services. “Finally, I am a little confused by your statements that government “shouldn’t rely on it’s coercive powers” and “should play by the same rules as everyone else”; what exactly do you mean, and do you have any examples? I am not sure I have quite followed your train of thought there.”All i mean is that contestability should be the aim of any competition policy. “When you are a 22 year old graduate in 1992 after 13 years of a government that has constantly preached the free market, yet you are one of the 15% unemployed, in an economy with 9% inflation and 15% interest rates, I think a scepticism about capitalisms benefits is natural. I hope my scepticism is a”Fair enough – but i think the skepticism should fall mainly on the government than the abstract system they alluded to, and quite possibly weren’t adhering to at all. (Actually, I think most skepticism should go to the previous state of affairs: everyone accepts that the cure hurt, but was it necessary? If so, who deserves the blame? I think if Thatcher as being like a heart surgeon who diagnosed a massive problem and performed painful corrective surgery. It took a while for the patient to recover, but don’t shoot the messenger). Anyway, that’s for another time.I haven’t adequately responded to all your points, but that’s the benefit of a long running discussion.
I will try to keep this brief because I think this chat is careering into a cul-de-sac; so,“Without a no claims bonus, people would tend to drive with more abandon.”Perhaps, but I doubt people want to get into a crash in the first. The most scary and dangerous driver I know has been in two bumps; each time I doubt he changed his driving habits because he kept his no claims bonus and managed to get a compensation payout each time (even though, knowing the way he drives, I am certain he must bear the main part of the blame). I have lost my no-claims bonus once because my car was stolen, a “fault claim” for some reason, while I have been in bumps where I just haven’t gone through the insurers. Just personally speaking but I don’t think I am any more careful a driver now than I was before my bumps because I never intended to crash my car when I did so. On the other hand, I have broken the speed limit many times on purpose, but I am more wary now because I don’t want any more points on my license. That said, the resulting increase in my insurance premium is a factor there, so you may have a point. But I think I am getting a bit sidetracked here!” I don’t want to be forced to do that purely because he’s English”I never said he was English! Seriously, though, I see the point you’re making but using your argument any action by national governments can be seen as nationalistic; but I would have though that is unavoidable since national governments operate on a national level. By operating at a national level I see them as fulfilling their remit, not being nationalistic.“I’d rather see a British government that spent more time on international development issues than domestic public services.”So would I, and you won’t get any argument from me that national governments should act less in their own self-interest. But governments are there to represent the people, and I think most people would want their government to concentrate on domestic public services than international development, so what do you do? I think you average voter hates the idea of the nanny state sticking its nose into their lives, but also wants government action left right and centre when they want something doing. It’s a funny old world. “The skepticism should fall mainly on the government than the abstract system they alluded to, and quite possibly weren’t adhering to at all”True enough, and to clarify I wasn’t trying to justify my viewpoint because of my history, just to explain where I come from, and to admit that this has probably affected my own prejudice. I certainly wasn’t claiming my background is a good reason for my scepticism; although I think a bit of scepticism towards anything is healthy. Don’t get me started on Thatcher though.I wonder if you have seen the film “The Corporation”? I saw just a bit of it the other day, and at one point they showed how some firms are taking a more environmentally friendly stance these days. Cue Milton Friedman to say something like it was wrong for companies to worry about anything other than their profits and their shareholders, and I think he sort of makes my point for me; because somebody does have to worry about such things, and if it isn’t going to be companies then I guess it will have to be governments. I think that is all I am really trying to say; that when free markets don’t solve a problem then government may have to step up to the plate, and free marketeers should perhaps be a bit more tolerant of state action when they do so. We will differ on when we believe the free market has failed, and I admit that perhaps no action may be better than ill advised action by the state, but broadly speaking I think this is the position I hold. “I will try to keep this brief”I failed.
Just to clear up a couple of things:“I don’t think I am any more careful a driver now than I was before my bumps because I never intended to crash my car when I did so.”But the issue isn’t whether your driving altered after the bumps, but whether your driving in the first place was a result of the insurance. If the bumps weren’t your fault, then there’s no reason to change behaviour, but i’m claiming that the initial behaviour is a function of the incentives to drive safely.“operating at a national level I see them as fulfilling their remit””I think most people would want their government to concentrate on domestic public services than international development, so what do you do?”Both points are accurate statements, but I don’t think they are (morally) right. So what do you do? Use persuasion to convince people that the remit should be different, and that we can’t all live at the expense of each other.I think that consumers are knowledgable in the marketplace (they bare the costs of their mistakes) but pretty stupid when it comes to politics (i’ll try to post more on this to demonstrate what i mean).Therefore i’d like to see two things:1. Constitutional changes that limit the scope of the problem (e.g. give more power to local regions)2. A general change in public opinion on the role of government, hence The Filter^“I wasn’t trying to justify my viewpoint because of my history, just to explain where I come from”Full disclosure is a very important thing in debates – especially political ones. I’m very impressed that you state your prior convictions clearly, and i intend to follow your lead. So many people treat their past as creating a right to hold a certain belief, it’s commendable that you see it more as a problem.I haven’t seen “The Corporation” but am familiar with Friedman’s argument. I think it’s flawed in the sense that if consumers care about the environment, it’s profitable to be green, but he’s implicitly assuming constant preferences.From what I’ve read, the vast majority of environmental issues arise from institutional failures (such as a lack of property rights), and the best solutions to global problems are market-based (emission trading for example). I don’t see this as government correcting the market outcome, but fulfilling their responsbility to provide the legal background the a free market requires. I agree with Friedman, though, for example when you saysomebody does have to worry about such thingsDoes someone have to worry about their being enough food tomorrow in Paris?
Okay, I really will try to be brief this time.On driving; I think we have taken this as far as we can go really and it has all got a bit pedantic, but in short I don’t think that insurance has affected my driving. I may be wrong, but I just don’t think I am considering my no claims bonus when I drive.I agree with you on your ideas for government; it may seem like I am an apologist for big government but I don’t think I am. I am all for a more devolved system of government (so long as it is genuine; the recent plans for a north west parliament seemed more like centralisation, by taking powers from county level and making them regional) and for as small a state sector as possible. It may just not sound that way when I question a free market solution about which I have my doubts.I didn’t see enough of The Corporation to say whether I agreed with their arguments, it looked a bit like polemic to me. On environmental issues, however, you say “if consumers care about the environment, it’s profitable to be green” which is true; but if consumers don’t care, or not enough of them care for it to be profitable, then I don’t see where we get a free market solution. I am sure that market based solutions like carbon emissions trading are the best way to resolve some environmental concerns, but I don’t see them springing up without some governmental organisation. Perhaps I am wrong, I would be more than happy for that to be the case.As for Paris, I believe they are fine for food just at the moment. I wasn’t trying to say that someone has to worry about and organise everything, I don’t want a planned economy; just that when there is market failure the companies don’t have to worry about it so long as it doesn’t affect their business. I don’t see food in Paris as being an example of market failure, or of unpleasant externalities, so I think we can all rest easy on that one.
just quickly:”it may seem like I am an apologist for big government but I don’t think I am. “I know, and I don’t mean to portray you as such. I agree with your comments on regional assemblies.”if consumers don’t care, or not enough of them care for it to be profitable, then I don’t see where we get a free market solution”Pollution is waste, hence inefficient. Even if it’s free to offload, there’s an incentive to reduce it and cut costs.I bare zero cost in terms of the amount of kitchen waste I produce, but that doesn’t mean that I won’t try to combine my ingredients so that i’m not throwing anything away. I have to pay for the inputs, therefore I want to (ideally) use them all up. The same applies to energy.”As for Paris,”That’s the beauty of decentralised markets – less worrying!Thanks for the debate, you’re right thought it’s time to move on to something else! btw nice to smackhead back on the scoresheet, saving the blushes
Yes, time to move on; I think we started by finding common ground and ended up turning slight disagreements into major differences. We’ll never agree on everything, indeed it would be spooky if we did.Thanks for taking the time to engage me in debate; I know you are used to jousting with keener minds than mine, so thanks for your efforts.As for Robbie; will wonders never cease?