It is well acknowledged that our public services are overburdened with pointless and counter productive regulation, that there is too much wastage and bureaucracy which stops police officers, teachers and social workers getting on with the job, and front line staff are treated like teenagers who can’t be trusted. Much of the blame lies with obsessive control driven from Whitehall.
Every party – indeed every party for the last 30 years – has promised to remedy this by slashing bureaucracy and “re-empowering” the front line, but none have succeeded. Tony Blair made it a key priority, but made matters worse. The centripetal pull of Whitehall targets and centralising control is simply too tempting when services aren’t performing, or when something goes wrong and the media demands that government is take action. As I argue in a recent Demos publication Leading from the Front, this is the right thing to do. But to work, it must be based on three strands.
Firstly, professionals should be liberated from bureaucracy and over-management; this means they should be free to organise themselves, and allowed to take responsibility for performance and improvement. In practical terms, this means a radical devolution of power, budgets, and agency down to the front line. One way to do this is create self-directed teams. Any group that considers itself to be a distinct group of employees with a clear mission can apply to become self-directed – organising their own work, setting their own targets, with budgetary control, without having to get approval. If they are working well, they are left to it. This could work in social care, social work, health care services, job centre pluses, to name but a few. In schools, it would mean giving all schools the same power as academies (without turning them into academies). Alongside this, central government should give non-earmarked, discretionary funds to front line staff to spend however they see fit. In Australia, this has worked to help people with social care needs stay independent without having to go through the burdensome application system and repeated evaluations show it to be incredibly efficient.
Secondly, the increase in power needs an matching increase in training and entry requirements – if we are to give power to front line staff, we need to make sure they are ready for it, and that the professions are valued and skilled. So for example, if we academise all schools the PGCE should be extended to three years.
And finally, underpinning all of this, accountability needs to change to become horizontal to peers, and downwards to the public, not upwards to central auditing agencies. There is far too much central auditing, inspection, and improvement. There will still of course be a need for some central auditing function but any new auditing system should focus on measuring outcomes and not process, have a large peer presence, and be more about spending time with people on the job. Where things are working, leave them to it. When institutions aren’t performing there should be stronger powers to for high performing peers to take them over. This could be done by a single inspection agency and auditing agency – not the myriad of organisations that currently discharge accountability – at a colossal cost.
It sounds quite ambitious. But it can really work. Many of the best performing companies in the private sector realise the greatest source of productivity and performance is to allow people to find meaning and purpose in their work. Companies where staff set their own salaries and hours; hire their own boss; take a share in the profit; design new ways of working and direction of their companies. These organisations are performing., they are productive and efficient. They hire the best staff. They recognise that people, when left to their own devices, can be trusted.
At the core of it all, is the belief that instrinic motivation is possible – people aren’t all self interested and lazy, and a set of rules which treates them as such is both counter productive and infantilising. Indeed as Adam Smith said of his own pin factory: “the man whose whole life is spent performing a few simple operations…has no occasion to exert his understanding or to exercise his invention in finding out expediencies for removing difficulties. He generally becomes as stupid and as ignorant as it is possible for a human creature to become”.
Jamies Bartlett is senior researcher at Demos.
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31 Comments
Your first paragraph says it all , spot on. However you’ve forgotten the vested interests.
Is it 45% or 55% of the working population employed in the public sector? Will they vote themselves out of jobs, if they do, who will counsel them, tend their benefit claims etc etc.
The obsessive central control has stopped us thinking or taking any resposibility. It’s binary gone mad. does it fall within the rules, yes or no, next chaoice yes or no ad infinitum.
Sad times
Absolutely agree with your basic thesis.
Centralised control is indeed the enemy of real efficiency in delivery but it’s firmly established as the default mode. To change to some other method for establishing accountability will require a lot of courage and clear thinking for politicians. However, the prize is big. Prof John Seddon says it can be as big as 40% (though usually less).
“The increase in power needs a matching increase in training and entry requirements”
I fear that this means “In order to liberate ourselves from the tick-box culture, we must start by ticking a whole lot of new boxes….”
Largely I agree with the OP except on the matter gil raises – for people who have constructive, productive, useful jobs this is a great idea (and it’s nice to see someone actually getting into the specifics of what decentralization and removal of targets actually means in practice) – but I can see there being problems for teams whose jobs aren’t actually meaningful and useful, since a top-down organization should at least nominally be identifying these useless teams and removing them. A lot harder to do if everyone is just doing their own thing.
(I can highly recommend Seddon’s book, the yawningly-entitled Systems Thinking in the Public Sector, which should be recommended reading for anyone with the ability to change how public sector organizations are structured.)
David Allen: ““The increase in power needs a matching increase in training and entry requirements”
I fear that this means “In order to liberate ourselves from the tick-box culture, we must start by ticking a whole lot of new boxes….””
There is a valid point behind this. If you are setting up an organisation to in effect run itself, it will be operating in a whole raft of areas that will not have been handled by members of that organisation.
For example, if a school becomes in the old parlance Grant Maintained, then there’s a strong likelihood that the staff will lack key skills. These may be:
– how to budget
– how to recruit
– how to comply with regulation
– how to procure
etc etc
These are not skills covered on the PGCE course as far as I’m aware.
No, but I really wonder if all teachers everywhere need 3 years of training in order to work in this manner, when all PGCE graduates will be directly moving into frontline teaching, rather than any sort of management or coordination function. That’s a whole extra university degree in terms of time rqeuirement!
It seems to me that a bigger win for new teachers would be ensuring access to high-quality lesson plans for all their classes, since they seem to spend a lot of time writing their own (no reason they can’t diverge or not use them at all, but a really good template to start from) and lots of direct, ongoing peer review of each others’ work, which doesn’t seem to happen much at the moment (not that I’m a teacher – any new teachers’ opinions better than mine very welcome!)
Tabman,
In principle of course you’re right. However, the law of unintended consequnces is liable to intervene.
As others have said, it’s the vested interests of the tick-box specialists which are the problem. Tick-boxers nowadays can easily outperform the genuinely able professionals in all sorts of fields – training and qualifications being a prime example – because they control the gate. No senior manager can readily resist the plea that the way to drive incompetents out of his organisation is to raise the standards for qualification. What then happens is that a new noddy course springs up,with a silly multiple-choice exam at the end, and suddently the people who actually have the ability to do the job find themselves unqualified for it. Along come the tick-boxers who dutifully complete the course, learn little, get the job, and make a pig’s ear of it. It is a slippery slide. Now that tick-boxers rule the world, they cannot easily be dislodged!
Incidentially this is not just a public sector disease. It’s equally prevalent in large private sector companies. (Possibly even more so, since private companies just “know” how wonderful market discipline must have made them, so, they don’t feel so worried that they might possibly be horribly inefficient!)
Just a thought on “freeing the professionals to do their work”
The Police – can go back to picking people up at random, perhaps especially those of certain colours, ages or sexual orientation
Teachers – can go back to some of the sadistic, useless prats found in my 1970s Grammar School
Nurses – are we to pretend Beverley Allitt never existed?
Doctors – wasn’t there a chap in Hyde who very much went his own unregulated way?
The above may be a little over-provocative, but aren’t many of our current regulatory regimes the result of past (mal)practice?
Hah! Why should the public sector be let off the hook of burdensome regulation? After all they’re only spending other people’s money. In the wealth generating part of the economy 80%+ of small and medium sized enterprises say that their biggest challenge in running their business isn’t finding customers, isn’t managing the bank balance, isn’t dealing with suppliers, but the burden of government regulation, and in particular its constant change.
Over-rgulation is endemic in government, tis true. It cannot be otherwise though – it is a monopoly in so many areas, and worse, a monopoly by force rather than by being the best. It dos not have the economic incentives to be efficient. It’s not like we ever see any of the savings back, is it. How many of us have been in group budget setting meetings – yes, we’re looking for savings, but for every saving the hands go up with someone else’s “good” new idea (or often just “pet project”) to spend the saving on.
“Efficiency” only really matters when it comes to the point that government realizes it can take no more out of the productive economy without causing so much damage (economic or reputational) that it gets beaten in the next election. It has removed itself from the very economic mechanisms that enable the rest of the world to allocate productive resources to the right goods – the price mechanism operating in a free market (and before anyone bleats “right wing” let’s not forget that Marx too promoted this essential function of the free market). So it has to invent for itself quasi-market indicators to give its captive users some sense of confidence that someone, somewhere thinks they’re getting good “value”.
The “accountability” is at best second hand. Those who are not paying directly for goods and services do not realize their true price, or cost, and those representatives to whom it ought to be accountable want to save in order to spend it on something else. And every time it tries to introduce some limited form of market testing, it seems to manage to get shafted by rent-seekers – because those who do make the decision, are open to the rent-seeking lobbyists, are not looking out for their own bottom lines.
That is true. However they must still survive in the market for customers. And management are accountable to shareholders with a direct financial interest. Even if a company has, by being the best/cheapest succeeded in gaining a dominant position, so long as nothing keeps competition out of its market by force, it is still vulnerable to being beaten by new competition if its inefficiencies become so obvious that it drives labour and capital into that market to produce more/better/muscle in on the profitability.
And the main factor in maintaining a private monopoly by force is state granted privilege and barriers to entry which are often the result of rent-seeking by those larger organizations who can afford the time and effort involved in doing lobbying for such protections.
As a current example, large construction firms bidding for central or regional government projects or some other projects funded less directly by government (eg HEFCE capital grants), do not have to worry about being the most efficient or cost effective because government has decided that only businesss of a certain size will be allowed to bid. So any more efficient entry-level competition (who are, by nature, likely to be leaner being less able to absorb inefficiencies) does not impact on those bigger, privileged state approved contractors.
To be frank, a three-year PGCE on top of a three or four year degree will act as a major deterrent to entry into the teaching profession. At the moment – in an economic crisis where arts graduates in particular are finding job-hunting difficult – teaching has seldom been more attractive, but when things are on a more even keel a three-year PGCE will deter those with good honours degrees from considering teaching. It will also be a big financial burden as it will inevitably have to be heavily subsidised, both in terms of fees and in terms of student maintenance. And I have to echo sambi; the average teacher will not be dealing with how to budget or how to recruit in their first few years, but instead will focus on teaching – which is precisely the point of PGCE training. There might be a solid argument for mid-career training as teachers begin to fill management roles, but there’s no reason this should be in a PGCE.
Additionally, the very idea that there should simply be a ‘three-year PGCE’ seems arbitrary. How has this duration been decided on? Have you devised a syllabus that would fill three years with relevant skills and training? Or is the three years figure simply one plucked out of the air, on some basis of equivalence with other occupational training programmes (e.g. some clinical medicine courses) rather than any serious examination of requirements? That really would be regulation/accreditation for no purpose.
It’s also a mistake to think that simply changing the length of the professional training for an occupation will increase the ‘value’ ascribed to the profession. There are strong cultural prejudices amongst sections of the middle class against the teaching profession and that won’t change just because the course has been lengthened by a couple of years. Indeed, it may even make some regard intending teachers as mugs, or gluttons for punishment. Increasing respect and value for the profession would require a whole raft of measures, including significant pay rises and tighter entry criteria. It would mean at the very least ending 2:2 entry to PGCE courses; and this would destroy entry to large sections of the teaching profession.
In short, it’s a far more complex problem than is allowed for in this article, and a reduction in regulation can’t be bought with increased accreditation if that accreditation is effectively worthless and irrelevant. That’s aside from the fact that, after the impact of the financial meltdown, it seems a very odd time politically to be talking about deregulation.
Besides, accreditation is often a manifestation of rent-seeking. One of the problems with US medical costs is that the white middle and upper class medical schools lobbied in the early C20th for Congress to create a licensing system that did not recognize the black, womens and community based medical schools because the produced graduates that were aiming to help their communities and consituencies by, for example, offering low cost package deals to the mutuals and friendly societies and lodges that were providing low cost social insurance to the masses.
In order to preserve the exclusivity of a medical career and its ability to earn high fees, the number of accredited institutions was slashed. Even today, you cannot practice in the US if you’ve qualified elsewhere in most cases. All protectionist rent-seeking on the part of that profession. And enabled only because a state exists that can legislate and enforce such protection.
One of the biggest changes government could make is to get out of the business of accrediting things – because it’s not terribly good at it. Insurance companies could accredit doctors for example – if they’re good enough to get a professional indemnity insurance from Clerical Medical you’d know they’re good, if they could only get one from Bodgit and Stitch you’d maybe be more wary of using them. After all, yet again, government does not have the right incentives to ensure such things are accurate, because it can get away with apologizing to victims of its incompetence a great deal more frequently than could, say, an insurance company carrying the risk itself.
Jock,
Granted accreditation is fraught with problems, not least that it has often been targetted by interest groups seeking to preserve the exclusivity of their patch.
But private sector accreditation is no panacea either. The financial rating agencies, monoline insurers and AIG – all formerly highly respected and trusted firms – have made megabucks from rating or insuring mortgage-backed securities and CDSs yet it turns out that much, perhaps most, of the business they transacted was fraudulent as the buyers of the various products have discovered, too late, to their (and our) enormous cost.
In other words, there is nothing special about the private sector and no special protection to be found from markets.
It is human nature for people to twist any system – public or private – to their (rent seeking) advantage if they can. We just have to stay vigilant.
Liberal Eye – wasn’t it the case that the big problem with the rating agencies was that they were paid by the people who created the investments, creating a huge perverse incentive to rate things well in order to keep getting good business? It’s entirely possible to set up a ratings agency whose income comes from the customers of teachers – the government etc – rather than the teachers themselves.
There hasn’t been a free market in financial products, whoesale or retail, since at least 1913 (the formation of the Fed and the ascent of inflation money) – brought on by the state.
Ratings agencies, so far as I recall, were not bearing the risk of their ratings as, say, a doctor’s insurance underwriter would be. The insurance writer has considerably more economic incenive to get it right than the state. The risks the principals risk AIG were able to take on would not be possible in an era of competitive money systems with no “last resort” lender prepared to defraud its citizens in order to keep its financial friends afloat.
There is indeed a special protection to be found in a free market, not interfered in by organizations like governments that can enforce its destabilizing interventions – and that is competition. The insurance market is burrently one of the most interfered in, the lobbying of the established players to erect barriers to entry of others. One of the biggest interferences is compulsory insurance – motor, professional indemnity, employer where legislation enforces what has to be covered and who has to buy cover. As I said: no free market to see here.
Compulsory insurance is in fact a covert state mandated transfer of wealth, and usually the wrong way – from responsible, thrifty people. The state – you gotta love it!
Jock – interesting argument. Intuitively, most people would argue that compulsory motor insurance is a Good Thing. So – why is it not? Is it because irresponsible citizens don’t get insurance in the first place? How would non-compulsory insurance work differently to today?
As sanbikinorian says the ratings agencies were subject to huge perverse incentives to rate securites highly to keep getting good business.
Had they somehow changed their ways – for instance either so that they were paid by the buyers rather than the sellers or by making themselves into unlimited liability partnerships so their directors would feel the financial pain resulting from errors – then we would all be much better off today.
But, in a free market, why should they change their business model or corporate structure? As it was it suited them just fine with much personal reward and little personal risk. In a worst case scenario the directors could simply slope off to a comfortable retirement. Any change would have had to be forced on them by some external intervention.
As anyone who has ever been involved in setting up any sort of incentive pay scheme (in effect an internal market aiming to match rewards to results) knows it is extremely difficult to get right and the whole process is fraught with unintended consequences. So why would we expect any business to emerge from the pains of its start-up in a form that minimises risks and perverse incentives in the larger markets in which they participate? The reality is that a business will usually follow the path of least resistence even if that creates bigger and/or different risk later.
As for AIG, the problems arose from selling insurance against financial defaults through its Financial Products Group (AIGFP). It managed to wholly evade insurance regulation by various means – eg by basing AIGFP in London although it is doubtful if, given the anti-regulatory bias since Reagan, this was really necessary. Even the most cursory regulatory inspection would have shown that AIG did not have the capital to support the risks it was covering. Did they do this knowing that the Govt would bail them out? Possibly, but it is more likely they believed their own propaganda to the effect that they had abolished risk and/or that internal communication failures and perverse rewards (eg a culture of no-one rocking the boat by questioning how so much profit is being made – or else!) blinded them to the real risks.
How AIG (and hence its customers) was then bailed out is utterly inexcusable but libertarians draw the wrong conclusion. In obsessing about and constantly bad-mouthing the state they weaken it yet it is the power of the state that ordinary people need to protect them from the predatory practices of bad people whether they be thieves or thieving businesses.
The problem is that the state is at risk of regulatory capture. So surely the thing to object to is regulatory capture, not the state per se. In many ways this leads to the same results – a market economy in which people bear the consequences of their actions – but there is also a difference. I want to rescue the state from bad men, libertarians would rather abolish it. But in doing so they forget that large firms can, so to speak, make their own weather. Once sufficiently dominant, they can impose self-serving conditions and the market is then most certainly not ‘free’.
Hoow do you think these companies got to be so big in the first place? By the cartelization, arranged by the state, of the money system.
Absent the state, these would a. not exist, or b. if they did, would only do so through visible probity since anything else would draw competition freely into that market.
It doesn’t matter whether the particular directors of AIG said to themselves “the state will bail us out, so let’s go for it”. The *system* has been at fault. All have been trading in fake commodities – state based fiat money – taking a lead from state financie managers who think they can “manage” an economy by signalling more or less inflation of the money supply usually against market trends and expectations.
Personally, I would not say that libertarians simply say, a priori, that the state should be abolished. If all its benefits outweighed all its costs I think we would care less about it. But we have concluded that they don’t. Also, *government* need not mean *state* in the sense that a group of organizations or people – they may be geographically connected or otherwise connected by a common trade or other interest – could arrange a mutual government that was not predatory, not coercive, not violent or that could be overthrown if it became so.
One of the biggest changes government could make is to get out of the business of accrediting things – because it’s not terribly good at it. Insurance companies could accredit doctors for example
Government doesn’t accredit doctors, universities do.
Well, I’m not involved in accrediting people as medical doctors with the MBBS, but I am involved in accrediting people as Computer Scientists with the BSc and MSc and PhD. I can assure you government does not tell me, or my colleagues what to do when we do this. We choose the curriculum, we assess the students. There is an agreement with the British Computer Society (which is not controlled by government) to accredit our degrees (not every BSc in Computer Science has this, it isn’t really seen as a major thing). There is also a system where the degree awards are overseen by external examiners from other systems. It’s not a perfect system by any means, but the idea that government involvement is the biggest problem with it is ludicrous.
I have also been involved with admissions to the degree programme, and can say for sure that private sector accredited training qualifications are useless for this purpose. A-levels and equivalent overseas national qualifications are the only trustworthy things. Government interference in A-levels hasn’t helped – for example, the insistence that I have to treat a useless “vocational qualification” as equivalent to A-level Maths is very, very silly, but so far, thank goodness, this is only a guideline I am free to ignore as a university admissions tutor.
Private sector training certificates are useless because no private training company wants to tell anyone that they’ve done anything but pass 100%. You’d soon lose your customers to a rival if you did that. In any cases, the certificates are only really for clueless people in HR to use to tick boxes. If private sector accreditation was really so good, and universities really so bad, wouldn’t the big companies pick up on this and use something other than a good degree from a top university as the first sort in picking trainees?
A-levels are getting watered down because league table madness creates perverse incentives. So FE colleges encourage their students to do useless qualifications which gain high grades rather than useful ones which don’t. It’s all market driven – get the students, you keep your job, lose them, you don’t.
Ideological loonies like Jock who can’t see beyond their own noses and twist the world to fit their theories are real pains, aren’t they?
For further considerations on the stupidity of do-it-yourself qualifications in health care, consider the rip-off which is private complementary health. How many people I know are throwing their money away paying for sugar pills, and worthless “therapy” and the like. It’s because it’s a business, and those running it are good at spotting a sucker. That’s the free market Jock so loves and this is the solution to everything.
I am actually a pragmatist. There’s lots good about markets, there’s a place for them. Just because I condemn the loony extremists on this issue doesn’t mean I’m an extreme doctrinaire type on the other side who wants state run everything. It’s a mark of the looniness of the loonies that they can’t see this. And they are so lacking in true liberalism that rather than welcome robust discussion of their ideas, they accuse me of “polluting” their discussions for putting the other side, and of being not really human because I dare to disagree with them.
If you were a pragmatist, you’d be willing to do a genuine zero-basing exercise on your notion of state, to quantify the benefits and all the costs. And you would find that many of your state interventions are the cause of other problems that then require other invterventions, occasioning added taxation and so on to correct.
On your point about universities – well, at the moment at least, the state is responsible for universities. You are *not* on your own by any means. We have QAA audits and RAE exercises and HEFCE Institutional Audits and all sorts of things. And on the medical side, which was what was under discussion in this little bit about accreditation, the state maintains the monopoly of organizations such as the GMC.
Who said anything about “do-it-yourself” qualifications in medicine? I stated that middle class white colleges found ways of denying accreditation to womens’ and blacks’ medical colleges in the US in order to protect their incomes. That does not mean that these community based colleges were any the worse at producing doctors, just that they suddenly found themselves unable legally to do so because of lobbying on the part of moneyed interests.
Frankly, I do shudder to think what sort of doctors you accredit, if your myopic view point cannot compute something so utterly different from today’s state that to believe it would be like now (or 1979) but with no controls.
How precisely did the state by arranging the cartelization of the money system facilitate the growth to dominance of, say, the supermarkets? And how, now that they are so big and have such a huge advantage in buying power as to be able to lock out new entrants, are they to be disciplined by the potential entry of new competitors into the market? (The minor exception is those who are already huge in another national market like Aldi).
Yes, they have to be a little careful, but only because of the residual power of the state. Over time, acting as a group with similar influences and objectives (an informal cartel), they are able to shift the ground rules. In milk for instance their gross margins have gone from very low 10+ years ago (about what one would expect for a commodity product) to very high – strong prima facie evidence for an uncompetitive market.
Libertarians, it appears, believe in a theology in which ‘free’ markets replace God and fiat money replaces the apple as the source of Original Sin.
I’m sorry – what have the supermarkets got to do with AIG and the financial sector?
Supermarkets have benefitted hugely from their lobbying power with the state however – in terms of land use policy for example, over the years from agricultural compulsory collectivism – most especially in markets such as dairy, where if you were not a member of the MMB you’d likely not be able to seel to these mega-buyers. They pay nothing like the full costs of transportation networks they use, pocketing the difference from the producer and so on.
Still, as your last blog post showed, having a heavy handed state, which handed them these advantages in the first place, has not stopped them using trickery to get more money out of us.
Your comment made claims (as it appeared to me) for the generally applicable efficacy of competition. I merely argue that what might possibly be so in one instance is not, in fact, a general rule. Large companies can and do make their own weather and one of the most potent ways to further their interests is, in general, to gain influence over govt. Left to their own devices companies are not saints nor are they always or reliably constrained by actual or potential competition.
Libertarians seem to have difficulty accommodating this fact in their theology.
My point was general, but the example specific to the financial industry’s operations – though the money monopoly is indeed one of the most fundamental unbalancing problems that underpins others. So, get rid of their ability to influence public policy in their favour – and let’s see where the land lies when competition is not restrained by state interventions in their favour.
Hayek’s point about being a Liberal rather than a Conservative was precisely that – that a Liberal should be able to take such a bold step confident that human ingenuity and voluntary collective action unimpeded will develop coping strategies, whereas a Conservative has to be certain that his proposals will do exactly what he says they should before acting.
There is nothing, per se, wrong with “bigness” – even monopoly – so long as it is based on being the best provider at the best value and is *open* to competition if it strays from that. Remember that profit is a signal that there is scope for competition to muscle in.
A good suggestion that for the financial sector – How about compelling Banks to be unlimited liability companies.
Jock,I disagree with you about monopoly power – In business it has to be a bad thing. Think about regulatory and government capture , as well as price wars- allowing the monopolist to crush any nascent competitor.
We have seen too many examples in real life to disprove any theory that it is OK.
I think you mistake me. If there is no barrier to competition then monopoly doesn’t really exist though there may only be one supplier of something – so it may appear so.
All it means is that that supply and demand are in equilibrium at a price that approximates to the most efficient cost of production and that there is therefore no market price signal that more production of that particular good is required. If prices rise and the producer is pocketing monopoly profit then in a free market where no agency (usually government) is preventing competition then it will drive the other producers into the market for that good in order to try and pick up some of that profit until equilibrium returns.
In other words, to use your phrase (which I did not use) monopoly *power* does not exist in such a market, even if a monopoly technically does – the fact that there happens to be a single supplier is not exacting a supra-normal profit from the consumers. Personally, I think such circumstances would be rare, and would probably be temporary if they did exist, but not inconceivable.
Jock
On your point about universities – well, at the moment at least, the state is responsible for universities. You are *not* on your own by any means. We have QAA audits and RAE exercises and HEFCE Institutional Audits and all sorts of things
You appear to have missed the point that I am writing from the basis of someone who actually works in the field. I do not believe that what I teach and how I teach it would alter if I were teaching it privately and on the basis that I was teaching what I believe to be the most useful material taking into account my own experience. That is, I do not feel the heavy hand of government in the way you are claiming it falls.
That is not to say I do not feel the heavy hand of government in other ways. I have already mentioned elsewhere today the perverse incentives caused by the RAE. The QAA is largely a useless box-ticking exercise, it means you can teach utter crap and come out with full marks, so long as you do it in the correct box-ticking ways.
Frankly, I do shudder to think what sort of doctors you accredit, if your myopic view point cannot compute something so utterly different from today’s state that to believe it would be like now (or 1979) but with no controls.
Well, had you read what I wrote you would see I am not personally involved in accrediting any doctors, unless by this you do not mean medical doctors.
However, if you did not really mean doctors but instead meant graduates in Computer Science, I think you yourself are showing what you accuse me of. I can perfectly well see the point you are making. As I have already said, in the field where I work there is a great deal of commercial training and accreditation. You appear to feel you are so wonderful and right about everything that just because someone questions your assumptions it must mean they don’t understand them. And you appear to feel your views are so wonderful and right, that anyone who questions them and tries to put the case against is just some fool motivated by base means. You appear not to have grasped that part of the reason I question them in this sort of forum is that I believe in debate and skepticism, and that therefore if I feel in some forum one side of a question has been put in a sloppy way with too many assumptions, I will concentrate on putting the opposite case. There was a time when I contributed heavily to a discussion forum on Ireland, where many of its contributors supposed, because like you they were one-track-mind people, that I was a supporter of Ulster Unionism. In fact my position was pragmatist, and if I were in Northern Ireland I would be a moderate Nationalist, SDLP type. But because the bias in that forum was heavily Republican, I tended to be the line posting the Unionist case arguments.
Now, a real liberal would understand this. A real liberal (you know who I am talking about) would not be so blinkered as to suppose that anyone who disagreed with her must not even be human. A real liberal, it seems to me, is someone who can see both sides of an argument, and who feels putting the case against something is important even if it is something he basically agrees with. Someone who thinks putting the case against is “pollution” (you know who I am taking about) is, in my opinion, so far removed from real liberalism that I think it quite right to liken him in some ways to other one-true-way people, like Trotskyists.
“…the money monopoly is indeed one of the most fundamental unbalancing problems that underpins others. So, get rid of their ability to influence public policy in their favour – and let’s see where the land lies when competition is not restrained by state interventions in their favour.”
Are you suggesting that getting rid of the ‘money monopoly’ will somehow remove financial institutions’ ability to influence public policy in their favour? There are a zillion ways that they influence policy that have nothing to do with ‘money monopoly’. As capitalists and entrepreneurs they are constantly seeking ways to improve their business. Some are perfectly reputable and socially productive, some involve finding more or less dodgy ways to modify the system to their own advantage and some are downright illegal by any normal standard ethics.
Moreover in the original example of AIGFP this was a purely insurance operation and nothing to do with ‘money monopoly’ and extending credit etc. Such evidence as I have seen suggests that it was the result of driven individuals highly motivated by a perverse incentive scheme, working in a pretty dysfunctional group of companies with inadequate controls and a cavalier culture, and working outside of any regulatory oversight – partly achieved by moving the operations involved to London and partly because there was a belief in govt circles, fostered by neo-liberals, that any sort of regulation is toxic. Possibly also campaign contributions had enabled AIG effectively to buy some lawmakers.
I compeltely disagree about AIG. Its operations over the past decade were triggered by state action. They were part of a game in which politicians decided that for political reasons they could not allow an earlier recession to appear, they loosened monetary policy (which they would not be able to do in a free money system), which for ever has been a signal to the markets that those in power would welcome an increase in the money supply through lending. With already high levels of indebtedness, this meant lending to people who would previously have not normally been considered for lending to, which meant higher levels of risk. Higher levels of risk required new systems of risk management. That gave rise to the “clever” CDOs and similar, and in turn these gave rise to the even more clever CDSs and similar.
AIGFP was deeply embdedded in this merry-go-round.
Now, sure, all these “innovations” gave lots of people opportunities to make vast sums of money, but they would have been unnecessary and, I am sure, unachievable, in a free money system and there would have been no state trigger for this round of inflation. All the while, there was a considerable confidence that the powers that be would “see them allright” – after all, a complete meltdown would have been just as unacceptable politically as it would have been for the bankers themselves. A loss of confidence in a currency supposedly under the management of a sovereign state is far more dangerous politically than a loss of confidence in a currency under the management of an individual bank.
That is a remarkably long chain of causation you posit. Moreover you must presumably also believe that at each step in the chain the cause you suggest is far and away the dominant influence at that step and that other influences are zero or at least relatively minor. Otherwise you would have to argue something like, “Politicians loosened monetary policy which was one of many influences that … “ By the end of the chain the original influence would have been so diluted and so mixed with other causes that you could no longer point to too loose monetary policy as the single thing that caused the credit crunch.
If you argued that too loose monetary policy was just one influence among many that caused the credit crunch, I would agree with you but on any reasonable reading the banks had a hand in matters. Any other interpretation fails the sense test.
The reason it is of crucial importance in the chain of influence is that without a politically manipulated fiat money system it would have been impossible. You don’t have to believe me. Eddie George was on record in front of the Treasury Select Committee in early 2007, before the shit hit the fan, explaining that their loose money policy of 2000-2001 was going to leave them with a “mess for his successors to sort out”.
The ability of the state to bring about inflation of the money supply is one of the most deadly weapons twentieth century states have had. If it doesn’t itself cause wars (which some would claim) it at least enables them to be funded by sleight of hand masking the true costs to everyone of such misadventures. Our money has been devalued 98% since the founding of the Fed less that a hundred years ago. This is a hidden tax. But alongside it goes the understanding that the banking system and the political system are in close cahoots – against whom, I wonder? Why, you, me and productive enterprise, that’s who.