Are we losing?
Plus: trade deals galore and the economics of Empire
In today’s newsletter:
Are classical liberals losers?
Our take(s) on the US and India trade deals
The Bank of England cuts rate
and more….
‘Are classical liberals a bunch of pathetic losers?’ That’s the provocative question posed by Tyler Cowen in a new essay for The Free Press.
The case for the proposition rests on two ideas. First, that liberalism’s inherent neutrality makes it vulnerable to political and cultural losses to illiberal ideologies – from religious fundamentalism to the extreme woke. Second, that liberalism’s central skepticism of political power makes it ineffective as a governing philosophy – it is simply incapable of using the power of the state for its own ends.
Roughly speaking, this is the battle cry of the post-liberal right. That the liberal era has left our institutions dominated by people opposed to traditional Western values, and that now the power of government must be used vigorously to put things right.
Where liberals might want to change the funding arrangements of universities or the state broadcaster, so that left-wing views don’t benefit from taxpayer support, the post-liberal right would rather reshape them in its own image – or at least get a kick out of punishing its ideological enemies. Where liberals might want to strictly limit the remit of government departments, so that the political views of its employees don’t matter as much, post-liberals prefer to simply put their own people in control.
In the post-liberal view, classical liberals are the people sitting on the sidelines grumbling about abstract concepts like the rule of law – while they are getting things done.
So what do I think of this argument? Firstly, it is a perversion of liberalism to equate its openness and toleration with nihilistic relativism. To the extent that things have worked out like that in practice, it is an intellectual and moral error – not something built in to liberalism as a philosophy. I would also suggest – as my former colleague Aaron Ross Powell does here – that liberalism need not be a cold and entirely political-economic framework. There is also a culture and ethics of liberalism that can and should be expounded.
Secondly – and this is a point Tyler makes in his essay – the trouble with using the power of the state for your own ends is that ‘your side’ is only likely to win half the time. Give government power, and sooner or later it will be used against you. The liberal approach – institutional reforms to limit state power, and intellectual argument to win people over to individualist values – may be less expedient, but offers up fewer hostages to fortune.
I would add here that I do think classical liberals have become naive in their approach to government, sometimes failing to appreciate and respond to the enormous complexity of modern policymaking, and sometimes wilfully ignorant of the structures of power and political-economy constraints that conspire against them. We need to be better at dealing with the world as we find it.
The final section of Tyler’s essay changes tack, arguing that while classical liberal victories tend to be few and far between, when they do come, they can be transformative. The key thing is to make sure that during periods of historical downtime – when classical liberal ideas appear ‘dead or dormant’ – the intellectual flame is kept burning. As Tyler puts it, ‘I counsel patience, and investment in good ideas and in talent, not a quest for power per se.’
You probably knew it was coming, so here it is: that mission is precisely what the Institute of Economic Affairs is all about. We turn 70 this year; we have endured plenty of times when classical liberalism was on the back foot, and enjoyed one extended period when our philosophy was in the ascendant. But through it all, our research has advanced good ideas, our education programmes have developed talent, and our communications have sought to win over elites and so shape the climate of opinion. We play the long game.
It may be true, as Tyler Cowen puts it, that classical liberal victories require the coming together of ‘social, intellectual, economic, and also political forces’. But when that happy day arrives – and I, for one, believe that such an opportunity may come sooner than we think – the IEA will be ready for it.
Tom Clougherty
Executive Director
P.S. The best way to never miss out on IEA work, get access to exclusive content, and support our research and educational programmes is to become a paid IEA Insider. For a limited time only, new paid subscribers will receive a copy of Dr Steve Davies’ book Apocalypse Next: The Economics of Global Catastrophic Risks for free.
Offer ends on the 31st of May!
IEA Podcast: Communications Manager Reem Ibrahim, Executive Director Tom Clougherty, and Editorial Director Kristian Niemietz discuss the new US and India trade deal and healthcare in Northern Ireland, IEA YouTube
Lack of groupthink at the Bank of England is something to cheer
Responding to the Bank of England's decision to cut interest rates to 4.25%, Julian Jessop, Economics Fellow at the IEA, said:
The Monetary Policy Committee’s majority decision to cut rates by another quarter point today was widely expected and fully justified by the downside risks to inflation and growth. The only real surprise was the split, with two members voting for a half point cut and two for no change.
The three-way split on the MPC sends mixed signals about the future path of interest rates and may disappoint those looking for more clarity. In part this reflects the variable quality of the official statistics, notably on the state of the labour market.
Nonetheless, the diversity of views is a fair reflection of the heightened economic uncertainty, both at home and abroad.
If anything, the lack of groupthink is something to cheer. It would be more worrying if nine rate-setters all came to exactly the same conclusion despite the many unknowns, including the fallout from a global trade war.
It is also good to see a whole section of the Monetary Policy Report devoted to developments in broad money. This included an acknowledgement that these developments might be signalling downside risks to activity and inflation, albeit with ‘significant uncertainties’.
Many commentators, including members of the Shadow MPC which meets at the IEA, have been arguing for some time that the Bank has not been paying enough attention to monetary aggregates, so this is another welcome sign that the real MPC is now taking account of a wider range of perspectives.
IEA’s Shadow Monetary Policy Committee votes eight to one to cut bank rate, read the full details on the IEA website
Read coverage of the Shadow Monetary Policy Committee’s recommendation in The Express
News and Views
New India trade deal is another ‘Brexit benefit’, Director of Communications Callum Price writes in The Express:
Trade deals like this can represent what politicians like to call a ‘Brexit benefit’. Now the UK can set its own trade policy, not only has the Government been able to avoid being pulled into a painful trade war alongside the EU, it has also been able to sign a new deal with another independent nation.
The economics of empire
On 24 March, the IEA’s Kristian Niemietz spoke on a panel at the Free Market Road Show, held at the University of Ljubljana. The article below is based on his introductory remarks.
Orsted halts major North Sea wind farm project in blow to Miliband, Energy Analyst Andy Mayer quoted in The Times:
The mothballing of Hornsea [is] a “reminder of the folly of legally binding climate targets”.
The government’s plan to decarbonise the power grid by 2030 denies real trade-offs between lower emissions, energy security and affordability.
Businesses understand these trade-offs and recognise how key they are to the government hitting its legal target. They can, therefore, extract a higher price for their services, which helps ensure the UK continues to have the most expensive energy in the world.
This just reveals the sham that National Insurance is overall – Reem Ibrahim takes aim at the justification for NI, as highlighted by the India trade deal on GBNews
Britain’s Energy Disaster & How Innovation Could Turn It Around, Energy Analyst Andy Mayer interviews Matt Ridley, IEA Podcast
Does the Chancellor want to hijack your pension? Executive Director Tom Clougherty quoted in The Express:
Tom Clougherty of the Institute of Economic Affairs warned against trying to direct investment.
He said: “Pension funds should be left to focus on getting the best possible returns for savers... The great danger of the government’s approach – trying to get everyone to invest the same way – is that if it doesn’t work out, everyone loses as a result. And that is a very real possibility.”
Why does the same car cost $23,000 more in the UK?
By Jonathan Oppenheimer, South African businessman and Executive Chairman of Oppenheimer Generations.
Liberty in Burundi
The Whetstone Freedom Fund (WFF) is an international initiative founded by the Institute of Economic Affairs in honour of the late Linda Whetstone, to support classical liberal ideas around the world. Each month on Insider we take a deep dive into the countries and partnerships which are being supported by the WFF.
EVENT: In Conversation with the Rt Hon Robert Jenrick MP
We are delighted to invite our paid Insider subscribers to an upcoming IEA event, ‘In Conversation with The Rt Hon Robert Jenrick MP’.
EVENT: Dr. Yaron Brook on the Morality of Capitalism
We are delighted to invite our paid Insider subscribers to an upcoming IEA event, ‘Discussion with Dr Yaron Brook on the Morality of Capitalism’.
Nice piece! My view is that rather than far left and far right being at opposite ends of a two dimensional scale they are in fact both the same! Dictatorships and Oligarchy’s with the power of state and money or the power of money and state! It’s more clear to me later in life as I am that, the scale is not a straight line but a circumference in the round! With the extremes of view on one far dark side of the circle side by side thinking only of themselves and their followers and the rest of the reality of clear thinking for all on the near ‘sunny’ side. My view of the common liberal centre is those who think of all the population in their thinking and all the rest thinking of themselves only! What we see in Putin and his power of money and state is no different to Trump and his power of money and state! They are just at different levels of control. If you look at China, Turkey, Hungary, Belarus, North Korea, Iran, Saudi Arabia and India, they seem to be in that form of control. To our surprise, Trump is now talking their language. The Liberal thinking rest can counter that with clear thinking and proper answers. My thinking is to take power away from manipulating money. Thatcher took away exchange control regulations. Which allowed money to flow in and out of the UK. Wrongly assuming more would glow in! By the exodus of millionaires that has proved incorrect. Before we can agree deals with other Countries we should put our own economy in order. No economy works without ‘spending’. And without money to spend nothing works! So I say, put exchange controls back in! First produce s new currency! Get everyone who has our existing currency either in paper or digital to ‘swap’ their existing money for the new digital money in the UK. That is the point by which you asserts in if the ownership of that money is lawful! Secondly you give those who have it and prove it the new digital money. We must calculate the need if a nation to have an amount fit for purpose. For example, a population of 1 million need less than that of 60 million. So more money has to be available for the system to work. Then digitally put a ‘Spend by Date’ on ALL money in that system. say a month. After all, we have to pay bills by a date, debts by a date, tax by a date so why not spend the rest of money by a date? Take the power of money away from hoarding it or holding it for years in such great amounts that we are devoid of it! Be rich off the stuff we buy not the money itself! I think it would create such a tsunami of money we will only need one tax, VAT! Streamlining the tax system. We will only need one Bank, one state Pension and higher wages and bigger benefits as the coffers of the state will overflow every month! It will bring in more money for all and happiness for all! Earn ad much as you want and be able to spend it all! A win win win situation! Also the decision makers will not be lead by power of money, just the democratic result of a perpetual snd permanent solution to boom and bust and the rich getting richer at the cost of the poor getting poorer. A true level playing field! Keep ask money in Country. No money in it out! Foreigners can have bank accounts here. To sell goods. Bug they have to spend it back in house too! It get it taken by the exchequer if not spent in house in the month! Let hours glow in and out easily, just not the money! That’s the country of origin. Now that democratic way is the centre from which we afford our government spending. On roads, homes education and do on. And bit an Oligarchy or dictator in sight! Every person
Can vote by phone! Leaving government autonomous and perpetual. As if us now we have 5% of people holding 95% of money! That’s undemocratic. If the system is infallible it f d identity make it wrong! If it’s right and it works why aren’t we using it. Demand it!! By populous of people. That’s my view.