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The Laura Perrins Interview: May’s economic meddling won’t work, says the IEA’s Ryan Bourne


(Today we interview one of Theresa May’s enemies – a card carrying member of the dreaded ‘libertarian Right.’ Ryan Bourne is Head of Public Policy at the Institute of Economic Affairs and Director of The Paragon Initiative.)

Laura Perrins: Many thanks for sharing your thoughts with our readers.

So, how are you feeling now that our Prime Minister has her sights set on slaying the ‘libertarian Right?’ I guess she is doing this because they feel they have so comprehensively routed the social conservatives. How are you holding up?

Ryan Bourne: It was a bit of a shock to be the frontline of the PM’s attacks. But in many ways, it’s touching! The libertarian Right is a small-band of people committed to a smaller State, yet May has set us up as equals to the official Opposition. Given some of her plans for industrial strategies and unions on boards (let’s call it what it is), maybe we even are now the intellectual opposition in the UK! One suspects she pre-emptively attacks us because she knows this, not least because it’s what much of her membership instinctively believe.

But, let’s wait and see whether this is a genuine paradigm shift (or some might say retreat) in Conservative Party thinking or whether it’s just rhetorical triangulation. It may well be that she thinks classical liberals have nowhere else to go and she’s simply trying to bring working-class voters from the North and Midlands into the Tory fold. In doing that, she has to set up two bogeymen and presents herself as the sensible middle. But the early signs do suggest we are set for a more interventionist and authoritarian Conservative Government under her, which is very worrying, not least because the early ideas she has espoused do not actually work.

LP: Staying on this theme, this is not my fight, although I have explained elsewhere the link between economic liberalism to social conservatism, essentially that strong families are a necessary if not sufficient requirement for a small State.

We are to believe that libertarians are selfish individualists who when not making heaps of money to spend on fast cars, Scotch and prostitutes, spend time at home plotting how to make more children homeless.

But my understanding of libertarianism is that a free market will deliver the greatest amount of material prosperity to the greatest amount of people. In particular, a free market serves the poor and middle more effectively than a highly regulated one?

RB: The opposite of State intervention and control is merely free people making free decisions. Obviously there are some libertarians who are very individualistic, but broadly defined, libertarianism has little to say on how people should organise themselves within a free economy. Indeed, Hayek’s Constitution of Liberty (a founding libertarian text) in essence explains how a complex cooperative, great society can come about in an environment of freedom under the rule of law.

For that reason I’ve never really understood why by being opposed to State control makes one selfish and individualistic. In many ways its State action that crowds out civil society and the family, and makes society more atomistic. If a welfare state promises to take care of you from cradle to grave, then the incentive to build familial bonds, to participate in civil society institutions and charity etc diminishes.

The case for a small, unintrusive government in economic terms is two-fold. First, trades between two parties occur because they are mutually beneficial. Allowing these free trades to take place uninhibited therefore enhances human welfare. Secondly, free economies tend to be conducive to innovation, and in the absence of attempts to stymie or prevent new ideas talking hold, a free market delivers dynamic improvements and creative destruction that enhances long-term living standards through productivity growth.

LP: Just to take one policy – having workers on company boards. Germany has workers on company boards and they have managed to prevent thousands of jobs going abroad. Why is it such a bad idea?

RB: Well, first of all, the reality of this is that it would be unions, rather than workers, on boards. To get a bit of an idea as to how damaging this might be for some companies, let’s imagine that RMT sat on Southern Rail’s board right now. Yeah, exactly.

The reality is that the German co-determination model is not quite all it’s cracked up to be. We know that there is academic evidence that the value of German companies is almost 30 per cent lower given their fundamentals because of this sort of governance arrangement. And you only have to look at the example of Volkswagen – whose board ceased to operate properly when its chairman allied himself with workers’ representatives to block layoffs and wage cuts – to see the potential downsides.

If it really were great for companies, then they are of course free to do it here. That they do not is instructive.

LP: In her conference speech, May said: “It should not matter who your parents are because all that should matter is the talent you have and how hard you are prepared to work.”(my emphasis).

You explain in this blog, how this type of meritocracy is profoundly unconservative as it discounts family, community and all those little platoons that are so crucial to supporting children as they grow and develop.

May’s vision is quite chilling. I hope you yourself have never benefited from any parental support (other than them providing accommodation and food)?

RB: Haha, well I actually had this debate with Polly Toynbee at party conference too. She simply couldn’t comprehend how anyone could oppose equality of opportunity! But good ideas should be scalable – and the logical end point of believing the State should equalise everyone’s starting points in life, with people’s fates solely determined by their talents and hard work, is actually the elimination of family, altruism and ultimately love. It is a bizarre moral worldview – and here’s the irony: it’s the ultimate manifestation of pure individualism, an idea that Theresa May attacked as being a feature of ‘the libertarian right’.

My own parents, of course, have helped me in incalculable ways in early life. It’s what the vast majority of parents do. They want the best for their kids. That should be celebrated, not denounced as unfair advantage.

LP: You were educated at Magdalene College, Cambridge achieving a double-first in Economics at undergraduate level and later an MPhil qualification. You could have done anything you wanted, including making heaps of money in the City. Why did you choose this route?

RB: Well, at one point I almost did that but graduating initially in 2008 wasn’t fun if you wanted to move into the City. I ended up staying on and studying some more and then began working at a very good economic consultancy. But a few weeks into that I broke my leg and couldn’t work for a few weeks. I was laid up at home during the 2010 general election and became increasingly agitated at the economics I was hearing within the general election. I researched whether there were any jobs I could do which combined my economics background with my new-found interest in policy and politics. That brought me to the think-tank world – initially the CPS and then the IEA. And from next year, stateside to the Cato Institute!

LP: Finally, do you have any tips to parents who want to imbue their children with a sound understating of economics (to prevent them becoming barmy socialists)?

RB: Three things:

1)  Buy them a copy of Thomas Sowell’s Basic Economics.

2) Learn and teach them basic concepts that can be used to analyse all decisions: opportunity cost (what is foregone when we decide to do something), trade-offs (how might doing this affect our ability to achieve other objectives), unintended consequences, and incentives (what are the payoffs to those making these decisions)

3) Try to get their head around the key difference between socialists and those sceptical of government. The former believe that humans are imperfect and society can be perfected by a benevolent government; the latter realise that government is made up of imperfect human beings too and that the world is both imperfect and imperfectable. The key question is what arrangements lead us to a better world.

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