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GUEST POST – Anton Howes on the right incentive

By Julian Harris
July 13th, 2009 at 8:15 am | 3 Comments | Posted in Uncategorized

whitehallThe assumption goes that we must allocate budgets to departments according to what they ‘need’. However, this results in those performing the worst being paid the most. The fact that the state is made up of individuals and cliques, often after power, influence and larger budgets, appears to be too often overlooked. The prevailing incentive is therefore for public bodies to allow bad outcomes, presumably up to the point where they would be penalised if the situation were to worsen any further. Despite the presence of excellent public servants, the market incentive to waste and run down a service is likely to be very strong – a point that at least acknowledges that those running government are not always superhuman paragons of virtue.

The seemingly obvious solution is to continue with the existing system, but put in place countervailing incentives to achieve more specific desired outcomes. Sweden for example, after years of fruitless increases in funding aimed at decreasing hospital waiting times, recently set up a fund to pay those authorities able to cut queues below a certain level. The powers of market incentives were very quickly demonstrated, with nearly all local authorities achieving the required cuts within a mere nine months.

However, statesmen set specific targets at their peril – the unintended consequences of these actions could be severe, for example resulting in departments allowing the pursuit of specific quantitative outcomes to let the quality of their work to wane.

A possible solution may be that of achieving budget stasis, capping the amount allocated to departments at a specific amount (dependent on demographic changes, capital expenditure, inflation, etc.), but rewarding all cuts in waste and expenditure with a pound-for-pound increase the following year in the budget. The effect of this would be to prevent future increases in waste and any relaxation of standards by removing the reward for failure with the cap, whilst allowing departments to cut waste easily every year, without the threat of a shrinkage in their budget. This newfound stasis would enable ministers to make overall cuts in expenditure permanent, with the relevant departments no longer having as much incentive to demand that it be increased back to previous levels.




Anton Howes also blogs at Observations of an Aspiring Public Servant, where a longer version of this post is available.

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Many thanks to our Lib Dem Blogs readers

By Julian Harris
July 11th, 2009 at 2:48 pm | 1 Comment | Posted in Uncategorized

bubblyA pleasant Saturday surprise to discover, courtesy of Ryan Cullen’s blog, that Liberal Vision was the second highest visited website from the Lib Dem Blog aggregator in June.

Only Lib Dem Voice came higher.

Here’s the full list:

1st Liberal Democrat Voice
2nd Liberal Vision
3rd Nich Starling
4th Himmelgarten Café
5th Liberal England
6th Liberal Burblings
7th Irfan Ahmed’s Blog
8th Liberal Bureaucracy
9th Mark Reckons
10th Liberal Revolution

Thanks to Ryan for the info and to all our readers and comment-leavers.

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GUEST POST – Franklin Cudjoe on Fairtrade and the G8

By Julian Harris
July 10th, 2009 at 5:49 pm | 2 Comments | Posted in Uncategorized

franklincIn the New Statesman’s “Observations on Fairtrade” I was quoted as saying that free trade, not Fairtrade, is the key to developing countries like my own. Here are a few reasons why this is so.

Most of the Fairtrade premium charged by supermarkets does not make it to the poor in developing countries. It has been estimated that only ten per cent filters down, most of it consumed by Western retailers. No wonder that many people suspect that supermarkets are granting monopolies to their own-brand Fairtrade-approved goods for the sake of their own profits. They convince consumers that they are morally obliged to buy Fairtrade stock, offer no alternative, then pocket the difference.

But more importantly, even the amounts that do trickle down will not help economies to develop. Any subsidies provide perverse incentives that can delay development. Increasing prices artificially causes an increase in supply which results in too much produce being grown. As Fairtrade growers only pass on about 20 per cent of their stock to the Fairtrade scheme, the results are quite dangerous, and can result in the market price actually coming down (due to surpluses).

Instead, people in less developed countries need to be able to follow price signals and adapt to changing demands – both from our own markets and those in the West.

Sadly both of these markets are blocked from us by trade barriers. Your governments are partially to blame for this – but even more culpable are our own self-interested politicians.

Trade barriers between African countries are an extreme impediment to our economic development. Shipping a car from Japan to Abidjan, Côte d’Ivoire, costs $1,500 – yet shipping the same car from Abidjan to Addis Ababa, Ethiopia, costs over three times as much – $5,000!

According to the World Bank, removing regional trade barriers would earn Africa an extra $1.2bn a year.

So what can concerned people in wealthier countries do to help? For a start, you can lobby your governments to stop setting a bad example by imposing trade barriers themselves. Many people in poor countries say “rich governments protect their industries, why shouldn’t we?”. The result is that we all lose – but poor countries suffer the most.

We now have a global trade war, arguably prompted by President Obama’s “Buy American” policies in the USA. Ministers at the G8 preach free trade while building up barriers back at home.

Buying Fairtrade is a feel-good scam. It does not help. Those who really want to help should urge their politicians and the G8 to bring down trade barriers – and make a lot of noise about it.




Franklin Cudjoe is the founder and Executive Director of IMANI Center for Policy & Education, a think tank based in Ghana. His work has been cited in House of Commons debates on aid and development in Africa.

A friendly Friday wager

By Angela Harbutt
July 10th, 2009 at 8:53 am | 3 Comments | Posted in Uncategorized

Every day now news stories slip into the press about hikes in fees, from increases in seatbelt fines and passport costs to rising Court debt fees and Land registry fees. 

And here’s the rub. Whilst those of us working in the private sector face redundancy, part time working, enforced holidays, loss of bonus’ etc, the public sector seems to carry on regardless. It seems immune to the problems facing the rest of us.

Where else would you find price increases the response to falling demand other than the public sector? “Its to protect the quality of the service”. Oh right – must remember to drop a line Tescos on that one. 

And heres the wager I would like to place with you. What will you  bet me that the various price increases we are currently witnessing “as a result of falling demand”, will be reversed when demand picks up again ?  Come the much-advertised economic boom will we see cheaper passports, a cut in seatbelt fines, lower land registry fees?

Hmmm….

Anybody willing to take on the bet ?

Sarah Brown: Press-ganged poodle or PR Pro?

By Angela Harbutt
July 9th, 2009 at 11:24 pm | Comments Off on Sarah Brown: Press-ganged poodle or PR Pro? | Posted in UK Politics

sarah-brown-blog

Gordon Brown has proved himself conclusively to be a charmless arrogant man, psychologically flawed, with all the “social skills of a whelk”. So what to do with such a catastrophic image problem just ten months out from a general election?sarah-brown-michelle-obama

Enter Mrs Brown stage left. Today, at the G8 summit, she was seen out and about with Michele Obama, yesterday it was a turn with the pope. Earlier this week it was reported that she has guest edited an upcoming special edition of the News of the World’s Sunday magazine “Fabulous” (on women’s health). Last week she was at Glastonbury (with Naomi Campbell no less) and the London Gay Pride march .

sarah-brown-and-naomi-campbell-at-glastonburyShe has also started twittering (300,000 followers no less),  has a face book page, and has come straight in at number two in Tatler magazine’s “Most Invited” list 2009. 

Thats a lot of PR.  Not only is she a bright PR professional, she is also warm, engaging, and  I am told, a genuinely “nice” person.SOCIAL Pride 143034

But the question that I really want to know is – has she been press ganged into the role by Gordon’s goons or has the PR professional taken it upon herself to attempt to salvage her husbands career on the (correct) assumption that she cant do any worse than the pretty shoddy lot her husband has thus far employed ?

Either way (a la Mrs Kinnock) I may well seek out Mike Smithson’s views on the what the odds are that it will be MRS Brown in parliament come the election after next rather than Mr Brown.

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