Liberal Vision

Swinson, Burke and Hare

*This image has been airbrushed and should not be confused with a photograph.

The Liberal Democrat MP for East Dunbartonshire, Jo Swinson, has recently been consulting views on whether organ donation after death should be ‘opt-out’. This to replace the current donor card ‘opt-in’ system. It would mean on death, unless your medical records stated an opt-out, or you carried some kind of ‘no-donor card’, the NHS might freely use your mortal remains for treatment and research.

The result of Jo’s survey showed 2:1 in favour in the idea.

We at Liberal Vision would count ourselves amongst the minority against. We suspect after a proper public debate we would be in the majority.

The thinking behind the proposed change, first put to the Commons (and heavily defeated) in 2003 as an amendment to the 2004 Human Tissues Act, by her former colleague Dr. Evan Harris, is to resolve the current shortage in the supply of organs for donation.

The donor card system does not work well in matching supply and demand and with the best of intentions Evan and Jo are looking for solutions. A world where lives are saved and quality of life enhancing treatments are more easily developed would be a good thing.

The problem is their recourse to illiberal statism. An opt-out scheme would create a presumption that the state, in this case the NHS, owns you on death, unless you remember to declare otherwise, and have some system to prove you have done so, either a card, medical records, or a national database.

A solution that would likely lead to many unfortunate incidents of human error where individual wishes would not be respected, NHS employees might be tempted to err on the side of incaution, not to mention the cost of the system and adminstration required to minimise those errors. It could end up looking something like the much unlamented ID-card scheme.

The simplest solution would be to create a regulated market for post-mortem organ donations.  This might involve payment on delivery to a recipient according to the living wishes of the donor. Most often this would mean the NHS or pharamceutical companies, making a contribution towards funeral expenses.

That would dramatically increase take-up of the donor card scheme. It would be redistributive, benefitting those most in need of help with the costs of losing a loved one. It would be no more likely to incentivise murder than the current system of wills. 

The worry about such a scheme, apart from absolutist, usually religious, objections to the sale of parts of the body, stems from the 19th century, and the trial of Swinson’s Scottish compatriots,  Burke and Hare (currently getting the Hollywood treatment from Simon Pegg).

In a nutshell the University of Edinburgh in the 1820s  had demand for the teaching of anatomy. A growing science and thus growing demand. The state restricted supply to executed criminals, then reduced that supply dramatically to 2-3 corpses a year, after the reppeal of the Bloody Codes. B&H were amongst many body snatchers plugging the gap, most from grave robbing. Dr. Knox, their customer, was trying, like Evan and Jo to advance medical science.  Grave corpses though, being partially decomposed, attracted lower payments than fresh.

All the incentives were there for murder, largely as a result of a desire to save lives, prohibition and state control. 

Skipping back  to today, and the reasons for the 2004 Human Tissues Bill, we have the Alder Hey child organ scandal. Modern day Knox, Professor Dick van Velzen, falsified records in order to secure body parts from over 850 children for the Liverpool hospital. But he was not alone, many NHS hospitals including Birmingham and Walton had done similar things, some selling the parts to pharmaceutical companies.

The lack of a legal and transparent market had again encouraged black market behaviours. The cost to the NHS for Alder Hey alone, not counting the legal and inquiry bills, was £5m in compensation.

Neither the 2004 Bill, the Human Tissue Authority it created, nor Evan and Jo’s suggestion solves this problem. With an opt-out scheme there will be still be mismatches in supply and demand, errors of judgement and malpractice, lawsuits, compensation and inquiries. Liberals should on principle be opposed to nationalisation of corpses.

It would be interesting to see what the results of Jo’s next e-consultation would be if we pitted the status-quo against her scheme, and contributions toward funeral expenses. The result of most such surveys depends on how you frame the debate and questions.

Military Keynesianism: Part II – Ezra Klein Edition

A little while ago I mentioned the growing trend among Democrats to suddenly be in favour of military spending in hope that it will provide a stimulus to the economy.

Well, Ezra Klein has written a special, special little article which continues in the same vein:

I’m pretty skeptical that a war with Iran would do much for the economy. It’s not just that the inevitable spike in energy prices would grind everything to a halt (and what if Russia or Venezuela or OPEC decide to stand with Iran?), but the war itself wouldn’t be large enough.

Wow.

Just wow…

The article continues in the same vein then ends:

That seems like the right way to use the military for economic ends: Since it’s unpalatable to simply subsidize certain industries or marshal hundreds of billions for certain investments, but it’s indisputable that you need to give the military anything it asks for, you have the military decide every tank needs to run off solar panels, or, to use an even more unlikely example, that we need a national highway system “to allow for mass evacuation of cities in the event of a nuclear attack.” You could imagine both infrastructure investments and energy independence fitting the bill today. Then you get your stimulus but you don’t need to have your war.

All of it is just so awful. An American ‘Liberal’ writing the sentence: “to use the military for economic ends” – it’s quite possibly the worse sentence I’ve ever read in my entire time in politics. I don’t think anyone has been quite so blatant about wanting to invade somewhere to bolster their economy since the British Empire.

Then there is the simple economic truth that government spending does not stimulate the economy. Ever. Under any circumstances. No. Not even WWII: read this if you think that.

You may believe that government spending for the sake of providing services is good and proper but you have to admit that government spending for the sake stimulating the economy is something different. Don’t take my word for it, read Bastiat – available here.

“there never was a good war or a bad peace…” -Benjamin Franklin

(Ezra’s article may be satire. I honestly think it might be… I just don’t know. So, I’m just writing this to cover my arse in case it does turn out to be satire. Which it honestly might. Seriously…)

Three cheers for the Browne review

The debate over the Browne review of higher education funding has only just begun, and the most negative responses, predictably have come from those who haven’t read it, or are wedded to unworkable and regressive systems like the graduate tax or pure state funding. From this corner we hope the government adopt the proposal in full, as an entirely workable compromise between the parties, building on the best elements of the previous government’s innovation in the sector.

In response to Simon Hughes statement we believe this proposal will help drive quality by changing the role of government from provider to regulator and forcing institutions to be more responsive to the needs of their students. By retrenching the principles of no up front payment, a higher repayment threshold, and a reasonable repayment percentage it should not put off anyone able from any background. Deep risk aversion to debt is better tackled by targeted support by institutions (this report helps that) and schools than multi-billion pound middle-class welfare. The repayment system with a 30-year write-off also means the system is fair and progressive. People cannot be forced to pay more than the cost of their education, and low-income earners are not punished by excessive debt for life.

It is hard to understate just how thoughtful and balanced this report has turned out to be. The six principles guiding the proposals are outlined as

• More investment should be available for higher education funding
• Student choice should be increased
• Everyone who has the potential should be able to benefit from higher education
• No one should have to pay until they start work
• When payments are made they should be affordable
• Part-time students should be treated the same as full-time students for the purposes of learning

The proposals themselves can be summarised as:

• The cap on fees will be removed
• The government will pay the cost of learning up front, students don’t start repaying until their income exceeds £21,000
• Payments are affordable at 9% of any income above £21,000, the interest rate is no higher than the government borrowing rate
• The mechanism will also apply to part-time courses
• Institutions that charge higher fees will have to pay back some of that to the government to offset the cost of borrowing
• After 30 years any outstanding balances are written off
• Living cost loans will be available to all at £3,750 per year
• Tapered maintenance grants of up to £3,250 per year will be available to students from households with income up to £60,000 per year
• Alumni donations will, like gift aid, be tax free
• All these thresholds and payments will be reviewed in line with the cost of living

Some benefits of the proposed solution:

• The system should permit an increase in the quality, flexibility and the number of places by increasing sector finance sustainably
• Quality will be driven by student demand, competition between institutions, and backed up by a simplified and unitary higher education regulator. Higher Education institutions will have more control over their own destiny.
• Variable fixed fees means students can think through the cost and benefit to them of specific courses and seek compensation for poor quality supply.
• No one can ever be impoverished by this scheme, nor can it be used as a future stealth tax by the state
• Unlike the NUS graduate tax proposal it will not increase government debt or force cuts in other areas to pay for them.

The only pity of this report is that it didn’t come from the Liberal Democrats. The party has had the Centre Forum report, Open Universities, since 2006, which makes many of the same points. Stephen Williams MP attempted to change the internal debate in 2008.

The political debate today is all about whether MPs will break election pledges to oppose fee rises, the real political tragedy though is that many of those MPs knew the policy they were committing to was unworkable populist guff to keep the peace with militant activists, and win a few temporary student votes. This is a case of local opportunism, and a failure to lead, biting back.

The courageous thing to do now though is accept the party got it wrong, highlight all the alternatives are worse and cannot be justified whilst other services are being cut, and back this report. In the long-run perhaps it will persuade the party to check what it pledges to do more carefully.

LibDems say ‘NO’ to Positive Discrimination – GOOD!

Davina Kirwan wins my award for most bonkers post on LDV yet. In it she decries the LibDems for not passing a motion enforcing “the requirement to have at least one BME candidate on shortlists where a Lib Dem MP has resigned, or within a by-election, being lost.”

I’m young, brown and female and I am delighted that members of this Party, young and old, instinctively knew to shoot this motion down. Discrimination, as far as I’m concerned, is discrimination and for the party to sanction it in any form would be a travesty. I’m not personally opposed to an ‘A-list’ but one would hope that it would based on more than a Candidate’s skin colour or gender.

Ms Kirwan’s ad hominem attacks on the Liberal Democrat Party prove her to be completely ignorant of the tenants of liberalism. We didn’t decide ‘not to act because it would be hypocritical’ but because it flies in the face of everything liberal philosophy is founded on.

This is, quite frankly, one of the most offensive Op-eds to ever be published on LDV, in tone as well as content. My favourite part of the article has to be: “how could something that equalizes opportunity be a bad thing?” Err, that could justify a lot of bad things actually… Well done to everyone who made sure the policy did not pass.

Vince Spart rides again

What to say about about Vince’s speech that hasn’t already been said after forensic text analysis and critiques by right and left.

On this occasion I rather agree with Labour blogger Hopi Sen’s ‘Sad donkey runs free’ analogy. In substance Vince has said nothing new, his attacks on the banking profession as ‘spivs’ are pure populism, and his chances of persuading his coalition partners to change anything on the basis of such an analysis are slight.

After the activist cheer has died away in a week, the main impact of the speech will be to permanently lower his reputation amongst business leaders, a novel communications strategy for the Business Secretary.

Behind the rhetoric, competition and bonsues in banking are difficult regulatory issues. For example are the footballer salary figures involved in some trader bonuses evidence of weak competition? Or a reflection that an individual whose decisions turns £1bn into £1.01bn over a year for their clients is entitled to expect some share of the £10,000,000 profit that represents as their fee? That a very small number of people can make a lot of money is not unique to banking, or typical for most parts of banking which involve more mundane activities like managing accounts and loans.

Bank profits on loans are also problematic as evidence of market failure.  A major driver of the credit bubble was the misselling of risky loans as safe, but that manifested itself in not charging enough to cover the risk. Since the bubble burst charges have risen. At what point is this evidence of weak competition? How do banks reconcile this with endless demands from politicians to make risky loans to small business and those on low incomes at interest rates that do not reflect the risk premium? 

What element to reserve ratios play in this? To raise the capital reserves of a bank deemed at risk to the new levels required by the draft Basel 3 agreement  requires profitable transactions. Are these profits acceptable to Vince? Are they unacceptable when the reserve ratio is achieved?

Market concentration can be evidence of oligopoly and anti-competitive practices; but not always; contestability at home and global competition can keep large companies honest.  One of the largest advocates of domestic concentration during the crisis was the previous UK government, encouraging  for example Lloyds to buy HBOS. Not great evidence for the wisdom of the state in adverting and correcting market failure through political leadership.

Another Vince idea, separation of retail and investment banking facilities as a necessary basis for future stability would be more credible if the headline failure of the UK crisis wasn’t Northern Rock, a retail bank.

Outside competition issues how do the Treasury reconcile the attacks on bank profits with the need for the tax revenues from those profits to cover a government debt… in part based on over-optimistic spending commitments premised on bank profits?

Rhetoric about balancing the economy is the current political answer, but to do this either requires other sectors to grow relatively faster than banking, or shrinking the sector. The latter is not a wise growth or jobs strategy. The former… tends to require loans from banks.

Vince has something of a challenge in delivering on his rhetoric.