Public service reform and liberal democracy

[Originally posted at LSE British Politics and Policy, 01/03/12]

Last week on the LSE British Politics and Policy Blog, Will Tanner argued that the government needs to change direction on public service reform. Tanner makes three points that flow from his frustration with progress. Mainly, he claims the government is being too cautious and it is placing an undesirable emphasis upon fostering mutual and not-for-profit alternatives to conventional public provision.

Tanner argues that “meaningful” reform needs to be faster and it needs to happen on a larger scale. This point resonates with KPMG’s 2010 paper Payment For Success, which sets out many of the measures you’ll find in the coalition’s Open Public Services white paper. The KPMG argument is that change needs to be rapid so it can more easily override objections and overwhelm resistance. Tanner thinks that new business models are not being embraced as extensively as they should. Rather, they are being restricted to specific policy areas. Finally, if we want to see public services dismantled more comprehensively then we need to reduce “barriers to entry” such as annoyingly inflexible and generous public sector pension arrangements. [Read more...]

On the wisdom of free capital markets

With the discussions over the future of the Eurozone at a critical phase, David Cameron yesterday started to make helpful noises about exercising a veto if British interests were not protected. And when he says British interests, it seems he primarily means protecting the status of the City of London as the pre-eminent financial centre in Europe. It is, of course, no great surprise that the Conservatives seek to protect the interests of the financial elite who are, after all, their major financial backers. But we need to hold on to the idea that it wasn’t so long ago that equating the interests of the City with the interests of Britain was being severely questioned. And those camped out at St Paul’s act as a continuing reminder.

Cameron’s comments led me to wonder how that rebalancing of the British economy away from finance and an over-inflated housing market was going.

We desperately need to take seriously the broader debate not only about rebalancing but also about the influence of the capital markets on broader social development and human welfare. [Read more...]

Choice, public services and the predatory state

I have recently had cause to reread CentreForum’s Your Choice: how to get better public services, published back in the summer. Don’t ask. It’s for a thing.

The resonance between the sorts of prescriptions that emerge from Queen Anne’s Gate and the policy prescriptions within the subsequent Open Public Services white paper is all too evident. Equally obvious is the rather thin intellectual base for many of these ideas. As a piece of think tank advocacy Your Choice isn’t attempting to be a rigorous academic study, seeking to provide a balanced review of the ideas under consideration. But it is rather too evident that it draws its intellectual authority from a relatively shallow well comprising previous CentreForum publications, publications elsewhere by CentreForum members, and publications from the axis of management consultants and other organisations with a vested interest in promoting its agenda. The principal credible contemporary academic work cited is by colleagues at the Centre for Market and Public Organisation and that is hardly unambiguous in its support.

But my main concern here isn’t really the problematic role of think tanks peddling flaky ideas into the policy process. I blogged about that a while ago. I have a broader concern – consensus and credibility. [Read more...]

On knowing what’s going on

Leading active members of today’s economics profession … have formed themselves into a kind of Politburo for correct economic thinking. As a general rule—as one might generally expect from a gentleman’s club—this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster where none occurs. They deny the possibility of events that then happen. … They oppose the most basic, decent and sensible reforms, while offering placebos instead.

James K Galbraith

Last weekend in a brief post over at Pop Theory Clive poses one of the key social scientific questions of our time – What do economists know? Of course, the answer depends on which economists one is talking about. As the epigraph above notes, the mainstream of macroeconomics largely misses the point. It didn’t see the current economic turmoil coming and has little to offer by way of solutions. One striking thing about Galbraith’s comment is that it was written in 2000. Not a great deal has changed since then. These deficiencies with mainstream approaches have been recognised by some high profile mainstream practitioners, as I noted last month in the aftermath of this year’s Nobel prize in economics.

Yet, it is not as if economics has nothing sensible to say on the matter. [Read more...]