His stance has outraged many people. But what exactly is the problem here?

I ask because the money involved in politics is from one perspective quite small. For example, if the 600,000 people who attended the largest pro-Palestine march last year had put just £10 into a kitty they’d have raised £6m - 12 times the value of the “hospitality” MPs have received this year. Or if just 5% of voters could pay £5 per month into a political fund this would be worth over £130m a year - more than all political parties received last year.

These numbers suggest we have a collective action problem. Small sectional interests - those of companies or rich cranks - can organise and raise money easily. Larger, dispersed interests by contrast are harder to organise and so don’t get a say. The upshot is that MPs are being bribed by the wrong sort of money - that representing small groups wanting special favours, sometimes to the detriment of the general interest.

What if this collective action problem could be solved - if we had, say, citizen advocacy groups who could, cough, lobby MPs on behalf of a wider and more representative range of interests? What would be wrong with this?

An obvious answer is that even a more equal bidding war for influence would still be undemocratic. Democracy, if it is a valuable ideal at all, is the principle that we should all have equal opportunity for political influence. That’s incompatible with MPs being bought even by groups more representative of the people. Hence the outrage at them being bought by anybody.

This line, however, argues for truly radical political change. Equality of influence is incompatible with, for example, the media being owned and controlled by a tiny minority or with politicians being selected for having a distorted view of the world.

Let’s put aside the arguments for or against such changes and ask instead: would introducing more money into politics would actually be a step towards such an ideal*? From our imperfect world, what would be wrong with this step? The answers shed some light on our attitudes beyond politics.

One thing that’s wrong with it is that we don’t like the cash nexus to be so naked. Just as some people might sleep with a man if he buys them dinner but not if he offers them £100 directly, so MPs might not be amenable to direct cash offers. They’re happy to offer “access” and the opportunity to be persuaded, but not to be overtly asked to change their vote in exchange for cash. To paraphrase (apocryphally) George Bernard Shaw, we know what MPs are; we just have to frame the proposal properly.

Many, however, would not change their vote for cash: even if we could outbid Harbourne’s £5m we could not thereby turn Farage into a decent human being. It is only at the margin that financial incentives change behaviour, More often, they reinforce our existing dispositions. Most of us want to do a decent job because of self-respect or a desire to show off; money helps us do so.

And incentives can backfire. They can crowd out intrinsic motivations; bankers who were motivated by big bonuses, for example, drove their companies into insolvency. Bringing even more money into politics might discourage MPs from thinking about legislation, and would attract unprincipled candidates who would merely vote for the highest bidder.

What’s more, money from groups representing honest collective interests might not carry much weight. It’s possible that MPs are attracted to current donors not merely because they have cold hard cash but for other motives.

Adam Smith saw one: the “disposition to admire, and almost to worship, the rich and the powerful”:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent....The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness.

This deference is reinforced by the fact that MPs, being more ambitious than most of us, are especially impressed by wealth and by the ability to rise to the top of corporate hierarchies - by what Alasdair MacIntyre called external goods.

To the extent that this is the case, they’re swayed by wealth not so much because of what it buys but because of what it represents - wordly success. Money coming from citizens’ advocacy groups would not carry such meanings and so would be less influential even if it were a larger sum. This is perhaps why donations from trades unions don’t buy as much influence, pound-for-pound, as those from rich individuals.

Even if all this were wrong, however, there’d still be a reason not to use citizens’ lobbying groups to funnel money to politicians. It’s that part of the purpose of politics (maybe a large part) is not simply to buy one’s preferred policies as we’d buy a pound of mince. Instead, political acts have what Robert Nozick called symbolic utility: they symbolise who we are and what we value. People don’t go on demonstrations to change policy: they rarely do so even when the demonstrators are correct. Instead, they go on them to, well, demonstrate - to show what type of person they are. Demonstrations symbolise particular values - the importance of specifically political activity, of solidarity, and a rejection of the transactional consumer-oriented politics that we’d have if money simply bought politicians**.

I don’t want to reject this: a life without symbolic utility would be a horribly arid one. But there’s a cost of pursuing it. Just as the symbolic utility of being a good parent might mean sacrificing some instrumental utility of having more money or relaxing nights out, so in politics the symbolic utility of demonstrating and activism might entail a sacrifice of making progress towards egalitarian policies.

But here’s the problem. Our opponents don’t feel the force of this trade-off. Bosses of utilities, gambling companies or fossil fuel companies don’t feel any need to build solidarity or show that they are good people, and so they can get on with the work of buying influence quietly.

For these reasons, what we have is to some extent a sham democracy, a facade behind which capital - and often the most regressive parts thereof - exercise dominant influence. And this would be the case even if political donations were to be limited.

* If the ideal is desirable, which is another matter.

** Of course, it’s not just the left that pursues symbolic utility. I suspect a lot of mainstream policies have symbolic rather than instrumental utility: fiscal rules, the criminalisation of hard drugs, or a rising minimum wage, for example. And many of Reform’s policies aren’t intended to be solutions to practical problems but rather to symbolise the sort of people Reform are, and the sort of voter they want.

This is most obviously true of proposals for remigration and mass deportations, which are not a serious response to any socio-economic problem but merely a desire to turn back time to when the UK was more ethnically homogenous.

It’s also true of Burnham’s urge to turn back 60 years of deindustrialisation and to reindustrialise the country, despite the fact that the management and labour skills we need to do so have vanished, insofar as they ever existed in the first place.

The widespread indifference to the collapse of universities is another example. As are proposed cuts in targets for sales of EV cars, plans for more drilling in the North Sea and (in the case of Reform) a refusal to accept the realities of climate change.

We could add Brexit to this. It was never a solution to any problem but rather an atavistic urge to return to a time when Britain or the UK (Brexiters have never been clear about what our country actually is) stood alone in the world.

Granted, the government does have an AI strategy, but this might be less a sign of a realistic embracing of the future than it is like a bunch of children impressed by a conjuring trick.

Our political class want to return us to an era when white men would leave their factory shift at companies such as Tube Investments or Hawker Siddeley, get in the Austin Allegro and go home to wives wearing crimplene* who had their Findus crispy pancakes waiting for them.

This desire to return to the past is a sharp contrast to our most successful politicians who have instead looked to the future. Harold Wilson’s official government profile says “his main plan was to modernise”. He presented himself as a modern technocrat against the amateurish old-fashioned Old Etonian Douglas Home** who wanted the “white heat of the technological revolution” to sweep away “out-dated practices”. Thatcher opposed state intervention in industry in part because it protected “yesterday’s industries, yesterday’s processes and yesterday’s products”, and she wanted to break trades unions in order to give managers the opportunity to modernise workplaces and embrace new technologies. And Blair couldn’t open his mouth in the 90s without talking of modernisation. As Alan Finlayson wrote in Making Sense of New Labour:

If there is a single word that might capture the essence of New Labour’s social and political project then it is ‘modernisation’.

Why, then, are today’s politicians so keen to return to the past when their predecessors succeeded by looking to the future?

For all Burnham’s talk that “in the 1980s, Britain took some wrong turns”, I don’t think it’s because they view the 60s and 70s as a template. They don’t want the tax rates, strong trades unions or extent of nationalisation that we had then.

Instead, they’re looking to a selective picture of the past because they cannot face today. Michael Oakeshott got it right. “If the present is remarkably unsettled”, he wrote , there’ll be “a recourse to and an exploration of the past.” Our true problems are difficult ones: economic stagnation; climate change; overpriced housing; inequalities of economic power; and a degraded public sphere that precludes rational politics. Rather than face these, politicians and the media are instead yearning for a (partly mythical) past.

This is because they simply don’t have the tools to deal with them.

Herein lies a difference between the modernising political projects of the past and the one we need now.

For Wilson, Thatcher and Blair “modernity” required that other people change: old boy dilettantes, trades unions, public sector workers or the left. Today, however, modernity requires that politicians themselves change.

It requires them to see that the lobbyists and vested interests they listen to are the “forces of conservatism” that are holding back economic growth. Reviving economic growth (if it is possible) requires, among other things, that we attack monopoly power, shrink the financial system, and simplify the tax system. But this would alienate corporate lobbyists.

It also requires them to recognise that the mass media is not only the enemy of decency and rationality but also a terrible guide to reality and public opinion, because it no longer aims at a mass market but is instead a few billionaires’ gimps writing for a handful of cranks. Kowtowing to the press is turning back time to when it mattered. What we need instead today is a reconstruction of the public sphere.

And it requires them to think less about mythical “policy levers” and instead about growing new ecosystems, be they forms of economic democracy, better functioning markets or consumer advocacy and advice groups that could act as countervailing power against powerful companies.

In short, politicians themselves must slough off the professional deformation which blights even the best of them: their excessive faith in top-down managerialism and regulation; their reluctance to challenge the constraints which regressive sections of capital tries to impose on them; or their neglect of the importance of emergent social phenomena. We need decentralisation not merely to local mayors, but to individuals - be it in the form of better-functioning markets, powerful consumer advocacy groups, or economic democracy.

Right now, the political-media class not only does not want to do this but barely even recognises than it is an issue. Like Cher, it would much rather turn back time - the difference being that at least Cher knew this cannot be done.

* A British invention.

** The only British PM to have played first class cricket.

Most of us over the age of 40 were educated to take economic growth for granted. Of course, we knew recessions were inevitable from time to time, but these were dips in a rising trend of prosperity. Between 1945 and 2005 real GDP per person grew on average by 2.3% a year, which meant that a young adult earlier this century was three times better off than his grandparents were.

But, but ,but. Such growth was historically unusual. Before 1945 trend growth was usually below 1% a year. The industrial revolution was a miracle that lifted us out of abject poverty, but it was a slow process.

Our faith that 2%+ growth is achievable might therefore owe less to historic evidence and more to the psychological tendency to regard the age we grew up in as the normal one.

In fact, we have many reasons to think that low growth - verging on stagnation - is indeed the norm, especially for a moderately rich country.

Certainly, classical economists thought so. John Stuart Mill wrote in 1848:

It must always have been seen, more or less distinctly, by political economists, that the increase of wealth is not boundless; that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that each step in advance is an approach to it.

For thinkers from Smith to Mill, economic growth was a race between diminishing returns and technical progress which would eventually be won by the former. “Eventually” might have arrived. We’ve picked much of the low-hanging fruit which means good ideas are harder to find. “Research productivity is declining sharply” found (pdf) Nick Bloom and colleagues, a finding corroborated (pdf) by Philipp Boeing and Paul Hunermund. What’s more, bosses have now learned the lesson (pdf) of William Nordhaus that companies capture only a “miniscule fraction of the social returns from technological advances”, and so are less incentivized to make them. Such slower technical progress cannot be offset by faster capital accumulation, given that we need a heck of a lot of it to raise output even by a little.

This tendency is exacerbated by another, pointed out by Dietrich Vollrath in Fully Grown. All economies shift from manufacturing to services as they mature, and this alone would reduce aggregate growth simply because it’s harder to make productivity gains in services than manufacturing.

There’s another reason why economic growth is slow. It requires labour and capital to move from less productive uses to more productive ones. And this change is necessarily slow simply because people take time to adjust; take time to learn of new opportunities or to gain new skills; and need time to not only install capital but to learn how best to use it. These reasons lay behind slow growth in the 18th and 19th centuries. Yes, there were some very dynamic industries but these were small and so their growth added little to aggregate growth: whist the 883,000 people working in the textiles industry in 1841 were becoming more productive, the 1.2 million in domestic service were not.

If AI is anything like all preceding technologies, this will be true of it too. Whilst there’s early evidence that productivity is rising in AI-producing sectors, there’s so far less evidence of it doing so in AI-using ones. That’s consistent with what we saw of other general purpose technologies such as steam power and electricity; it takes many years for them to greatly raise output.

On top of these technical forces there is also a cluster of social forces restraining growth. Joel Mokyr has written:

Technological creativity is a delicate and fragile flower that needs just the right institutional environment to thrive. Yet in a truly dialectical manner, its very success usually destroys the environment it needs to survive.

A prosperous society is one in which there are many people who are content with their lot and who don’t want to jeopardise it with the creative destruction that is economic growth. And so “the forces of conservatism” writes Mokyr “manage through a variety of legal and institutional channels to slow down and if possible stop technological creativity altogether.”

Some of these forces are company bosses themselves who focus on entrenching their incumbent power by buying out potential rivals, aggressively protecting their intellectual property or lobbying for favourable regulation. Managing a growing company is difficult because lots can go wrong (which is why growth stocks have traditionally been overvalued by investors) so why bother when you can opt for the quiet life instead?

As Joseph Schumpeter wrote, managers in big companies tend to be “rationalist and unheroic” bureaucrats rather than entrepreneurs, and lack the dynamism to drive growth.

But it’s not just bosses. There are also nimbys wanting to protect their house prices, a financial sector that benefits from the low real interest rates caused by stagnation, or lawyers and accountants who oppose tax simplification.

How can these people wield so much power against the wider public interest in raising growth? The answer lies in a point made by Mancur Olson in The Rise and Decline of Nations. Small groups find it easier to coordinate than large ones, and so pressure groups form among sectional interests rather than among larger dispersed interests. That leads to lobbying for special favours, protection and tax breaks, all of which accumulate over time to clog up the economy. Meanwhile, the dispersed interests in the sort of things that might raise growth - competitive markets, a simple tax system, more efficient procurement and infrastructure spending - do not organize themselves into lobbying groups and so don’t get a look in.

Maybe, therefore, we should regard stagnation as the norm, even before we think about other forces suppressing growth such as climate change, inequality or an ageing population.

None of this is at all radical. I’ve cited only mainstream thinkers, and I’m ignoring the possibility that inequalities of wealth and power hold back growth, or Marx’s idea that:

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters.

Instead, the point is that pessimism about economic growth, especially in mature economies, is a strong intellectual tradition. Conversely, optimism might be based less upon evidence and more upon the accident of our upbringing. After WWII there was a concatenation of circumstances uniquely favourable to fast growth: a backlog of civilian innovations; a need to rebuild housing and physical capital; declining trade barriers; an absence of major financial crises until 1973; strong wage growth encouraging capital-labour substitution and (perhaps) a confidence that aggregate demand would remain high thereby justifying big capital spending. These circumstances, though, were only temporary. But because we happen to have been born into them, we assume them to be normal. Which they were not.

Now, you might reply here that the UK’s economic performance is so bad that it should be easy to improve it simply by learning from overseas best practice. We don’t need clever ideas; we simply need to stop doing stupid shit.

What this misses, however, is that “stupid shit” is endogenous. The political obstacles to intelligent policy-making are themselves rooted in economics. Stagnation has fuelled a reactionary backlash against liberal migration, funding of universities and membership of the single market. Our economic maturity has created powerful “forces of conservatism” opposed to economic change. And the collective action problem means that sectional interests defeat the general interest.

We can draw two possible inferences from this. One would be to learn to live with stagnation, which means finding some way of beating the far right, the rise of which is itself a symptom of stagnation. The other is to recognise that restoring economic growth requires some very radical changes, if only to create the conditions in which sensible technocratic policy-making is even possible. What is clear, though, is that centrist tinkering isn’t enough.

Infantino’s plan failed because, despite being the nominal boss of Fifa, he did not actually have the power to deliver a meaningful World Cup to outside investors. In threatening to withdraw from the competition, European national football associations were able to prevent a worthwhile event: a World Cup without Spain, France, Germany or England would not be much of a spectacle.

This is an example of a longstanding issue in economics. It’s the so-called hold-up problem. It occurs whenever somebody can hold up production by withdrawing their supplies in order to get their own way. European FAs threat to not participate in a World Cup meant that Infantino didn’t have the power he thought he had.

Companies face this problem all the time. Suppliers of essential parts or labour can threaten to hold up production by withdrawing their efforts and so extract extra income for themselves.

Often, a solution to this is simply to write contracts compelling such parties to provide goods and services at a set price. But this isn’t always possible. Contracts often cannot fully foresee all contingencies or fully specify the precise quality to be supplied (footballers can’t be forced by contract to play well) and even if they can it takes millions of pounds and lots of management time to enforce them. This, I suspect, was Infantino’s problem; he didn’t have a contract compelling national associations to compete in a changed tournament*.

Where contracts are incomplete or unenforceable except at high cost, companies have another solution - ownership. If they buy the supplier they can replace a contractual relationship with a command-and-control one. That, said Ronald Coase (pdf), is why companies exist at all: sometimes market contracting is so expensive.

This is why the same companies own oil drillers as well as refineries or why Tesco has a large fleet of lorries rather than rely on subcontractors. And it answers our second question. Ingka holdings, who own many Ikea shops, is also a huge owner of forest land - 495,000 hectares. Such ownership gives the world’s largest user of timber a guaranteed supply, thereby reducing the hold-up problem. All these are examples of what Oliver Hart and John Moore wrote in a classic paper (pdf): “assets that are highly complementary should be owned together.”

But by whom? It doesn’t matter whether the oil driller owns the refinery or vice versa. But in other cases it does matter. This is because it’s not just owners of physical assets that can hold up production. So too can owners of human capital. The textbook example (pdf) is that of Saatchi & Saatchi. In 1994 shareholders wanted to dismiss Maurice Saatchi as chairman, resenting his high pay and failure to cut costs. Saatchi walked away to form a new company, taking many employees and clients with him. Saatchi and Saatchi went into decline. Those shareholders made the same mistake as Infantino. They thought formal control meant real control. It didn’t. Power lay not with them but with Saatchi.

In these cases the solution is for powerful agents to own the company. As Hart and Moore say, “If an agent is indispensable to an asset, then he should own it.” And again, this is what what often happens**. Business founders own their companies because they are indispensable, say because they have especial knowledge of the production process or have clients personally loyal to them. And many human capital-intensive companies such as law, accountancy or vets practices are owned by partners because if they were mere employees they might do a Saatchi and leave, taking clients, knowhow and colleagues with them.

Powerful agents shouldn’t own companies merely because they could hold up production if they didn’t. They should also do so for a related reason. We want assets to be controlled by those best able to mazimize their value. Because essential people are best able to do this, it is they who should be in control. To incentivize them they should be, in the jargon, the residual claimant - the ones who get what’s left after contracting parties (banks, bond-holders, employees, suppliers etc) have got what the contract specifies. If the company does well, the residual claimant gets big profits, and if it does badly they lose. Incentives should align with the power to make the most difference. And often they are, as when partners or business founders own the company.

The hold-up problem, and its close cousin the residual claimant theory, therefore helps explain lots of what we see about how assets are owned.

But, but, but. There are many issues here. I’ll name just a few.

One is that the residual claimant sometimes isn’t the agent that can maximize the value of the company. External shareholders are residual claimants in that they get what’s left of the company after other creditors have their pickings. But they can do a poor job of maximizing the value of the company because they do not exercise adequate control of management. This is one reason why we had a financial crisis in 2008: shareholders didn’t stop banks from holding bad assets. It’s not accident that building societies which had thrived for decades under mutual ownership collapsed after only a few years with external shareholders.

This problem is an old one. Back in 1989 Michael Jensen wrote:

The idea that outside directors with little or no equity stake in the company could effectively monitor and discipline managers who selected them has proven hollow at best...Institutional investors are remarkably powerless.

The publicly quoted company, he wrote, “has outlived its usefulness in many sectors.” And he was right. Rene Stulz and Kathleen Kahle have documented how the number of companies listed on US stock markets has declined markedly since the 70s with the result that those markets, dominated by a few colossal companies, are less representative (pdf) of the US economy than ever before.

Whilst Jensen’s diagnosis was excellent, however, his prescription has been less so. He wanted managers to have stronger incentives to maximize the value of companies and so favoured things like leveraged buy-outs that would give bosses bigger stakes. We know now, however, that these incentives can causes bosses to chase short-term rewards (pdf) to the detriment of the longer-term health of the company, and can crowd out erstwhile non-financial motivations such as the desire to be a good steward.

Of course, this wouldn’t matter much if the value of a company were merely a private matter between consenting adults. But in important cases it is not, because there are externalities. We saw one in the financial crisis, when the collapse of banks hurt not just shareholders but us all; not only did it cause a recession but it also exacerbated long-term economic stagnation which itself contributed to Brexit. Climate change is another example: the social value of (say) oil companies comprises not just the oil they produce but also the emissions that cause climate change. As Colin Meyer has written (pdf):

Shareholders are not...by any means the only party exposed to the misfortunes of corporations and the more...we strengthen the rights and powers of shareholders, the more we threaten the interests of others.

In a sense all of us are residual claimants upon companies that spew out unpriced or underpriced externalities, be they the risk pollution of banks or the environmental pollution of water companies or the existential danger of catastrophic climate change. In principle, governments could internalize these externalities by taxes or regulation - in effect, pseudo-contracts that shift residual claimancy back onto their owners or managers. In practice, this hasn’t happened. Which opens up a possibility: if we are residual claimants upon banks and other polluters, shouldn’t we have an ownership stake as other ordinary residual claimants do?

Something else reinforces this question. Let’s go back to Hart and Moore’s claim that “if an agent is indispensable to an asset, then he should own it.” In most cases, each individual worker is not indispensable. But collectively, workers are indeed indispensable; if they were to all go on strike, production would cease. The hold-up problem re-emerges. As Hart and Moore say:

What happens if a whole group of agents are indispensable to an asset? In this case, one (or more) of the group should always be given control over the asset.

This is close to what Marx thought. He thought that the working class would grow so powerful that it could eventually act like a single agent, causing a hold-up problem for capital as a whole and so demonstrating its indispensability and hence claim to ownership:

The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the labourers, due to competition, by the revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore produces, above all, are its own grave-diggers.

This didn’t happen because of the collective action problem. It’s difficult to get people to act as one and so the working class has not been able to demonstrate its collective indispensability. The economic logic for collective ownership which Marx thought would emerge has not therefore done so. And so capitalism, in some form, has survived. It is insufficiently appreciated that the economics of asset ownership has wider applications than generally realized.

* In this sense, the tragedy of Infantino is similar to that of Shakespeare’s most sympathetic tragic hero, Shylock. Just as Shylock failed to see that he needed a more complete contract than he had if he were to extract a pound of Antonio’s flesh, so Infantino didn’t realize that he needed a contract compelling national teams to play in a privatized tournament. Both are guilty of not appreciating Coase’s insight that contracts are often imperfect - though Shylock at least had the defence of having lived 300 years before Coase wrote.

** Such agents don’t always own the company if they can extract what they want by their strong bargaining position. This is why footballers don’t own football clubs, why bankers don’t own banks, and why powerful trades unions in the 60s and 70s rarely pushed for ownership stakes. There are however drawbacks to such non-ownership: larger football clubs are owned by reputation launderers and banks are vulnerable to crises.

Right now the system is, as Dan Neidle says, an “insane” gamble. If you have more than £23,250 you must pay all the costs of social care yourself. Which means you might have to pay tens of thousands of pounds and lose your house, depending on the luck of your health. For very many people this gamble is a horrible prospect. They’d like to insure against it. But the private sector doesn’t offer such insurance. That’s an egregious market failure.

Enter the state. In a free society the function of the state should not be to tell children what to do after bedtime or tell adults what toilet to use. It should rather be to do what individuals cannot do for themselves. And the private sector cannot provide the insurance against massive financial losses that many people would like.

Why not?

One reason is adverse selection. Younger people don’t want such insurance because the risk seems to be years away. Only those approaching the danger, or who are just starting to buy social care, want to buy it. But no insurance company would want to sell policies only to those who are bad risks; that’s why health and travel insurance usually doesn’t cover pre-existing conditions.

A second reason is that the risk is not only large (millions of people will need some care) but unquantifiable. Will more people in future face years of Alzheimers or physical incapacity because they now have healthier lifestyles and better control of blood pressure and thus less chance of sudden death through heart attacks? Or will medical progress help to reduce such risks? We don’t know.

What we have, then, is a missing market. Hence the need for state insurance. This isn’t a matter of fairness but efficiency; the state can give risk-averse people the peace of mind that the private sector cannot.

Economists have known this for years. As Kenneth Arrow wrote (pdf) in 1963:

The markets for the services of risk-coverage are poorly developed or nonexistent...The welfare case for insurance policies of all sorts is overwhelming. It follows that the government should undertake insurance in those cases where this market, for whatever reason, has failed to emerge.

Governments do indeed do this. They provide insurance against ill-health and unemployment, and against longevity risk through the annuity that is the state pension. Extending the principle to social care is basic economic logic. If the state doesn’t exist to pool risks, what is its function?*

As for what precise form the insurance should take, there are three main issues.

First, how to deal with moral hazard. Nobody is going to think “Yay, now I’m insured I can get dementia.” But insurance might raise demand for care in other ways. Families might step back from caring for elderly relatives. Or those who’ve been struggling alone claim insured care - just as, when the NHS was formed in 1948, many more people wanted free glasses than the government expected. Insurers’ conventional solution to this is to levy an excess. Requiring that we pay for the first £250 of damage to our cars, for example, deters us from claiming for every little scrape. In the same spirit, the Dilnot report advocated an excess of £35,000. Whether that’s the right amount is a matter of reasonable debate.

Secondly, should the care be provided via a free market as now, or partially nationalized as with hospitals? This question, however, is separate from that of how care should be funded.

Thirdly, how should government collect the insurance premia - via income tax, inheritance tax, some property tax, or what?

For me, we mustn’t let the best be the enemy of the good. Even second- or third-rate insurance would be better than what we’ve got now.

As I say, the issue here is one of basic economic thinking - about why markets are sometimes weak or absent.

It is, however, thought that is beyond the grasp of the right. It’s not just the last government’s failure to implement the 2011 Dilnot report that tells us this. A consistent theme on the right has been an inability to see collective action problems, the fact that people left to themselves can’t solve all social problems. For example:

- Austerity failed to appreciate the paradox of thrift - that if enough people try to save the result is not higher saving but lower incomes.

- Benefit reform to “encourage” people into work, or exhortations to “get on your bike and look for work” can get any individual into work. But they cannot get everybody a job when demand for workers is weak.

- Hostility to mask-wearing and social distancing during Covid was an inability to recognise that one cannot fight pandemics with individual free choices.

- Opposition to net zero is tied to a reluctance to see that carbon emissions and climate change are collective action problems requiring collective solutions.

Badenoch’s hostility to tax rises continues this ignoble tradition. In fact it is especially stupid because people are already paying for social care, and (except insofar as they stimulate extra demand) taxes will merely replace an irrational and arbitrary pattern of payment with a more efficient one.

Burnham, then, is thinking sensibly.

Three cheers.

Well, no. The problem of social care isn’t merely one of funding. It’s also one of real resources. Whatever the funding model, we’ll probably need more care workers in future. Where will they come from?

In recent years, of course, the answer has been immigration (a surprising number, in my experience, from Zimbabwe). With Mahmood now creating a hostile environment for such workers, however, this threatens to change. We’ll therefore need more British workers to do the job. But where to find them?

A few could come from the dole queues. But with unemployment still close to a 50-year low, this isn’t the only answer. Instead, they’ll have to come from other jobs. This will require higher pay and better conditions in the sector to attract people. Which means higher taxes not just to pay those higher wages but also to suppress the inflation that a bidding war for workers would cause. To put it bluntly, more workers in the care sector must mean fewer in other jobs, and taxes are one way of achieving this transition**.

Lower immigration means higher taxes. “There is no free lunch” used to be a cliche of the free market right***, and in this context it’s true. But this is not what politicians want to hear. If Mr Burnham wants to reintroduce economic thinking into Westminster politics, he’s got a tough job ahead of him.

* We Marxists have an answer, obvs. But non-Marxists are supposed to try to prove us wrong.

** Only one way, and maybe not the best. But in the absence of other measures to correct our misallocation of labour, it’s all the government has.

*** Yes, dear reader. There used to be such a thing as the free market right.

Let’s start with the story of Abraham Wald’s work for the US air force. During WWII, many of its planes were being shot down so it wanted to armour-plate the planes. Because such plating was heavy, only part of the planes could be so armoured. But which parts? They looked at the damage sustained by returning planes and saw lots of holes in the wings and tail, and thought that these areas were those most needing protection.

Enter Wald. The damage you see, he said, is only a sample of all the damage that our planes are suffering. And it’s a biased sample. We don’t see planes that have been hit in the fuselage because they don’t make it back. Shots in the wings, on the other hand, are survivable. We shouldn’t worry about armouring them, therefore; its the fuselage we must protect.

This was an early example of recognising the importance of sampling bias.

Now, the thing here is that such bias is obvious when it’s been pointed out*. The moment we say it, it’s clear that the planes that return home differ from those that get shot down. But this much wasn’t obvious to the USAF at the time, which was thinking of armouring the wings. The trick isn’t so much the answer but the question.

We must always ask of anything: is this all we’re seeing, or just a sample? And if it’s a sample, is it a biased sample? And if so, in which way?

We often forget these questions; investors, for example, fail to see that a short run of good performance by a fund manager might be a lucky biased sample of their actual performance.

Which brings me to my fear - that the same is true in politics. Politicians and journalists might, like the USAF before Wald stepped in, be drawing wrong conclusions from biased samples.

An obvious example of what I mean is the vox pop. These are egregious case of sampling bias. This is partly because the sort of people who are on the street in the middle of the afternoon are a biased sample of all people: they’re not at work or trapped at home by a disability. Worse still, the interviewees are themselves selected by editors for those who give answers they want**. The true and honest answer in many cases would be: “Why are you asking me rather than somebody who knows? Fuck off you daft twat.” But that would be left in the editing suite.

This, however, is only one case of many where the opinions we see are a biased sample. Here are some others:

- Financial markets. Investors are a diverse bunch: it takes differences of opinion to make a market. This means there’ll always be someone who’s very bearish, or bullish, or hyper-critical of the government. And this is not to mention that those willing to speak to the media aren’t necessarily a representative sample of all investors. Hard facts about markets are price moves; individual opinions are likely to be evidence of sampling bias.

- X/Twitter is obviously unrepresentative of opinion generally. Not only does the platform attract racists and repel their opponents, but also its algorithms boost rightist tweets and downgrade others.

- MPs’ surgeries. Those who attend these are disproportionately likely to be cranks or those with bees in their bonnets - not all, obviously, but a larger proportion than is found in the general public.

- Legacy media. When newspapers sold millions, it was reasonable to suppose that their opinions were shared by lots of voters. Today, however, hardly anyone buys a print paper: the combined sales of the Mail, Sun, Express and Telegraph are probably less than 1.5 million, just 3% of the electorate. Newspapers now cater to a minority of cranks. We’ve no reason to suppose therefore that their opinions or interests are representative of those of the wider electorate.

- Groupthink. Like many of us, politicians move in narrow circles - in their case, of advisors, journalists and fellow pols. This leaves them vulnerable to groupthink and professional deformation. For example what Simon Wren-Lewis called mediamacro after 2008; or overconfidence about the efficacy of top-down policies; or simply an over-estimation of the extent to which people pay attention to politics.

- Lobbyists. People who organize themselves to form pressure groups or pay lobbyists are a biased sample of all people. As Mancur Olson pointed out, interests that are concentrated among a few people are more likely to get organized than those that are spread across everyone. If ten people stand to gain £1m each from a particular policy they are more likely to form a pressure group than a million people each of whom would gain £20, even though the aggregate gain is larger in the latter case. Lobbyists therefore - by virtue of their very existence - are a biased guide to what is really in the public interest.

You probably won’t be surprised by any of this. Sampling bias is often obvious once it is pointed out. But the thing is that we have to be alert to it. Remembering the question - “is this a representative sample?” - is the difficult thing. The answers are often easy.

Which brings me to my concern: are MPs actually alert to the problem? And it’s a serious one, because all these points imply that the information MPs get - from the media, their constituents or lobbyists - is biased***?

Several things make me suspect not. One is that, under Starmer, Labour’s anti-immigration policy courted the votes of the right without actually winning any. That’s consistent with the party mistaking voices on Twitter and legacy media for wider opinion. It made the mistake of which Bertie Wooster accused Roderick Spode:

The trouble with you, Spode, is that just because you have succeeded in inducing a handful of half-wits to disfigure the London scene by going about in black shorts, you think you’re someone. You hear them shouting “Heil, Spode!” and you imagine it is the Voice of the People. That is where you make your bloomer. What the Voice of the People is saying is: “Look at that frightful ass Spode swanking about in footer bags! Did you ever in your puff see such a perfect perisher?

Two other facts suggest governments neglect sampling bias: the complexity of the tax system; and regulatory capture. Both are consistent with governments kowtowing to lobbyists, unaware that these are unrepresentative of the wider public interest which requires strong regulation and a simple tax system.

Of course, none of this would matter so much if politicians were popular. But they’re not - which is a further data point suggesting that they’re listening to the wrong voices.

Now, I might be mistaken here. It could be that ministers in the Starmer government weren’t really interested in accurately gauging public opinion or (often a different thing!) the public interest. Maybe all they wanted was to defeat the left and get well-paid jobs after politics.

If politicians do want an accurate picture of public opinion, however, then they have a problem, because the traditional means of discovering it are now prone to significant sampling bias.

* Though Wald’s mathematics (pdf) was not so obvious!

** Years ago, a friend was stopped in the street by a voxpopper doing a piece on a survey that had shown Oakham to be one of the best places to live in the country. “What’s it like living here?” she asked. “It’s good”, he said. “Oh, I’m having a bad afternoon” she replied. “I can’t find anyone to say anything bad. “OK” he replied, “there’s not much for young people to do.” Guess what appeared.

*** A further problem is that a lot of public opinion is itself formed by the sampling bias, and not just because of media bias. But that’s another story.

Things have changed. One feature of the Starmer government (and indeed its Tory predecessor) has been to act in ways that no sane business would. I’ll give nine examples.

- Good businesses know that it’s easier and better to keep existing customers than to try to win new ones. Labour, however, has done the opposite. Shabana Mahmood has told socially liberal party sympathizers to “fuck right off” whilst chasing Reform voters who never in fact moved to Labour.

- A good business learns from best practice around the world. UK governments have not done this, for example failing to learn from Japan (or pretty much anywhere else) on how to reduce the cost of infrastructure projects.

- No decent business would have appointed someone without experience to a senior position and without doing basic due diligence, as Starmer appointed Mandelson.

- Businesses don’t deliberately deprive themselves of revenue. But the government does, by keeping us out of the single market thereby causing the economy and tax revenues to be smaller than they’d otherwise be.

- Businesses know what their core competence is, and try to cultivate it. Labour has done the opposite, allowing even top universities (one of the few sectors in which the UK has world-class establishments) to decline, whilst trying to support a steel industry in a country with the highest energy costs in Europe.

- Businesses know that balance sheets have two sides. The government has been unaware of this. Rachel Reeves is reported to be considering using a regulated asset base model to finance the building of new towns, whereby a company provides infrastructure in exchange for charging a regulated price for its use such as a toll for roads or an electricity price for nuclear power stations. This makes sense only because it allows her to meet fiscal rules that consider only the liabilities side of the balance sheet and ignore assets such as the future revenues from toll roads. But this is unbusinesslike. Unless they are in financial distress (which the government is plainly not) businesses don’t have self-imposed rules which prevent profitable investments. And if it’s profitable for a private company to borrow to build a new town then it must be profitable for the government to do so too, simply because the government can borrow more cheaply than the private sector.

- A good business knows that you sometimes need to spend money in the short-term to make it in the longer-run. Successive governments have not done this, for example by closing Sure Start centres even though these save the Treasury money in the longer-run, and by not investing enough in net zero even though the benefits of doing so would exceed the near-term costs.

- In business, contracting out is a matter of detailed economics, not ideology or favours to cronies. Good businesses buy in services only if doing so is cheaper and if they have the ability to ensure the precise quality of what they’re getting. Indeed, as Ronald Coase pointed out (pdf) companies only exist at all because the costs of contracting out exceed those of doing the job in-house. Governments, however, have been more careless about this than any decent company would be. For example, the privatization of probation services and children’s homes led to a collapse in quality; Sam Freedman’s Failed State is good on this. And military procurement has for years been as much about corporate welfare as about building good defences. The House of Commons Defence Committee recently said the procurement system was “broken” and that “multiple, successive reviews have not yet fixed it”. And the NAO has found (pdf) that of 52 of the latest major procurement projects only two were delivered on time and within budget. Very few businesses could survive by being so sloppy (or worse) for so long.

- Businesses know that ownership matters. Takeovers, buy-outs, flotations, and sales of some units are quotidian events. The government by contrast keeps issues of ownership off the agenda, despite clear evidence that private ownership of the water industry is a failure.

Of course, I’m not saying that business is a paragon of how organizations should behave. It’s not. It is, as Marx pointed out, a sphere of exploitation, alienation, domination and unfreedom. And it often fails by its own lights. Nick Bloom and John Van Reenen have shown that there’s a “long tail of badly managed firms”, partly because of nepotism and perhaps because managerialism has supplanted actual good management.

But the government has not abandoned the business paradigm for these reasons. Quite the opposite. It’s kept many of the bad aspects of business and abandoned the good, acting in utterly unbusinesslike ways**. It’s given us not actual competence but rather competenciness - a simulacrum of the real thing. The centre-left’s pretence to being the hard-headed grown-ups in the room is merely a narcissistic fantasy. It no more gives us competent government than children playing at doctors and nurses provide qualified medical professionals.

So, why are politicians so unbusinesslike?

One reason could be that they have so little experience of business that they just haven’t a clue how it works. As Martin Robbins says:

Our political system is so out-of-touch with any semblance of what effective management looks like in the modern world that in their minds basically any dull man in a suit will do.

Politicians get their image of business not from the real world but from The Apprentice, wherein a bunch of talentless wannabees mistake ambition and gobshitery for any ability to run things.

But there’s something else. In the 1990s, Labour saw business as a paradigm of successful achievement, in contrast to the party itself which had been out of power and sometimes in chaos since 1979. Today, however, two decades of stagnation have left us with very few British businesses that are models of success*. Instead, the paradigm has changed. Politicians now aspire not to be like businessmen but like “influencers” trying to grab eyeballs. Badenoch is the exemplar of this in the digital age: like a cushion that bears the imprint of the last arse to have sat on it, she repeats the last tweet to have impressed itself upon her. Farage is the analogue equivalent, with his dominance of legacy media. Starmer’s tragedy was like Coriolanus’ - unable to either parlay his old skills into his new role, nor adapt to it.

Which poses a question about Burnham. To what extent is his rise the result of him seeming to be a better influencer, with nice eyes and an ability to speak human, and to what extent because of superior ideas and ability to govern? We can but hope.

* One exception to this is Games Workshop, but politicians don’t want to appeal to their client base.

** Don’t tell me that Labour needs to act like this because of public opinion. I might buy that if they were at 35-40% in the polls, but at 15-20% it is just drivel.

In this context, I’m pleased to see a great paper by Matthew Lawrence and Alex Williams, The Productive State: A Framework for Manchesterism.

To see its virtues, let’s start from a basic fact - that in several industries private ownership has failed. It has given us energy prices which are among the highest in the world, and water companies that are in effect pollutants who funnel cash from customers to bond-holders. We have, they write:

The worst of both worlds: price distortions, excess profits, regressive distributional impacts, and chronic underinvestment, matched to cumbersome but ineffective public oversight.

The notion that this could be solved by better regulation is centrist utopianism. As George Stigler (no leftist!) noted back in 1971 (pdf):

As a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.

Instead, say Lawrence and Williams:

The fundamental problem is ownership, not conduct. It is impossible to regulate away a problem created by ownership.

The solution, they say, is to have new public corporations to own and control key utilities. These would have big advantages over private ownership. One is that, because they have state backing, they would have a lower cost of capital. This, allied to their longer time horizons (not being accountable to shareholders who are focussed on quarterly earnings) would encourage longer-term investment. A second would be that they would be accountable not to discredited regulators or to ministers following passing whims but to workers and communities.

The precise composition of their boards should vary according to context: only fanatics believe that there is a one size fits all solution to questions of ownership and control.

Herein lies what for me is a great strength of this paper - the recognition that context is indeed so important.

One thing that matters here, they recognise, is the potential for productivity growth. Where there is such potential, private ownership can often achieve it. This isn’t because such ownership is necessarily more innovative: as Mariana Mazzucato has shown, state-run entities can also be innovative. Instead, it’s because competition drives productivity improvements by forcing inefficient units to close (pdf) and facilitating the opening of newer efficient ones; a well-functioning market rather than ownership form is essential to productivity gains.

But, but, but. Genuine productivity gains aren’t possible in many industries. We’ll not find a much more productive way of producing and distributing water or even of running trains. What matters is capacity more than efficiency, and this is better achieved by public corporations that invest more than the private sector by borrowing cheaply and having longer time horizons.

And, add Lawrence and Williams, the same is true in some services sectors:

Care work, education, and healthcare require human presence, time, and relationship; their quality depends on exactly the things that resist productivity improvement. In these sectors profit serves little productive function — it cannot incentivise efficiency gains that are not available.

In such industries, “productivity improvements” are often just managerialist bullshit, a cover for increased exploitation, rent extraction and service degradation. In such industries, there’s a case for public rather than private ownership.

Equally, they say, public ownership might be better where essential needs are involved such as water, housing or energy or where there are essential policy goals to be achieved, such as decarbonization.

So far, so good. So, what are the problems with this?

It’s not that such corporations would take on too much government-backed debt. Balance sheets have two sides - a fact our silly fiscal rules don’t acknowledge. The profits from such corporations could cover interest payments thereby actually strengthening the public sector balance sheet.

Which brings us to what is an issue. There’s a trade-off: corporations could pursue social goals such as reducing the cost of living; or they could maximize profits. Only rarely will these goals coincide. There is a case for them doing the latter: Nye Bevan, for example, advocated the socialization of profits as a means of financing public services and reducing the power of capital. But we need to be clear which we want.

Herein lies a common objection to such public corporations: as we saw in the 70s and 80s, ministers will sometimes use them to pursue their own political projects such as the crushing of trades unions. Lawrence and Williams think this can be avoided by having workers and community representatives on boards to achieve “arm’s-length independence from day-to-day ministerial control.” How likely is this? Pessimists will reply that ministers don’t like giving up power; optimists that we have a precedent for such an arrangement - the Bank of England.

A further problem is one they recognise but which is for me (for now) important - the real resource constraint. Why don’t we have (say) more building of social housing? Yes, it’s partly because of silly ideological objections. But even with the most sensible politics, we’ll not be able to build many houses quickly for want of builders and materials. The point broadens. Yes, public ownership will change management incentives. But to paraphrase Harold Abrahams’ coach in Chariots of Fire, incentives can’t put in what God left out. They’ll not be able to magic up a solution to the UK’s decades-old problem of a lack of quality management. So we shouldn’t expect utilities to become very much better run. There’ll always be a great deal of ruin in this nation.

There’s another issue here. Lawrence and Williams are very intelligent guys with great ideas. But is there any place in politics for these? We’ve been here before. Their paper echoes John McDonnell’s attempts to promote (pdf) more diverse modes of ownership as a (partial) solution to low investment and stagnant productivity. Those attempts failed not because they were proven to be mistaken by intellectual effort - they weren’t - but because they were unacceptable to the more reactionary elements of capital that had influence over the media and Labour party. Why should these good ideas prove more implementable than McDonnell’s good ideas?

Politics is not a neutral arena in which the best ideas win: if nothing else, Brexit taught us this. Instead, it is an arena of power. The challenge for technocrats of all parties isn’t to have good ideas. It is to foster the conditions in which such ideas can triumph. In this context, this requires the mobilization of workers and customers* to actively support Lawrence and Williams’ ideas and to oppose failed private ownership.

Such mobilization must be for life, not just briefly. Even the best-designed modes of empowering workers and customers and disempowering ministers can be overturned by a future government. Worse still, public ownership, even if it works well, gives a future right-wing government assets which it can sell-off cheaply to their cronies to finance tax cuts for their clients. An overlooked issue for sensible policies is the challenge of how to future-proof them against malicious and stupid governments?

* Do we want residents to be mobilized? Yes, if the issue is one of polluted water, but no if it is about mass-scale housebuilding. Which speaks to a problem with democratic ownership (and democracy generally!); giving people a voice can mean giving the wrong people a voice.

It’s not just those experts of whom people have had enough who believe this. So too do the voters. According to Yougov, 57% think we were wrong to vote to leave the EU, including 23% of Leave voters. And only 12% think Brexit has been a success.

Our biggest political decision in years, taken after months of extensive public debate, was therefore mistaken.

Unlike other bad decisions, such as the Truss/Kwarteng Budget or the election of a succession of inadequate prime ministers, this decision doesn’t look like being swiftly corrected. When it mattered most, therefore, our political system and culture got it wrong.

Which raises the question: what can be learned from this?

The answer is NOT merely that “bad men lied”. Yes they did, for example the claims that Turkey would soon join the EU or that leaving would give the NHS an extra £350m per week. But this only poses two questions: why did people believe the lies? and why were the lies not successfully exposed as such?

Let’s take the first question. People didn’t believe the lies merely because they were stupid. Natural experiments conducted by Bernie Madoff and Elizabeth Holmes show us that intelligent people can fall victim to scams. Instead, there are a few psychological mechanisms which Leavers - maybe knowingly, maybe not - tapped into, such as:

- Wishful thinking. People want to believe there are easy answers and the wish is father to the belief. The idea that the “easiest [trade deal] in human history” would solve our problems was such an answer.

- Deference. We have, said Adam Smith, a “disposition to admire, and almost to worship, the rich and the powerful.” It’s no accident that the pushers of lies such as Farage and Johnson were posh public schoolboys of the sort which some people look up to.

- Prospect theory (pdf). People who have lost money are sometimes willing to gamble to get even. That’s why, for example, why they tend to back outsiders (pdf), especially in the last race of the day. Brexit therefore appealed to those who felt that they’d lost out - to those who agreed with Anand Menon’s heckler: “That’s your bloody GDP, not ours.”

- Snake oil. People are likely to turn to con-men if the alternatives have failed. Werner Troesken shows how snake-oil sellers (pdf) exploited this. They invested a lot in advertising and in product differentiation and so when other products failed they could claim that theirs would work when the others hadn’t. Similarly, Brexit was offered as an alternative to previous policies.

These last two mechanisms are consistent with the facts that support for Brexit was strongest in areas hardest hit by austerity and in areas that suffered more deaths from suicide and drug use, symptoms of socio-economic dysfunction. This fits a general tendency for economic stagnation (as evidenced for example by pub or shop closures) to foster support for the far-right*.

Brexit wasn’t therefore merely the result of lies. Discontent with the existing order created a rich soil in which lies could take hold.

Which raises our second question. To extend the gardening metaphor, why were these lies not rooted out? John Stuart Mill famously thought that in a free discussion “wrong opinions and practices gradually yield to fact and argument.” This did not happen in the Brexit debate. Why not? To put this another way, why did the media not call out and correct lies?

Simple. Journalists don’t tell the truth for the same reason that they don’t deliver our groceries or fill potholes. It’s not their job. The job of journalists is the same as that of every other employee - to do as their employer wants. And much of the media is run by those who support Brexit more than they support truth and honesty. The BBC was too weak a counterweight to this propaganda, preferring to report the controversy rather than the facts.

Our public sphere - the realm in which political debate occurs - has fallen victim to a tragedy of the commons. Just as individual pursuit of self-interest can cause common land to become over-grazed or fishing stocks to become depleted, so the self-interested pursuit of partisan opinion degrades the public sphere.

To push the analogy further, commons were traditionally often protected by stinting: setting limits, often through social norms, on how much one could graze or fish. Analogously, the public sphere was once protected by norms against lying. But the demise of those norms flooded the zone with shit.

How to change this is a separate question; suffice to say here that it should be much higher on the political agenda than it is.

Instead, my point is addressed to those who believe, I think rightly, that Brexit was a mistake.

It’s not sufficient merely to point out this fact. We also need to be aware that Brexit arose from particular socio-economic and institutional conditions - in particular a stagnant economy which fostered not merely discontent with the existing order but also hostility to liberalism and an open society; and a privatized public sphere which allowed lies and fanaticism to thrive.

And these two factors are still very relevant.

Which brings me to my beef with centrists and technocrats of all parties. Calling for good policies is like writing recipes when you don’t even have a kitchen - a pointless display of intellectual superiority. Instead, the challenge is: how can we create the conditions in which intelligent policy-making is even feasible? Those who want liberal technocratic policies must favour radical change, because only this will create the conditions in which rational policy-making is even possible.

* All this is not wisdom after the fact: Benjamin Friedman’s The Moral Consequences of Economic Growth was published in 2006 and should therefore have been known long before the Tories implemented fiscal austerity.

First, we must recognise that to a large extent the bond market constraint is in fact an inflation constraint. If a government were to borrow significantly more, bond investors would fear that the higher aggregate demand would raise inflation. This would lead either to expectations of higher interest rates as the Bank of England tried to control inflation, or to fears that their gilts would be redeemed in pounds that were worth less. Either would force up yields and hence borrowing costs.

On the other hand, government debt in itself is much less of a problem. We know this because yields were much lower in the 2010s than in the previous decade even though debt was twice as high; and because yields hit a record low in 2020 as Covid pushed up the debt-GDP ratio but rose sharply in 2022 when Russia’s invasion of Ukraine raised inflation expectations.

All this is quite compatible with there being a “political risk premium”. A weak government, unable to take unpopular decisions such as cutting spending or raising tax, is more likely to increase borrowing.

But, but, but.

For one thing, higher inflation is a problem whether there’s a bond market or not simply because the public don’t like it; they think a pay rise is due to their own merit but a price rise is someone else’s fault. The bond market just gives governments a more timely signal of this problem.

And for another, this is a constraint upon right-wing as well as left-wing governments. When Truss cut taxes for the rich in 2022 yields rose as the markets feared higher inflation.

The converse of this is that if we were to impose massive tax rises on the rich bond yields would probably fall as the market anticipated weaker demand and lower inflation. The MMTers have a point: higher taxes are an anti-inflationary policy. And bond markets would welcome this.

The bond market would welcome some leftist policies.

But not all. Imagine a government were determined to increase economic growth by improved supply-side policies - be they looser planning laws, tax reform, better financing of start-ups, better competition policy, economic democracy, whatever. And imagine further (which might be a stretch) that the bond market were to believe it would be successful. What would happen to yields?

They’d rise, even if the increased growth were not to cause inflation. This is not because markets hate the left; yields would rise even with the centre-rightist policies advocated by Westlake and Bowman as long as they increased economic growth. Instead, it is merely because if investors anticipated better economic growth they would try to sell bonds to buy assets that were more sensitive to economic growth, such as equities.

Wouldn’t this also add to government borrowing costs?

Yes. But the same growth that causes borrowing costs to rise would also bring in extra tax revenue. It’s not good enough to go “borrowing costs up, ugh”. What matters is why yields rise: one that occurs because of a higher Trump tax (increased oil prices) is a bigger problem than one that is a reaction to the prospect of faster economic growth. Rising bond yields aren’t necessarily a bad thing, and aren’t necessarily a constraint.

Which brings me to my beef. If we’re going to talk about constraints upon government policy, let’s not single out only one. Let’s discuss others.

One is simply the overt power of capital. Under capitalism governments must maintain business confidence if there’s to be investment and growth, which requires business-friendly policies; the lobbyists give big business disproportionate influence not only over politicians but also over regulators; and the prospect of well-paid jobs after politics helps ensure that politicians work for the rich.

Another constraint is our debased public realm. Not only does this amplify Farage’s right-wing lies, it also pushes rank bad economic policy such as austerity and Brexit and distorts the political agenda, giving too much weight to immigration* and not enough to issues that really matter for living standards such as how to better control utilities; how to cut the cost of infrastructure projects and military procurement; how to reallocate labour; how to improve management; how to provide and pay for social care; how to divert entrepreneurs from rent-seeking to productive activities; whether and how to promote economic democracy; and so on. And this is not to mention the Kuenssberg-Mason-Peston habit of ignoring policy in favour of Westminster tittle-tattle and the fact that even the very best journalism (of which we see little) provides a distorted view of the world by focussing on human interest rather than social science.

Personally, I suspect this constraint is less binding than many imagine, and that the power of the media is like that of the Wizard of Oz, an illusion. Whilst governments believe in it and act accordingly, however, it is a constraint not only upon leftist policy-making but all intelligent policy-making.

This belief, however, is not the only mind-forg’d manacle. Politicians are selected to be biased towards an excessive confidence in top-down policies and against decentralized policies and institutions that give agency to ordinary people. So they have too much faith in managerialism and too little in economic democracy, well-functioning markets, freedom and emergence. That forecloses a lot of policy options - not only leftist ones such as more worker ownership or market socialism but also rightist ones such as more use of markets.

Another constraint is an ideology that disposes voters and politicians to be deferential to the rich. Adam Smith famously wrote:

We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent...The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness.

Several cognitive biases feed into this disposition.

One, described by Kris-Stella Trump, is an anchoring effect: our perception of what is fair is coloured by the actual existing distribution of resources. So when the top 1% get 13% of pre-tax income as they do now we think big inequality is more acceptable than we did in the early 80s when their share was only 7%.

Related to this is a status quo bias, a preference for the existing state of affairs even if a change would benefit us. Building on this, John Jost has developed system justification theory (pdf), the idea that “even members of disadvantaged groups would – for psychological reasons – want to believe that the existing social system is legitimate and justified.”

A third bias is wishful thinking. People over-estimate their future incomes and under-estimate risks, leading them to be overly supportive of austerity and benefit cuts. The same bias might cause them to be too sympathetic to Reform’s plans to deport immigrants, believing these will only affect “bad” immigrants rather than their friends, neighbours and relatives.

A fourth bias arises from reference groups; we tend to compare ourselves to those around us. This causes the poor to be less hostile to the rich (who are out of sight, out of mind), and more so to benefit claimants and migrants who are their neighbours. And so we get not class envy but rather within-class envy (pdf).

And so we have an ideological bias against questioning inequality and towards despising the poverty and weakness of the innocent. That’s a constraint upon egalitarian policy-making.

Now, we can and should argue over just how binding these constraint are: I suspect they are less so than you would infer from Labour’s current behaviour. But that is a separate issue. The main point is that the bond market is by no means the only constraint upon intelligent leftist policy-making, and very likely not the biggest one.

* As Ben Ansell has shown, people actually living in diverse areas are more supportive of immigration. Which suggests anti-migrant sentiments are at least in part a media confection rather than the result of actual lived experience.

Maybe non e vero ma e ben trovato. But it illustrates an important problem with targets: not only can they be gamed, but they replace what actually matters and so distort our priorities. In his new book, The Score, C. Thi Nguyen calls this “value capture”, whereby a simplified metric supplants our fundamental values. There’s often a gap, he says, between what’s being measured and what actually matters.

This is what happened with our Russian nail factory: what really mattered - producing nails - was supplanted by fulfilling a target. It also happens when teachers “teach to the test”: the fundamental goal of educating students is replaced with fulfilling a metric of getting them through an exam. It happened in the run-up to the financial crisis, when bankers’ targets for increasing lending took precedence over the need to lend prudently. It happened at Stafford Hospital when the target of gaining Foundation status caused hundreds of patient deaths. It happens when company bosses chase short-term earnings targets to the neglect (pdf) of values that will sustain the business over the long-term such as an honest corporate culture or development of good products. And Nguyen adds the example of US law schools who invited applications from people with no chance of being admitted because a high rejection rate was used as a sign of the schools exclusivity in league tables.

Such things don’t happen merely because cynical people game the targets. The problem, says Nguyen, is also that metrics change our internal value system. For example, people might go for a walk rather than do more strenuous gym work because getting their step count up eclipses the more general and important aim of getting fit.

As Jerry Muller wrote:

What can be measured is not always what is worth measuring...The things that get measured may draw effort away from the things we really care about. And measurement may provide us with distorted knowledge - knowledge that seems solid but is actually deceptive. (The Tyranny of Metrics, p8)

I say all this because I fear that Rachel Reeves is doing exactly this. She is reported to be considering using a regulated asset base model to finance the building of new towns. Under this method a company provides infrastructure in exchange for charging a regulated price for its use, such as a toll for roads or an electricity price for nuclear power stations.

One problem with this is that if it is worthwhile for a private company to invest in exchange for such revenue streams then it will also be worthwhile for the government to do so. Using the RAB would therefore mean the government forgoing some revenue; this continues a pattern for Reeves to ignore opportunity cost. A second problem is regulatory capture: the company will successfully lobby for lax regulation and thus high prices. The RAB thus risks being a bad deal for both taxpayer and customers. There’s no magic money tree.

So why do it? The argument is that it would attract more investment and so accelerate building.

But the government can already attract billions of funding: recent gilt auctions have been three-times oversubscribed. And this financing will be cheaper than the RAB to the extent that gilt interest payments are lower than the toll revenues the government foregoes.

The government doesn’t need RAB financing to raise money. It needs it to get around the constraint imposed by the fiscal rule that public sector net financial liabilities should be falling as a share of GDP by 2029–30. Also, future interest payments count as public spending whereas foregone toll revenues do not, so again a RAB model makes it easier to meet the fiscal rules.

This is where value capture comes into the story.

Insofar as fiscal rules serve a purpose, it is because they prevent the government from borrowing and spending so much as to increase inflation and therefore interest rates.

But, but, but. If workers are being hired to build new towns, this is potentially inflationary anyway insofar as it adds to demand for workers and building materials thereby pushing up wages and prices. This is true whether the building is financed public or privately. Reeves can bypass the fiscal rule by using private finance, but she cannot bypass the inflation constraint.

And it is this that really matters. Gilt yields - government borrowing costs - depend far more upon inflation expectations than they do upon the level of government debt: this is why they were much lower in the 2010s when the debt-GDP ratio was over 75% than they were in the 90s when the ratio was half that. And of course private sector spending can raise inflation expectations just as much as public spending; this is why gilt yields rose during the economic booms of the late 80s and late 90s even though governments ran fiscal surpluses then.

What Reeves is doing therefore is substituting a metric (the debt-GDP ratio) for its fundamental underlying purpose, low inflation. She’s behaving just like that nail factory that made a useless one-ton nail. She’s forgetting the point of the rule and making a fetish of it.

How harshly should we judge Reeves for this? From the point of view of economics, very much so. But maybe that’s not the proper point of view. In sticking to fiscal rules, Reeves won’t satisfy the bond market; it cares about inflation more than the rules. Who she will satisfy, though, are Kuenssberg, Mason and Peston. Breaking the fiscal rules - even for an intelligent end - would cause these to engage in their tiresome “gotcha” questions. Bypassing the the rules, on the other hand would spare Reeves this embarrassment. Politics is institutionalised stupidity.

Under our first-past-the-post electoral system, a party does not need a majority of the vote to win a parliamentary majority. In fact, since 1970 less than 45% has been sufficient. And in a multi-party system a party needs even less: in 2024 Labour won a massive majority with just 33.7% of the vote.

The challenge for any party, therefore, isn’t to “unite the country”. It is to find support from 35-40% and to hang onto it.

Thatcher of course knew this well. She built a coalition of traditional Tories, well-off professionals, aspirational yuppies, white van men and people who’d bought a cheap council house.

In doing so, she taught us two big lessons.

Lesson one is that successful electoral coalitions are not homogenous. Thatcher distrusted the “wets” and many older Tories despised the new money and wannabes who backed Thatcher: Sir Julian Critchley called them “garagistes”. But Thatcher held the coalition together. You don’t have to like people to find them useful.

Lesson two is that you don’t need to “reach out” to your opponents. You don’t need to placate them or acknowledge their “legitimate concerns”. Thatcher didn’t do any of this. She saw her opponents as an “enemy within” to be disempowered. If people aren’t going to vote for you it doesn’t matter whether they think you’re decent but slightly misguided or whether they hate you with every fibre of their being. All that matters is that you keep your own 35-40% on side.

Herein, however, lies a nice coincidence. For a centre or leftist party what is electorally sensible is also morally correct.

One reason for this lies in the old problem of vicious preferences: why should we give any weight to desires to do harm to others? We wouldn’t agree to do so behind a Rawlsian veil of ignorance for fear of our fundamental interests being vulnerable to others’ urges. And nor is there an obvious justification in utilitarianism; the pain suffered by the victims of such preferences probably outweighs the pleasure others get from having their whims indulged. We should therefore say to supporters of Reform’s plan to split up families; create an British-style ICE and massive detention centres; and drive out long-standing residents: “your preferences are no part of civilized politics.” This, of course, is if we have to discuss the matter at all. Which we shouldn’t. A good 35% strategy would crowd the subject off of the agenda simply by putting so many other ideas onto it - mostly about improving growth and public services. Controlling the agenda is crucial.

There’s another reason to ignore many people’s preferences. It’s simply that they are founded upon error. Almost half of voters think immigration has increased recently, even though it is is sharp decline. Many voters are wrong about the composition of public spending: over 20% believe that either overseas aid, asylum seekers or MPs expenses are among the three things that government spends most on when in fact these are tiny shares of spending. And they are wrong too about benefit spending. One survey found that people on average believe that 36.9% of welfare spending goes on unemployment benefit whereas the true figure is less than 5%. They also overestimate levels of benefits fraud: the average guess was 28.1% whilst actual overpayments attributable to fraud are just under 3%.

Such egregious errors mean that peope’s preferences are no guide to their well-being. If you think that cutting unemployment benefits or overseas aid will pay for a decent tax cut you are simply wrong, just as you were if you thought Brexit would pay for big rises in NHS spending, and just as you are if you think lower immigration will improve jobs or public services.

As Daniel Hausman argues (pdf), there’s no reason to satisfy mistaken preferences when these are a bad guide to what will improve people’s welfare.

In fact, there’s a positive reason why we shouldn’t do so. To see it, imagine that university grades, job offers or even jury verdicts were handed out by lottery. There would be righteous outrage. This is because we have a right to expect that decisions that have important effects upon our lives be taken competently. As Jason Brennan has written:

Just as defendants have a right not to be subject to incompetent jury trials, innocent people have a right not to be subject to badly made high-stakes political decisions. Presumptively, if the legitimacy and authority of jury decisions depend on competence and good faith, then so do the legitimacy and authority of all government decisions. (When All Else Fails p88-89)

By this benchmark, government policy aimed at placating those who are simply wrong is noy just unwise but illegitimate.

It is therefore both electorally expedient and morally correct to ignore large chunks of public opinion. Personally, I’d include much of the media in this. It does nothing to keep people well-informed and nothing to improve the standards of governance. And it appeals only to a small minority. The combined daily print sales of the Mail, Sun, Express and Telegraph are probably less than 1.5 million. That’s less than 4% of the electorate - fewer people than go fishing (pdf).

Now, I’ve kept quiet about what the precise policies of a 35% strategy should be. They certainly would not be promises of immigration crackdowns which alienate Labour’s own supporters without winning new ones. What they should involve is an appeal to the material interests of working-age people, tenants and public sector workers and promotion of the social liberalism to which most Labour voters subscribe.

Labour is doing some of this: improving tenants’ and workers’ rights; more support for childcare; and gradually raising public spending. But of course opinion polls and the recent council elections show that it is generally failing. It has learned neither of the two big lessons from Thatcher.

In trying to appease racists whilst telling liberals to “fuck right off” it has lost its own supporters whist not gaining Reform voters: Yougov estimates that 38% of those who voted Labour in 2024 swtiched to the Greens and Lib Dems in May’s council elections, whilst only 6% went to Reform. In chasing a mirage of a homogenous bloc of socially conservative “working class” voters Labour has lost much of its coalition of liberals, young metropolitans, ethnic minorities, public sector workers and trades unionists.

In doing so, it acted in a completely unbusinesslike manner. All good businesspeople know that it’s easier to keep a customer than to win a new one; that you can’t always choose your customers; and that one must never “do a Ratner” and insult your customers. In ignoring all this Labour has been simply grossly amateurish.

A better strategy would have been: “we’re going to hold onto our base and the other 60% of the electorate can fuck off.” Whilst Labour might not say the latter explicitly it should have followed Thatcher in identifying some enemies within, because doing so can help cement one’s own coalition: racists, Tories who spent 14 years wrecking the economy and public services, allies of Farage and Putin, or rip-off landlords and utilities.

All of which poses the question: why has Labour not done this?

It could be that they’ve been misled by the median voter theorem, which just doesn’t apply in a multi-party first past the post system. Or maybe they’ve been misled by the media and X into believing that public opinion is both more right-wing than it really is. Or it could be that Blue Labour ideology (which seems much more “blue” than “Labour” to me) has trumped electoral considerations. Or it could even be that many influential figures in Labour aren’t actually interested in winning the next general election but simply want to “bash the Trots” and get well-paid jobs in the private sector.

Whatever the reason, there is something we know for sure. The attempt to reach out to reactionary and racist voters has failed. Labour needs a new approach - which means learning from Thatcher’s success.

Starmer, they say, has no ability to manage a team; an aversion to conflict; no guiding mission for power; no energy to drive change; little interest in people; and no interest in political strategy.

And now, we might add, no ability to command the loyalty of all Labour MPs.

There’s an important and overlooked lesson here: success in one job doesn’t ensure success in another, so it is vert difficult to identify the best person for a job.

For example, Boris Groysberg has shown that when divisional managers at General Electric bcome CEOs of other companies, their performance varies enormously even though all had similarly impressive CVs before moving. He’s also shown that the performance of “star” equity analysts often drops markedly when they move firms. And Robert Huckman and Gary Pisano have shown that the performance of heart surgeons varies according to which hospital they do operations in. “Surgeon performance is not fully portable across hospitals” they say:

When a highly skilled worker must interact with a complex array of other assets—human and physical—within a given firm, the performance of that worker may not be easily transferred across organizational settings.

This echoes Robert Protherough and John Pick:

Rightly we honour the memory of managers such as Jesse Boot, Dr Bernardo, Florence Nightingale, Thomas Cook, the Joseph Rowntrees or W.H.Smith…[But] the notion that they had in common a single talent which can be identified as “managerial skill”, capable of ready transference between their different callings, is pure fantasy. That Dr Bernardo could equally well have run a chain of newsagents, or that Thomas Cook could just as readily have run a chocolate factory, is manifestly absurd. Yet the modern world believes as fervently in the transferability of management as it believes that management skills are separate and identifiable realities. (Managing Britannia, p 13)

All this of course confirms what every football fan knows. From Brian Clough at Leeds to Arne Slot at Liverpool, via almost every post-Ferguson boss at Man Utd and every manager bar Mauricio Pochettino at Sp*rs, countless managers arrive with stellar reputations and leave as failures.

And not just in football. Lots of men (it’s usually men) have been brilliant in one sphere only to show themselves as fools when they move out of it: James Watson, William Shockley, Bobby Fischer, Richard Dawkins...

Success, then, is often not transferable.

Why? One reason is that successful people can get high on their supply, mistaking luck for skill and becoming overconfident.

There’s another reason, though. It’s that what determines success or failure isn’t merely individual ability but rather the match between the individual and the job requirement. This is what Groysberg found. If a manager good at controlling costs took over a mature business needing to protect its margins, he did well. But if he took over a firm needing to grow, he didn’t. The same thing’s true of football managers. One good at organizing a defence and playing effective but dour football won’t last long at a team demanding exciting football: think of Mourinho at Sp*rs or Man Utd or Moyes at West Ham.

The same’s true in politics. Theresa May’s lack of interpersonal skills was a handicap in negotiating Brexit, but one can imagine that her dour diligence would have served OK during Covid; at least she wouldn’t have been partying.

Which brings us to the problem with Starmer. Sure, being head of the CPS is a high-profile leadership role. But it differs from being PM in some important respects. For example, the CPS has a clearly defined role but what the role of government should be is vaguer. The PM must therefore define it, must set out a clear vision and strategy. Also, MPs are not like CPS lawyers. For one thing they are not Starmer’s employees; their future instead depends upon the voters or potential private sector employees. This makes them less deferential (and more likely to talk to the media!) A PM therefore needs skills of persuasion and the ability to command personal loyalty; merely being the boss isn’t enough. And the CPS, being a monopoly, need not worry about competitors, whereas a party leader most definitely must.

In these respects, being a good DPP (assuming, arguendo, that this is what Starmer was) does not equip one to be a good PM. Starmer has been unable to make the transition.

To some extent, this is forgivable. We are all prisoners of our professional background (as well as our class, formative years etc). Starmer’s culpability lies in allowing his ambition to over-ride both his self-knowledge and (what should have been) his knowledge of management history, or even of the saying that “round holes need round pegs.”

In this, however, he’s not alone. Our individualist culture over-emphasizes the importance of personal qualities and under-emphasizes that of organizational capital and of the need for a good match between person and role. This is reinforced by neoclassical economics’ talk of human capital and marginal product.

So, what’s the solution to this?

In part, we need unsentimental precision. We must ask: what exact qualities do we want in a PM? And: who possesses these? In asking these we must ignore vibes and hype. We must also pay little heed to policy platforms, as these can change; policy is a product of incentives, not merely individuals’ dispositions.

There are, however, tight limits on how much we can achieve even with this approach simply because we can never have perfect information about individuals and even less about the future; the things we might want from a PM today might not be those we want in a few years’ time if only because there’s a big difference between governing and campaigning. Everybody taking a view on who the next Labour leader should be must be humble in their judgment, and must recognise that their circle of competence in this matter is small.

In fact the private sector doesn’t get it right, as anyone who has worked in it knows: there’s a reason why the Peter and Dilbert principles are so well known. Hirers often look not for the best employee but for those whose skills they can easily assess, causing them to prefer proven mediocrities to potentially but unproven better ones. And often it is more important to avoid toxic employees rather than hire superstars.

Which suggests we need something else - resilience. If you can’t get a decision right, at least ensure that your inevitable mistakes don’t do much damage.

In one sense, we have such resilience in politics. However bad the PM is, the NHS treats people, taxes get collected and benefit cheques go out. The basic functions of the state continue, albeit not as well as they might.

Support for the Labour party, however, is not so resilient. Which matters as a weak Labour party increases the strength of Reform even if few voters switch directly between the two parties.

One way to improve resilience would be to have a more collective leadership - not necessarily formal co-leaders as the Greens used to have, but a system in which the leader is only first among equals; in which power is devolved from the centre; and in which strategy is decided by something more robust that the private whims of a few shadowy individuals.

Of course, such a system is precluded by our political culture. The media wants a simple narrative of politics as a conflict of individuals - anything to stop it facing the facts of complex social systems. And a mindless managerialist ideology leads politicians to over-invest in the dream of “good leadership”: centrists are as unrealistically utopian as any teenage lefty.

So yes, perhaps we get the leaders we deserve.

To someone of my age, whose feeble intellect was formed in the 70s and 80s, this is weird. “In our system, under our principles, the government is there to serve and satisfy the liberties of the people” said the most influential politician of my lifetime. For her, freedom and the rule of law were essential principles - ones under attack now from our main political parties. And for her and her fellow cold warriors the virtue of the west against communism was precisely that it valued freedom.

Which poses the question: why are Thatcherite values now opposed by those who live in the shadow of Thatcher and even by some who consider themselves Thatcherite?

Part of the story, I suspect, lies in the optimism bias. Politicians are selected to be overconfident about their ability to control human affairs from the top-down; you wouldn’t enter politics unless you thought you could “make a difference”. This disposes them to be heedless of Hayek’s argument for freedom:

Since the value of freedom rests on the opportunities it provides for unforeseeable and unpredictable actions, we will rarely know what we lose through a particular restriction of freedom. Any such restriction, any coercion other than the enforcement of general rules, will aim at the achievement of some foreseeable particular result, but what is prevented by it will usually not be known....And so, when we decide each issue solely on what appear to be its individual merits, we always over-estimate the advantages of central direction. (Law Legislation and Liberty Vol I, p56-57)

If we’re being generous, Reform’s desire to bang up tens of thousands of people is the reductio ad absurdam of this optimism bias. It over-estimates what James C Scott called legibility (pdf), the ability of government to read society - in this case, the ability of the state’s goons to distinguish between illegal immigrants and legal ones or British citizens*.

This over-optimism is reinforced by a nastier selection effect: politicians are selected to be psychopaths**. People who are superficially charming, willing to take risks, and who lack empathy are well-equipped to rise to power in politics (and business!), especially in a culture that values “strong leaders”. And psychopaths want to control others.

Although voters in general have only average levels of psychopathy, they too are prone to the optimism bias. “I never thought they’d eat my face says woman who voted for the Leopards eating people’s faces party” is a meme for a good reason. It describes, for example, those who voted for Brexit only to later complain about long airport queues and difficulties in owning their home in Spain. And the same applies to support for Reform’s mass detentions; the party’s supporters think it will be other people who get stopped and detained, oblivious to the fact that even the whitest of Brits cannot be easily distinguished from a Romanian or Pole.

Which brings us to another reason why people hate freedom; doing so is an expression of hatred for out-groups.

Immigrants and ethnic minorities, however, are not the only out-group. So too are young people. Why ban these from social media when older ones are just as likely (or more so) to be radicalized online? And mightn’t such a ban harm isolated youngsters - such as neurodivergent or trans ones - who can find a community online that they can’t otherwise? Who cares? Youngsters are the out group. And that’s what matters.

All this, however, runs into a question. None of these biases against freedom are new, as Hayek (perhaps partially) pointed out. Why then, did politicians at least feel the need to pay lip-service to freedom in my formative years when they don’t now?

In many cases, I suspect, it’s because their professed love of freedom was insincere. Talk of freedom was a way of trying to legitimize western governments during the cold war in the face of communist tyranny, and to legitimize hierarchy and the pursuit of profit. That’s why the right talked more about the lack of freedom suffered by Russians than that suffered by black South Africans, Chileans or Indonesians. It’s also why they were much keener on free markets when mass unemployment was forcing wages down than they are when those markets raise wages or threaten the profits of incumbent companies. And it’s why they have never been interested in people’s lack of freedom in the workplace. As Corey Robin has written:

When the libertarian looks out upon society, he does not see isolated individuals; he sees private, often hierarchical, groups, where a father governs his family and an owner his employees.

Also, what the right today means by freedom is instead mere narcissism - the belief that they should be free from social obligations. This is why they hated wearing masks during Covid; hate speed restrictions; oppose efforts to curb carbon emissions; and want “free speech” for racists but not for supporters of Palestine.

By contrast, it is the left that is more obviously sincerely pro-liberty: wanting to legalize drugs as Zack Polanski does, and wanting more rights to protest, are libertarian policies but they are also leftist impulses.

It’d be tempting to infer from all this that it is the left, and not the right or centrists, who are now the true champions of freedom. Perhaps so: personally, I’ve long thought of myself as having a large libertarian streak. Whether there are many votes to be had in such stance is, however, questionable.

* Alternatively, of course, it might be that they simply don’t care about such distinctions.

** Of course, this isn’t to say they are all psychopaths (or even that this is always a bad thing!), merely that there’s a bias towards them.

If your final shortlist for a job comprises Mandelson, George Osborne (and maybe Bear Grylls) but not anyone with direct relevant experience such as career diplomats then you’ve probably not even bothered to do a detailed job description; you’ve not asked “what’s the shape of the hole we want to fill and who is that shape?”. One of the most prestigious jobs in government seems to have been filled with less care than an investment bank would take over the hiring of a junior analyst.

This, however, is by no means the only way in which political decisions fall far short of basic professionalism. Here are some others:

- The government ignores opportunity cost. For example, in funding Sizewell C or Transport for City Regions, in supporting the expansion of Heathrow, or in wanting to increase the share of GDP spent on the military, it doesn’t say what is being cut, or not being done, to pay for these projects. We can’t therefore know whether these are good ideas or not. That’s a failure of basic project appraisal. And opportunity cost is not the only basic economic idea of which the government seems unaware: there’s also regulatory capture, transactions cost economics and the tragedy of the commons for example.

- Shabana Mahmood claims that 350,000 “low-skilled” workers and their dependents qualifying for settlement in the UK over the next five years represent a £10 billion cost to the taxpayer. This is not only almost certainly false in its own terms, but misunderstands economics: “low skill” is the product of ideology and a low level of economic development, not just individual characteristics.

- Sir Keir Starmer seems not to understand the basics of what the job of Prime Minister should be. It should be to set out a basic strategy (”vision” if you like) for government and to resolve conflicts between departments. But observers agree that he is terrible at both of these.

- Starmer thought there were “policy levers” which he could pull and easily achieve results, only to discover that there weren’t. This is a double failure: to not appreciate history (many ministers before him made the same mistake (pdf)); and to fail to understand that policy-making isn’t a simple engineering issue but is more like gardening, an exercise in guided emergence.

- Labour’s promise not to raise tax or national insurance rates makes intelligent tax reform more difficult - for example by lumbering us with the £100,000 pa “tax trap” which deters people from working more, changing job or getting promotions.

- The government’s fiscal rule that the current budget should be in surplus by 2029-30 means that fiscal policy depends upon a forecast that is inherently volatile, with the result that policy itself is unstable. If that’s not daft enough, targeting net financial debt means that the government considers only one side of its balance sheet and ruling out the acquisition of potentially lucrative assets: a household with such a rule, for example, would never take out a mortgage.

- There’s great concern with opinion polls, without anybody asking: how is public opinion formed and changed? and is it really a reliable guide to what people really want or to good policy-making?

None of these examples are merely of individuals mis-speaking in a throwaway remark. They are instead fundamental to how the government operates, and are examples of a basic failure to understand social science and government. No sane person would run a household or business with the lack of care or intellect that the government devotes to its affairs.

And this is with the “grown-ups” in charge. If we could bear to look beyond Labour, we’d see the LibDems and Greens wanting to over-ride the price signal of high oil prices; people of all parties drivelling about the benefits system without having endured applying for PIP; and whatever nonsense comes from Reform.

Politics, then, is fundamentally stupid.

Why have things sunk so low?

It could be that what’s happening is incentivized stupidity. Just as bankers had no incentive to spot risk in the run-up to the financial crisis, so politicians have no incentive to act intelligently. Voters are woefully ignorant about basic social facts, and the media ensures that they remain so. Politicians have an incentive to pander to this ignorance. And many on Labour’s right, it seems, would rather “bash the Trots” and get a well-paid job after leaving parliament than actually win the next election.

This, however, is only part of the story. It doesn’t explain why Starmer was willing to risk losing so much political capital appointing Mandelson as US Ambassador. And anyone wanting a job outside parliament surely has an incentive to give the impression of not being an idiot. What’s more, the media was more powerful in the 90s and early 00s than it is now (at least if power is proportionate to circulation) and yet Blair and (especially) Brown managed to govern intelligently.

Something else, then, is going on.

Partly, it’s a part of a general dumbing down: just compare the BBC’s output now to (say) Civilization or the Ascent of Man. In particular, what Simon Wren-Lewis calls the “knowledge transmission mechanism” (pdf) has broken. Academics, perhaps because of pressure to publish, have retreated from the public realm to be replaced by junktanks and newspaper columnists. Whereas Thatcher would regularly refer in her speeches to Friedman, Hayek or Popper, her epigones cite nobody of comparable standing.

There’s something else. We’ve lost the conception of politics as a discrete profession in which trade-offs and conflicts of interest are managed by our representatives. Instead, politics is seen as just another retail experience where we leave bad reviews if we don’t get what we want. The public sphere has suffered from a tragedy of the commons, leaving a wasteland with no place for politicians wanting to do anything other than fulfill the orders of billionaires and shadowy donors.

Whatever the reason, the fact is the same. Westminster politics is something which no intelligent person can look upon with anything other than revulsion. We are in the position described by Alasdair MacIntyre at the end of After Virtue: how to build communities to sustain intellectual life during our new dark age.

The episode reminds us that MPs lose their privacy: remember that fuss about Ed Miliband eating a bacon sandwich or Diane Abbott having a drink on a train? Every ordinary trip out of the house risks not just being reported to the press but being interrupted by some gobshite. They can’t enjoy the things the rest of us take for granted.

Even when they’re “on” (as celebs put it), MPs have troubles. They’re assailed by every crank and pompous arse wanting their time. Their offices are vandalized. Those with constituencies outside London are at the mercy of unreliable and overcrowded trains. They face regular conflicts between their own opinions (”conscience” if we’re being pompous) and the demands of their whips. And all this for a lack of respect from voters.

There are indeed burdens of office.

Which is not a new observation. Shakespeare has Henry V complaining (Act IV scene 1):

We must bear all. O hard condition,

Twin-born with greatness, subject to the breath

Of every fool whose sense no more can feel

But his own wringing. What infinite heart’s ease

Must kings neglect that private men enjoy?

And what have kings that privates have not too,

Save ceremony, save general ceremony?

And what art thou, thou idol ceremony?

What kind of god art thou that suffer’st more

Of mortal griefs than do thy worshipers?

What are thy rents? What are thy comings-in?

O ceremony, show me but thy worth!

Kings, he continues, worrying about governing, sleep less soundly than the “wretched slave” with a “vacant mind.”

Even at the time, this was not a new thought. In around 474BC Xenophon imagined a dialogue between a scholar, Simonides, and Hiero, the tyrant of a city state, wherein the latter says:

The fact is rather that the pleasures of the despot are far fewer than those of people in a humbler condition, and his pains not only far more numerous, but more intense.

The ruler, he says, cannot travel freely for fear of assassination - or, nowadays harrassment and interruption. He can’t trust those around him, fearing they are merely insincere flatterers: Starmer’s claim that he wasn’t told of Mandelson failing vetting is plausible given that underlings often withhold bad news from their bosses. And, added Hiero, the ruler is never satisfied with a job well done as he always needs more power and security. As Enoch Powell said, “all political lives, unless they are cut off in midstream at a happy juncture, end in failure.” How many politicians leave office saying “I’ve achieved all I set out to do”?

All this raises the question: why, then, would anyone want to become a politician?

I’ve asked one or two directly, and they’ve struggled to explain why, saying it’s some gut feel, something in their blood. Which I think is a good honest answer. De gustibus non est disputandum. Some of us become trainspotters or opera fans without being fully able to articulate why.

Many MPs rationalize this taste, some sincerely, by claiming to want to do publc service. The problem is that those who think they can make a positive difference to society are often overconfident: about their chances of achieving ministerial office; about their ability to resist the pressures of the media, lobbyists or capitalists; about the ease of actually making policy, believing in non-existent “levers of policy”; and about the possibility of policy changing complex societies and economies. The mere fact of being a politician therefore marks someone out as ideas which are unrepresentative of rational educated people.

There is, however, a less pleasant reason why a few people might want to bear these burdens of office. It’s that they don’t actually value the ordinary human relationships and freedom of conscience that those in power must sacrifice, but do value being a minor celebrity and the insincere flattery of cranks and lobbyists. And because they don’t care about others, they don’t feel the burden of responsibility of having to make others suffer.

Such people are psychopaths, more like the Henry who orders the murder of prisoners after the battle of Agincourt than the one who feels the “mortal griefs” of having others’ lives in his hands.

Of course, everybody sneers at diagnosis from a distance. What we can say, though, is that a lot of observed political behaviour is consistent with decision-makers being psychopaths: the austerity that killed tens of thousands of people; the bombing of Yemen, Afghanistan, Iraq, Iran, Libya and Syria; the pattern of coercive control seen in the urge to curb our freedoms such as the freedom of movement we had in the EU or the criminalization of peaceful protest; or the valorization of strong, even ruthless, leaders.

This isn’t wholly a bad thing. There’s a place for psychopaths. Politics isn’t about cosy chats with Laura Kuenssberg. Sometimes, it’s about choosing who to throw under the bus. That requires ruthlessness.

Nevertheless, one might feel disquiet at our political culture selecting so strongly for psychopaths, hobbyists and the overconfident and selecting against rational people who want a quiet life. Paradoxically, the intrusion into MPs personal lives actually worsens the quality of government.

What can be done about this?

Calls for a “kinder, gentler politics” are mere sanctimonious posturing. And hypocritical too, given that such kinder, gentler politics doesn’t extend to cover immigrants, trans people or benefit claimants.

I’m not sure raising pay alone is sufficient. This might only increase resentment towards MPs and make people feel more entitled to intrude into their lives. It might also crowd out more public-spirited motives, leaving us with MPs who are no more competent but more self-interested.

One alternative would be to have a better public sphere. An intelligent polity would pay more attention to social science and to systems thinking and less to gossip and tittle-tattle about individual politicians. Merely saying this of course raises Isaiah Berlin’s point that great goods cannot co-exist: a free press is incompatible with good government (or even basic principles of democracy).

There is, though, another possibility: sortition, selecting citizens at random (pdf) to serve in citizens’ assemblies to consider important issues subject to rules of evidence designed to facilitate rational evidence-based decision-making. This wouldn’t render traditional MPs redundant. But in moving issues to such assemblies it leaves fewer decisions in the hands of people who have been selected for overconfidence or psychopathy.

And it might shift the political culture. Members of citizens’ assemblies would serve only temporarily and wouldn’t be career politicians. They wouldn’t therefore have so high a public profile as MPs and the media would have less incentive to snoop into them. And having them shape policy according to rational rules of evidence would increase the importance of evidence and downgrade that of individuals. That should encourage attention to shift from individuals to evidence and science.

This is a radical idea, albeit one that has other arguments in its favour. But that’s the point. Our political system and culture is so dysfunctional - even for politicians themselves let alone the 99.99% of us who aren’t plutocrats - that it needs radical change.

It is because of these costs that companies exist. They, in effect, replace the market with a hierarchical relationship. Rather than finding a contractor for every job the employer can simply tell an employee what to do. Instead of looking for a supplier of parts, the company can make them itself. And rather than worry about having to renegotiate contracts if things change, a company can simply order its workers to do different tasks.

Every time a company asks: should we do this in-house or contract it out? it is posing the question Coase asked 89 years ago. And so we have the large field of transactions cost economics.

So far, so conventional. But, but, but. It is not just entrepreneurs who face costs of using the market. So too do all of us, especially in a world where we must be on guard against scams and enshittified products. As the great Dan Davies has said:

Every transaction is a decision, and decisions cost energy. Removing the price mechanism, for a while, can be intensely relaxing.

Back in 1970 Alvin Toffler coined the term “choice overload” to decribe how having more options causes people to have a harder time deciding and to be less satisfied with their choices. Even a well-functioning market (in fact, especially a well-functioning market) is costly not only in terms of time and effort in using it but also in terms of the cognitive load it imposes on us. That was the message of Barry Schwartz’s book, The Paradox of Choice.

We’ve big evidence of this. Since the 1960s American women have had much more market choice - more opportunities to find good jobs. But Betsey Stevenson and Justin Wolfers found that this entry to more parts of the labour market actually made women less happy on average. They wrote (pdf):

The increased opportunity to succeed in many dimensions may have led to an increased likelihood of believing that one’s life is not measuring up. Similarly, women may now compare their lives to a broader group, including men, and find their lives more likely to come up short in this assessment. Or women may simply find the complexity and increased pressure in their modern lives to have come at the cost of happiness.

That’s a downside of more participation in the labour market.

Individuals, then, like companies, need ways of escaping the market, of avoiding the cost of using it.

In fact, we have many of them.

Historically, one has been marriage. Arthur Pigou famously said that “if a man marries his housekeeper or his cook, the national dividend [what we now call GDP] is diminished.” This is because doing so replaces a market transaction with a non-market one. The problem is that, as Marx and generations of feminists have both noted, non-market relationships can be as oppressive as the market relationship.

Another escape has come from trades unions, who undertake the task of negotiating pay and conditions, thereby saving members the cost of doing so.

Of course, unions are weaker now than they once were, but their role has been (in part) replaced by regulation, such as minimum wage laws. This is no accident. Philippe Aghion and colleagues have shown that unions and legislation are substitutes for each other. Such is our need to escape the costs of using the market that if we cannot do so one way we’ll do it another. And it’s not just labour market regulations that do this job. Consumer protection laws save us the cost negotiating and enforcing contracts. (Optimists might add that regulators also do this - which is true to they extent that they haven’t been captured by the industries they oversee.)

Not that we need others to help us escape the market. We can reduce cognitive load by force of habit. We go to the same supermarkets and pubs and keep the same bank and utility providers for years, until service drops below an acceptable level. As Herbert Simon said (pdf), satisficing saves us the bother of optimizing.

We also have hobbies that keep us out of the market. DIY and gardening save us the bother of hiring tradesmen and gardeners. And we like all-inclusive holidays as they save us the trouble of finding good bars and restaurants in unfamiliar places.

And then there are price comparison websites and Google reviews, though these are flawed: reviews can be gamed, and those websites are funded by their industries.

We also, though, simply choose to stay out of the market, to not buy or sell. Millions of us achieve Timothy Leary’s dream of dropping out of the labour market simply by retiring. And before then many of us want jobs for life to save us the trouble and uncertainty of changing job. I stayed at the IC because I didn’t want the bother of going to job interviews or having the hassle of starting a new job, and I certainly hated the thought of freelancing - having to pitch stories to comissioning editors, chase payment and deal with HMRC. Equally, we don’t move house unless we need to, not only to avoid the deadweight financial costs of doing so but also to avoid the stress of dealing with lawyers and the fear of regretting the move. And we avoid making home improvements because of the uncertainty of finding decent builders or bathroom fitters.

Of course, many people don’t use these escape routes. Quite the opposite. The self-employed choose to leave corporate hierarchies and go to the bother of finding their own customers and so on. In doing so, though, they are asking Coase’s question, and weighing the costs of using the market against the costs of being in a hierarchy. Transaction cost economics isn’t just for companies; it’s for people too.

Trouble is, some of our ways of escpaing the market are inefficient from the point of view of a market economy. Staying out of the markets reduces GDP. Habit can be a barrier to entry; it keeps companies that are just adequate in business, and retards the growth of more efficient companies who cannot prove their merits. What Marko Tervio said of the labour market applies also to consumer markets: mediocrities (pdf) win out over unproven talent. Also, if we stay in an adequate safe job rather than risk changing, there can be a loss of productivity caused by a mismatch between workers and roles. And our reluctance to move house results in an inefficient allocation: some people stay in houses that are too big whilst others are cramped together.

Of course, the notion of perfect market efficiency is a fantasy as silly as those of any teenage leftist. “There is a great deal of ruin in a nation” said Adam Smith. Nevertheless, anyone who was serious about wanting a well-functioning market economy would ask whether these inefficiencies could be reduced. One way to do so would be to foster the growth of strong independent consumer advice and advocacy groups - trades unions for customers if you like - which would cut the costs of market transacting by searching for the best suppliers and prices on customers’ behalf.

In the absence of such powerful groups there is a case for regulation. It reduces the costs and uncertainty of market transacting and so encourages us to enter the market. Labour protection laws encourage us to change jobs and consumer protection laws give us confidence to buy goods knowing we can take them back to the shop if they’re defective, for example. The alternative to regulation could be us choosing not to buy or sell at all, making us all poorer.

In saying all this I am echoing Karl Polanyi. A market society, he wrote in The Great Transformation, is “entirely unnatural”. The “tendency to barter” which Smith thought a natural human propensity, wrote Polanyi “is not a common tendency of the human being in his economic activities, but a most infrequent one.”

This is not to say we must ditch markets: if you think they impose a cognitive load you want to try participatory planning. What it does mean, though, is what Adam Smith knew - that markets, if they are to work for everyone’s benefit, must be embedded in particular institutions and cultures. It’s far from clear that 21st century capitalism has these.

First, the facts. ONS data show that the Gini coefficient has fallen slightly since 2007. This is in effect a measure of all inequalities across the whole spread of incomes so it can hide a lot. My chart, taken from HMRC data, shows more detail. It plots changes in real incomes (deflated by the CPI) from 2007 to 2023 (the latest data) across the income spectrum from the 10th to 99th percentile*. It shows that, essentially, the lower were incomes in 2007 the more they’ve risen since.

The chart perhaps exaggerates the changes because I’m using unannualized data. Someone who as stayed at the 30th percentile of the income distribution (£21,500 in 2023) has seen their real income rise by just over 1% a year whilst those in the 70th-80th percentiles (around £43,000) have seen next to zero growth. From year to year, that’s a barely perceptible difference.

This squeezing of relative incomes reflects several things, among them a rising minimum wage; improved pensioner benefits; and lower unemployment. These are to be welcomed.

But it also of course is due to the stagnant economy that has seen a flat-lining of average and above-average incomes. In this sense, rightists asking us to celebrate falling inequality are like people who have burned our house down telling us we now don’t have to bother with the washing up.

There are also other good reasons for not celebrating.

One lies in house prices. At the start of the century, the average house cost £70,000, four times as much as the income of someone at the 60th percentile. Now, it costs over £270,000, which is eight times as much as that income. That means that whilst somebody on a middling-to-good income could have afforded a decent home thirty years ago, today they cannot.

Yes, this is a matter of inequality; the inequality between those who can afford a house and those who can’t has become more salient in recent years.

This has broken an implicit social contract. We were brought up to believe that if we did well at school and got a good job we would enter the property-owning “middle class”. This belief has for many proven false, the more so because managerialism has eroded professional autonomy, with the result that those “middle-class” jobs - in finance as well as academia (pdf) - have become stressful insecure grunt-work with long hours. Marx’s description is thus vindicated: “the lower strata of the middle class...sink gradually into the proletariat.”

The resentment this engenders is reinforced by the fact that, for many people near the top of the income distribution, inequalities are visible and irksome. A pre-tax income of £70,000 puts you into the top 10%, £100,000 into the top 5%, and £201,000 into the top 1%. We naturally compare ourselves to people like us. Just as no man is a hero to his valet, so nobody in the 0.1% is a hero to his underling or college contemporary. Middle-managers have a lively awareness of the short-comings of senior managers, as professors do of those of vice-chancellors. And a doctor covered in blood will wonder why he gets less for saving somebody’s life than his college contemporaries get for doing something less useful or even harmful.

Inequalities of income, however, miss an important fact - that there are also inequalities of power. These inequalities unite those on low and high incomes alike. The professors on £80,000 a year (93rd percentile in 2023 figures) facing job insecurity and stupid instructions from their vice-chancellors or the doctors subject to NHS “reforms” are in similar positions to the minimum-wage worker being bossed around by her supervisor. But they’re in a very different position from the man in the top 0.2% who’s on £500,000 a year. He has “fuck-off money” - the freedom to walk away. And if we go further up the scale, immense wealth and income buys you not just freedom from economic concerns and bad bosses but also political power.

Which gets us to the crux. It’s plausible that these inequalities of power have contributed to (pdf) economic stagnation. Bankers’ power to extract implicit subsidies and to avoid tight regulation contributed to the financial crisis. Billionaires’ control of the media tipped the balance towards Brexit, and prevents intelligent and meaningful analysis of policy not least by keeping some issues off the agenda and others on it. The mega-rich invest resources that could be spent on new technologies instead in efforts to preserve their wealth, for example by entrenching (pdf) hierarchies or by lobbying for favourable regulation and copyright laws that stifle competition. Weak trades unions and strong management power have encouraged increased exploitation rather than investments in labour-saving technologies. And big corporate hierarchies encourage office politicking; cultivating skills which management can easily assess rather than more useful ones; and incentivize short-termism (pdf) at the expense of healthy corporate cultures.

The stagnation resulting from these mechanisms might have reduced inequalities between those on above-median incomes and those on lower ones, but it has increased resentment. If the economy is growing at 2-3% a year someone in a lousy job might justifiably feel optimistic about getting a better one. But if the economy is stagnating such hope is absent. And so similar level of inequality is accompanied by more anger: Albert Hirschman called this the tunnel effect.

In this context, the fact that measured inequality of incomes hasn’t changed is irrelevant. If a man’s been hit by lorry you do not restore him to health merely by stopping the lorry.

What we have here is yet another example of how discourse is dumbed down by a lack of a Marxian perspective. Marx’s beef with capitalism was not that it created inequality or poverty; pre-capitalist societies did that. His complaint was that it created new forms of domination, oppression and alienation; deprived many of the independence that comes from property ownership; and that the inequalities between property owners and the propertyless which intially fostered economic development would eventually retard it.

Discussions of income inequality miss the important fact that these complaints are more valid now than they have been for years.

* I’ve left out the bottom 10% of incomes as these might be distorted by people running down their savings rather than taking an income or by the self-employed under-recording their incomes (although data shows that these incomes have increased in recent years). And HMRC don’t give data on incomes within the top 1%.

cope with reviewer 2.

In my 60s, however, I have finally discovered what I was cut out for - to be a dilettante. I go to a class on Shakespeare each week, learn Italian, study music theory and composition, play guitar, read novels and history, and cultivate a garden as well as writing this Substack. I know a little bit about a lot of things: you want me on your quiz team.

Which poses a question: which is better - to be a dilettante or a fanatic?

I use the word “dilettante” rather than polymath not from modesty but from reality. Knowledge has advanced so much that it’s no longer possible to be a true polymath. Maybe John von Neumann or Jacob Bronowski came close, but they were rare geniuses even three generations ago. What Adam Smith said of the production of goods applies also to the production of knowledge: it requires a division of labour, people who devote much of their life to a single narrow subject.

We need fanatics who do just this. And not just in academia; musicians, novelists and artists must be fanatical enough to practice enough to master their disciplines.

Fanaticism doesn’t always foster knowledge, though. Liz Truss is a fanatic, but not overly freighted with knowledge or wisdom. She’s an extreme example, but you know many less extreme others, and if you don’t just look at any Question Time audience.

And even where fanatics do learn, Smith’s analogy goes further. Just as there are diminishing returns to the production of goods so too are there to the production of knowledge: research productivity is falling. And fanaticism coupled with pressure to publish leads some academics to falsify data, use AI slop or simply to make claims that aren’t true - hence the replication crisis.

Also, of course, Smith wasn’t entirely admiring of the division of labour. It causes people, he said, to become “as stupid and ignorant as it is possible for a human creature to become.”

That’s perhaps an exaggeration for most professional people. But it contains a germ of truth. The Christmas editions of University Challenge are a little dumbed down because people who’ve had distinguished careers (a malefaction I avoided) haven’t had the time to cultivate wider knowledge.

The fanaticism that leads one to identify closely with one’s work can also lead to professional deformation, a failure to see that one’s professional standards cannot always be applied to the wider world. Academics, for example, are prone to seeing bad policy as intellectual error rather than what it often is - the product of power struggles or bad incentives.

Another fault of the fanatic was exemplified recently by Marc Andreessen saying that people 400 years ago didn’t do introspection - oblivious to the fact that the title character in Shakespeare’s most famous play does exactly that.

Dilettantism is a correction to this error. What I’m learning is that there are different ways of learning. For most of my life, I’ve been able to flip through papers and books on economics thinking “I’ve got the gist of this”, and this has been good enough. In other subjects it’s not. In learning a language or playing guitar what matters is that you just immerse yourself. James Buchanan’s advice to young researchers is correct: “keep your ass in the chair.” When reading Shakespeare and other literature you must look not merely for clarity as you do perhaps in scientific disciplines but for ambiguity. The meaning of “to be or not to be”, for example, varies depending on which word is emphasized. And whilst the search for absolute precision and for general laws is good in physics, it is often silly in the social sciences.

Fanatics who have stuck to one discipline neglect these differences - especially if, like too many techbros, they overvalue high IQs. That leads to a mistaken belief that because they are masters of one discipline (or fancy themselves as such) they can apply their expertise to anything else. Andreeson’s silly remark continues a long tradition of people who excel in one field making fools of themselves in others: Bobby Fischer, William Shockley, James Watson, Richard Dawkins, pretty much any businessman in politics, and so on. A good dilettante, on the other hand, at least knows enough about other disciplines to know his limits.

A related mark of the fanatic is the habit of seeing things from only one point of view. We see this sometimes in economics, when conventional economists try to squeeze every “shock” into a DSGE model without considering whether such models have their limits - not least being that they have so many “shocks” that are exogenous to their system. Better economists follow Dani Rodrik’s advice and use different models in different contexts, knowing the strengths and weaknesses of all. They’re dilettantes.

What’s true of economics is also true of politics. There are those so wrapped up in their own mindset that they can’t escape it. The absurd extreme example of this is Trump’s war on Iran. As a narcissistic solipsist he has no theory of mind, no insight into his opponents, and hence no strategy, with the result that he was surprised when the Iranians fought back.

Sane people, however, are prone to a less idiotic form of what I mean, and the vice is far from confined to so-called extremists. When he blamed Today’s falling listenership on “news avoiders” Nick Robinson failed to appreciate that the journalist’s point of view is only one of many, and that intelligent people are increasingly cheesed off with it. And mainstream economists sometimes cannot think outside of their preferred theory, whereas we Marxists can use Marxism or conventional economics as the context requires, Marxism for me being an antidote to ideological fanaticism.

In these respects the dilettante is a close relation of Richard Rorty’s ironist - one who forever doubts their own beliefs and vocabularies, aware that there are other sometimes compelling ones and able to step into them when required.

Here, however, we run into a problem. Social structures sometimes select for fanatics.

Dilettantes can set up a successful businesses, but they sell out for a few million and retire to the country. What distinguishes them from billionaires isn’t ability so much as the fact that the billionaire is fanatical enough to keep going. This is true of work generally. Whereas fanatics try 9-9-6 working (at least for a while!) dilettantes jump off the partnership tracks, change career, downshift or retire early, allowing fanatics to rise to the top. No wonder, then, that so many CEOs are sniffy about home-life balance. Corporations are sometimes likened to psychopaths, because they often end up being run by those with a monomanic obsession with “success”.

The business people we hear most from - billionaires and CEOs - are fanatics.

The same’s true of politics. Being an MP means your evenings are taken up with meetings and your days with attending to constituents and lobbyists with bees in their bonnets. That means the political process selects for fanatics, and so even the best politicians are unrepresentative of intelligent thinking. For example they overvalue hard work, failing to see that for millions of people it is drudgery and unfreedom, and overestimate what policy can actually achieve.

Years ago, journalists spoke of MPs such as Jenkins or Heath having a “hinterland”. That’s gone out of fashion.

One might imagine there’s an upside to fanaticism in business and politics, expressed (pdf) by George Bernard Shaw:

The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

He wrote that in 1903. The following four decades showed the problem with it - that the enemies of progress are even worse fanatics. We now face the same problem we had in the 30s: how to defeat the forces of reaction, those who would reverse the progress made on racial and gender equality?

Not with dilettantism or ironism. Robert Frost warned against this when he said that “a liberal is a man too broadminded to take his own side in a quarrel.” That’s great for civilized discussion in SCRs, but less so when fighting the far right. As Toby Buckle says, those who believe in liberal equality need to state their case more strongly - to be more fanatical.

Here, our national mythology disguises a nasty fact - that Stalin and communists did more to beat Nazism than liberal westerners. Dilettantes and ironists might be civilized people, but on their own, civilized people don’t defeat Nazis.

Almost everybody in work is in it for themselves. Doctors, binmen, guys on the checkout at Lidl - none would be there if they weren’t being paid. And do you care what a dentist or mechanic knows about the real world? No.

Why, then, do we put our trust into these people who are all in it for themselves and are out of touch with the real world? And why, so often, is this trust justified?

Incentives, that’s why. The mechanic who couldn’t fix your car, or dentist who couldn’t mend your teeth, or the shop that sold you mouldy veg, would soon lose business. And, being in it for themselves, they don’t want that. As Adam Smith famously said:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.

And here’s the problem. Whilst the self-love of the butcher, the brewer, or the baker gets us our dinner, that of politicians doesn’t so often do so. As voters we are beggars, depending on the benevolence rather than self-interest of politicians.

This is because well-functioning markets (which are only a subset of all markets) give people who are in it for themselves incentives to act in our interests. In politics, however, these incentives are weaker and even perverse.

In theory, this shouldn’t happen. Politicians want to get re-elected, and this should incentivize them to pursue the public interest.

One problem with this is that voters don’t know what the public interest is because they are systematically misinformed about social affairs. They have no idea about the size and composition of public spending; misunderstood the impact of EU regulations; overestimate the numbers of asylum seekers; overestimate (pdf) spending and fraud on welfare benefits (pdf); and don’t understand how economics works.

Politicians feel incentivised to pander to such ignorance. Cameron and Osborne spoke of the “nation’s credit card”; Labour promised in 2024 not to raise income tax rates; and the Greens and LibDems want the government to respond to high energy prices by cutting fuel duty. In any rational polity, all these statements would be greeted by voters with contempt and plummeting support. But they weren’t.

Politicians who are incentivized to pander to public opinion thus give us bad government, because voters’ preferences aren’t a good guide to their interests. The fact that voters sometimes wise up to their mistakes - for example by regretting Brexit or being cheesed off with declining public services - does not overturn this point.

There’s another bad incentive: there are no penalties for failure. There have certainly been many such, from privatized water through fiscal austerity to Brexit and privatized probation services and children’s homes. But the authors of these have not suffered. Quite the opposite. Cameron and Osborne went onto big money jobs. Even Chris Grayling, one of the most egregiously abject of ministers, got paid £100,000 a year for seven hours work a week on leaving office. And advocates of Brexit such as Daniel Hannan or Nigel Farage are still raking in cash despite having been proven wrong.

In fact, failure can sometimes be good for politicians even in electoral terms because, as Gilles Saint-Paul points out, it can maintain a government’s client base. He gives the example of pro-poor parties that would lose their supporters if they actually abolished poverty. But there are others. The fact that Brexit hasn’t worked gives its advocates the chance to whine that it hasn’t been properly tried. And grievances about immigration have to be maintained by parties trying to appeal to anti-immigrant voters.

The converse is also true: success doesn’t get you elected. Rising incomes for workers under the Labour governments of the 60s and 70s meant that many felt themselves sufficiently well-off to vote Tory. And the 1997-2010 Labour government did a good job of reducing pensioner poverty - with the result that pensioners stopped voting for it.

Politicians don’t, then, have strong incentives to avoid bad policies. But they do have incentives to chase corporate donations and cushy jobs after leaving office. This encourages them to not regulate industries harshly; to not demand value for money in procurement (pdf); and to extend profitable subcontracting. Wes Streeting’s keenness on introducing more private companies into the NHS might be founded less upon fine considerations about NHS productivity and transactions cost economics and more upon the career prospects of an MP with a majority of only 528.

The claim that politicians are “in it for themselves” therefore misses the point. Incentive structures in politics encourage those who are “in it for themselves” to make bad policy. Whereas well-functioning markets can make bad people do good things, political systems can make even good people do bad things.

Incentives matter. In failing to see this, people are substituting moralistic cliche for analysis of systems.

What to do about this? You can perhaps all think of ways of changing incentives - though almost all those ideas run into the problem of how to actually achieve such change.

You might, therefore, that this is a case for having more public-spirited people in politics, for somehow strengthening the notion of “public service”.

But “find a saint” is not a reliable political strategy. And even if one could do so, the fact remains that politics is not merely a matter of good will. The politician’s job, like that of the dentist or car mechanic, requires technical skills: the ability to recognise trade-offs and explain them to voters; an understanding of decision theory and cognitive biases; an awareness of the key mechanisms in the social sciences; an ability to drive through the implementation of policy; an ability to get elected; and so on.

Herein lies yet another problem. Our degraded public sphere is dominated by noisy fanatical partisans who demand only that politicians echo their prejudices - hence the Tory party electing Truss or Badenoch. Nobody is much interested in encouraging (or even defining) the technical skills of politics. And so these wither away.

It’s a tired cliche that we get the politicians we deserve. But it’s true.