IEA Blog

Yesterday, the Catholic Bishops issued a document Choosing the Common Good which is intended to guide Catholics in the run up to the general election and beyond. Unlike its predecessors such as Taxation for the Common Good and The Common Good and the Catholic Church’s Social Teaching it has not hit the headlines. This is because, in contrast to the other documents, it is sober, well written, does not take the Bishops beyond their competences on technical economic matters and does not misrepresent aspects of the tradition of Catholic social teaching through a partial and selective analysis. There is nothing like the ghastly suggestion that tax is like the string that binds society together that appeared in Taxation for the Common Good (perhaps that document should have been followed by one on regulation that could have stated that “regulation is like the red tape that binds society together”).

Instead, the basic message of the new document is that if you want a good society then people need to behave virtuously – in their business lives, social lives, when they participate in civil society and in their public lives. These virtues, the document argues, need to be practised at all times and the paper does a good job of outlining what the traditional virtues are and why they are important.

In my view the Church should be sceptical of a state that spends over 50% of national income and which completely dominates the welfare scene. But it is better for the Bishops to put such warnings in nuanced terms or to leave it to the laity and other intellectuals to fight these battles than go beyond their competences in suggesting economic reform. I would not particularly want the Bishops to produce “The Free Market for the Common Good” written in the same terms as Taxation for the Common Good. Nevertheless, there were warnings about the ability of the state to solve our problems which were welcome (and inoffensive even to the left). For example:

“Have we allowed ourselves to be seduced by the myth that social problems are for the government to deal with? Politics are important but there are always limits to what any government can achieve. No government can solve every problem, nor make us more generous or responsive to need. The growth of regulations, targets and league tables, which are tools designed to make public services accountable, are no substitute for actions done as a free gift because the needs of a neighbour have to be met.”

“In place of virtue we have seen an expansion of regulation. A society that is held together just by compliance to rules is inherently fragile, open to further abuses which will be met by a further expansion of regulation. This cannot be enough.” And,

“Families have a right to a life of their own, and governments do well when they interfere as little as possible while supporting parents in the exercise of their responsibilities.”

Are there any criticisms one would make? Possibly, but these would be constructive criticisms rather than the tearing apart that some authors of Catholic Social Teaching and the Market Economy thought was necessary of previous documents. Perhaps the following could have been considered:

1. In the section on the environment, people were reminded of their responsibilities. It might have been useful to mention that, in terms of public policy, these responsibilities can be met in a number of ways (for example, direct regulation or the better definition of property rights and the use of the price mechanism) and we should not just vote for a party that says it is going to address environmental problems directly by regulation because we think that is the Christian thing to do. I say this not because the likely author of the document (Archbishop Vincent Nichols) is likely to think in such a way but because Catholic agencies in the West – who have a very high profile amongst the laity – do think like that whilst passing off their old, tired, subjective political views as objective moral thinking (more on this next week).

2. It could have been made clearer that individuals, families and the community through voluntary activity have the primary responsibility for looking after the poor rather than the state.

3. Possibly the only thing which missed the mark altogether was at the end where the document talked about the benefits of the state/Church partnership in education. This is really not where Catholic social teaching leads us. The primary responsibility for education lies with the parent and the family. The state should aid the family (for example, with finance if necessary) to educate their children – as should the institutions of the Church. It is not for the state and Church in partnership to build the schools, design the curriculum, determine the terms and conditions of employment of almost every teacher in the land and tell parents where to send their children to school. There has been interesting movement on this issue, in fact, in the Catholic hierarchy in the last few weeks – perhaps since yesterday’s document went to print!

4. Something could have been said about structural budget deficits. These have not been widely discussed (as far as I am aware) in Catholic social teaching since the sixteenth century. However, without getting into the technical issues about deficit reduction in a recession, the Bishops could have mentioned that lasting structural budget deficits can be a reflection of selfishness on behalf of the electorate that is trying to transfer resources from a future generation who have no representation. This is clear in the Greek case but becoming more pertinent in the UK.

This document should have been big news. “Bishops fail to put their foot in it” should be regarded by editors as genuinely newsworthy when it comes to statements on economic and political matters – both in the case of the Catholic Church (since the 1970s) and the Anglican Church. But this document goes further. It does not just avoid past mistakes but provides excellent food for thought.

The Guardian had a splash on Saturday with yet another attack on the big supermarkets. On this occasion it accused Asda and Tesco of having raised their prices in the weeks running up to Christmas. Former Office of Fair Trading (OFT) Director-General Sir John Bridgeman, now supplementing his retirement income as an “international consumer consultant”, described this as a “systematic, cynical and aggressive attempt to exploit demand.”

Tesco and Asda deny this, pointing out that some prices rise as special offers end, while others are being cut as new promotions come into force. And while Bridgeman and The Guardian argue that some of the price rises fall on goods for which there is increased demand at Christmas (such as the Peppa Pig playset), other increases were on more mundane items such as lightbulbs, toothbrushes and teacakes.

The supermarkets can’t win: recently they have been castigated for low prices on alcoholic drinks (encouraging binge drinkers), food (exploiting farmers) and clothes (exploiting Third World clothes manufacturers). When prices rise, on the other hand, they are exploiting consumers.

I hold no brief for supermarkets, but why do they need to defend themselves?

What is wrong with them charging more for goods in high demand and cutting prices on goods where demand is low? Such behaviour will ultimately maximise the profits which keep employees in jobs, contribute to our fiscal deficit and to the dividends on which our pension funds depend. High profits can be attacked if they result from excessive market power – but supermarkets do not possess this, despite the repeated efforts to convict them over the last 15 years by Sir John and his OFT cohorts.

Leave them alone. The supermarket sector is one of the UK’s greatest success stories and doesn’t deserve the continual drip, drip, drip of spurious allegations. The Guardian’s expose has nothing to offer policymakers. What does it want, a ministry controlling all the hundreds of thousands of prices which Tesco, Asda et al. change every year? How would that work?

I suppose I am not the right person to be giving an unbiased take on the Pope’s recent remarks to the English and Welsh Bishops on their ad limina visit to Rome on this secular economics blog. However, the Chief Rabbi has waded into the debate making similar points to those I have been making, and also quoting F. A. Hayek, so I feel justified. The issue also has a lot of parallels with those that Len Shackleton frequently blogs about: freedom of association and freedom to contract in labour markets go hand-in-hand.

In case you have missed the debate, the Pope has told the Bishops that they should continue to speak out against legislation (specifically equality legislation) which circumscribes religious freedom. The usual example given is where legislation restricts the freedom of relgious schools to choose not to employ practising homosexuals. Though the debate is often seen in those terms (that is, about the employment of gay people) so that easy headlines can be written about discrimination against that group, it should also be mentioned that the same school would not wish to employ a headteacher who was a practising non-married heterosexual (or re-married divorcee) either. There is a constistency in the Catholic position which some gay activists respect.

The problem is that we have moved from a free society to one based on rights. Freedoms do not conflict (or at least they are managed by agreements – contracts) whereas rights do conflict because they impose duties as a corollary. Let us take the example of a right to the adoption of children by gay couples – something that has led to the disbanding of Catholic adoption agencies. In a land governed by “freedom” gay couples would be entitled to adopt through any agency which wished to provide services and the Catholic adoption agencies could offer their services to whoever they chose (let us say just to married couples – but see below). Indeed, specialist gay adoption agencies could spring up. In a land governed by “rights”, gay couples have a right to have adoption services to be provided by any entity that provides adoption services. That imposes a duty on Catholic adoption agencies and circumscribes their freedom (and the net result is a reduced variety of adoption agencies). Rights come into conflict. Does the Church have a right as a religion to set up an adoption agency in accordance with its moral views? Not if homosexuals – or unmarried heterosexuals – have a right to adoption from all agencies. Do homosexuals – and unmarried heterosexuals – have a right to adoption from all agencies, without discrimination? Not if Church groups have a right to set up adoption agencies in accordance with their moral views. Resolving these incompatible rights can only lead to open conflict (the current position – where there is a great deal of bitterness on both sides of the debate). Yet, if all accept freedom as the basis for social and economic relationships, there need be no conflict though each side will, no doubt, want to persuade the other of the correctness of their views.

This argument can be widened to freedom of association more generally. I am perfectly comfortable with women-only clubs, socialist-only clubs and freemason-only clubs though I would not want to be a member (indeed could not be a member) of any of them. Similarly it should be possible to have men-only clubs and so on. And religious groups should also be free to form associations and act in accordance with their own moral principles.

But the Church has only itself to blame on many of these issues. The continental influence in general, and soggy-socialist influence amongst the English-speaking Bishops, has made the Church at large often conflate “freedom” and “rights” in public statements and not distinguish effectively between them. The Church’s own consistent theory of rights is somewhat different from most secular understandings and this is not articulated well either and is certainly not well understood. Bishops in England and Wales have not spoken out against “rights-based” equality legislation until it affects their own patch. And Catholic agencies have also acted inconsistently. It was not consistent, for example, for Catholic agencies to facilitate adoption for heterosexual singles and then turn round and say they would not do the same for gay couples because a child needs both a mother and a father and should be put in that setting if at all possible. Jeremy Paxman very effectively nailed the now Archbishop of Westminster on that very point on Newsnight and the whole argument surrounding Catholic adoption agencies was then finished in the view of many people.

The Church could simply extend one of the great planks of Vatican II. In dealing with the communist countries it effectively said that the Church will not try to create Catholic government if she were given full freedom to operate in communist countries – including the freedom to speak out against oppression of human dignity. This would mean the defending of what the Church regarded as genuine human rights deriving from natural law (for example – the right to hold property). It should cherish and speak out in favour of freedom of association more – even though there would be many associations formed that the Church did not like! The Church should pursue its mission by persuasion. “Rights” agendas, unless strictly limited in scope, lead to conflict. There is no logical end-point to a “rights-based” legal code which gives rights to some and imposes unacceptable duties on others, whereas we can live in freedom harmoniously. Indeed, once such rights-based codes are accepted in principle, we put in place the vested interests that will simply work for their extension, so we create a huge “human rights and equality” industry. Of course, not all problems will be resolved by making freedom the basis of law. One thinks of abortion, for example, where most religions would believe that the unborn child should get the same legal protection as those who were born but some believe otherwise. However, a belief in freedom in general surely provides the only widely-acceptable basis for religious freedom in a secular society.

Yesterday I appeared on the Radio 4 Sunday Programme. The programme is available online on the BBC iplayer at http://www.bbc.co.uk/programmes/b006qnbd until 2 January. It begins with a discussion of the work of Charles Booth and William Booth. The debate with Philip Booth comes about 36 minutes in.

Part of the programme looks at a book by Wilkinson and Pickett called The Spirit Level which suggests that more unequal countries lead to much worse outcomes for everybody. Wilkinson himself said on the programme that it would be better to tax the rich and throw the money away because the resulting increase in equality would be good for society. In my view, policies based on institutionalising envy should have no place in a civilised society. But, notwithstanding this, his premise about taxing the rich is based on the results of a great deal of statistical modelling about inequality which raise many questions.

I must confess that I have not read the book – I would genuinely welcome comments from those who have read it, or indeed from the authors. I have read some detailed summaries and reviews and the following points come immediately to mind.

- There is much made of the relationship between inequality and infant mortality – in particular the high rates in the US and the very low rates in the “equal” societies of Japan and Sweden. However, when I looked into this, I discovered that, in the US, every baby who is delivered and dies counts in the statistics, no matter how premature or how small. In Japan, deaths within 24 hours of birth are recorded as miscarriages; in Sweden, deaths under a certain birth weight are not recorded in infant mortality statistics. Apparently this, together with the higher number of migrants in the US (see below), explains the differences in recorded infant mortality.

- The authors make much of the relationship between crimes of violence and inequality – again the US being the outstanding example. However, we would expect crimes against property to be associated more with inequality and these are 2.5 times higher in Europe than in the US…Why are the authors so quiet about this?

- When problems are positively associated with equality (such as suicides) these are regarded as anomalies (to the authors’ credit they are not brushed under the carpet, they do try to explain this).

All in all, the message seems to be that homogeneous and closed societies that are not very receptive or attractive to migrants score well on equality. Large heterogeneous, dynamic economies that are attractive to migrants score badly. Migration, of course, helps cause inequality – as migrants are often moving to avoid poverty and they start poor, but this leads to some important questions. Why are migrants attracted to countries that are so unequal if all other quality of life indicators are worse in such countries as well? Why are migrants not clambering to get into Japan and Sweden? And why, in many respects, is Japan, if it scores so well on equality and so many other lifestyle measures, burdened with a huge debt and a catastrophically low birth rate that seems to reflect a huge degree of pessimism?

“Revealed preference” seems to suggest a desire to live in the US and the UK rather than in Japan, whatever the statisticians might think is rational.

One of the more irritating suggestions that people make in the debate about “corporate social responsibility” (CSR) is that “businesses should put something back into society”. Entered into google as a string, the phrase produces 21.7 million hits, with small variations producing many millions more.

I sometimes wonder, when I go to the local newspaper shop and purchase a newspaper for £1, whether I should say to the vendor before I leave – “having sold me a newspaper, I hope that you will now put something back into society”. Getting up at 5am, taking risks with very little capital to fall back on and providing communities with newspapers at a reasonable price is not enough it would appear.

Of course, when people use that line of argument, they are not talking about the corner shop, they are talking about Tesco, or Starbucks or PC World. But the argument is the same. Why if Tesco profits from selling a newspaper is it time for them to “put something back into society” whereas if the corner shop sells a newspaper people appreciate that they are providing a good service at a reasonable price?

The raison d’etre of a business is to put something into society by being a business. The provision of cheap and plentiful food in good condition; the development and supply of computers with ever-greater functionality; the provision of a cup of cappuccino that does not involve the buyer having to go through the expensive and laborious process of buying the machinery and making the coffee himself are all activities that put something into society. Why is it that businesses are caricatured as “taking out of society” when they behave as businesses but “putting something into society” when they spend money on community projects and the like?

More generally in the debate on corporate social responsibility, there should be no reason for businesses to make a special effort to be “social”. Business, by its nature, is a social activity. Businesses are free associations of persons put together for a common objective. That common objective, furthermore, can only be achieved by interacting with others in the community – mainly by providing goods and services that people wish to buy.

Should businesses be responsible? Of course they should. All individuals and all organisations should behave in a civil and responsible manner. However, this does not require businesses to have specific objectives that might, indeed, undermine their whole purpose. In fact, proponents of corporate social responsibility – that is proponents of businesses having specific programmes and objectives that explicitly promote aims other than maximising owner value – seem to want businesses to undertake tasks for which they are not suited but towards which other corporations and associations are, in fact, specifically oriented.

The latest edition of Economic Affairs covers these issues in more detail with articles from Elaine Sternberg, David Henderson and Stephen Copp, with Sushil Mohan and Alistair Smith writing specifically about fair trade. Enjoy Christmas, but please don’t campaign for businesses to behave like Santa Claus.

The status of women in the Muslim world is a controversial subject. The position accorded to women by Qur’an and Sunnah of the Prophet differs vastly from practice within various Muslim societies. Over the centuries, various pre- and post-Islamic cultural values have crept into the body of religious corpus and have become embedded as “God’s laws”. 

Well-defined and well-enforced property rights are one of the fundamentals for prosperity. In particular, women’s property rights are fundamental to women’s own economic security as well as wider economic development.

Our analysis of six different Muslim countries has concluded that the correct application of the rights granted by Islam can encourage female empowerment and promote the generation of wealth. The present lack of women’s property rights is classic example of institutional disconnect between theory and practice in Muslim countries.    

Most Westerners and many in the world of Islam are unaware of the rights granted to women by Islamic Law. These comprise independent ownership of property and the right to trade, buy or sell. Islam has provided clear cut strategies for empowering women – to augment their status, and to add to the social and economic wellbeing of society. The full and proper implementation of women’s property rights and the consequent economic freedom will promote female entrepreneurship.

Women’s status becomes particularly important when they are responsible for managing loans and savings. They benefit from microfinance services that enable them to generate and control their own income. Research shows that credit extended to women has a significant impact on their families’ quality of life and especially benefits their children. The enforcement of property rights also brings immense social gains and strengthens the position of the underprivileged, the most fundamental tenet of Islam. Asset control gives women greater confidence and decision-making power within households and helps protect against the risk of domestic violence.

It is clear that if Muslim countries acted to bring their laws, and even more importantly their practices, in conformity with the Qur’an and the practice of Prophet Muhammad, they would ensure well-protected property rights for women.  It is crucial that Muslim countries and societies focus on identifying and eliminating discriminatory practices, including complex or antiquated legal systems and the local customs and traditions which are often conceived as part of Islam. They must create and implement policies that empower women to own, administer and manage property.  

Islam provided the platform for these steps 1,400 years ago. It is time for Muslims to use that platform.  

This article is based on the research paper “Muslim women and property rights” by Azhar Aslam and Shaista Kazmi, published in the June 2009 edition of Economic Affairs.

A new study published today by the Institute of Economic Affairs examines the compatibility of the Islamic religion with free-market economic policies. Contrary to the concerns of many in the West, the study finds that the main tenets of Islam are not opposed to the key elements of a free economy such as the primacy of property, respect for family, the importance of nurturing business, enforcement of contracts and allowing individuals to trade freely.

Whilst some aspects of a free economy that was based on Islamic principles would look quite different from the main features of Western economies, there are no obstables in principle to Islamic societies being economically free, open and business-friendly.

 
The most important general principles highlighted by this study, edited by Imad-ad-Dean Ahmad and published in Economic Affairs, the journal of the Institute of Economic Affairs, are as follows: 

• The fulfilment of contracts appears immediately after prayer and charity in the list of what defines righteousness in the Qur’an.
• Well-defined property rights, including procedures for recognition and inheritance, are basic elements of the establishment of a market economy. In Islam, private property is not simply recognised, it is sacred.
• The Qur’an encourages trade, prohibits fraud, and prohibits envy.
• The Western notion of “liberty” shares much with the Muslim understanding of justice, which includes freedom of religion and intellect (thought and expression).
• While parts of the Muslim world have some catching up to do with the West in terms of women’s rights, in the case of women’s property rights it was the West that lagged behind the Muslim world. The Qur’an guaranteed women rights of property and contract, and even a share in an inheritance, fourteen centuries before some states in the USA granted married women the right to property at all. 

These principles have been applied in practice in the Muslim world – even if they are not universially applied today. For example, the parts of the study looking at Dubai, Turkey and Moorish Spain illustrate how the basic features of the market economy can exist side-by-side with a devoutly religious society.

Furthermore, the section of the study on entrepreneurship based on internet platforms shows how Muslims need not wait for domestic policy reforms in order to take advantage of business opportunities – trading online simply allows individuals and enterprises to bypass regulatory impediments. Finally, the substantial issue of interest on loans is addressed by a group of three Muslim scholars. Whilst the way in which Islamic finance bypasses the prohibition on interest is not uncontroversial, even within Islam, Islamic banks are thriving and using impressive self-regulatory vehicles to ensure that good business practice sits alongside the adherence to religious principles.

Writing in an environment in which respect for freedom of contract and property rights is being eroded in the Western world, the editor of the study concludes by arguing that: “harmonious economic development will require both Western civilisation and the Muslim world to recognise the importance of liberty, contracts and private property as universal values.”

Islam and the Free-Market Economy is edited by Imad-ad-Dean Ahmad. Click here to download the editorial (pdf).

Sir Liam Donaldson’s proposal for a minimum price per unit of alcohol is a novel addition to the long list of interventions in markets in the name of some alleged higher good. As is often the case, this higher good is ambiguous. One line of argument seems to be that a minimum price will somehow deter the binge drinkers who dominate too many of our town centres late at night. This seems highly unlikely, given that many of these young people are reasonably well off. Public binge drinking is anyway a law-and-order issue which the police could clear up very quickly with existing legal and regulatory powers, given the political will.

No, this is really about the general health of the population, and is of a piece with the smoking ban and attempts to regulate what we eat and how much exercise our children take. Donaldson argues that, despite being more expensive than in most continental economies, alcohol is “too cheap” and that this is damaging our health. It’s part of the new bipartisan policy drive to nudge us and cajole us into altering our lifestyles. Will it work?

The report on which the proposal is based, by Sheffield University researchers, makes estimates of the price-elasticity of demand for alcohol and from these Donaldson’s team works out by how much consumption will fall (about 7%) if a minimum of 50p per alcohol unit is imposed. It then argues that such a fall in consumption will lead to (strictly, “will be associated with”) 3,400 fewer deaths, 100,000 fewer hospital admissions a year, 300,000 less days off work… and comes out with savings to the government of £12 billion over a ten year period. What’s not to like?

Plenty, actually. For one thing, the analysis involves a series of quite heroic assumptions. Beginning with the elasticity estimates: the literature suggests a very considerable range of estimates, and to put faith in a precise figure is daft. The likelihood is that in any case the new price will be subverted by illegal imports of drink from outside the UK, as already happens on far too large a scale.

If consumption of cheap drink does fall a little amongst the heaviest boozers who currently end up in hospital beds, other forms of self-harm may well substitute – drugs, non-beverage alcohol and tobacco. In any case hospital admissions reflect medical and administrative priorities, and fewer drink cases may just be substituted by other patients currently further down the waiting lists. Don’t expect a cut in NHS bills any day soon.

Why use a minimum price instead of increasing the (already high) rates of tax and duty on alcohol? The rationale is that this is more targeted – it hits those hardest who currently buy the cheapest forms of alcohol. But this is debatable. It has been pointed out that it would also hit modest drinkers of supermarket wine just as hard as cheap cider drinkers. The data used by the Sheffield study do not in any case justify the degree of precision which Donaldson advocates.

How will the minimum price be adjusted, as it will have to be over time? Linking it with inflation will not make obvious sense, for there is no reason why this should maintain a constant effect on consumption as incomes rise. An apparatus will have to be set up, rather as is the case with minimum wages, to make periodic adjustments – and this will be subject to the usual pressures of lobbying by interested parties, using unnecessary resources to persuade some great-and-good all-expenses-paid character to see the world their way.

To the extent that consumption is cut, the value of the elasticities estimated is such that the total spent on alcohol will almost certainly increase. For pubs and supermarkets, this will mean higher profits. Over time the price will almost certainly be raised faster than inflation, probably adding each time to private sector profits. Can you see this regime surviving long? There will almost certainly be pressure to add to an already complicated tax and duty regime to get at these windfall profits. When once you start regulating, you never stop.

Gordon Brown, who could be forgiven for seeking solace in a dram or two himself at the moment, seems thankfully sceptical about all this. But the idea’s unlikely to go away in a hurry – particularly as a version of it seems likely to get a run-out north of the border.

There is at the moment a hugely irrational anti-banker mood in this country. Every day I see angry letters in the papers and angry blogs calling for all sorts of dire penalties for bankers and financial traders. They are Public Enemy Number One, accused of gambling with “our” money and bringing the country to the verge of ruin. Government ministers such as Harriet Harman threaten all sorts of extra-legal manoeuvres to take Sir Fred Goodwin’s pension away.

But hang on there. Others were implicated – the government, for running massive fiscal deficits and messing up pensions by changing the tax regime (thus putting pension funds under pressure to obtain higher returns), the Bank of England for failing to take asset inflation into account in its conduct of monetary policy, the FSA and other regulators for poor regulation, the boards of financial institutions (and especially their overpaid non-executive directors who are meant to keep an eye on excessively risky behaviour) – and also us, the ordinary punters, for overstretching ourselves in the mortgage market, or seeking higher returns from our savings and ignoring the small print about asset prices going up and down. Yes, we’re all in it.

And there was nothing particularly irrational about the way bankers were paid – the “bonus culture”. There is a colossal literature on performance-related pay, of which bankers’ bonuses are an extreme manifestation. Economists, and committees of the great and good, have generally argued that linking pay to performance is desirable wherever possible, and particularly for top executives and traders where small changes in performance can be worth many millions of pounds.

People might accept this, but argue that allowing failed bankers to keep bonuses and pensions in the current climate is different. There are arguments, I guess, that where the state is supporting banks and financial institutions which would otherwise go bust, there may have been a case for trying to renegotiate rewards in return for keeping banks going. But people generally have a contractual right to compensation which was freely agreed in advance, and it is sophistry to suggest otherwise.

Politicians, journalists and angry phone-in callers all have 20-20 hindsight, and claim that the likes of Fred Goodwin took unnecessary risks – in his case, by pushing through the merger between RBS and ABN Amro (which, of course, could have been stopped by the competition authorities). He screwed up. Businesspeople do. Having done so, he negotiated the best leaving package he could. It is not only bankers who do this, incidentally; Chelsea FC’s annual report shows that they spent £23 million last year paying off two managers (Mourinho and Grant) and five assistant coaches – quite a big “reward for failure”, but one which has attracted little public comment..

Whatever the current situation, the government is surely wrong to be attempting to legislate for the future behaviour of firms and putting caps on bonuses, or conditions that they are paid in shares which have to be held for many years.

Top executives and traders face highly demanding jobs, and won’t take them in the UK unless they can get a return commensurate with their commitment. And they are also not going to negotiate one-way contracts which don’t reward them very well for success and yet still allow banks to sack them for poor results. They will go abroad or into private, unregulated funds where the government’s writ doesn’t run. We will end up with state-regulated bankers modelled on Dad’s Army’s Captain Mainwaring, but with less imagination.

I’m not happy seeing failed bankers walking away with large rewards. In their position I hope I would have the humility to return some of the pensions and pay-offs, or devote them to a good cause. But I really don’t like to see them bullied and harassed by politicians whose own record does not bear close scrutiny.

An update to An economic Christmas-present puzzle: buying books on Amazon:

After my three letters to Amazon (going back two months now) were ignored, the IEA blog seems to have done the trick as a very lengthy response suddenly appeared in my email inbox. I am now Case Number 1,461,552 which makes me ponder. Is it good or bad that the number is so high?  

So, what did the email tell me? Apparently sellers can set any price they wish, which is 100% fine with me. However sellers “are required to have the item in their possession at the time they list it for sale”, so the dealer who simply sends an order from his amazon.co.uk site to amazon.com for fulfillment is way out of line. It is a “community rules violation” and it has been so reported. I am glad to be vindicated on that front. This was not pure arbitrage at all in my book. 

On the bigger question of listings in general there is also good news. Amazon recognises my book as my personal intellectual property and on filing of a Notice of Infringement I can ask that only Amazon be allowed to sell my book at its site. So that will hopefully quickly see off these characters asking for two to three times the cover price. Puzzle solved?